HomeMy WebLinkAboutAgenda Bill 06/25/2001 (28) •
• ATTACHMENT
abk
RESOLUTION OF'THE PETALUMA CITY COUNCIL AUTHORIZING THE SALE OF
WATER REVENUE BONDS RELATING TO THE FINANCING•OF THE WATER SYSTEM
IMPROVEMENTS AND REFUNDING OF CERTIFICATES OF PARTICIPATION ISSUED
FOR THE ZONE IV WATERa'SYSTEM IMPROVEMENT AND APPROVING RELATED
DOCUMENTS AND AUTHORIZING:OFFICIAL.ACTIONS
•
•
•
•
I '
Resolution No, N
of the:City of Petaluma, California,
4
5 RESOLUTION.OF THE COUNCIL Or THE GITY OF PETALIJMA
6 • AUTHORIZING THE ISSUANCE AND SALE OF`WATER
REVENUE BONDS; SERIES,„2001, APPROVING
'OFFICIAL 'STATEMENT, . B AUTHORIZING OFFICIAL
9 + ACTIONS.RELATED THERETO
to •
11 The Council of the City ofPetaluma does RESOLVE as follows.
12
13 SECTION 1. Authority. The'Cityci•s-a chartered city and municipal corporation organized
14 and_existingunder the constitution and lawsrof'the State of California„and;is duly empowered as a
15 chartered,city:to exercise the powers reserved-to it under`said constitution with respect to municipal
16 affairs.
17
18 SECTION 2. Sewer arid Water?System Bonds;Bond;Law As an exercise of such
19 powers,the City has heretofore adopted.thepprovisions of Chapter'4 08'(commencing with Section
20 4.03 010) Of the,Petaluma`Municipa1Code -,as amended by Ordinance No 2112 N C.S ,.entitled
21 "ORDINANCE OF THE CITY OF=PETALUMA AMENDING THE PETALUMA BOND LAW,
RELATINGTO THE,REFINANCING OF REVENUE_BONDS”;(the "Ordinance"), which'
adopted on•May 7, 2001 (the Law )''-whichcauthorizes the City,`when°the public interest and
24 necessity require; by resolution, to*issue its l'evenue'bonds for the purpose of financing or•refinancing
25 the acquisition,construction, extension or improvement of any'sewer o •water`enterprise•system or
2 • Of the:City..
27 •
28 SECTION 3. Bondsr-Pfojiosed The City, after due investigation,and deliberation, has
29 I determined.thatiit is in•the public interest of the City,at this time to;authorizekthe,issuanceaof its water
30 revenue bonds (the `Bonds") under the Law for the purposeiof (i) refinancingra,lease obligation of
31 the City and Certificates of Participation therein executed and delivered.lin 1990 in the principal
32, amount of$6,600 000•to finance Zone IV Writer System,Improvements (the `1990 Certificates"), (ii)
33 financing improvementsdto'the Petaluma.municipal watersystem (thet"Project ), (iii)•fundingra
34 reserve fund for'the,Bonds; and (iv)fundingt costs of issuance incurred in connection.with the .
35 issuance and sale of the Bonds.
36
37 SECTION 4 Prelimina y Official Statement. Kelling; Northcross&Nobriga,.as financial
38- advisor to,the City(the Winancial,Advisor") has prepared and subnrittedjto the:City a;preliminary
39 1Official Statement%relating to•thelBond"s, aAcopyofwhich is,on°file with the;City Manager,for •
40 distribution;to municipal bond broker=dealers•and banking which may bejnterested in
41 purchasingthe'Bonds,
4, .
43
•
4,
48
49
50 0 .. N GS.
nl
1 •
2
,3
4 SECTION 51 .Authorization of Sale. Tuesday, July 17, 2001, at the hour,o •10 00 a;m.
5 (Pacific Standard`'Time), islherebyfixed as,the;time; and the officefof the Financial Advisor at'I333
6 Broadway, Suite 1000, Oakland, California 94612 is hereby fixed as the placeiat°which bids''ilbbe
7 received for thepurchase of the;Bonds as described;in and subject to"the terms and conditions'of the
8 Official Notice=of Sale, a,copy'of which is on:fle with the City Clerk, or at'such other,time as shall be
9 ;determined by the City Manager. The•Finance Director is hereby authorized;to award the sale of the
10 Bonds to the bidder whose.responsible'bid;for;the•Bon_ds results in the lowest true interest to`the
1Y City, to be determined in accordance with the:Official:Notice of Sale. The portion.,of the Bonds
12 attributable to>the,refundinggof the 1990 Certificates_.shall only be sold if sayingslequal to at least four
13 percentf(4%) of the principal amount,,of the 1990"Certificatesioutstanding are achieved'through the
14 safe:of the Bonds and the refunding of the 1990 Certificates The portion;.of the Bonds attributable to
15 the Project shall`be sold:without=regard to the savings level,to be achieved by the refunding:of the
16 1990;CertifidateS
17
18 ,SECTION'6. :Indenture,of Trust: The Bond's, in a principal"amount of not-to-exceed
19 $11,509;000, sshallbe;i'ssuedpursuant to an Indenture of Trust; dated as of Augusti 1,,2001 (the
20 • "Indenture"), by and between'tlie City and a'trustee to:bechosen by the Finance Director; astrustee
21 (the "Trustee"). Thelndenture in substantially the form on filer-with the City Manager, is hereby
22 approved, and the Mayor„the City Manager,and the Finance Director (each, an''Authorized Official")
.23 is hereby pa r nn s following of e
24' B nds,and'theCity Clerkis ereby authorized ad'direct d to attest said A hori d Ofcal
25 signature.
26
27 SECTION 7. Official St itement ,Tli`e pi eliminary Official Statement describing;the=Bond's
2s in substantially•theformi.heretofore submitted to the'Council,'is hereby approved, subject towwhatever
29 additions, deletions and corrections;may be deemed advisable by the-Authorized Official upon
30 consultation with°the Financial Advisor,.Bond.Counsel and the City Attorney.- The Authorized'
31 Official is hereby separately`authorized and directed, upon consultation with:the.Financial;Advisor,
32 Bond Counsel'and-the City,Attorney; to approve'such changes to th'e'prelunina y Official Statement-
33 as shall be-necessary•to cause such preliminary Official;;Statement to;be"brought into,the°form',ofa
34 .final Official Statement, and"-.the Authorized Official is,hereby authorized and directed to execute and
35 deliver copies:of the filial Official<Statement to°the purchaser of theiBonds,•at:the`time of delivery of
36, the Bonds.
37
38 The Council hereby approves, and hereby"deems nearly within the meaning of Ru 2'-1
le 15c2 of
39 the Securities Exchange Act of 1934 (the"Rule' ) theprelimi ary Official Statement. The
40 Authorized Official,is hereby authorized execute an:appropriate:certificate stating-the Council's
41" determination,that the preliminary' flicialrStatement:has`been.deemed nearly final within the:meaning
42 of the Rule.
43
44 SECTION',8. Dist,ibution,of Official Statements The Financial Advisor'is hereby •
45 authorized and directed to:cause copies of the preliminary Official Statement to be printed and mailed
46 to prospective bidders for the Bonds .
•
47
48
49
50
5)
52 0; .. N;C:S, •
'53 -
; •
1 • .
',2 • '
•',.3 • • •
. _.
SECTION.9. Trepan-idol-la:if DendX. The Finance Director is directed to cause the Bonds to
„ _ ..
beprepared in accordance with the';0716-YiSibilS of.theiIndenturetot Trust approved in Section 6 and to
0
-teause theinexeoution'hythe'propen officers of the City and authentication by the Trustee and to cause
t •therBOnds';fo be delivered when so executed and authenticated totor'on-helialf of the purchaser or
18' :1)14rCbasers•ThereOf;-,opon•the receipt of purchase price therefore.
10, SECTION it Execution oftWieumentS. the•:miastot,:Vice:Mayor,)Cify Manager;tcity
ii , Cleric; Finance Director Director of Water Resources City Attorney and any and all other officers of
12' i'the City are each:authorized and directed in the name and on behalf brthe City to:ntake:anyanchall
13 I certificates, requisitions, agreements; notices, consents, warrants and other documents, which they or .
14 any of Om:might deem necessary onaPpreppliatelifterderto consummate the lawfiil issuance, sale,
I
is and delivery ofitheDondsc.to•the cri'ginat,,p-urchaSerEthereof, including an Escrow Deposit and Trust
16 1 Agreement.relitiii&to theIrefulidilgi.61Ilie 19910,Ceraficates:
17
fa SECTION 11 -EffectiveDate This resolution shall be effective tupon its adoption by the
t§ Council
:20.
21
2-2,
23, .
24 "
25 I
, .
•
. • '
28 • ' .
29,
-31
32 .
33:
:34 • _
36
. .
37
40 Under themoweOricPautbOrity,cordbrred•tipon‘this+Councikbycilleharter,,oLsaid City.
41 REFERENCE: Ilhereb37.,661Wtli-Ejfbitegbiiig Resolution as introduced and adopted by the Approved,as-te
42 Council of the City of,Retaliiiimat'IORogiilti6rfieeticig on , . form
byalie rollooang vci-e: - •• . . ,
'44' ' • • ,
City Attorney
45 AYES: .
4-6 NOES: ,
. .
4.1 'AJ '8'ENI: • _
49 ATTEST: • . -
City Clerk Mayor
51 '
52' .
Resoltaion No: _ NCS
•
I '•
ATTACHMENT`II
.CITY'S FINANCIAEADVISOR KEELING NORTHCROSS,&NOBRIGA.-FINANCIAL,
PROJECTIONS;ASSOCIATED WITH REFINANCING 1990 CERTIFICATES OF
PARTICIPATION
ski
•
t
•
II
H H ;
l
I
: ; JunA,-2001 4'29 pin„Prepared bg;Kelling NOrthcrgss&Nofiriga (Finance'4Al l'.Petlmctt:WATER-40IREF90;REFONLY) •Page,'1.
SOURCES••AND;USES'OF,EUNDS'
S
City of Petaluma-Water Systeih' •
.2001':Refunding:oi 1990:COP?Insured
Dated-Date 08/01/2001-
Delivery Date ,08/01/2001
Sources:, • - •
Bond Proceeds,:
Par Amount ,4 605,000.00
Other Sources,afFunds:
DSRF 609'380.00
5,2c4380;00
Uses:
Refunding1EscrowDeposits: '
Cas}i'Deposit 0:16
SLG Purchases'- 4;550:347:00
4;550,347.'16
OP-14791d Deposits:
Debt Service•Reserve;Fund,• 460;500:00
•
.
Delivery Date?Ex
pen.
ses:
•
Cost ocissuance! ;125,000.00
Underwriter s"DiscounP 57 562:50 .
` Insurances '20,683149.
203',245199
Other„Uses df Funds: .
Additional Proceeds 286:85
,8121:1:3811!0&
,
•
I •
•
•
•
•
Jim 1,2001 4:.29 pin Prepared by Kelhng Northcross&Nobriga. (Finance 4.411 Petlmcty:WATER-01 REF90;REFONLY) Page 2
SUMMARY OF•BONDS REFUNDED:
CitytofPctaluma=-Water System
2001Refunding,of 1990.COP-Insured
Maturity Interest Par Call Call
Bond Date Rate': Amount. Date Price
199000P-90ISSUE: - •
SERIAL 11/01/2001- 6!800%0. 200;000:00
11/01/2002 7:000%; - 215;000:00 11/01/2001 100!000
11/01/2003 71.000%. 230;000.00 11/01/2001 100.000
11/01/2004 7i000%� 250,000:00 11/01/2001 100:000
11/01/2005 7!'100°°% 275,000:00 11/01/2001 100:000
11/01/2006 7:100% 295,000:00: 11701/2001 100:000
11/01/2007 7100%. 325,000.00 I 1/01/2001 100:000
0000
11/01/2008 .7:100% 355'00000' 11/01/2001 100.000
11/0122009 7.400%. '385,000:00 11/01/2001 100!000
1 1/0112010. 7:100% 420,000.00. 11%01/2001 100:000
11/01/2011 7:100% 460,000:00 11/01/2001 100.000.
, 11/01/2012 '71100%0 500;000.00 11/01/2001 100.000
11/01/2013 .,5.000%0 530,000.0 11/01/2001 100:000
4;440,000:00
•
•,
•
•
•
•
•
�
Jun 1;2001 4:29 pm Prepared by Kelling Nor'tlictoss&-Nobriga (Finance 4'i411Petlmcty:WATER-OI REF90,REFONLY) Page 3
BOND DEBT SERVICE'
City,of Petaluma-Water System
200LRefunding of 1990 COP-Insured
Dated Date 08/01/2001
Delivery Date 08/01/2001
Period Annual Bond Total
Ending Principal Coupon ' interest Debt Service Debt Service Balance Bond Value
08/01/2001 4,605,000 4,605,000
11/01/2001 290,000 3.100% 44,161.88 334,161.88 334,161.88 4,315,000 4,315,000
05/01/2002 83,828.75 83;828:75 4,315,000 4,315,000
11/01/2002 270,000 3.100% 83,828.75, 353,828.75 437,657.50 4,045,000. 4,045,000
05/01/2003 79;643:75 79;643.75 4,045,000 4,045,000
• 11/01/2003 280,000 3.200% 79;643175 359,643.75 439,287.50 3365,000 3365,000
05/01/2004 75;163.75 75,163.75 3,765,000 3,765,000
11/01/2004. 295,000 3.400% 75;163:75' 370,163.75 445,327.50 3,470,000 3,470,000
05/01/2005 .:70,'148.75 70,148:75 3,470,000 3,470,000•
11/01/2005 310,000 3.500% 30;148:75 380,148.75 450,297.50 3,160,000 3,160,000
05/01/2006 64,723.75. 64,723.75 3,160,000 3;160,000
11/01/2006 320,000 3.600% 64323.75 384,723.75 449,447.50 2,840,000 2,84Q000
05/01/2007 58,963.75 58,96175 2,840,000 2,840,000
11/01/2007 340,000 3.700% 58,963.75 398,963.75 457;927.50 2,500,000 2;500;000
05/01/2008 52,673:75 52,673.75' 2;500,000 2;500,000
11/01/2008 - 360,000 3.800% 52,673:75 412,673.75 465,347.50 2,140,000 2,140,000
05/01/2009 45;833.75 45,833.75: 2,140,000 2,140,000 •
iiip1'1/01/2009 380,000 4.000% 45,833.75 425,83335 471,667.50 1,760,000 1,760,000
05/01/2010 38,23375 38,233.75 1,760,000 1,760,000
11/01/2010 405,000 4.150% 38:233.75 443,233.75 . 481,467.50 1,355,000 1,355,000
05/01/2011 29;830.00 29,830.00 1,355,000 1,355,000
11/01/2011 •430,000 4300% 29:83000 459,830.00 489;660.00 925,000 925;000
05/01/2012. • 20,585.00 20,585.00' 925,000 925;000
11/01/2012 -455;000 4.40.00% 20;585.00 475,585:00' ' 496,170.00 470,000 470,000
05/01/2013 10,575.00 1057500 470,000 470,000
11/01/2013 470,000 4.500%. 10575;00 480,575.00 491,150.00
4,605;000 1,304;569:38 . 5,909,569.38 3,909;569:38.
-
•
0
I •
a .
tu
2,
co
G.
R
O. ?I N.O. M'vl C G b - ^ r- in 0 en CC N.IO en JO - V b N N O CC'
^ 0 e r C C 1- L\ vo or 4 vT:N tel V. N C' N N en
ea. 0 N N CO 1' V. - M CO C vl l-- C '':O vl et et'O V In:G co.N'M V1 co en N'
> V V''0 0 M N - N Ol I- C C"I.VI N V N'N V?7O N in co - M U
�. - Cl N V CO'en n - V M+'V N.VI V In et VI N IC N CO etc 0 C N C M.
or C O'N N'.O N;'n-,b n vl'0 Pr Vj M 0'C 600 O'O VI.VI.∎C O1T oa'
aE 00 .0 N
W:' .v 0 en
o D C
O •
G.Y T. " V' O O: co 0 'O co 'O 'O O C C 0: V'
• �' N q C. O. O co O 10 C 0 n V{ q•
M b 0 2 O [ ' N o: �e O N- ICC v v1 M T1'
)O
i` ^ C C C C C
, 'C C. C C' C C O' en,
E
0-
t
.- v :O O 0 0.0 O 0 0 010
C. 0 O'JO'0 0 0 0 v VI VI v in V
- C 0'0 0 0 0 0 0 0 0 0;vl co O VI VI"O o VI VI'N N N NNN' N
er O'.2 N CC N•2 co M M vl vl r+1 6 VI76 M M in Vt"QI Ol C C "VI vl C
C F 2-C Vl O C' en en C O bi'.r0 6.vl O O'.0 etc r"'.l0 'C co CC in M N
U 2 CO i'O..'\ N N..- -• p C O..0, m M - -IM en N N.N N l0 iO,C 0 6
U N'N NCO ■ v1 •-. V0 r-:'N N N.-rN:- b:VI 0-M CC ' 6'6(V' 2
o vl 4 I C C M:'- en N'.-N,N N'- en C '0. 'M
C. T
L'
00 3' 'CO O 0 0 0 0 0 0 0>0 0';0 0 010 0 0 O v l in vY in v i vi l0
it-id y .D'rn 2 r'I M men co 00 rd red ^ M n,M-n n-M M CI P V e? C.`C 2 2 in en
C 240 N 01 Cl - .-. co C' N t'- N NBC 2 2 CO N h en N7N N NI 2 N
y M`N N O O ,c IO vl vl Cr N N l0..6 4'1 N O O 01v). -0.
0 .0 a:C, C O'O In O O O vli VC CI 01 n ter VS b 00 rt.0 O r0 -.0. •'VI C
ev IC ON
CC :N
0C U, N N C.N:vl 6 C: IG N NniN C co C co en N .N vl - lC -
n en en M en en O ' V V C V ':N o N. 'C
■ 2 00
0 z M M
E F
0 'VU 00 v` N VI V1 I'Vl vi in VIOVI Vl VI.n V$Vl In in VI in Vl in in VIM N
C C M',�6 VD G lC )0 V' ' O IC LC IC G G G,e0 NO C' b.C)0 b'b IC.IC CI
c C 'p y vI 0,0 co-O 070 0 0 070.0 C O O!O 0 0..0 0 0 0 0 0 0 O
'Q 0 0 N 6.VI VI VI V1-n in in VIM"V in VI VI'.VI:VI In V1 VI'Vl V1.VI VI Vl C'
0 N VI VI VI'rn VI.VI v1.VI VI..V) in VI VI V1'V1"VI N In In VI.VI'V) VI 0 C
•co N'p a 0 a C1.' c C• Q. Ci C' CIo11CS a C' Ci CC O'Q,w4V C C C O' C'0 P E.
3 ; C : E
•
>. E o
< C' m.. 00 U 00 In vi vl VI VI VI VI VI Vi V1.;VI VI VI VI`In VI VI`:VI 0 0 0 0 0 0 2.
00 CO ❑ '? CC N.N N"N r N N N N n. r-- I-.r N:NN r- r- 0 0 0 0 0.0 en C
U.^J -a '� - 2.W n n M M oo 2 M en en M n n`M,.M el O C VI VI VI.VI O, •-
F.•C. C y IC N N V'""C. IO `D el' et N 0.0 1/40 `D N r,'n'•en M en en en 2 00 N:N 'C C .3. C
H C. ;4 rn f% 2'.2 IC IO .�. .. - N N oI CI IC b,2.W NIN co':oO vI vl 6 Vl 6 2 0 �
O 0 C M M L\',CI Vl'O C C C C'.2 co,N N..v1'vl 2 M 0\:P C vl O C CI' �' C
4-, '.(Y, .0 en 00 v1 I'vI N N N CC IC DO in ON VI 'C-N en C N.VI N N -..00 0: -0 0
0 en M en en en M. M C' C C C C .0 C.' eel:,.r,
0 O
O O, :..
`0 3 0 00 0.0 0 0 o c.o oyo o:0 0 oc o,o o.o o 0 o o o co
D 2 - - _ .-. Ice Ioe -„-. VD•e '.IO.ee"v, v' N
CO•4 .0 VD V0 - -� - CC CC'C •O co 2 IC..0 W2 0.C'oC co - •-• en 00:€. :S.•ID N:N O C Vl.0 co r•l:V' G N N N N VI V V .-• In -C 0. i.7
C N M:M M 2 r NO o'N NI:N N N N .CIb O. CI o o N N O C. N, j - on:
N r-,6 n, y
(Y,
n .- en M...• en - M en V V et et O In ,"'. 0 .. 04.
L
O
Z 0. L 2
CO
L
O
z 3 `° O C O O O 0 0 O:O co O co C,C o co O co, 0x0 O'O O O
2 E. N C C'C C C et I- C.0 C C C C C C C C C C <I* V* V";C C n
03
y4•' V 4 2 00 2 2 00 co 2 corm co co CO 00 00 2 2 2 00 2 272 00,00 'C r
U - 61 61 N NN N=N NIN N NIN N N'N"N N N N N.N N IC N
O C C1 2 00 2 00 00 co 00 CC CC 00 2:00 00 00 co cc CC CO 00 CO'00 CC CC N fN
- -
0
z •
C, '� 0 0.0 0 0 0;0 0.0 0 0'..O C.0 0 O•o O 0 O..0 0 0':0 0 0 .0
._ .y ._ vlt in vl In VI Vt vl vI In 0.0 vl.N C O:'n in;o C;.C''C O,C c co .
�: 0.. E N:N N N N N.N N N C'C N'N O O;N O'6 0'0 0 C'C C'"O 'N
Ot0 0 co co en co oC N N C C ,0 O•C C en en C zo VI.V1 N
co O 6 o O 0 N N ,n vl C C N VI C, C. N N,M en O`O N.N C
T. - CC N N G. 01 O v 0 VI 0 vl co n 6 0 N N N N - --M M
70 Vl`^VI M'CD.N'N N 01 "0 O N M C N 'C VD DO C C en -.R
C
e
C
0'
0:
-.N.'N n n V'C VI Vl C b N r 2 2 CI"CI C C -•- ^ -
E O-o 0 0 0 0 I C O O C 0.0 O C C O'.0 - --
C C O C 070 0.0 C O C C'O coo C`0.0 O O O C C o:0 O
OI O N CV CV N N NN N N N N'N N N N■N N N N N el N N,N N.
•
y 0 0,..o j0 o O 0'O C O C CEO O 0 0 040 C o o 0�0 O
^ ,n in - :Vl in -• cc vl -I VI VI
co; .
N,
C
•
• 1 Jun 1,2001 4:29 pm,.Prepared by.KellingNortlicross'&•Nobriga (Finance:4.4I1':Petlmcty:WATER-01REF90,REFONLY) Page5
BOND SUMMARY STATISTICS
City of Petaluma-Water.System!
2001`Refunding of 1990 COP-Insured'
Dated Date 08/01/2001
Delivery Date .08/01/2001
Last Maturity I I/01/2013
Arbitrage Yield 4.147947%
True Interest Cost(TIC) 4:287891%
Net Interest.Cost(MC) 4.270508%
A11-In,TIC 4.857604%
Average Coupon 4.090040%
Average Life'(years) 6.926
Duration of Issue(years) '5:884
Par Amount 4,605,000:00
Bond Proceeds 4,605,000.00
Total Interest .1;304,569.38
NetInterest 1,362,131.88
Total Debt Service- 5,909;569.38
Maximum Annual Debt Service "496,170:00
Average Annual'DebtServiee •482,413.83
Underwriter's Fees.(per,S 1000)
Average Takedown?
Other Fee 12:500000
Total-Underwriter's Discount 12.500000
Bid Price 98;750000
Par Average Average
Bond Component Value Price. Coupon Life
serials , 4,605,000.00 100.000 4.090% 6.926
4;605,000.00 6.926
•Al]-1n Arbitrage
TIC TIC Yield
Par Value 4,605;000.00 4;6.05;000.00 4,605;000.00
+Accrued,Interest
+Premium(Discount)
-Undenviiter's Discount -57,562:50 -57;562:50
-Cost of Issuance Expense. -125000.00
-Other Amounts -20,683.49 -20;683.49
•
Target Value • 4,547;437.50 . • 4,401,754.01 4,584,316.51
Target.Date 08/01/2001 08/01/2001 08/01/2001
Yield 4.287891% 4.857604% 4.147947%
•
Jun 1,2001 4.29 pm Prepared.by=Kelling-Northcross.&Nobnga (Finance 4.41 I Pet!mcty:WATER-0IREF90,REFONLY) Page 6 •
SUMMARY OF REFUNDING RESULTS, ,•
City ofPetaluma-Water System.
2001 Refunding of 1'990 COP-Insured
Dated Date 08/01/2001
Delivery Date 08/01/200P
Arbitrage yield 4.147947%
Escrow yield 3.625710%
Bon ■Par Amount 4,605,000 00
True InteresiCost 4.287891%
Net Interest Cost. 4.270508%
Average Coupon 4:090040%
Average Life 6.926
Duration 5:884
Pat amount of refunded.bonds 4;440,000.00
Average coupon of refunded bonds 6.679823%
Average life ofrefunded bonds 7.402
PV.ofprior,debtto 08/01/2001.@4:147947% 520915114
Net PV Savings 368;679:23
Percentage savings of refunded bonds 8.303586%
Percentage savings of refunding bonds 8.006064%
•
•
•
•
r
Jun 1,2001 429 pm-Prepared.by:Kelling;Northcross&.Nobniga (Finance 4:411.Petlmcty WATER-OlREF90,REFONLY) Page 7
ESCROW REQUIREMENTS'
City of Petaluma-Water System.
2001 Refunding of 1990 COP Insured'.
Period Principal
Ending Principal Interests Redeemed Total
11/01/2001 .200,000.00 151,407.50 . 4,240,000:00 4,591,407.50
200,000.00 151,407.50 4,240,000.00 4,591,407.50
•
•
. .
•
.
•
-
.
Jun,1,2001 4:29 pm Prepared by,Kelltng Northcross&Nobriga (Finance 4:411 Petlmc ty:WATER-01REF90,REFONLY): Page 8 •
ESCROW DESCRIPTIONS ,.•
City of Petaluma=Water System
2001 Refunding of 1990 COP-Insured
Type of Type;of Maturity First Int Par Max
Security SLOS Date Pmt Date Amount Rate Rate
Aug .1,.2001:
SLG Certificate 11/01/2001. 11/01/2001 4,550;347 3.580% 3.580%
4,550)47
SLGS Summary
SLGS Rates File 01 JUN01
Total Certificates of Indebtedness' 4,550,347.00
•
•
•
•
•
•
•
• Jun 1,2001 4:29 pm Prepared by KellingNorthcross'.&Nobriga (Finance 4A11'Petlmcty:WATER-O IREF90,REFONLY) Page 9
0 PRIOR BOND DEBT SERVICE
I City of Petaluma-Water,System
2001 Refunding of 1990 COP-Insured
Period Annual Bond Total
Ending Principal Coupon 'Interest Debt Service Debt Service Balance Bond Value
.
08/01/2001 • 4,440,000 4,440,000
11/01/2001 200,000 6.800% 151,407:50 351,407.50 • 351,407.50 4,240,000 4,240000
05/01/2002 144;607.50 144,607.50 4;240,000 4,240,000
11/01/2002 215,000 7.000% 144,607:50 359,607:50 '504,215.00 4,025,000 4,025,000
05/01/2003. _ 137;082.50 137,082:50' 4,025,000 4.025,000
11/01/2003 230000 7.000% 137,082.50 367,082'.50 504,165.00 3,795,000 3;795;000
05/01/2004 129;032:50 129,03250' 3;795;000 3 000
795;
11/01/2004 250000 7.000%` 129;032.50 379;032:50 508,065.00 3,545,000 3,545;000
05/01/2005 120;282:50 120,282:50 3,545,000 3,545,000
11/01/2005 275,000 7.100% 120,282:50 395;282.50 515,565.00 3,270000 3,270000
05/01/2006 110:520.00 11/01/2006 295;000 7.100% 110;520.00 400;520:00 516;040.00 2,9755,000 2,975,000
000
05/01/2007 100;047.50 100,047:50 2,975,000 , 2,975,000
11/01/2007 325;000 7.100% 100047.50 425,047.50 525,095.00 2,650000 2,650,000
05/01/2008 88,510:00 88,510.00 2,650000 2,650,000
11/01/2008 355,000 7:100% 88.510.00 443,51600 532,020.00 2,295;000 2;295,000.
05/01/2009 75,907.50 75,907.50 2,295R00 2,295,000
11/01/2009 :385,000 7:100% 75,907.50 460907.50 536;815.00 1,910,000 1,910000.
05/01/2010 62,240.00 62,240.00 1,910;000 1,910,000
-11/01/2010 420000 7.100% 62:240:00 482,240.00 544,48000 1,490,000 1;490,000"
it
05/01/2012 a 31,000.00 31,000 00 562,000:00 1 5900,000 1;030,000
II/01/2011 .460000 7.100% 47330.00 507330.00 554660.00 1,030;000 0;030000'
,000 1,030,000
11/01/2012 500,000 7100% 31;000.00 531,00000 530,000 530,000
• 05/01/2013 30
5/01/2013 - 13.250.00 13,250.00 530,000 . 5600
1
1/01/2013 530;000 5:000% 13,250.00 543,250 00 556;500.00;
4;440;000 . 2;271,027:50 6,711,027.50 6,711,027 50
S
,
•
ATTACHMENT III
TIMELINE FOR BOND ISSUANCE
Sur Mo Tu We Th Fr Sa
Apr 1 2 3 4 5 6 7
8, 9 10 11 12 13 14
Si PETALUMA WATER BOND 22; '23 2a 18 5 26 27 2s
�I May 29 .30 1 2 3 4 5
FINANCING SCHEDULE 13 14 15 16 10 11 19
20 21 22 23 24 25 26
Jun 27 28 29 30 31 1 2
Schedule as of May 9,:2001 3 4 5 6 7 8 9
10 11. 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
Jul 8 12 9 10 11 12 13 14
15; 16 17 18 19 20 21
22 23 24 25 26 27 28
Aug 29 30 31 1 2 3 4
5; 6 7 8 9 10 11
12 13. 14 15 16 17 18
19 20 21 22 23 24 25
26. 27 28 29 30 31
Date Activity Responsibilit
•
y
Monday,May 7 1st Reading;ofarnended ordinances City
Friday,May 4 Notice of Public Hearing on Rate Increase City
Wednesday,May 9 Draft Official Statement, KNN
• Tuesday; May 22 Comments on:draftOS All
• 1st draft financing,documents
Tuesday,May 29 Comments,on.finanding..documents All
Tuesday,June 5 2nd drafirdocuments All
Agenda,title/packet_for June 25 • BC/KNN
Wed Ordinance effective City
Wednesday, 7 Ordin ff
Monday,June 18 City approves,rateincrease City
Tuesday,June 19- Credit packet to sating,.agencies/insurers KNN
Wednesday,June 20 Notify CDIAC of sale BC
Sunday, June 30 Publish-NOS BC
• Tuesday July 3 Response from Rating;Agencies KNN
Thursday, July 5 Response from Insurers KNN
Friday,July 6 Mail POS KNN
• Tuesday,July 17 Sale of Bonds • KNN
Wednesday, August 1 Pre-close All '
New rates effective City
Thursday,August 2 Closing, All
BC =Jones Hall •
KNN =Kelling;-Noithcross&Nobnga
City =City of Petaluma
1
ATTACHMENT IV
DRAFT INDENTURE OF TRUST
PRELIMINARY OFFICIAL STATEMENT
•
•
0
26091-03 JH:WHM 3/20/01
5/31/01
INDENTURE OF TRUST
by and between the
CITY OF PETALUMA
and
CCC
as Trustee
Dated as of August 1,,2001
Relating to
City of Petaluma
$[Principal Amount].
Water Revenue Bonds,
Series 2001
a.
TABLE•OF CONTENTS
ARTICLE I
DEFINITIONS;AUTHORIZATION-AND PURPOSE OF BONDS;
EQUAL SECURITY
SECTION 1,01. Definitions. 3
SECTION 1.02. Rules of Construction 13
SECTION 1.03. Authorization and JPurpose of Series 2001-Bonds 13
SECTION 1.04. Equal Security. 14
ARTICLE II
ISSUANCE OF SERIES 2001 BON DS'
SECTION 2.01. Terms,of Series 2001;Bonds 15
SECTION 2.02. Redemption of Series 2001:Bonds. 16
' SECTION 2:03. Form of Series 2001 Bonds: -- - •-- 18
SECTION;2.04. Execution of Series 2001 Bonds. 18,
• SECTION 2.05. Transfer of Series 2001:Bonds 19
SECTION'2:06. Exchange of Series;2001 Bonds - -- 19
SECTION 2.07. Temporary Bonds 19
SECTION 2.08. Bond Registration Books 19
SECTION 2.09. Bonds Mutilated;:Lost,Destroyed or Stolen - 20
SECTION 2.10. Payment ProcedureP.ursuant.to Municipal Bond Insurance Policy 20
SECTION 2.11. Book Entry System 22
ARTICLE III
•
ISSUE OF, SERIES• 001 BONDS;PARITY'BONDS
SECTION 3.01. Issuance of Series'2001,Bonds _ 24
SECTION 3.02. Application of Proceeds of Sale of Series 2001 Bonds:. 24
SECTION 3.03: Reserve Account - - 24 ..
SECTION 3.04. Escrow Fund Error!.Bookmark not:defined.
SECTION 3.05. Cost of Issuance Account. 22
SECTION 3:06: Issuance of Parity Bonds - - -- - 25
SECTION 3.07. State-Loans 26
SECTION 3:08. :Subordinate.Bonds- 27
SECTION 3.09: Validity of Bonds - 28-
ARTICLE IV
PLEDGE OF NET REVENUES; FUNDS ANDACCOUNTS
SECTION,4:01. Pledge of Net Revenues,Revenue Fund. 29
SECTION 4.54. Receipt and Deposit of Revenues - 29
; SECTION 4:03, Establish-merit of Funds and Accounts and Allocation of Revenues Thereto 29
SECTION 4;04. Application of-Debt,Service Fund 30
SECTION 4.05. Application of Reserve-Account 31
SECTION 4.06. Application of Redemption Account. 31
SECTION 4.07. Investments. 32
SECTION 4:08. Valuation;Investments 32
ARTICLE V
COVENANTS OF THE CITY; SPECIAL TAX COVENANTS
-i-
SECTION:5.01. Punctual,Payment;Compliance With'Documents 34
SECTION 5.02. Against Encumbrances. 34 •
SECTION 5.03. Discharge of Claims. 34
SECTION 5.04. Acquisition;Construction on Financing of any.Project and Improvements to the
Sewer System. 34
SECTION 5.05. Maintenance and Operation of Sewer System in Efficient and Economical
Manner 34
SECTION-5.06.. Against Eminent Domain - 34
SECTION5:07: Insurance. 35
SECTION 5.08: Records and.Accounts. 35
SECTION 5.09: Protection of Security andRights'of Owners- - 36
SECTION 510. Against Competitive Facilities 36
SECTION 5:11. Payment of Taxes,Etc, 36
SECTION 5.12. Rates and-Charges 36
SECTION 5:13. No'Priority for Additional Obligations 37
SECTION5.14. No Arbitrage . - 37
SECTION 5:15: 'Information Report 37
SECTION 5:16: Private Activity Bond Limitation 37
SECTION.5.17 Federal Guarantee Prohibition: 37
SECTION 5.18. 'Further Assurances: 37
• SECTION 5.19. Continuing Disclosure. 37
SECTION 5.20. Rebate Requirement. - . -38
SECTION'5.21. Maintenance of Tax Exemption 38
ARTICLE VI
THE TRUSTEE
SECTION 6:01, Appointment,of Trustee. 39
SECTION:6.02. ..Acceptance of Trusts 39
SECTION 6.03. Fees,Charges and Expenses of Trustee 41
SECTION 6:04: Notice'to,Bond Owners of Default 41
SECTION 6:05. Intervention,by Trustee _ • - 42
SECTION 6:06. Removal of Trustee. 42
SECTION 6.07. Resignation by Trustee. ` - 42
SECTION 6.08. Appointment of Successor Trustee ..--42
SECTION6:09. Merger:or;Consohdation: -- 43
SEC l ION 6:10. Concerning any Successor.Trustee -43
SECTION 6:11. Appointment of Co-Trustee 43
SECTION 6'12. Indemnification;,Limited,Liability of Trustee. 44
• ARTICLE'VII
MODIFICATION AND AMENDMENT OF THE INDENTURE"
SECTION 7:01. Amendment by Consent of Bond Owners 45
SECTION 7:02: Amendment Without Consent of Bondholders 45
SECTION 7.03. Disqualified Bonds. 46
SECTION 7.04. Endorsement or Replacement of Bonds After Amendment- . 46
SECTION 7.05. Amendment by Mutual Consent . 46
• ARTICLE VIII
EVENTS`OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01. Events of Default and Acceleration of Maturities 47
SECTION 8.02.. Application of Funds Upon Acceleration. 48
SECTION 8.03.. Other Remedies;Rights of Bond Owners - 48
-ii-
•
SECTION 8.04. Power ofTrustee to Control]Proceedings 49
110 SECTION 8.05. Appointment of Receivers 49
SECTION 8.06. Non-Waiver 49
•
SECTION 8.07. Rights and Remedies of Bond Owners 50
SECTION 8.08: Termination of Proceedings 50
SECTION 8.09. Municipal-Bond Insurer as Third-Party Beneficiary 50
SECTION 8:10. Rights of Municipal Bond Insurer - - 50
• SECTION 8.11. Effect on Municipal Bond Insurance Policy 51'
• ARTICLE IX•MISCELLANEOUS
SECTION 9.01. Limited Liability of City, 52
SECTION 9.02. Parties InteresMd Herein 52
SECTION 9.03: Discharge of Indenture • - 52
SECTION 9.04. •Content of Certificates 53
SECTION 9.05. Execution of Documents hy Bond Owners. 54
• , SECTION 9.06 Waiver of Personal Liability -
• 54
SECTION 9.07. Partial Invalidity' 55
SECTION 9.08. Destruction of Cancelled Bonds 55
SECTION 9.09. Funds and Accounts. •
SECTION 9.10. Notices. 55 •
SECTION 9.11. Notices to be Given to the'Municipal Bond Insurer 55,
' SECTION 9.12. Unclaimed Moneys'. - - 56
• EXHIBIT A: Fonn of Series 2001 Bond•
•
•
•
•
•
•
•
•
-in-
INDENTURE OF TRUST
•
THIS INDENTURE,OF TRUST, made and entered into as of August:1, 2001, by and
between the CITY'OF PETALUMA, a chartered city and municipal corporation organized and
existing under the constitution and laws of the State of California .(the."City"), and CCC; 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,,as,trustee (the"Trustee");
WITNESSETH:
WHEREAS, the City is authorized pursuant to the provisions of Chapter 4:08
(commencing-with:Section 4:08.010) of the Petaluma Municipal Code, as amended, and enacted.
pursuant to the charter of the City, to issue its revenue bonds for the purposes of financing or
refinancing improvements to its water enterprise; •
WHEREAS, the City entered into a Lease Agreement with the City,of Petaluma:Public
Financing Corporation in November, 1990 in the principal amount of $6,600,000 (the "1990
Lease") for'the purposes of financing Zone IV Water System Improvements,and caused to be
executed,and delivered Certificates Of Participation ("1990 'COPS"), representing the right to
receive Lease Payments from the City under the 1990 Lease;
WHEREAS, the City has determined that interest savings'will be realized_if'the 1990
Lease,and the,1990 COPS are refunded;
WHEREAS, the City has determined to provide for the issuance of its revenue`,bonds
under this Indenture for the purpose of (i) refunding the 1990 Lease and the 1990 COPS; (ii)
funding certain capital improvements;to the Petaluma Municipal Water System (the "Project"),
(iii) funding a reserve fund for the. Series 2001 Bonds; and (iv) paying costs of issuance
associated with the issuance of the Series 2001 Bonds, and to that end the City Council has
heretofore adopted its°Resolution No 01 approving and authorizing the issuance of its City
of Petaluma Water Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds") for such
purposes;
WHEREAS, in order to provide for the authentication and delivery of the :Bonds,, to
establish and declare the terms and conditions upon which the Bonds are to be issued and
secured, and'to secure the payment of the principal thereof and of the interest and premium, if
any,thereon,the Council has authorized the executionand delivery of this Indenture;
WHEREAS, all of the Bonds will be secured by a pledge;of the Net Revenues,as defined
herein, and certain:other moneys and securities held by the City and the Trustee hereunder
and
WHEREAS, all acts and proceedings required by law necessary to make the Series 2001
-Bonds,when executed by the City, authenticated and delivered by the Trustee and:duly°issued,
the valid, binding and legal special,obligations of the City,=and'to constitute this Indenture a
valid and binding agreement for the uses and purposes herein set forth,in accordance with its
-1-
•
•
terms; have been done and and the execution and delivery of this Indenture have been in
all respects duly:authorized;
•
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest and premium (if any) on all Bonds at any time
issued and Outstanding 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 terns and conditions upon and subjec •fo which the Bonds,are to be issued
and received; and in. consideration Of the 'preriuses•'and of'the mutual covenants herein
contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for
other valuable considerations, the receipt whereof is hereby acknowledged, the City does
hereby covenant and agree with the Trustee, for the benefit of.the-respective Owners from time
to time of theBonds,as'follows:
•
•
Ask
•
•
•
•
•
•
•
ARTICLE I •
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;EQUAL
SECURITY
SECTION 1.01...Definitions. 'Unless the context otherwise;requires„the'terms;defined in
this Section shalt for all purposes of this Indenture and of any Parity Bonds;Instrumentand.of
the Bonds and of any certificate, opinion, request or other-documents:herein mentioned have
the meanings,herein specified.
"Authorized Investments” means anyof`the-following, butmonly-to'the extent,that the
same are acquired at Fair Market Value,,.which at the time of investmentare;legal investments
under the laws of the State of California for the moneys'proposed to be invested:therein:
(a) direct obligations.of (including;obligations issued or held in,book entry form
on the books of) the Department of the Treasury of the United States of-America;
(b), obligations of any of the following federal agencies which obligations
represent full faith and credit of the United States of America, including: (i) Export-
Import Bank (ii) Farm Credit'System Financial Assistance Corporation, (iii) Farmers
Home Administration; (iv) General Services Administration; (v) U.S. Maritime
Administration (vi) Small" Business Administration (vii) Government National
Mortgage Association (GNMA); (vin) U.S. Department of Housing & Urban
Development (PHA's); (ix) Federal'.Housing Administration and (x) Federal Financing
Bank;
(c) senior debt obligations rated"'Aaa" by.Moody's and "AAA"by S&P issued by
the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation, senior debt obligations of other government-sponsored agencies approved ,
by AMBAC:Indemnity, obligations of the Resolution,Funding;;Corporation (RFFCORP)
and senior.debtobligations of other government sponsored agencies;
(d) US. dollar denominated deposit accounts, federal funds and banker's
acceptances with domestic commercial banks (including the'Trustee and its affiliates)
which have a rating on their short term certificates of deposit on the date of purchase of
P-1 by Moody's and A-1 or A-1+ by S&P and maturing no more than'360 days after
the date of purchase, provided that ratings on holding companies are not considered as
the rating of the
(e) commercial paper which is rated at the time of purchase in the single highest
classification, "P-1" by Moody'se and "A-1+" by S&P, and which matures not more than
270 days after the date of purchase;
(f) investments in a money market fund"rated '-'AAAm" or "AAAm-G" or better:
by S&P, including any such money market fund,from which the Trustee or its affiliates
receive,fees for services to such fund;
3-
(g) pre-refunded municipal,obligations defined as follows: Any bonds or other
obligations of any state of the United States •of America or of any agency,
instrumentality or local,governmentalbunit of,any such states whichare not callable at
the option.of the•obligor prior to maturity-.or-as to which irrevocable instructions have
been given by the obligor to call,on the date specified in the notice; and (i) which are
rated,,based upon,an irrevocable;escrow,account or fund.(the`"escrow"), in the highest
rating category of Moody's and S&P or any successors thereto; or (ii)(A) which are fully
secured as to principal and interest and redemption premium, if any, by an escrow
consisting only of cash.:orobligations-described in paragraph.(a) above, which escrow
may be applied only to the payment-of suchprincipal of;.and';interest and,redemption
premium; if any, on such bonds or other obligations on the maturity date or dates
thereof or the specified redemption date or dates( pursuant to such irrevocable
instructions, as appropriate, and (B) which escrow is sufficient, as verified by a
nationally recognized independent certified public accountant, to pay principal of and
interest ancrredemption premium, if any omthe,bonds or other,obligations described in
this paragraph on the maturity date or dates thereof or Ion the redemption date,or dates
specified-in the irrevocable instructions referred!to:above, as:appropriate;
•
(h) investment agreements, supported by appropriate opinions of counsel,'
between the Trustee and;a financial institution whose long-term debt has a Minimum
Rating;
(i)i Repurchase agreements ("repos") that provide-for the transfer of securities
from a dealer bank or securities=firm (seller/borrower) to the Trustee (buyer/lender),
and the transfer of cash,from the Trustee to the dealer bank or securities firm with an
agreement that the dealer bank or securities firm wilbrepay'the cash plus a yield to the
Trustee in exchange for=the securities ata specified date: Repurchase Agreementsrmust
satisfy the following.criteriaf
• 1. Reposmusfbe between the Trustee and a dealer bank-or securities firm.
a. Primary dealers oh the Federal Reserve reporting dealer list which fall
under"the jurisdiction of the SIPC and which,are rated A or better.by S&P and
Moody's, or
b. Banks:rated"A" or above by S&P and Moody's.
2: The writtenrepo contract must include the following:
a: Securities which are acceptable for transfer are
• ' (1) Direct US. governments
(2) Federal agencies.backed by the full faith-and credit of the U.S.
government (and FNMA and FHLMC).
b. Theterm of the repo may be up to 30 days
-4-
.c., The collateral must be delivered to the Trustee (if the,Trustee is not
supplying the collateral) or third party-acting as agent foi the Trustee, (if the
•
Trustee is supplying the collateral), before/simultaneous with payment
(perfection-by possession of certificated securities).
.d. The Trustee has a perfected first priority security interest in the
collateral.
e. Collateral is free and clear of-third-party liens and in the case'of:an
SIPCbroker-was not acquired pur"suaritto a repo or reverse repo.
f., Failure to maintain the'requisite:collateral percentage, after a two day
restoration,period, will require the Trustee to llquidate,collateral.
•
g Valuation of,;Collateral
•
(1) The securities must be yalued by such dealer bank,orsecurities
firm weekly, marked-to-market at current market price plus accrued
interest.
(a) The value of collateral must be equal to 104% of the
amount of cash transferred by the Trustee to the dealer'bank,or
security firm under the-repo;plus accrued interest:,If the value'of
securities held,as,collateral slips below' 104% of the value of,the
cash transferred by the Trustee, then additional',cash and/or
acceptable securities must be transferred. If, however, the
securitiesrused asrcollateral are FNMA or FHLMC then the value
of collateral,must equal 105%.
3. A;legal opinion must be delivered to-the Trustee to'the effect that the
Repo meets guidelines under state law for legal investment:of public funds.
(j) the Local Agency Investment Fund maintained by the State of California; and
(k) Shares in a California common law trust established pursuant to Title 1,
Division 7, Chapter 5 of the California 'Government Code which •invests' 'excluusively in
investments permitted by Section '53635 of Title 5, Division 2, Chapter 4 of the. California
Government Code, as.it may be amended, including but not limited' to the California Asset
Management PrOgram.(CAMP).
"Authorized Official" means the City- Manager, Finance. Director, Assistant City
Manager, or any other'officer-of the City duly authorized by the,Colincil for that purpose.
'Averag_e Annual Debt=Service' means the total aggregate Debt Service for '-the entire
period, during which the Bonds are Outstanding divided by the number of Years or
portions thereof during which the,Bends are Outstanding.
Bond'Counsel" means any attorney at law or firm of;attorneys, of nationally recognized
standing in matters pertaining•to=the federal taz exemption of interest on bonds issued by states
-5-
and political subdivisions, and duly.admitted to practice laW before the highest.court of any
state of the United States"of America.
"Bond. Law" means The charter of the City and the provisions of ,Chapter 4.08
(commencingrwith.Section 4.08.010), of the Petaluma Municipal Code,.as amended, and as in
effect'on the Closing Date.
"Bond Registration'Books", means the.books maintained by the Trustee pursuant to
. Section 2'.08 for the registration and transfer of ownership of the Bonds.
"Bond's" means;;collectively,,the.Series 2001 Bonds and any Parity Bonds:issued and at
any time Outstanding,hereunder and.under a Parity Bonds Instrument.
"Bond, Year" means the twelve-month period beginning. on the anniversary of the
. Closing Date:in.each-year and.eriding on the day prior to the,aririiversary date of the Closing
Date in the following year except that (i) the first Bond Yearshalf begin on the Closing Date,
and (ii)the last Bond Year may end on a redemption date prior to maturity of the Bonds.
•
"Business Day"'Means any day other than a Saturday; Sunday or a day on which the'
Trustee isauthorizedby lawto•remain closed. ,
"Certificate of the City" means a certificate in writing :signed by the City Manager,
so Finance Director, Assistant City:Manager, or by any other officer of the City duly;authorizedby
the Council for thatpiirpose.
"Charges" means fees; tolls; assessments, rates'and chrges prescribed under the Bond.
Law or any-;other law of the State by the Council for the services and facilities of the Water
System furnished by the City.
"City" means the City` of Petaluma, a chartered city and municipal corporation
' organized and existing under,the Constitution and laws ofdthe',State, and any successor thereto.
"Closing Date`means the date!upon which there is an exchange of the,Series 2001 Bonds
for the proceeds representing the'purchase of such Series bythe Original Purchaser thereof.
"Continuing Disclosure'Certificate"'means that certain Continuing Disclosure Certificate
executed by the City and,dated the date of original execution and delivery of the Bonds, as
originally executed,and as it may be amended from time to timein accordance With the terms
thereof.
"Cost of Issuance Account" means the Account.by That name established pursuant to
Section 3:05. ' • '
"Costsi of'Issuance" means all expenses incurred in connection with the authorization,
issuance, sale.and delivery of the Bonds, including but:not limited to compensation, fees and
ID expenses of the City and: the Trustee and their respective counsel, compensation to any
financial consultants-and,underwriters, legal fees and expenses, municipal bond insurance or
surety bond premiums, filing and recording costs, rating agency fees, costs of preparation and
reproductionofdocuments and costs of printing.
6-
•
"Council" means the Council of the City or any other legislative body of the City
hereafter provided for pursuant to law.
"Debt Service" means, during,any-period of computation, the'amount o btained for such
period by totaling the.following'amounts:
(a) The-principal amountof-all Outstanding Serial Bonds,payable by their"terms
in such period;
(b) ''The.principal amount of all Outstanding Term Bonds scheduled toi be paid
or:redeemed by operation of mandatory Sinking Fund Installments'inStich.period;and
(c) The interest which would be due during such period; on the aggregate,
principal amount of Bonds which would be'Outstanding,in such period if the Bonds are
paid:or redeemed as scheduled.
"Debt Service Fund" means the hind by that name established and held by the Trustee
pursuant to Section 4.03:,
"Defeasance Obligations" means (a) cash, (b) non-callable Federal.Securities,described,
paragraph (a) of the definition thereof ("Treasuries") (c) evidences' of .ownership, of
• proportionate interests infuture interest and principal payments on Treasuries(held bya,bank iik
or trust company as custodian, under which the owner-of the investient rs the,real party in
interest,and.'has the right to proceed directly and individually against the obligor and the
underlying'Treasuries are not available to any person claiming through the custodian or to
whom the custodian may be obligated or (d) pre-refunded'-municipal obligations rated "AAA"
and "Aaa" by S&P and Moody's, respectively (or any combination thereof):
"Depository" means (a) initially, DTC, and(b) any other Securities Depositories actingas
Depository pursuant to Section 2.15.
"Depository System Participant"'means any participantin the Depository's book-entry
system.
"DTC" means The Depository Trust-Company,N ew York,New York,and its successors
and assigns.
"Event:of:Default"means.anyof the events described in Section 8j/1.
"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 (withinthe meaning of section 1273 of the Tax Code)
and,otherwise, the&term "Fair Market Value" means the acquisition price in a bona,fide,arm's
length transaction (as referenced above)' if (i) the-investment is a certificate of deposit that is
acquired,m accordance with applicable regulations under the Tax Code, (ii) the investment is
an agreement with specifically negotiated withdrawal or reinvestment provisions and ia.
specificallynegotiated'irnterest rate (for'example, a guaranteed,'investment contract,.a forward
7-
•
at supply contractor other investment agreement),that is acquired in accordance'with applicable
regulations under the Tax Code ,(in) the investment is a United States Treasury Security--State
and Local Government,Series that is acquired in accordance with applicable regulations of the
United States Bureau of.Public:Debt, or (iv) any commingled'investment fund in which the City
• and related parties do notrown'more.than a ten percent (10%) beneficial interest therein if the
return paid by the fund is without regard to the source of the investment.
"Federal Securities" means any ofahe following whichat the time of investment are legal
investments underthelaws of The State for the moneys proposed to be invested therein:
(a) direct general obligations: of the United States of America (including
obligations issued or held'in book entry form on the books of the Department of the
Treasury of the United States of America);and
(b) obligations of any department, agency or instrumentality hof the United
States of America the timely payment of principal of and interest on which are
unconditionally and fully guaranteed by the United'States of America.
"Fiscal Year" means the period commencing.on July 1 of-each year and terminating on
the next succeeding June 30. •
"Gross Revenues"" means,for any period of^computation, all gross charges received for,
and all other gross income and;revenues derived by the City from, the ownership or operation
of the Water System or`otherwise arising from the Water System,during such period, including
but not limited to (a) all Charges received by the City for use of the Water System, (b) all
receipts derived from the investment of funds held by the .City or the Trustee under this
Indenture, (c) transfers from (butexclusive of any transfersito) any rate stabilization reserve
accounts, and (d) all moneys received by the City from other public'-.entities whose inhabitants
are served.;pursuant to contracts with the City.
"Improvement" means arry addition, extension, improvement, equipment, machinery or
other facilities to or for:;the'Water System.
"Indenture" means this Indenture of Trust, as originally executed or.as it may from time
to time be,supplemented, modified or amended by any Parity Bonds'Instrument pursuant to
the provisions;hereof.
"Independent Certified Public' Accountant" means any :certified public accountant or
firm of such accountants appointed and paid by the City,and"who,or each of whom-
(a),isiinfact independent iand'not under domination of the City;
(b) does not have any substantial identity of interest, direct or indirect, with the
City; and
• (c) is not and no'member'of which is 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 theibooks of,or reports to the City.
•
-8- •
•
"Independent Consultant" means any financial or engineering consultant (including •
without limitation any Independent Certified Public. Accountant) with an established
reputation in the field;of municipal finance or firm of such consultants appointed and paid by
the City,and who,or each,of whom-
(a) is in factindependentand not-under dominatio •of the City;
(b), does^nothaveany substantial'identity of interest, direct or indirect, with the
City;'.and
(c) isnot and no member of which is 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 report •to the City.
•
"Informatiion:Services"means;Financial'Information, Inc.'s "Daily Called' Bond Service",
30 Montgomery Street, 10th Floor, Jersey City„New Jersey 07302; Attention:-Editor; Kenny
Information Services' "Called,Bond Service", 55-Broad Street, 28th Floor, New`York, New York
10004; Moody's`Investors,Service "Municipal and Government," 99 Church Street, 8th.Floor, •
New York, New York 10007, Attention: Municipal '.News Reports; Standard &',.Poor's
Corporation"Called Bond Record," 25 Broadway,3rd Floor„New York, New York 10041; and,
in accordance with then current guidelines of the-Securities and Exchange Commission, such
other addresses and/or such other'services providing information with respect;to called bonds
as the City"may designate.in a Request cif the City delivered to the Trustee:
"Interest Payment Date” means, with respect to the Series 2001 Bonds, May 1 and
November lain each year, beginning November 1,2001, and with respect to*any Parity Bonds,
any date on*which interest is due and payable thereon,and continuing so•longas any B on ds,or
Parity Bonds remain Outstanding.
"Interest Requirement" means, as of any particular date of calculation, the amount equal
to any unpaid interest(then due,and payable, plus•an,amount+.which will on the next succeeding
Interest Payment Date be equal to the interest to becomeidue and payable on the Bonds on such.
next`succeeding Interest Payment Date.
"Maintenance and Operation Costs" means the reasonable and necessary costs spent or
incurred,by the City for maintaining and operating the Water:System, calculated accordance
with sound accounting`principles, and all reasonable and necessary expenses of-management
and,repair and-other'expenses to maintain and preserve the WatevSystem,iri good repair and
working order, and.including all reasonable and necessary administrative costs of the City
attributable-to the Water System and the Bonds„such as salaries and wages and the necessary
contribution to retirement of :employees, overhead, insurance, taxes (if any), expenses,
compensation and indemnification of the‘-Trustee,and fees of auditors, accountants , attorneys
or engineers,:and including all other reasonable and necessary costs of the City or charges
required to-be paid byitto comply with the terms of the Bonds'or this Indenture, but excluding
depreciation, replacement and.obsolescence charges or reserves therefor and amortization of
intangibles or other bookkeeping entries';of.a•siniilar'nature. •
•
"Maxm-ium Annual Debt Service” means, as of the date of calculation, the maximum
amount of Debt Set Vicefor the current or.any.future Fiscal Year.
9
•
•
"Minimum Rating" means,a long-term rating of A or better from S&P or Moody's or a
short-term rating which is in the•highest general rating category iof S&P and Moody's, in any
event determined without regard to any"refinement or gradation Of such rating by a numerical
modifier, a plus or a minus sign, or otherwise.
•
'Woody's" means Moody's Investors Service; a corporation duly organized and;existing
under and by virtue of the laws of the State of Delaware;;and its;successors'or assigns, except
that if such corporation shall be:dissolved or liquidated or shall no longer perform thefunctions
of a securities rating agency, then the term "Moody's" shall be:deemed to refer to any other
nationally recognized securities rating agency selected by the City.
J"Municipal:Bond Insurance.Policy" means the municipal bond insurance policy issued
by the Municipal Bond Insurer-insuring the payment,when due, of the principal of and interest
on the Bonds.]
J"Municipal Bond Insurer means — and its successors and
assignsd .
"Net Proceeds", when usedwith reference to the Bond's, means the face amount of the
Bonds, plus accrued interest and premium, if'any, less original issue••discount and less proceeds
deposited in the Reserve,Account; "Net Proceeds", when used with reference to any insurance
or condemnation award or sale of property, means:the gross proceeds from the sale of property
or insurance or condemnation,award with.respectito which that term is used remaining after
payment of all expenses (including attorneys' ,fees and any extraordinary expenses of the
Trustee) incurred in the collection of such:gross•proceeds.,
"Net Revenues" means, with respect to, the Water System, for any period of
computation, the amount of the Gross Revenues;received'from the Water,System during such
period, less the amount of Maintenance and Operation Costs of the Water System;,becoming
payable during such period:
"Original Purchaser"" means the first'-purchaser of any Series of Bonds from the City.
"Outstanding", when used as of any particular time with reference to Bonds„means
(subject to theprovisioris:of Section 7:03) all Bonds theretofore executed;issued and delivered
by the City under this Indenture except-
(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for
cancellation;:
' (b) Bonds paid of deemed to have been paid within the meaning of Section 9.03;
and •
(c) Bonds in lieu of or in substitution for which other Bonds shall have been
executed, issued and delivered by the City pursuant to this Indenture or any Parity
Bonds'Instru'ment.
7
-10-
•
"Owner" or"Bond Owner" or-"Bondowner", whenused with respect tawny Bond, means
the person in whose name the ownership of such Bond shall be registered on the Bond
•
Registration Books.
•
"Parity Bonds"means all bonds,notes or other obligations (including without,limitation
long-term contracts, loans,sub-leases or.other legal financing arrangements) of the City payable
from,andtsecured by a pledge of and lien upon any of the Net Revenues issued.or`incurred
pursuant to Section 3 06 or3 07. .
• 'Parity Bonds Instrument"' means the resolution, trust indenture or 'installment sale
agreement adopted; entered into or executed,and delivered`by the City,'and under which Parity
Bonds are issued.
"Participating: Underwriter" has 'the meaning ascribed thereto in the :Continuing
Disclosure Certificate.
"Principal Corporate.Trust Office" means the corporate .trust office of-the Trustee at the-
address set forth in Section 9.10, or such other or additional offices as may.be'designated by;the
Trustee from"tinge to time.
"Principal Installment" means with respect to'any particular;Principal;Installment Date;
an amount equal to the,sum of (i) the aggregate principal amount of Outstanding'Serial Bonds
payable on such Principal Installment Date as determined by the applicable Parity Bonds
Instrument,(but not including Sinking'Fund Installments) and (ii) the aggregate of Sinking
lor
Fund Installments with respect to all Outstanding Term Bonds 'payable, on such. Principal
Installment Dateas determined hereby and by the applicable.Parity Bonds Instrument:
"Principal Installrrient_Date" means the date •on which Principal Installments are.
required tabernacle pursuant to Section 2.01.
"Project" means certain extensions and improvements to the City's Water System,
comprised,of ,or any other improvements,to the'Water System selected by the
City.
Project Fund" means the fund by that name established and held by the Trustee
pursuant to Section 3:04:
'Qualified Surety Bond_means any irrevocable standby or direct-pay,letter of credit or
surety bond, issued by a commercial bank or insurance company and deposited with the
Trustee pursuant to Section 4.05(b), provided that all of the following requirements are met at
the time of acceptance thereof by the Trustee: (a) the long-term credit ratmg of such bank or
insurancecompanyis'"A" or better from each':rating agency which then maintains a rating on
the Bonds; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c)
such 'letter-,of credit,,or surety bond has a stated,amount at least equal to the portion of the.
Reserve Requirement with,respect'to which funds are proposed to be released pursuant to
Section 4.05(b), and (d);the Tru'stee,is authorized pursuant to the terms of such letter of credit or �.
surety bond to draw thereunder an amount equal to any deficiencies which,may exist from
time to time in the Debt:Service Fund for the purpose of making payments required pursuant to
Section 4.04.
111-
• "Rating Agency'.means„as of any date, each of the,following rating agencies which then
maintains a rating on any ofthe Bonds:,(a) Moody's; and (b)'S&Pc
"Record Date” means;:,with respect to the Series 2001 Bonds,the fifteenth (15th) calendar
day of the month immediately preceding an Interest Payment Date or, with respect to any
Parity-Bonds, any other date established iitthe applicable Parity Bonds.Instrument.
•
"Redemption Account" means the Account by that>name established and held by the
Trustee.pursuant to Section 4.03.
"Redemption Price"'means;with•respectto any•Bond, the principal amount.thereof, plus
the-applicable'premium, if.any, payable upon,redemption thereof pursuant to this Indenture
and the:Parity Bonds Instrument;pursuant to which the,same'was issued.
"Request of the City" means'a'request in writing.signed by'the City Manager, Finance
Director or Assistant City Manager of the City, or by any other •officer of the City duly
authorized;by the Council for that purpose. •
".Reserve Account" means the,Account by that name established and held by the Trustee
pursuant to:Section 4:03:
"Reserve Requirement" means,.for any particular Series, an amount equal to the,lesser
of: (i) Maximum Annual Debt Service: on such Series; (ii) ten percent (10%) of the original
principal;amourit of such Series; or (iii) 125% of Average Annual.,Debt Service on such Series.
"S&P" means Standard & Poor's Corporation, a corporation duly-organized and existing under
and by virtue of the laws of the State of New York, and its successors or assigns, except that if
such corporation shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, then;the term•'"S&P" shall be deemed•to refer to any other'nationally
recognized-securities rating agency selected by the City: -
"Serial,Bonds" means allBonds other than Term Bonds.
"Series" when used with respect to less than all of the.Bonds, means and refers to all of
the Bonds delivered on original issuance in simultaneous transaction, regardless:ofvariations.
in maturity, interest interest.fate,on other provisions, and any Bond thereafter delivered milieu of or
substitution for any of Bonds pursuant to Sections 2.02(i), 2.05,2:06, 2.07,2.09 anc17:04:
"Series'2001 Bonds" means the City of Petaluma Water Revenue Refunding Bonds,
Series 2001,issued and,at-anytime Outstanding-hereunder.
"Sinking'Fund.Installment" means, with respect,to any particular date, the amount of
money required hereby or by or pursuant to a Parity Bonds Instrument to be paid by the City
on such date toward the_retirement of any particular Term Bonds prior to their respective stated
maturities.
"State" means the State of California.
"Subordinate Bonds"' means all bonds, notes or other Obligations (including without
limitation long-team contracts„loans, sub-leases or other legal financing arrangements) of the
12
City payable from and secured by a pledge of and lien upon any of the Net Revenues issued or
incurred pursuant to Section 3.08.
•
"Subordinate: Bonds Instrument" means the resolution, trust indenture or installment
sale agreement,adopted, entered into or executed and delivered bythe City,,and under which
Subordinate Bonds are issued.
"Supplemental Indenture" means any supplement or amendment to this Indenture
which complies with the provisionsof Section 7J31 or 7.02. •
"Tax Code" means the Internal Revenue Code of 1986 as in effect on-the date.of issuance
of the Bonds or (except as otherwise referenced herein) as,it may be amended to apply to
obligations issued on'the date of issuance-of the Bonds, together with applicable proposed,
temporary and final 'regulations promulgated, and applicable "official public guidance
published,under the Tax Code.
"Tax Regulations'means temporary and permanent regulations promulgated,under.the'
Tax Code.
"Term Bonds means,'withvrespect tor any Series 2001 Bonds or any Parity Bonds, such
Series 2001 Bonds or Parity Bonds which are payable prior to their stated maturity=by,operation
of Sinking Fund Installments.
•
"Trustee" means CCC, appointed by the City to act as trustee hereunder. pursuant to •
Section,6:01, and"its assignor any other corporation or association which may at any time be
substitutectm its place, as provided.m Section 6.01:
"Water.System'.'-means the existing water system of the City, comprising all facilities'for
the collection, transmission, transportation, treatment and distribution of water for the
residents,commercial and industrial consumers of water in the City.
"Water Utility Fund" meansthe Fund by that nanie established;and heldby the Finance
DirectorpursuanttoSection 4.02 hereof.
SECTION,1.02: Rules of Construction. All;references in this Indenture to "Articles,"
"Sections," and other subdivisions are to the corresponding Articles/Sections or subdivisions of
this Indenture; and the words "herein," "hereof," "hereunder," and other words of similar
import refer to this Indenture as a. whole and not to any, particular Article, Section or
subdivisionrhereof.
Words,of the rnasculine,gender shall be deemed and construed to include correlative
words of the feniin e ae and neuter genders'. Unless:the context,shall;otherwise:indicate, words
importing the singular ''number shall include the plural number and vice 'versa,.and words
importing personsi shall,include corporations and associations,including public'bodies, aswell
as natural persons.
SECTION 1.03. Authorization •and Purpose of Series 2001 Bonds:. The City has S
reviewed all proceedings heretofore taken relative to the authorization of the'Series 2001 Bonds
and has found, as a result of such review, and hereby finds and determines that all,things,
-13-
conditions, and acts required bylaw to exist,-happen and/or be performed precedent to and in
4. the issuance of the Series 2001 Bonds do exist, have happened and have been performed in due
time, form and maimer as required bylaw, and the City is now authorized,as an exercise of the
municipal affairs power of the City as a chartered city under the constitution and laws of the
State and pursuant to the Bond Law and each ancDevery requirement of law, to issue the Series
2001 Bonds in the-manner and form provided in this Indenture. Accordingly, the City hereby
authorizes the issuance of the''Seties 2001 Bonds pursuant to the.Bond Law and this Indenture
for the purpose of providing fundsyto:"refund the 1990 ,COPS, to pay the costs of and to pay
Costs of Issuance of the Series 2001 Bonds:.
SECTION 1.04. Equal.Security. In consideration of the acceptance of the Bonds by the
Owners thereof, this Indenture shall`,be,deemed to be and shall constitute a contract among the
City, the Trustee and the Owners from time to time of the Bonds; and the covenants and
agreements herein set forth to be performed on behalf of the City,shall be for the equal and
proportionate benefit, security and protection of all Owners of the Bonds without preference,
priority or distinction as to security'of otherwise of.any of the Bonds over any of the others by
reason of the number or date thereof or the time of sale, execution or delivery thereof, or
otherwise for any cause whatsoever, except as expressly provided therein or herein.
•
•
•
•
•
1
0
•
-14-
ARTICLE II
ISSUANCE OF SERIES 2001 BONDS •
SECTION 2.01. Terms of Series 2001 Bonds. The Series 2001"Bonds authorized to be
issued by the City under and subject'to the Bond Law and the=terms•of this Indenture;shall be
designated the "City of Petaluma Water;Revenue Refunding'Bonds,,Series 2001", and shall be .
issued in the original principal amount of Dollars ($[Principal
Amount]).
The Series,2001 Bonds shall be issued in fully registered, form without coupons in
denominations of $5,000 or any integral multiple thereof,so long,as no Series 2001 Bond shall
more,than one maturity date. The Series 2001 Bonds shall mature on November 1 in each
of the years and iri the amounts,and shall bear interest;atthe rates, as follows,
Maturity Date •Principal
•
Interest Rate
(November-1) Amount Per Annum
2001
2002
2003
2004
2005 •
2006 •
2007'
•
2008
2009
2010
2011
' 2012
2013'
Interest on theSeries 2001 Bonds,shall be payable'on each.Interest Payment Date to.the
person whose name appears on.the Bond Books.as the Owner thereof'as of the
Record Date immediately'preceding each such Interest Payment Date, such mterest to be paid
by check or draft of the Trustee mailed by first class;mail to the.Owner or, at the option of any
Owner of at:least $1,000,000 aggregate principal amount,of`the Bonds with respect to which
written instructions have been'filed with the Trustee prior to the Record Date, by wire transfer,
at the address of"such,Owner as it,appears on the Bond Registration Books. .In the event there
exists a default in payment of interest due on such Interest Payment Date, such interest shall;be.
payable on:a;,payment date established by the Trustee to the persons in whose names the Bonds
are registered at the close'of business on a special record date for the payment of such defaulted
interest established by notice'mailed by the Trustee to,the registered Owners of the Bonds not
less than 15':--days preceding such special record date. Principal of arid'"premium (if any),on any- •
Series 2001 Bond shall, be paid upon presentation and surrender thereof it the Principal
Corporate Trust Office of the Trustee.in . Both the principal of and interest,and
•
-15-
•
premium (if any) 'on the Series 2001 Bonds shall be payable in lawful money of the United
States of America:
•
The'Series 2001.Bonds=shall be dated-.August:1,,2001;and bear interest based on a 3601
.
day year comprised of twelve'30-day months from the Interest Payment Date next preceding
the date of,authentication thereof, unless said date of authentication is an Interest Payment
Date, in which event such interest is payable from such date of authentication, and unless said
date of authentication is prior:to in which event such interest is payable from August
1, 2001; provided, however, that'll, as of the date of authentication of any Series:,2001 Bond,
interest thereon is in default,;Such"Series 2001 Bond'shall',bear interest'from the date to which
• interest has`previously been paidtor made available for payment thereon in full.
SECTION 2.02. Redemption,ofsSeries•2001 Bonds.
(a) Optional Redemption. The Bonds,maturing on or before November 1, are not
subject to optional redemption prior`to maturity: The Bonds maturing on or after November
1, are subject to redemption prior to their respective maturity dates, at the option of the City,
as awhole or in part on any,date, in arty order directed`by the.City,.arid if the City fails to direct
the order, pro rata among maturities; and by.lot within,a maturity, on any date.on or after
November 1, ,from any source,of available funds, at.the following.respective Redemption
Prices (expressed as percentages of the.,principal amount of the Bonds to be redeemed), plus
accrued interest.thereon to the date of,redemption:
Aoki
Redemption Periods
• Redemption Prices
November 1, through October 31,, —%
November 1, ' :and=thereafter. %
The City shall be required,to give the Trustee written notice of its intention to redeem
Series-2001 Bonds under this subsectionr(a), and shall deposit all amounts required for such
redemption with the Trustee at least one (1)day prior to the.date.fized for such redemption. •
(b) Special Mandatory. Redemption. From Insurance,or Condemnation Proceeds,
The Series 2001 Bonds shall also be subject;to redemption,as a whole or in part on any date, in
any order directed by the City; and if the City fails. to direct the order, pro rata iamong
maturities; and by'lot within,'a:maturity, to the extent of the Net Proceeds of.hazard;insurance
not used to repair or,rebuild the Water System or the Net Proceeds of:condemnation awards
received with respect to,the;Water System to be used for such purpose pursuant=to Sections 5506
or 5.07, at a Redemption Price equal to the principal amount of the'Series 2001 :Bonds plus
interest accrued thereontothe date:fixed:for redemption,without premium.
(c) .,Additional Bonds. Any Parity Bonds issued pursuant to Section 3:06 of this
Indenture may be;made subject to redemption prior to'maturity,.as a whole or in part, at such
time or times, and upon payment of the principal amount thereof and accrued interest thereon
plus such premium(or,premiums, if any, as maybe determined by the City in the applicable
Parity Bonds Instrument.
(d) Notice iof 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' offa redemption notice by first class mail atleast 30 days and not more than 60
-16-
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 Bands.
(e) Contents of Notice. All noticesiof redemption shalIbe dated'and,shall state:'
(i) the redemption date, •
(ii) theRedemption Price,
if'fewer than all Outstanding Bonds are to be redeemed,the identification
(and,.in the case of partial redemption;,the respective principal amounts) ofthe Bonds to
be redeemed,
(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 theretosl all cease,to accrue.froni and after said date, and`
(v) the place or places where such Bonds are to be surrendered,for payment of
the Redemption Price; which places of payment may include the Principal Corporate''
Trust Office of theTrustee.
(f) Deposit ofMoney. At least one (1) day 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.
(g) Consequences of Notice:. Notice of redemptionh'aving^.been,given:as aforesaid "the
Bonds or portions of Bonds so,to be redeemed shall, on the redemption date,,become;due and
payable at the Redemption Price therein spe`cified,: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 havezmterest accrue thereon. Upon surrender of such Bonds for redemption:in
accordance with said notice, such Bonds;-shall becpaid,by the 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 by°,the'Trustee,and shall not+be redelivered: Neither the;failure.of any Bond Owner,
to receive any notice so mailed nor any defect therein shall affect the sufficiency of the
proceedings''for redemption of any Bond's nor the cessation of`accrual of interestffthereon.
•
(h) Additional-Notice. In addition to,the foregoing notice/further noticelshall be given
by the Trustee asset as;:set out•below, but 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 ifnotice thereof isgiven as above prescribed:
(i) Each 'further notice of redemption given hereunder shall contain: the
information:requiredabove for an official notice of redemption plus (A) the+CUSIP
numbers of all Bonds being redeemed; (B) the stated interest rate with respect to each
-17-.
Bond„being redeemed; (C) the.maturity,date of,each.Bond being redeemed; and (D) any
otherdescriptive information needed to identify accurately the Bonds being redeemed.
(ii)' Each further notice of redemption shall be sent at least 35„days before the
. redemption date 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, and, on the date notice'is mailed to Bond
Owners,to one or more,InformationServices.
(iii) Upon the payment of the-Redemption Price of the Bonds being redeemed, .
each check or other transfer'of funds issued for such purpose shall bear the CUSIP
number identifying, by issue, and `maturity, the Bonds being redeemed with the
proceeds:ofsuch check'or other transfer:
(i) Partial.RedemptiorrofBonds. In the event only a,portion of any Bond is.called for
redemption, then upon surrender of such Bond redeemed in part only, the City shall execute
and the Trustee shall authenticate and deliver to the Owner, at the expense of the City, a new
Bond or Bonds, of the same;maturity,. of authorized denominations in aggregate principal •
amount equalto the unredeemed;portion of the Bond or Bonds:,
0) Manner of Redemption: Whenever any Bonds are to be selected for redemption, the
Trustee!shall determine, by lot, the numbers of the Bonds to be.redeemed, and shall notify the
s; City thereof.
INF
(k) Redemption.. of redemption of Bonds as
provided in subsection f(a) above, amounts in the Redemption Account of the. Debt Service
Fund may also be used and withdrawn by the Trustee at any time,upon the Requestof the City
filed with the Trustee-no later than April 15 in any year,for the purchase of Bonds'at public or
, private sale as and when 'and at such 'prices (including brokerage and other charges, but
excludingiaccrued interest,,,which is payable from the Debt Service,Fund) as the City may in its
discretion determine, but not to exceed, the principal amount of such Bonds plus the
redemption premium applicable on thernext ensuing optionalcredemption date. The City shall,
at the time of any such purchase, pay-to the Trustee for deposit in.the Debt Service Fund the
amount of any deficiency'in,such Fund which may be caused.by such purchase: All Bonds
purchased pursuant,to this Section shall be"cancelled.
All Bonds redeemed-pursuant to this Section and all Bonds purchased by the City
pursuant to this:subsection(k) shall be cancelled arid destroyedpursuant.toSection9.08.
•
SECTION, 2,03'; Form. of Series 2001 Bonds. 'The. Series 2001 Bonds, the Trustee's •
certificate of authentication, and the assignmentto appear thereon, shall be substantially in the
respective forms, set fotth in Exhibit.A attached hereto arid by this reference incorporated
herein, with necessary-or appropriate variations, omissions and insertions, as permitted or
required by this Indenture.
• • •
• SECTION 2.04. :Execution of Series 2001 Bonds. The'Series 2001 Bonds shall be signed
in the name and on,behalf of the City with the manual or facsimile signatures of its Mayor and
its Finance.Director'and attested by the manual or facsimile signature of its City Clerk under
the seal of the"City., Such;seaLmay be in the form of a:faesimile of the City's seal and shall be
-18-
•
imprinted. or impressed upon the Series 2001 Bonds,: The Series 2001 Bonds shall then be
delivered to the Trustee for authentication by it In case any officer who shall have signed any.
of the Series 2001 Bonds shall cease to be such officer before the Series 2001 Bonds so signed
shall have been'authenticated,or delivered by the'Trustee or-issued by the City,'such Series 2001
Bonds may nevertheless be,authenticated, delivered and issued and,upon such authentication,
delivery and issue, shall be as binding upon the City as`though the individual;who signed the
same had continued to be such officer of the City: Also, any Series 2001"Bond inaybe;signed on
behalf of the City by any;individual who on'the actual date of the execution of such Series 2001.
Bond-shall be the proper,officer although•on the nominal date of such Series 2001:Bond.such
individual shall nothave been such officer
Only such of the Series 2001 Bonds as•shall•bear thereon a certificate of authentication in
substantially the form+set forth in,Exhibit A, manually executed by the Trustee,:shall be-valid or
obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of
the Trustee:shall`be conclusive evidence that'the Series 2001 Bonds snauthenticated have been
duly authenticated and delivered hereunder and are entitled to the benefits:of this Indenture:
SECTION, .2:05: Transfer of Series 2001 Bonds. Any Series 2001 Bond may, in
accordance with.its terms, be transferred upon the Bond Registration Books'by the person in.
whose name it is registered, in person or by his duly authorized attorney, upon surrender of
such Series 2001 Bond for cancellation, accompanied by delivery of a written instrument of
transfer in a form approved by the Trustee, duly executed. Whenever,any:Series 2001 Borid
shall be surrendered for transfer, the City shall execute and the Trustee .shall thereupon,
authenticate and deliver to the transferee a new Bond or Bonds of"like tenor, maturity;and •
aggregate principal amount: No'Series;2001 Bonds the notice of redemption of which has been
mailed pursuant to Section 2:02(d) shall bea ubject.to'transfer pursuant;tb,this.Seetion.
SECTION`2.06. Exchange of{Series2001 Bonds. 'Series 2001 Bonds maybe exchanged•at
the Principal Corporate Trust Office of the Trustee, for:Series-2001 Bonds of'the same tenor and
maturity and of. other authorized denominations No Series 2001 Bonds the notice of
redemption of which has been mailed-,pursuant to'Section 2.02(d) shall be subject, exchange
pursuant to'this Section. •
SECTION 2.07: Temporary Bonds. The Bonds may be issued initially in temporary
form exchangeable for definitive Bonds'when.ready for,delivery. The temporary Bonds may be
printed, lithographed.or typewritten, shall be of such denominations as maybe determined.,by
the City and-may contain such reference to any of the:provisions of'this Indenture as may be
appropriate. Every- tent-diary Bond.shall be executed. by the .:City and be registered,and
authenticated by the Trustee upon the same conditions and'in substantially thesame manner as
the definitive'Bonds. R the'City issues temporary Bonds, it will execute and'furnish.definitive
Bonds, without delay, and thereupon the temporary' Bonds may be surrendered; for
cancellation, in exchange therefor at the Principal Corporate Trust Office of the Trustee, and the.
Trustee shall ,authenticate and, deliver, in .exchange for such temporary :Bonds, an equal
aggregate principal amount of definitive Bonds of authorized denominations. Until ,so
exchanged,,the temporary Bonds shall be entitled to the same benefits under this Indenture as
definitive Bands authenticated and delivered hereunder.
SECTION'2.08:, Bond Registration Books. The'Trustee will-keep or-:cause;to be kept at
its-trust office sufficient`'Bond:RegistrationBooks'for the registration'and transfer of theBonds,
-19-
• which shall,at all times during regular business hours be open torinspection by the City; and,
upon presentation for such.purpose, the Trustee shall, under'such reasonable regulations as it
' may prescribe;.register or transfer or cause to be registered,or transferred, on said books, Bonds
as hereinbefore.provided:,
SECTION_2.09. Bonds..Mutilated, Lost, Destroyed or Stolen. If any•Bond shall become
mutilated, the City, at the expense of+-tfie Owner of said Bond,,shall execute, and the Trustee
shall thereupon authenticate anddelivera new Bond of like maturity and principal amount in
exchange and substitution for the,$ond'so mutilated,but only•upon surrender to the Trustee of
the Bond so mutilated. EveryfmutilatedBondso,surrendered to the Trustee shall be,cancelled
by it and delivered to,'or upon the order of; the City. If any Bond issued hereunder shall be
lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
City and the Trustee and, if such evidence be satisfactory"to them and"indemnity satisfactory to
them shall be given, the City;•at-the expense of"the Bond Owner,shall execute, and the Trustee
shall thereupon authenticate and deliver, a new Bond of like.maturity and principal amount in
lieu of and in substitution for the Bond so`lost, destroyed or stolen,(or any such Bond shall .
have matured or shall have been called for of issuing,a'+substitute Bond the
Trustee may pay the'same;without surrender thereof upon receipt of indemnity satisfactory to •
the Trustee). The City-may require'payment of a reasonable fee for each new Bond issued
under thisSea:on and of the.ezpenseswhieh may incurre&by the City, and the Trustee. Any
Bond issued under the provisions. of this Section in lieu of any Bond alleged to be lost,
, destroyed or stolen shall constitute'an'original'contractual obligation on the part of the City
whether or nottthe Bond alleged toEbe lost, destroyed or stolen'be at any time enforceable by
Iv anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with
all other Bonds secured by this Indenture.
SECTION 2.10.;Payment`Procedure Pursuant to:Munieipal Bond Insurance Policy.
(a) In the event that; on%the second Business Day, and again on the Business Day,
prior to each Interest Payment Date, the Trustee has not received sufficient moneys'
(following a draw on the Reserve..Account Surety 'Bond)' to pay all principal of and
interest on the Bonds due on the-second following or-following as the case may be,
Business`Day, the Trustee shall immediately notify the Municipal Bond Insurer- or its
designee on-the?same Business.Day by telephone ortelecopy, confirmed in writing by
registered or certified mail, of the ainourit of the deficiency.
(b) If the deficiency is made up in whole or in part prior to or on the Interest
Payment-Date, the Trustee shall so,notify the,Municipal Bond'Insurer or its designee.
•
<(c) In addition, if the Trustee has written notice that any Owner has been
required to;disgorge:payments of principal of or interest on the Bonds to a trustee in
'bankruptcy or^creditors or others pursuant to a final judgment::by a court="of competent •
jurisdiction that such payment constitutes a voidable preferenceto such Owner within
the meaning of•any applicable bankruptcy laws, then the Trustee shall notify the
Municipal BondInsurer or its designee.of such fact;by telephone or telegraphic notice,
Ask. confirmed in writing by registered or certified mail. •
(d) The Trustee is hereby irrevocably designated, appointed, directed and
authorized to act asattorney-in fact'forthe Owners as follows:
_2p_
•
•
(1) If and to the extent there:is•a• deficiency in amounts required to pay •;
interest'on the Bonds, the Trustee shall-(A) execute and deliver to,State Street
Bank; and Trust Company, ■.A., or its• successors under the Municipal Bond
Insurance Policy (the "Insurance Trustee'),,inform satisfactory to the Insurance
trustee, an mstrument appointing the Municipal=Bond4Insurer askagentfor such
Owners in any legal proceeding related to the payment of such interest and an
assignment to the Municipal Bond Insurer of the claims for. interest to which
such deficiency relates and`which are to be paid by the Municipal-Bond,Insurer,.
(B),receive, on behalf of the respective Owners in accordance with•the tenor'of
the Municipal Bond Insurance Policy,paymentfrom the,Insurance.Trustee with
respect,to the claims for interest so assigned, and (C) disburse thesameato such
respective Owners,and
(ii) If and to the extent of a deficiency in amounts ,required to pay
principal•of the Bonds, the`-Trustee?shall,(A) execute and deliver to•the Insurance
Trustee:in form satisfactory to the Insurance Trustee an instrument appointing.
the Municipal Bond Insurer as agent for such Owner in any legal;proceeding
.relating to the payment of, such principal and an assignment to.the Municipal
Bond Insurer; of any of the Bond `surrendered to the Insurance Trustee of so
muchrof the principal amount thereof as has not previously been paid or for
which moneys,are not held by'the Trustee and available for^such•payment (but
suchassignment shall-be delivered only if•payment from the Insurance Trustee
is received), (B) receive, on behalf of the respective Owners in accordance with
the tenor of the ,Municipal Bond Insurance Policy, payment therefor from the
Insurance Trustee,and (C)'.disburse"the sameto such Owners.
(e) Payments with-respect to claims for interest on and principal of the Bonds
disbursed by the Trustee.,from proceeds of the Municipal Bond:Insurance Policy shall
not be considered to discharge •the obligation of the City on such Bonds, and the
Municipal Bond Insurer shall become the, owner of such Bonds and claims for- the
interest in accordance with the tenor of the„assignment made to it under the provisions
of subsection (d)(iii) or otherwise.
(f) Irrespective of whether any such assignment is executed;and delivered; the
City and the Trustee hereby agree for the benefit of the Municipal Bond Insurer that,
(i) They recognize that to the;extent:he Municipal:Bond Insurer makes
payments, directly or indirectly (as'by paying'through the Trustee), on account
of principal of.or;interest on the Bonds, the ;Municipal Bond Insurer will be
subrogated to the rights of such Owners-to receive from the City the amount of
such principal and interest so paid, with interests thereon and solely from the
sources stated'in this Trust'Indenture and theiBonds; and
(ii)They will accordingly pay to,the Municipal Bond Insurer'the•amount
of such principal and interest (including'principal and,interestrecovered under
subparagraph (ii)'of the'first paragraph of the Municipal Bond Insurance,Policy,
which principal and interest shall be deemed past due andnot to have'been
paid), with interest thereon as provided in-this Trust Indenture and the Bonds,
-21-
but onlyfrom thesources andin the manner'provided,herein for the'payment of
principal and ;interest with respect to the obligations to Owners,. and will
. otherwisetreat-the.Municipal Bond Insurer as the,Owner of such rights to the
amountof suchprincipal and interest; '
SECTION:211. Book Entry System. '
. (a)• Original Delivery. The,Bonds shall`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 ownership;of each such Bond shall be registered on the Bond Registration
Books•maintained by the Trustee pursuant to Section 2:08„hereof in the name of the Nominee.
Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be
registered inthename•of the Nominee on such.Bond Registration Books.
With respect to Bonds;the:owwnership of which shall be registered in the name of the
Nominee, the City and the Trustee shall''=haveno responsibility or obligation'to any Depository
' System Participant or to any person on`'behalf`of which the City holds an interest in the Bonds.
Without limiting:the generality of the-immediately preceding sentence, the City and the Trustee -
shall haves no•sesponsibility or obligation with respect to (i) the:accuracy of the records of the
Depository, the Nominee or any Depository System Participant with respect to any ownership
' interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person,
other than a Bond Owner as shown in the Registration Books, of any notice with respect,to the
ii Bonds, including any;notice of redemption, (iii),theselection,by the Depository of the'beneficial
interests in the Bonds to be redeemed;in the event:the'City elects.to redeem the:Bonds:in part,
_ (iv) the payment'to any Depository,System.`Participant or any otherrperson, other than a Bond
• Owner as shown in the.Registration:Books,.of any amount With respect to principal, premium,
if any, or interest represented by'the Bonds or (v)-any consent`given or-other-action taken by
Depository as Owner of the'Bonds. The City and the Trustee may treat and consider the person
in whose name eachiBond:iss registered as'+the absolute owner of such:Bond for the purpose-of,
• payment of principal,.premium,'if any, and interest represented by,such Bond, for the purpose
of giving notices;of redemption;and other matters with:respect to such Bond,for the purpose of.
registering transfers of ownership of such Bond, and,for all other whatsoever. The
Trustee shall pay the principal, interest and''premium, if any, represented by the Bonds only to.
the respective Owners.or their respective,attorneys.,duly authorized in writing, and all such.
payments shall be valid andeffective to!fully satisfy and discharge all obligations with respect
to payment Of principal,interest•and premium, if any, represented by the Bonds',to the;extent of
the sum or sums so paid. No person other than a Bond Owner shall receivea Bond evidencing
the obligation of the City to make payments of 'principal, interest and premium, if any,
• pursuant to this Trust Indenture:. Upon?delivery by the Depository to the Norninee'of'written
notice to the effect that the Depository has determined to substitute anew,Nominee in its place,
such new nom inee shall become,the Nominee hereunder for all purposes, arid upon receipt of
such a notice the•City shall promptly deliver a copy of the same to the,Trustee.
(b) :Representation Letter. In°order to qualify the Bonds for the,Depository's book-entry
system, the City shall execute:and"deliver to such Depository a letter representing such matters
iik 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
-22-
shall agree to-take all action reasonably necessaryfor.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 Trust
Indenture,to qualifythe Bonds for the Depository's book-entry program.
(c) Transfers Outside Book-Entry System. In the event that 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 execution of replacement Bondssby providing the Trustee with a list showing
the interests of the Depository System;Participants in the Bonds, and by surrendering the
Bonds, registered they name of the Nominee, to the Trustee on or before the,,date such
replacement-Bonds are tobe 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 actingas such, the,City fails to identify-another Securities s,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.
In the event the City determines that it,is in the best interests of the beneficial owners of
the Bonds that they be able to obtain certificated Bonds, the City mayanotify the Depository
System Participants of the availability of such certificated Bonds through the,Depository. 'In •
such event, the. Trustee will execute,• transfer and exchange Bonds as required by the
Depository and.others in appropriate amounts; and whenever the Depository requests, the
Trustee and the City shall cooperate With the Depository in taking appropriate action (y) to
make available one or more separate certificates evidencing the Bonds to any Depository
System.Participant having Bonds credited to,its account,with the Depository, or,(z)'to arrange
for another Securities`Depository to maintain custody of a single certificate,evidencing such
Bonds,,all at the City'sexpense.
(d) Payments to the Nominee. -Notwithstanding any other provision of this Trust
Indenture to the contrary, so long as any Bond is registered in the name ofthe Nominee, all
payments with respect to principal, interest and premium, if any, represented by such'Bond
andall 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.
•
•
•
-23-
ARTICLE III
•
•
• ISSUE OE'SERIES.-2001 BONDS;PARITY BONDS
SECTION'.3:01. Issuance of,Series2001 Bonds. Upon the execution and delivery of this
Indenture, the City shall execute and. deliver Series 2001 Bonds in the aggregate principal
amount of.. Dollars ($[Principal Amount]) to the Trustee for authentication
and delivery to the.Original Purchaserthereof upon the Request of'the'City.
SECTION 3.02 Application of Proceeds of?Sale.ofSeries 2001 Bonds. Upon the receipt
of payment for the Series 2001 Bonds on the Closing Date in the'amount of $ (being
an amount equal to the principal arnountrof the Series,2001 Bond's ($[Principal Amount]), plus
accrued interest from August 1, 2001 to the.Closing Date, ($ ) less: (i) original issue
discount ($ ); (ii) underwriter's discount ($ ); (iii) the Municipal Bond
Insurance'Policy premium [and Reserve.Account Surety Bond premium] equal in the aggregate
to $ , paid by the Underwriter directly to the Municipal Bond Issuer; and (iv) the
Underwriter's good faith deposit-already received by the Trustee and held for the credit of the
City ($ )),.the Trustee,shall apply the proceeds of sale thereof as follows:
(a) The Trustee shall deposit in the Debt Service Fund the amount of
$
(b) The Trustee shall'deposit in the Reserve Account the amount of$
(c) The Trustee shall transfer to, the Escrow Bank. an amount. equal' to
$ ,for depositto the Escrow Fund; and
(d) The Trustee^shal deposit in the Project Fund the amount of$
(e) The Trustee shall,deposit in the Cost of Issuance Account the remainder of
such proceeds,in an amount equal to'$
SECTION 3.03. Reserve Account. On the Closing Date the Trustee shall deposit in the
Reserve Account the amount specified in Section 3:02 (b). An amount equal.to,the Reserve
Requirement in the'form of either cash or a Qualified Surety Bond under.Section''4.05(b) for the
' account of the,Reserve Account, shall be maintained in the Reserve Account at,all times, any
.
deficiency therem shall be replenished from available Net Revenues,pursuant to Section 403(3).
The Reserve Requirement for an issue of Parity Bonds may be increased by any Parity Bonds
Instrument establishinganyParity Bonds pursuant to Section 3.06.
SECTION.3:04. Project:-Fund.- There is hereby created a separate Fund to be known as
the "City of Petaluma Water Revenue Bonds Project Fund", herein referred to as the "Project
Fund", to be held in trust by the Trustee. The Trustee shall disburse moneys in the. Project
Fund for the purpose,of paying or reimbursing the payment of the costs of acquiring and
•
constructing the Project, including but not limited to all costs incidental to or connected with
such acquisition and construction; in either case upon-receipt by the Trustee from time to time
of a Request of the City which:.(a)identifies the total amount of such costs,to be paid pursuant
to such Request„including all items of cost in,such detail as.maybe available to the City; (b)
-24-
states with respect to such disbursement (i) the requisition number, •(ii) the amount to be
disbursed for payment;of such costs, and (iii) that each item of cost identified therein has,been
properly incurred,,and is a proper charge against the Project Fund and has:not been the,basis of
any previous disbirrsement,:and (c) is accompanied by an.invoice,if any.:
The City may;apply any or all of the moneys on deposit in the .Project Fund' to the
financing of any alternative project in place of any component of the Project upon the filing;
with;the Trustee of a Certificate of the City stating that (i) such substitution will not have any •
adverse'effect on the security-for the Series 2001 Bonds, and(ii) the alternative-project identified
will be of benefit to the Water System. The Certificate of the City shall be accompanied'by an
opinion of bond counsel,substantially to the effect that-such substitution will not adversely
affect the exclusion of interest on the Bonds from;gross income for federal inco"ne tax purposes.
Any amounts "remaining in the Project Fund after the date of completion of the,Project
shall, uponthe filing with the Trustee of a Request of the City, be transferred by the Trustee to
the Debt Service Fund.
All interest earnings and profits or losses on the investment of amounts in the Project
Fund shall be deposited in or charged-to the.Project Fund and applied to thepurposestthereof:
SECTION 3:05:. Cost of Issuance Account There'is hereby created an account to be
known as the "City of Petaluma Water Revenue Bonds, Series 2001 Cost of Issuance Account"
(the "Cost of Issuance Account"), which the City hereby covenants and agrees ttci cause to be
maintained and which shall be held in trust by the Trustee: The moneys in the Cost of Issuance
Account shall be-used in the manner provided by solely for the purpose of the,payment of
Costs of Issuance upon receipt by the Trustee of Requests of the City therefor, on or after the
Closing Date. Any funds'remaining in.the'Cost of.Issuance Account on November 1,-2001,shall
be transferred by the'Trustee to the Debt Service Fund.
SECTION 3.06. Issuance"of Parity Bonds. do addition to the Series 2001 Bonds,the•City
may, by Parity Bonds,Instrument, issue or incur other loans, advances or indebtedness,payable
from Net Revenues to be derived from the Water,System, to provide,financing for the Water
System, in such principal amount as shall be determined-.by the City The City may issue or
incur any such Parity Bonds subject to the following specific-conditions which are hereby made
conditions precedent to the issuance and delivery of such Parity Bonds:
(a) The City shall be in compliance with all covenants set forth in this Indenture.
(b) The Net. Revenues of the Water System, calculated on sound;accounting
principles, as shown by the books of the City for the latest Fiscal Year or any more
recent twelve (12) month period selected by the City, ending not more than sixty (60)
days prior to'the:adoption ofthe Parity Bonds Instrument pursuant to which such Parity
Bonds'are:issued,-as shownby the books of the City;:plus,,at the option of the City„any
or all of the items hereinafter-in this paragraph designated (i) and (ii), shall at least equal
One Hundred Twenty-Five percent•(125%) of Maximum Annual Debt Service; •with
Maximum-Annual Debt:Service:calculated on all Bonds to be Outstanding immediately
subsequent to the issuance of such Parity-Bonds which have a lien on Net,Revenues of
the Water System The items any or all of which may be added to such Net Revenues
for the purpose"of issuing or incurring Parity Bonds.hereunder are the'following:
-25-
i(i) An allowance for Net Revenues .from any additions to or .
improvements or extensions of the System,to be made"witlf the proceeds of such
Parity Bonds, and also for Net Revenues from any such,additions,improvements
or extensions .which have been made from moneys from any source but in any
case which, during all or,any part of such Fiscal Year of such,twelve (12)-month
period, were not in service,;all in-an amount,equal.to ninety percent (90%) of the
estimated additional average annual Net Revenues to be derived from such
additions, improvements.and extensions for thetist{thirty-six (36) month period
• in which each addition,improvement•or. extension is respectively to be in -
operation, all as shown in the written report of an Independent Consultant
engaged by'the City; and
(ii) An:allowan ce:for.earnings arising,from any increase in the Charges
which has become effective prior to the incurring of such additional
indebtedness'biit which,:.during all or any part ofsuch.Fiscal-Year;or such twelve
(12) month period,wasnot'in effect,in an amount equal to the:amount,by which
the Net Revenues'would''have been-increased;if such increase in Charges had •
been in effect'during the•whole of such:Fiseal Year.or such twelve (12) month
period, all as shown iri the written report,of'ari Independent Consultant engaged
by the City..
(c) The Parity Bonds.Instrument providing for the issuance of such Parity'Bonds
under this Section-3.06 shall'provide that •
(i) Theproceeds of such Parity Bondsrshall be::applied to the acquisition,
construction, improvement, financing or refinancing of additional facilities,
improvements•or extensions of existing facilities ,within the Water System, or
otherwise for facilities, improvements onproperty which the City determines are
of benefit to the'Water System, or for the purpose of refunding any Bonds-in
whole or in part,.including"all costs(including costs of issuing such Parity Bonds
and including capitalized interest on such Parity Bonds during any period which.
- i the City.deemscriecessary oradvisable) relating-thereto;
(ii),.Intereston such,Parity.Bonds shall be payable:on.an.Interest Payment
Date;
(iii) The;principal ofsuch.Parity Bonds shall be payable on November 1 .
in any year in:which principal is payable; and
"(iv) Money or a Qualified'Surety Bond as authorized by Section 4.05(b)
shall be deposited in a reserve accountfor such.Parity Bonds from.the proceeds.
of the sale of such Parity Bonds or otherwise equal to theReserve Requirement.
SECTION 3:07. State Loans.. The City may borrow money from the State to finance
improvements to the Water System, without:complying with the provisions of Section 3.06 (c)
(ii), (iii) or (iv), and,the obligation of the City to make payments'to the State under the loan
agreement memorializing said loan (the "State Loan") may be treated as Parity Bonds for
purposes of Indenture;provided.that the City shall notmake a payment on such State Loan
-26-
(except as hereinafter expressly permitted) to the extent it would have the effect of causing the
City to fail to make etiinely payment on:the Bonds. In the event the City's Water Utility Fund
•
does not contain sufficient funds to:make the full amount of payments on the Bonds and such
State Loan,the Cityashalllmake payments on the Bondsand such State Loan on a pro'rata basis.
SECTION 3.08. .Subordinate';Bonds. Nothing in this Indenture shalLprohibit or impair
the authority of the City to issue bonds or other obligations secured by a.'lien on Gross
Revenues or Net.Revenues which is subordinateito the lien established hereunder, upon such
terms and in such principal!amounts as the City.:may determine; provided,that the City may
issue or incur any Stith Subordinate Bonds subject to the following specific conditions which
are hereby'niade conditions?precedentto the issuance and delivery of such Subordinate Bonds:
(a) The City shall be in compliance with all covenants set: forth in this
Indenture.
(b) The Net Revenues of the Water System, calculated on sound accounting
principles, as shown by the books of the City for the latest.Fiscal Year or any more
recent twelve (12) month period,selected by the City tending not more than,sixty (60)
days prior--.to'the adoption,of the Subordinate Bonds Instrument-pursuant to which-such
Subordinate Bonds are issued, asshown by the'books of the City, plus, at the option of
the City, any or all of the items hereinafter;in this paragraph designated (1) and (ii)
„shall
at least equal.One Hundred percent (100%) of Maximum Annual Debi;Service, with
.Maximum,Annual,Debt Service calculated on'all Bonds to beOutstanding immediately •
subsequent to the issuance of such Subordinate?Bonds which have a lien on Net
Revenues of the Water System:, The items any or all of which may be added'to such Net
Revenues for the purpose of issuing or incur_ringSubordinate'Bonds hereunder are the
following:
(i) An allowance for Net Revenues from any additions to or
' improvements or extensions of the System to be made with the proceeds.of such
Subordinate Bonds, and also for Net Revenues from any such additions,
improvements or extensions which have 'been :made:from moneys from any
.source but in any case which, during all or any part-of'such,Fiscal Year or such
twelve (12) month period, were not service, all in an amount equal..to ninety,
percent.(90%) of the estimated additional average;annual Net Revenues to be
derived from such additions, improvements and extensions for the first thirty-six
(36) month period in which each addition, improvement or extension is
respectively to be in operation,:'all' as shown in the written report of an
Independent Consultant engaged;bythe City;-and
. (ii) An allowance for earnings arising from,:any increase in the Charges
which has become effective, --prior to the incurring of such additional
• indebtedness but which, during all or any part of such Fiscal Year or such twelve
(12) month period,was not in effect,,in an amount equal to the amount'by which
the Net Revenues would have been increased if such increase in Charges'had
beenr,in,effect during the whole ofEsiich Fiscal Year or such twelve (12) month,
period,_all as shown in the;written report of an Independent Consultant engaged •
bytheGity.
-27-
(c) The Subordinate Bonds Instrument providing for the issuance of such
Subordinate Bonds under?this Section 3.08.shall provide that:;
(i) . The proceeds' of .such Subordinate.Bonds shall be applied to the
acquisition, construction, improvement, financing or refinancing of additional
facilities, improvements,'or extensions of existing facilities;:within the Water
System, or otherwise for facilities, improvements or property which the City
determines are of benefit dto the Water System, or for 'the purpose of refunding
any Bonds in-whole or in:part,including all costs (including costs of issuing such
Subordinate Bonds, and `including capitalized interest on such Subordinate
Bonds during any period which the City deems necessaryor advisable) relating
thereto;
(ii) Interest on.such Subordinate Bonds shall be payable on an Interest
Payment Date: and
(iii) The principal of such Subordinate Bonds shall be payable- on
November 1 in any year in which principal's,payable.
SECTION 3.09. Validity of-Bonds. The validity ofsthe authorization and issuance of the
Bonds shall not be affected in any way by any proceedings;taken'by the City for the acquisition
or construction of the Project, or by any contracts made by the City in connection therewith,
a and-the recital contained in the.Bonds that the same are issued;.pursuant to the Bond Law shall
be•conclusive evidence of•their validityand of the regularity of their issuance.
•
•
•
•
•
,
-28-
ARTICLE IV
PLEDGE OF NET REVENUES; AND ACCOUNTS
SECTION 4'01._Pledge of Net Revenues,Water'Utility Fund.
(a) The City hereby transfers,;places a charge upon, assigns,and.sets;over to the Trustee,
for,the benefit:of the Owners,that:portion of the Net Revenues which.is necessary to-pay the
principal or Redemption Price of and interest on.theiBonds in any Fiscal Year,together with;all
moneys on depositin the Debt Service,Fund, and such portion of the Net.Revenues is hereby
irrevocably pledged to the punctual payment of the principal or Redemptiom.Price,of and
interest on thelBonds. The':Net Revenues!,shall not be used.:for any`other'purpose.while any of
the Bonds remain Outstanding, except out of Net Revenues there'may be:apportioned and
paid such sums-for such,purposes, as are.expressly^permitted by this Article. Said pledgeshall,
constitute;a:first, direct and exclusive charge and lien,on the Net Revenues.forthe paymenttof
the principal or Redemption Price of and interest on the Bonds in accordance With the terms
thereof.
(b) The Net Revenues constitute a trust fund •for the security, and payment of the
principal or.Redemption Price of and interest on the Bonds The general fund;ofthe City,,is not
liable and the credit or taxing power of the City is not pledged for the;,payment;of theprincipal
or Rederiwthint Price of and interest on.the Bonds. The Owner of the Bonds shall not compel
the•exercise of=the taxing power by the City or the forfeiture of its property. The principal or.
R
•
edemption Price of and interest on the Bonds are not a debt of the City, nor; a legal, or
equitable pledge, charge, lien or encumbrance, upon any of its property, or upon any of its
•income, receipts,or revenues except the Net Revenues of the Water System.
SECTION 4.01 Receipt and Deposit•of Revenues. The City covenants and agrees that
all Gross Revenues, when and as received, will be received and held by the City in trust
hereunder and will be:deposited by the City in the Water Utility Fund and wilfbe accounted
for through and held..in trust in the Water Utility Fund, and the City shall only,have•such
beneficial right or interest in any of such money as in this'Indenture provided. All such°Gross
Revenues shall be transferred, disbursed, allocated and•applied solely to the uses•and purposes
hereinafter,in this Article set forth, and shall be accounted for separately and apart-from- all
'other money,funds, accounts or other'resources of the City.
SECTION 4:03:. Establishment of Funds and Accounts and Allocation,of' Revenues&
Thereto. The, Debt Service Fund, as a special fund, and,the Redemption .Account and the
Reserve Account, as'special accounts therein;are hereby created.
The Debt Service'Fund.andahe Redemption Account and the Reserve Account therein
shall be held and rriaintained by the Trustee. —
All,Gross Revenues shall be held in trust by the Finance Director in the Water Utility
Fund and shall be applied, transferred,.used and withdrawn only for the purposes hereinafter
authorized in this Article:
•
_99_
(1) Op eta tin gCosts. The Finance shall first pay from the moneys in the Water
Utility Fund-the budgeted Maintenance,,and Operation.Costs as•such Costs become due and
payable.
(2). Debt Service Fund: On or before the second.day.,prior to each Interest Payment
Date, beginning October 30, 2001, the Finance .Director Shall'transfer from the Water.Utility
Fund to the Trustee for deposit iii the DebtService Fund (i) an amount equal to theaggregate
amount of interest to become due and payable on.all Outstanding Bonds on the next succeeding
Interest-Payment Date, plus (ii) beginning November 1,2001; an equal to the aggregate
amount of Principal.-Installments (includingany Sinking Fund Installments) becoming due and
payable on all Outstanding Bonds on. the nekt succeeding Principal Installinent Date. All
interest:earnings;and profits or losses on the investment of amounts in the Debt,Service Fund
shall'be deposited in or charged to the Debt Service,Fund and applied to the purposes thereof.
No transfer and deposit need be made into the Debt Service,Fund if the amount contained
therein, taking into account investment earnings and profits, is at least equal to the Interest
Requirement or Principal Installments to become due on-the next Interest Payment Date or
Principal Installment Date upon all Outstanding'Bonds.
(3) Reserve Account: After Making the payments, allocations and transfers provided:
for in subsections (1) and (2)•above,;if"the balance in the.Reserve Account is less than the
Reserve Requirement, the deficiency shall be restored by transfers from the first moneys which
become available in the Water Utility Fund..to the'Trusteefor deposit in the Reserve.Account,
such transfers to be made no dater, than the times provided in Section 4.08(a). Provided,
however, that'the Reserve Account will be replenished in the following"priority: (i) principal
1 and interest on`the Qualified,Surety Bond will be paid from first'available Net Revenues; and
(ii) after all such amounts are in full, amounts necessary to fund the Reserve Account to
the Reserve;Requirement, after-taking-into account the amounts.available under the Qualified
Surety Bond,shall be depositedfrom hextavailable Net Revenues'.
•
(4) Surplus: As long as all of the foregoing payments,.allocations and transfers are
made at the times and in the manner set-forth above in,subsections (2) to (3), inclusive, any
moneys remaining in the Water Utility Fund may at any time be treated as surplus and applied
for any lawful purpose.
SECTION 4.04. -Application of[Debt.Service Fund.,
(a) The'Trustee shall withdraw from the Debt Service;Fund, prior to each Interest
Payment Date; an amount equal to the'Interest.Requirement payable(on such Interest Payment
Date, and shall cause;the same to be applied to thespayment of said'.interest when due and is
hereby authorized to apply the same to:the payment of such interest',by check or draft (or by
wire transfer, as the case maybe), as provided in Section 2.01:.
•
(b) The Trustee;shall withdraw from the Debt Service Fund, prior to each Principal
Installment Date, an;amountequal to the principal'amount of,the Outstanding Serial Bonds, if
any, maturing on said'Principal'Installment Date and any Sinking;Fund Installments due and
payable on acid Principal Installment 'Date, and shall cause 'the ,same to be applied to the
payment principal of said:Bonds:,when due and is hereby authorized to apply the same to
such payment upon,presentation and surrender of the Bonds as they become due and payable,
as provided-inSection2 01.
-30-
•
(c) All withdrawals,and:transfers under the provisions'of subsection,(a)or subsection. •
(b) of this Section shall be made'not earlier than one'(1) day prior to the Interest Payment Date
or Principal Installment Date to which they relate, and the amount so withdrawn or transferred
shall, for the.purposes.of.this,Indenture, be deemed to remain in and.be part of the appropriate
Account until such.Interest Payment Date or PrincipalInstallment`Date.
SECTION 4.05. Application.of Reserve Account..
(a) In General. If at any time there shall not be sufficient amounts",in the:Debt Service.Fund to make payment of Principal Installments or Redemption Price of or interesCon the
Bonds, the Trustee shall provide notice of such fact to the City, provided that no such',notice
shall be required to be given..with,respectto a withdrawal of amounts in excessgof the Reserve
Requirement or of:withdrawals-in connection with the refunding'of;-the.Bonds in whole<orsan
part) and draw on the Reserve Account Surety Bond and pay into the appropriate Fund or
Account the amount of the deficiency.- Any amounts in the Reserve'Account'in excess of the
Reserve Requirement (whether derived from interest or gain on investments or otherwise)
shall, on November 2 of each year, be paid by the Trustee to the City for deposit in the Water •
Utility Fund. • ,
(b) !Qualified,Surety Bond.,In-the event the City satisfies the'-Reserve:Requirement by
delivering to the Trustee a.Qualified ,Surety Bond, such Qualified Surety Bond, and any
subsequent,Qualified Surety Bond, shall provide that the Trustee:is entitled to draw amounts
thereunder when required by the provisions of this Indenture to make'transfers from the
•_
Reserve Account to the Debt;Service Fund in the event of a deficiency in any such;account,
provided that, in any.such event, the Trustee:shall'first applyto any such deficiency the amount,
of;cash (including cash represented by investrnents).thenon deposit in the Reserve.Account.
(c) Cash to the City. To the extent that the Reserve Requirement has been satisfied by
delivery of a Qualified Surety Bond under Section 4:05(b),,any cash,or Authorized Investments
on deposit in'the Reseive.Account shall be paid by the Triistee to the.City.
SECTION 4.06. Application of Redemption.Account. On or before the=date whichais,at
least forty-five (45) days prior to any Interest Payment:Date on'which,Series 2001 Bonds'are
subject to redemption pursuant to Section 2.02(a) or on which',any Parity Bonds,are subject to
optional redemption pursuant to the ;provisions of the Parity Bonds Instrument'authorizing
such Parity Bonds, the Finance Director shall transfer :from,the Water Utility. Fund to the
Trustee for'deposit in the Redemption Account an amount at least equal to`the Redemption
Price(excluding accrued interest, which is payable:from the Debt Service Fund) ofsuch'Bonds.
to be redeemed on such Interest Payment.Date. In addition,:the Finance Director shall;transfer
to the Trustee,for deposit in the Redemption Account all amounts required to'redeem any
Series•2001 Bonds which are subject to-redemption pursuant to Section 2.02 (b) and any Parity
Bonds which are-subjectto redemption pursuant to any similar provision of the Parity Bonds.
Instrument authorizing such Parity Bonds, when and as such amounts become available::
Amounts'in,the Redemption,Account shall be applied by the Trustee solely for the purpose of
paving the Redemption Price of Series'2001 Bonds'to be redeemed pursuant to Sections 2.02 (a) ."
or (b) and to pay the purchase price in,the same`manner and,subject:to the same limitation,as
purchasers of Bonds.under.Section 2.02(k) or the Redemption Price.of any Parity Bonds,to be
redeemed pursuant to similar provisions of' the Parity Bonds Instrument'authorizing such-
-31-
i
Parity Bonds. If after all of the-Bonds have been paid or deemed-0 have been paid, there are
• moneys remaining in the Redemption Account, such moneys shall be transferred by the Trustee
to the Finance Director for deposit in the Water Utility Fund.,
SECTION 4.07. Investments., All moneysin the Water Utility Fund may be invested by
the City from time to time invany Authorized Investments. All moneys in the , the Debt Service
Fund and Cost of. Issuance Account shall be 'invested by the Trustee solely in Authorized
Investments, as directed pursuant to a Request of the City. In the absence of any such Request
of the City, the Trustee may (but shall not be required to) invest any such moneys in money
market funds whose investments are restricted to,Federal Securities, selected by the Trustee,
which by their terms mature prior`to theb date-on which such moneys are required to be paid
out hereunder. Obligations purchasedasp,.an investment of moneys in any Fund or Account
shall be deemed to be part of such Fund or Account, and all interest or gain derived from the
investment of amounts in iany Of the Funds or- Accounts established hereunder shall be
deposited in the Fund or Account from which such investment was made; and shall be
accounted for and applied as provided in Section 4.04(c) (with-respect to the Debt Service Fund)
and Section 4.05(a) (with respect to the Reserve Account). For purposes of acquiring any
investments hereunder, the Trustee may commingle. funds .held by it hereunder with the
written approval of the City. The Trustee mayact as principal or agent in the acquisition of any
investment. The Trustee-shall incur no liability for losses,arising from any investments made
pursuant to this Section. .
SECTION 4.08. Valuation; Investments.
, (a) Method of Valuation and Frequency of-Valuation. Itcomputirig the amount in any
Fund or Account, Authorized Investments shall be valued at Fair Market Value. With respect
to all Funds and Accounts, valuation shall occur annually, except:inthe event of a withdrawal
from the Reserve Account, whereupon securities shall be valued immediately after such
withdrawal. If amounts on deposit in,the Reserve.,Account shall, at any time, be less than the
Reserve Requirement, such deficiency shall be made up from the first available moneys
received after making the required deposits to the Debt Service Fund (i) over a period of not
more than four (4) Months,, in four (4) substantially equal payments, in the event such
deficiency results from a decrease in the market value of the Authorized Investments on
deposit in the Reserve:,Account or (ii)'over a period of not more than twelve (12) months, in .
twelve (12) substantially equal payments, in the event such deficiency results from a
• ' withdrawal from such Account.
(b) Investrnent>of Amount&ERepresenting Accrued Interest. All amounts representing
accrued interest shall be held by the Trustee in the Debt'.Service Fund, pledged solely to the
' payment of interest on the '.Bonds and,invested only in Federal Securities maturing at such
times and in such amount's.as are necessary to match-the.interest payments to which they are
' pledged. .
(c) Additional Limitations. Except as otherwise provided in the following sentence,the
City covenants that,all investments of amounts deposited in any fund or account created by or
• pursuant to this Indenture, ors 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 by this Indenture or the Tax Code) at Fair Market Value.
Investments in-funds,or accounts (or portions thereof) that- are subject to a. yield restriction
-32-
under applicable .provisions of the Tax ''Code and (unless valuation is undertaken at least •
annually) investments in-the Reserve,Accoiint shall be valued at their present-value (within the
meaning of section 148 of the`Tax'Code).
•
•
•
•
•
•
•
•
•
•
-33-
•
ARTICLE V
COVENANTSOF THE CITY; SPECIAL TAX'COVENANTS
SECTION .5.01. Punctual Payment; Compliance With. Documents. The City shall
punctually pay or cause to be paid the interest and principalto become due with respect to all
of the Bonds in strict conformity'withthe terms of the Bonds and of this Indenture, and will
faithfully observe and perform. all of the conditions, covenants and requireinents of this
Indenture and all Parity Bonds Instruments. •
SECTION 5.02. Against Encunibrances. The City will not mortgage or otherwise
encumber, pledge,or place any charge upon the Water System.or anypart thereof, or upon any
of the Net Revenues, except as-provided in the Indenture.
SECTION 5.03. Discharge of:Claims: The City covenants that in order to fully preserve
and protect the priority,and security of the Bonds the City shalt pay from the.Net,Revenues and
discharge all lawful claims for labor, materialstand supplies-furnished for or in connection with
the Water System which,if unpaid,"may'become a lien or charge upon the Net Revenues prior or
superior to the lien of the Bonds and impair the security of`the Bonds. The City shall also pay
from-the.Net Revenues,all'taxes and assessments or other governmental charges lawfully
or assessed-upon ordn.respecdof the Water System or upon any part;thereof orupon any of the
Net Revenues.therefrom.
SECTION 5.04.' Acquisition,Construction or Financing of Improvements to the Water
System. The City will acquire,.cer striiet, or.finance Impr"ovements to the Water System to be
financed With the proceeds of;.any Parity Bonds with.all practicable dispatch; and such
Improvements will be made in..an'expeditious manner and in conformity with laws so as to
complete thesame as soon as possible.;
SECTION 5.05. Maintenance and, Operation of Water System in 'Efficient and
Economical Manner. The City covenants and agrees tomaintain"and;ooperate the Water System
in an efficient:and economical Manner and to operate, maintain and preserve the Water System
in good repair and working,order.
SECTION^d5'.06: Against Sale, Eminent Domain.
(a) The Ciy will not sell, lease or otherwise dispose of the Water System or any part
thereof essential,to the-proper operation of the Water System or to the maintenance of the Net
Revenues except as herein expressly permitted. The City will not enter into any lease or
agreement which impairs the operation,of the Water System or arty part thereof necessary to
secure adequate•Net Revenues for the payment of the interest on and principal or Redemption
Price, if any, on the Bonds, or which would otherwise impair the rights of the Holders with
respect to the Net. Revenues; or the operation of the Water System. Any real or personal
property which has become non-operative;or which is not needed for the efficient and proper
gib operation of the Water System, or any material or equipment which has;worn out, may be sold
at not less than the market value thereof without the consent:of the Holders if such sale will not
reduce Net. Revenues land 4f'all of the Net Proceeds of such sale are deposited in the Water
Utility Fund. '
-34-
•
(b) If all Or any part of the Water System shall be taken by eminent domain •
proceedings, the.Net Proceeds realized_by the City therefrom: shall.be deposited by the City
with the Trustee in a special fund in trust and applied bythe City to,the cost of acquiring or
constructing or financing Improvements to the Water System if (A) the City first secures,and
files with the Trustee a Certificate of the City -showing (i) the estimated loss in annual Net
Revenues, if>any, suffered, or to be suffered, by the City by reason of such,eminent domain
proceedings,!(u)'a,general description:of'the Improvements to the Water System°then proposed.
to be acquired ors constructed by the City'from such Net Proceeds, and (iii) anestimate of the
additional.Net Revenues to be derived,from such Improvements; and(B) the Trustee, on the
. basis of such Certificate of the City, determines that such additional Net Revenues- will
sufficiently offset.theloss of Net Revenues/resulting frOm such eminent domain proceedings{so
that the:ability of the City;to meet its-obligations'hereunder will not be,substantiallytimpaired;
which determination shall be final and conclusive: If the foregoing conditions are met/the City•
shall then promptly proceed with the acquisition or construction or financing of such
Improvements substantially in accordance with such Certificate of the City and payments
therefor shall be made by the Trustee,from such Net Proceeds and from other moneys of'the
City lawfully available therefor, and any balance of such Net",Proceeds.nottrequired by;theiCity
for the purposes, aforesaid:shall be deposited in the Water Utility. Fund. • If the foregoing
conditions are:not met, then such Net'Proceeds;shall be applied by:the Trustee pro rata to the
redemption'or,purchase of the Bonds of'each Series,then Outstanding in the proportion.which
the principal amountof the Outstanding Bonds of each Series bears°to the aggregate principal
amount of all'Bonds then Outstanding. If the Trustee is unable to purchaseor redeem Bonds in
amounts sufficient to exhaust the available moneys allocable to each such Series, the remainder •
of such moneys for each such Series, shall be held;in trust by the Trustee and applied to the
paymentof the Bonds of suchSeries 2001s the same become due by their terms, and,pending
such application, such remaining moneys may be invested by the Trustee in the manner
provided in Section 4.08,for the-investment of moneys:in,the Reserve:Account: •
SECTION 5:07. Insurance. The City covenants that it shall at all times maintain such
insurance on the Water,.System as is customarily maintained with respect to, works and
properties'•of likecharacter against:accident to,loss of or damage to:,such works c or?properties.
If any useful-part of, the Water•System shall be damaged or destroyed such part=.shall be
restored to use: The Net Proceeds of insurance against accident to or destruction of the physical
Water System,shall be used.for repairing or rebuilding the damaged or destroyed portions of
the Water System, (to the-extent that such repair or rebuilding is determined'by the City to,be
useful or of continuing value to the WaterA-System) and to the extent not=so applied, shall be
applied to the redemption of the Outstanding Bonds issued on a pro-rata'basis„and for such
purpose;shallbe,paidinto:the:Redemption Account.
Any such insurance shall be in the form of.policies or contracts for insurance with •
insurers of good standing and shall be payable to the City, or may be in the form,of,self=
insuranceby;the City: The City shall,establish such fund or funds or reserves'as it determines,
in its sole judgement, are necessary to provide,for its share of anysuch self-insurance.
SECTION 5.08: Records and Accounts. The City covenants that>it,shall keep proper
books of record and accounts of the Water System, separate from •all other records and
accounts,,m which complete and correct entries shall he made of all transactions relating to the
Water System. Said.'books shall, upon reasonable request, be subject to the inspection of the
-35-
•
Owners of not.less than ten percent (10%o).ofthe Outstanding Bonds "or their,representatives
authorized in•writing .
The City covenants:thatit will cause the books and accounts of the Water.System to be
audited annually by an,Independent Certified Public.Accountant;`and°will make available for
inspection by the Bond Owners at the office of the Trustee:in Sail Francisco, California, upon
reasonable request, acopy'of the report of;such Independent Public Accountant.
The City covenants that it will cause to be prepared annually, not more than one
hundred.eighty (180) days after the.close, of each Fiscal Year, as a part of its regular,annual _
financial report, a summary statement showing the amount-of Gross Revenues and the amount
of all other funds collected which'are.required to.be pledged or otherwise made available as
security for payment of principal of and interest on the Bonds, the disbursements from the
Gross Revenues and other funds' in reasonable. detail. The City shall furnish a copy of the
statement to the'Trustee,.and upon written,request,-to,arty Bond°Owner.
SECTION 5.09: Protection of Security and'Rights of Owners. The City will preserve and
protect the security of the Bonds and the rights of the Owners, and will warrant and defend.
their rights against all claims and-,demands of all persons: From and'after the sale,and delivery
of any Parity Bonds by theCity, suchParity Bonds shall be incontestable•by the City.
SECTION.5.10. Against Competitive Facilities. The City will not acquire, construct,
• operate or maintain'the Water System:or utility within thetservice;area of the City that would
be competitive with the Water System.
•
SECTION 5:11. Payment of Taxes, Etc The:.City will pay and discharge all taxes,
assessments and other governmental charges Which may heieafte±be lawfully imposed upon
the Water System or any part`thereof or upon any Revenues`when.the same,shall become due.
The City will duly observe and conform with all valid.requirements of any governmental
authority relative to the Water System or any part thereof, and will comply with all •
requirements with respect to,any state or federal grants received to assist in paying for the,costs
, of the acquisition,construction or,financing:of any Improvements to the Water System.
SECTION 5.12. Rates and Charges. (a) The City shall".fix, prescribe, revise and collect
Charges fon,the Water,System during 'each Fiscal Year which are at least sufficient; after'
making allowances for contingencies and error in the estimates, to pay the following amounts
in the following order:
•
(i) allMaintenance,and Operation Costs of the Water System estimated by the
City'tobecome due and payable in such-Fiscal Year;
(ii) the Debt Service on the Bonds;
all 'other payments required for compliance,with this !Indenture and the
instruments pifrsirant to Which.any Parity'Bonds relating,to:theWater System shall have
• been issued• ard
•
•
-36-
•
(iv) all payments required-to meet any other obligations of the City which.are
charges, liens, encumbrances upon or payable from the Gross Revenues of the'Water
System or the'Net,Revenues of the Water System.
(b) .In addition, the City shalll.fix 'prescribe, revise and collect-Charges -for the Water
System (exclusive of connection fees, and transfers to the Water Utility•Fund, from a rate
stabilization fund, should-,one be established) during each Fiscal Year which are sufficient to
yield Net Revenues of the Water System,at least:equal to one hundred percent (1166%)'•of the
amounts payable under the preceding clause,"(a)(ii) in such Fiscal Year for Bonds which have a
lien on such-Net Revenues.
•
(c) In!addition, the City shall fix, prescribe, revise and collect Charges for'the`Water
System during each,Fiscal Year which are sufficient;to yield Net Revenues of the Water;System
at least equal.to one hundred twenty-five percent (125%) of the'amounts payable^under the
preceding clause (a)(ii)'in such Fiscal Year'for-Bond§which have a lien on such NetRevennes:: .
SECTION 5:13: No Priority for Additional Obligations. The City 'covenants that no
additional bonds or other obligations -shall'.be issued or incurred having any priority in
payment of principal or interest out of the Net Revenues over the Bonds..
SECTION 5.14: No Arbitrage, The City shall not take, nor permit norsuffer to'be
any.action with respect to the proceeds of any Of the Bonds which would cause any of the
Bonds to be "arbitrage bonds" within the meaning of the Tax Code. •
SECTION 5.15. Information Report. The.Finance Director is hereby directed;to assure
the filing,of an information report for the'Series°-2001 Bonds fn compliance with Section,149'(e)
of the'Tax Code.
Section 5.16. Private Activity Bond Limitation. The City shall assure that the proceeds of
the Bonds arenot so used-as to cause the Bonds to satisfy the private business tests of;section.
144b) of the-Tax'Code;orthe private loan financing:test of section141(c) of the,Tax:Code.
SECTION 5:17. Federal Guarantee'Prohibition. The;City shall not take any action or
permit or suffer any action:to be taken if the result of the-.:same-would be to cause any of the.
Series 2001.Bonds to be "federally,guaranteed" within the meaning of section 149(b) of the Tax
Code.
SECTION 5.18:, Further Assurances. The City will adopt,,make, execute and deliver any
and all such further resolutions,instruments and assurances;as`may be reasonably necessary or
proper to carry outthe intention,or to facilitate;the performance of this Indenture, and-for the
better assuring and confirming unto the Owners of the Bonds the-rights'"and benefits•provided"
in this Indenture.
SECTION 5.19: ,Continuing Disclosure:;The City hereby;covenants and agrees that it
will comply with and carry out all of.the provisions of the.,Continuing'Disclosure Certificate.
Notwithstanding-any other provision of this Indenture, failure of the:City to comply with the
•
Continuing Disclosure Certificate shall not be considered an Event of Default; however, the
Trustee, at the written request of any Participating Underwriter or the holders of at least 25%
aggregate principal-amount of Outstanding Bonds, shall, but only to the extent+indemnified to
. -37-
•
its satisfaction from any liability or expense, including;�without limitation fees and expenses of
its attorneys, or any holder or'beneficial owner of the:Bonds may, take such actions as may be
necessary and. appropriate to compel performance, including: seeking mandate or specific
performance by courtoder.
SECTION 5.20. Rebate Requirement..'The City shall take any and all actions necessary
to assure compliance with section 148(f) of,,the Tax Code,. relating to the rebate of excess
investment earnings, if any,.to. the federal goVernment, to the extent that such section is
applicable;tothe Bonds..
SECTION 521. Maintenance of Tax=Exemption. The City shall take all actions
necessary to,assure the exclusion,of,!intereston the Bonds-from.the gross income of the Owners
' of the Bonds:to the.sante extent.as.such interest is permitted.to'be excluded froth gross income
under the Tax Code as in effect on date of issuance of'the;Bonds. •
•
IF
•
•
-38-
ARTICLE VI
•
THE TRUSTEE
SECTION 6.01. Appointment of.Trustee. CCC, With an office in San Francisco;.
California, a.national banking association,organized and existing under and by virtue of the.
laws of the United,States of America,is hereby'appointed Trustee by the City for the purpose of
receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use
and apply the same as provided in this Indenture. The City agrees that it will maintain a
Trustee having a corporatetrust office in San Francisco, California,with a combined`capital and
surplus of at least,Fifty Million Dollars ($50,000;000); and subject to,supervision or examination
by federal or State authority, so long as any •Bonds'are .Outstanding: If such bank or trust
company publishes a report of condition at 'least annually pursuant to law.- or to the
requirements/of any supervising or examining authority above referred to,then for the;purpose
of this Section 5.01 the combined capital and surplus of such bank or trust;company shall be.
deemed to be its combinedkcapital and•surplus as iset forth in its most recent report,of condition
so published. •
The Trustee;is hereby authorized to pay the Bonds when duly presented_for payment at
maturity, or on redemption or purchase prior to maturity, and to cancel all -Bonds upon_
payment thereof. The Trustee shall keep accurate records of all funds administered by it and of
all Bonds paid and discharged. •
SECTION 6:02. Acceptance of Trusts:. The Trustee hereby accepts°the trusts imposed
upon;it by this Indenture, and agrees to perform said trusts, but only upon and subject to the
following express terms and conditions:
(a) The-Trustee, prior to°the occurrence of an Event of Default and after curing
all Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth.in this Indenture. In case an Event of
Default hereunder has occurred (which has:not been cured or waived) the'Trustee may
exercise such of the rights and powers vested in it by this,Indenture; and shall use the
samedegree of care and.skill in their exercise, as a prudent and reasonable man would
exercise or use tinder the circumstances in:the conduct of his-own affairs.
(b) The Trustee may execute any of the trusts orpowers hereof and perform!the
duties required,of it hereunder by or through attorneys, agentsor receivers but,shall be
answerable for the selection of the same in accordance with the standard specified
above, and shall be entitled to rely conclusively on advice of counsel of its choice
. concerning all.inatters oftrust and its ditty hereunder. •
•
(c) The Trustee shall not be responsible for any recital herein, or in the Bonds, or
for the validity of;this Indenture or any of the/supplements thereto or instruments of
further assurance, or for the sufficiency of the security for the Bonds issued hereunder
di-intended to:be secured hereby and the ,Trustee shall not be bound to ascertain or
inquire,as to the observance or performance of any covenants, conditions=.or agreements
on Ihepart of.the City hereunder. The Trustee shall-notbe responsible or liable for any
-39-
,
•
loss suffered in;connection with;any investment funds inade;by it in accordance with
Section 4.08:
(d) The Trustee,shall notbezaccountable for the use of any proceeds of sale the
Bonds delivered hereunder.. The Trustee may become the Owner of Bonds secured
hereby'with the same::rights which`it would.have if not the Trustee; may acquire and
dispose of other'bonds or evidence,of indebtedness of the City with the same rights it
would,have if it were not the Trustee;;and mayactas a depositary for and permit any of
its<officers-ordirectorsrto actsasa°member of,,or°in=any other capacity with respect to,
any cormittee formed to protect'the rights of Owners of Bonds, whether:or not such
committee shall represent the Owners of the majoritym principal amount of the Bonds
then Outstanding.
(e) In the absence of bad faith on part, theTrtistee,shall.beprotected'in acting
upon:any notice, request; consent, certificate; order, affidavit, letter, telegram;or other
paper or document believed by it to be genuine and correct and to have been signed or
Sent by the.proper persom or persons. Any action taken or omitted to betaken the
Trustee pursuant to this` Indenture upon the request or authority or consent of any
person who at the time of making such request or giving such authority or consent is
the Owner iof any Bond, shall be conclusive and binding,upon'all future Owners of the
same Bond and upon,Bonds issued in exchange therefor or m place thereof. The Trustee
shall not be bound to,recognize any person as an Owner of any Bond or to take any '
action at his request unless the ownership of such Bond by such person shall be
reflected on the Bond Registration Books.
(f) As to the existence or non-existence of any fact or,as-to the 'sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely
upon a Certificate of the City as sufficient evidence of the facts'therein contained and
prior to the occurrence of an Event of Default hereunder of^which:;the Trustee has been
given notice or is deemed to have notice, as provided-in Section 6.02 (h) hereof, shall,also
be at liberty to accept a similar certificate to the effect that any particular dealing,
transaction or'action is:necessary or expedient, butfmay at its discretion secure such
further evidence" deemed by it to be necessary or,advisable; but shall in,no case be
bound tossecure the same. TheTrustee may accept a Certificate of the Cityto the effect
that an authorization in the form therein set forth has been adopted by the 'City,,as
conclusive evidence that such authorization has been duly adopted and is in full force
and effect.
(g) The permissive;right of the Trustee to do "things enumerated in this
Indenture:shallmot be,construed as a duty and it'shall not be answerable for other than
its negligence or'willful;default, The immunities' and exceptions from liability of the
Trustee shall extend to its officers, as finally-adjudicated by a court of law; directors,
employees and agents.
(h) The,Trustee shall not required"to take notice or be deemed to have notice
of any Event of Default hereunder except failure by the City to make any of the
payments to'the Trustee required to be made by the City pursuant hereto or failure by
the City to file with the-Trustee any document required.by this:Indenture,to be so filed
subsequentto the issuance of the-Bends, unless the Trustee shall be specifically notified
-40-
in writing°of such default,by the City or by the Owners plat least twenty-five percent
(25%) in,aggregate principal amount of the Bonds then Outstanding and all notices or
other instruments required by this Indenture to be delivered to tthe Trustee must, in
order to be effective, be delivered-at the Principal Corporate'Trust'Office‘of the Trustee,
and in the absence•of such notice so delivered, the. Trustee may conclusively assume
there ismo.Event of Default except;as aforesaid.,
(i) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, engineers;,accountants and representatives, shall'have the,righ •fully
to inspect the Water. System, including all books, papers and records of the City
pertaining to the Water System.and the Bonds, and to take,such_memoranda=from and
With regard-thereto as may desired but which is not privileged by statute.or by law:
(j) The Trustee shall not be required`to give any bond or surety in respect of the
execution Of the':said trusts and;powers orotherwise in respect of the premises:
(k) Notwithstanding-anything elsewhere in'this Indenturefwith respect to the
execution of any Bonds the withdrawal of any cash,the release of any property, or any •
action.whatsoever within the purview of this Indenture, the Trustee shill have the-right,
but shall not be required,,to demand anyshowings, certificates, opinions, appraisals or
other information, or corporate=action or evidence thereof, as••may be,deemed desirable
for the purpose of establishing the right of the;City to the execution of any'Bonds, the
withdrawal of any cash,or the taking of.anyother action by the Trustee. •
•
,(1) Before taking the action-referred.to in Section.8.03-the Trustee:mayy require,
that an indemnity bond satisfactory in terms and amount be furnished for the
reimbursement'of all expenses to which it may be put and to protect it against all
liability, except:liability which is finally, adjudicated by a count of law to have resulted
from'its negligence or willful default-in connection with any"such<action.
(m)i,All moneys received bythe Trustee:shall, until used,or appliedsor invested'
as herein-provided, be:held in trust for:the purposes for which they were received but
need not be segregated from Other_funds except to the extent required bylaw, The.
Trustee shall not be under any liability for interest,on any moneys received:hereunder
except such as it may agree to in writing.
•
SECTION 6.03 Fees, Charges and Expenses of Trustee.. The Trustee shall be entitled to
payment and reimbursement for reasonable fees:-for its services.-rendered:hereunder and all
advances; counsel fees (including expenses): and other expenses reasonably and necessarily
made or incurred by the Trustee<in connection with such services. Upon the occurrence of an
Event of Default hereunder, but only upon an Event of Default, the Trustee-shallhave a first
lien'with right of.payment prior,to payment of any Bond upon the amounts held hereunder'for
the foregoing fee ;
•
•
• Default consists of the failure by the City'to.make any payment wlien due; the Trustee may
elect not to give such notice;if and so long as`the Trustee in good faith determines that it is in
the best interests of theBond Owners not to:give:such notice.,
SECTION;6'.05`. Intervention,by Trustee. In any judicial.proceeding to whichrthe City is
a party which, iii the opinion Trifsfee and its counsel, has a substantial bearing•on the
interests of Owners of any of,the Bonds, the Trusteemay,mtervene on behalf of such Bond
Owners, and subject to Section 6 02'hereof, shall do so if requested in writing by the Owners of
at least :'twenty-five percent (25%), in aggregate principal amount of such Bonds then
Outstanding.
SECTION 6.06: Removal of Trustee. The Owners of a majority, in aggregate principal
amount of the Outstanding Bonds may,at any-time,-and`the City may so-long as no Event of
Default shall have occurred and then be:continuing,"remove the Trustee initially appointed,
and any successor thereto; by an instrument or concurrent instruments in writing delivered to
the Trustee (where applicable), whereupon the City or such Owners, as the case=may be, shall
appoint a successor or successors thereto;.provided:that anysuchrsuccessor shall be a bank or
. trust corhpanymeeting the iequiferrients"set forth inSectioni6.01 hereof:
SECTION 6.07: Resignation bv,Trustee. The Trusteenand any successor Trustee may at
any time resign by.giving thirty:(30) days' written notice:by registered or certified-mail to the
City. Upon receiving such notice of "resignation; the City 'shall promptly appoint a successor
aTrustee. Any resignation or removal'of the Trustee and appointment-of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. Upon such
acceptance, the City shall cause notice thereof to be given by first class"mail,to the Bond Owners
at their respective addresses set,,forth-on the Bond Registration Books. No resignation of the
Trustee shall take effect until°a successor is appointed and has=accepted.
SECTION 6.08: Appomtment of Successor Trustee: In the event of the removal or
resignation of the Trustee pursuant+toSections 6:06 or 6`:07,respectively, the City shall-promptly •
appoint a successor Trustee: In 'the event the City shall for any reason whatsoever fail 'to
appoint a successor Trustee within.forty-five:(45) days following the delivery to the Trustee of
the instrument described in Section 6.06 or within forty-five (45) days following the receipt of
notice by the City pursuant to Section 6.07, the. Trustee may apply to a court Hof competent
jurisdiction for the appointment of a successor Trustee meeting,the requirements;of,Section 6.01'
hereof. Any°suchsuccessor Trustee appointed by such court:shall;become the successor Trustee.
hereunder notwithstanding any action by the City-purporting-to appoint a successor Trustee
' followingthe expiration:of such.forty-five-day period.
•
The Trustee+may be removed at any time, upon thirty(30) days' written-notice, at the
request of the Municipal Bond"Insurer with the consent of'the City, for any breach of the trust.
set forth herein. The Municipal Bond Insurer shall receive prior"written notice of any Trustee
resignation.
Notwithstandingany other provision of`this'Trust'Indenture; no removal, resignation or
• termination of the Trustee shall take effect until a successor, acceptable to the Municipal Bond
Insurer, shall be appointed; provided, however, that if for any reason whatsoever no successor
Trustee shall have been,appointed within 45 days following receipt of notice by the Trustee
-42-
•
•
pursuant to Section 6.07 above, the Trustee may apply to a court of9 competent jurisdiction.for •
the appointment of a.successor Trustee meeting the'requirements otSection 6.01.
SECTION 6.09. Merger,or:Consolidation: Any company into•which the Trustee maybe
merged or converted or with whichitmay be consolidated, or any company-resulting from any
merger„conversion or-consolidation to Which it shall be a party, or any coriipany to which the
Trustee may sell or transfer all'or substantially all of:its,corporate trust business'(provided,that.
such company shall”be eligible under;Section.6.01),,shall be the successor to the'Trustee„and
vested with all rof the title to the trust estate and all of the trusts, powers, discretion;
immunities privileges and,all other matters as was its predecessor, without the execution:or
filing of any paper or..further act;anythinghereinto the contrary notwithstanding.
SECTION 6:10. ;Concerning any Successor Trustee. Every.successor Trustee appointed
hereunder,shall'execute,,,acknowledge and deliver to its predecessor and also to the City an
instrument'in writing accepting such appointment hereunder and thereupon such successor,
without any further act, deed or conveyance, shall,become fully vested with all the estates,
properties, rights, powers, trusts, duties, and obligations of tits predecessors, but such
.predecessor, shall, nevertheless; on the Request Of the City, or of its,successor, execute arid
deliver an instrument transferring to such,successor all the estates; properties, rights, powers
and trusts of such predecessor hereunder;der; and every predecessor. Trustee' shall deliver all
securities and moneys held by it as the Trustee .hereunder to its successor. Should any
instrument in writing,from the City-be required by-,any 'successor Trustee for more fully and
certainly vesting in such successor the estate, rights, powers and duties hereby vested or
intended to be vested in the predecessor; any and all such instruments in writing shall, on
request,:beexecuted, acknowledged and delivered by theCity.
SECTION 6.11. Appointment of Co-Trustee.. It is the purpose of this Indenture that
there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right;of banking corporations or iassociations to transact
business as Trustee in such jurisdiction. .It is recognizedthat in the case of litigation under this
Indenture, and in particular in case'of the enforcement of the rights of the Trustee on;default, or
in the case the Trustee+deems that by reason,of any present or future,law oflany jurisdiction,it
may not exercise any of the powers, rights or remedies:herein granted to the Trustee or hold
title to the properties, in trust, as herein granted,. or take any other action which may be
desirable;or necessary;in connection�therewith, it may be necessary that the,Trustee appointan
additional:individual of institution as a separate Or co-trustee: The following;provisions of this
Section 6.11 are adopted to these ends.
In the event that the Trustee appoints an additional, individual or institution as a
separate or co-trustee, each and every remedy;;power,,right, claim, demand,rcause of action,
inunuruty,_estate, title,;interest.'and lien expressed or_intended by this,Indentures to be exercised
. by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest.
in such separate or co-trustee but only to the extent necessary to enable such separate or co-
trustee to exercise such powers, rights and remedies, and every covenant and obligation
.necessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable,
by either of ahem.
ger
Should anymstrument in writing from the City be required by the separate trustee.or
.co-trustee so appointed by the Trustee for niore.fully and certainly-vesting in and confirniir g to
•
43-
• it such properties,rights, powers; trusts, duties,and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the City. In case any
' separate trustee or=co-trustee, or a successor to either, shall become incapable of acting, resign
or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co-trustee, so far as permitted by law, shall in and be exercised by the
Trustee until the appointment,of a new trustee or successor to such separate trustee or co-
trustee.
SECTION 6.12 : Indemnification; Limited Liability of'Trustee. The City shall indemnify
and hold the Trustee harmless from and against all claims, losses,costs, expenses,liabilities and
damages including legal fees and expenses arising from the exercise..and performance of its
duties hereunder and the termination of this Indenture. Such indemnity shall survive the
resignation or removal of the Trustee,hereunder: No provision in.this Indenture shall require
the Trustee to risk or expend;its own funds or otherwise incur any financial liability hereunder
if it shall have reasonable grounds for believing repayment of such funds or adequate
indemnity against such liability or risk_is not assured to it The Trustee shall not be liable for
any action taken or omitted to be taken by it in accordance,with the direction of a majority of
the Owners of the principal.amount of Bonds Outstanding relating,to the time, method and
place of conducting'any proceeding or remedy available to`the`Trustee under this Indenture.
•
•
•
-44-
ARTICLE VII
•
. MODIFICATION AND-AMENDMENT,OF THE INDENTURE
•
SECTION 7.01. Amendment by£onseth of. Bond Owners: This Indenture and the:'
rights and obligations ofthe City and of the Owners-of the Bonds.may be modifiedror amended
at any time by a Supplemental Indenture which shall become binding when>the written consent
of the Owners of a majority in aggregate"principal amount of the Bonds then Outstanding,
exclusive of Bonds'disqualified as provided in Section,7.03 hereof,'are filed with the Trustee:
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;interest
or redemption premiums at the time and place and at therate and'in the currency provided
therein of any Bond without the express written consent ofthe,Owner of such Bondi'(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 th&rights-Or obligations
of the Trustee.
•
SECTION 7 02: Amendment Without Consent of Bondholders: This Indenture and the
rights and obligations,of the City and of the Owners:,of Bonds may-also'be modified or
amended at any time by a Supplemental Indenture which shall become binding upon execution
and delivery;without consent of any Bond Owners, but only to the extent permitted bylaw and
onlyforanyone or more of the'following'purposes-
(a) to add to the covenants and agreements of the City in this, Iridentizre •
contained, 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; or
(b). to make such provisions for the purpose of curing any ambiguity, or of
curing,correcting or supplementingany defective provision contained'in this'Indenture,
or in any other respect whatsoever as the City may deem necessary or. desirable,
"provided under any circumstances that such_modifications or amendments shall not
adverselyaffect the interests of.the Owners oftheBonds;
(c) to,provide•for the issuance of any Parity Bonds, and to provide the terms'and
conditions under which-such Parity Bonds may be issued;,including'but not limited to
the establishment of special funds and accounts relating to such Parity Bonds.and any
other provisionsrelating:solely to such:Parity,Bonds, subject to and in.accordance with
the'pr'ovisions of. ectioii 3:06; or
(d) to make;such-additions, deletions or modifications as may be necessary or.
desirable toassure exemption from federal income taxation of interest on the Bonds.
Any amendments which require Bond Owner consent pursuant to this.Section 10.02
shall also require:the prior written consent of the Municipal Bond,Tnsurer. Notices regarding
any such proposed amendments shall be provided to the Portfolio Management Depaituient of •
the MunicipalBond Insurer at 113 King Street, Armonk, NY.10504.
-45-
SECTION 7.03. Disqualified Bonds: Bonds owned or held by, or for the account of the
Outstanding for•the purpose of any consent'or other action:or any ca ) shall not u deemed
City (but excluding Bonds held in any employees retirement fund)
calculation of Outstanding
Bonds in this article provided for, and shall not be entitled to consent`to, 'or'take any other
action'in this article-provided for.
SECTION 7.04. Endorsement or Replacement of Bonds,After Amendment. After the
effective date of any action taken as hereinabove provided, the City-may determine that the
Bonds shall bear a notation, by endorsement in form approved by/the-City, as to such action,
and in that case upon demand of the Owner of any Bond Outstanding at such effective'date
and presentation of.his Bond for that purpose at the Principal Corporate Trust Office of the
Trustee, a suitable notation as to,such action-shall'be made on such;Bond. If the City shall so
determine, new Bonds so modified as,'in the opinion of the City, shall be necessary to conform.
to,such Bond Owners' action'shall be prepared and executed, and in,that case upon demand of
the Owner of any Bond Outstanding at such effective date such new Bonds shall.be exchanged
at the.Principal Corporate Trust;Office of the Trustee, without cost to each Bond Owner, for
Bonds then Outstanding,upon surrender of such Outstanding Bonds.
SECTION 7.05. Amendment,by Mutual Consent. The provisions of this Article VII shall
not prevent any Bond`Owner from accepting anyaniendment as to the particular Bond held by
him, provided:that due ndtationtihereof is made on such Bond.
•
•
• .
-46-
•
•
ARTICLE VIII
•
. EVENTS OF DEFAULT AND REMEDIES of BOND OWNERS
SECTION 8.01. Events;of Default and,Acceleration of Maturities. The`following events
shall be Events of Defaulthereuhder:
(a) Default in The due and punctual_payment of the principal of:any Bond when
and as the same,shall become due and payable, whether, at maturity as therein
expressed,by proceedingsfor-redemption,by''.deci'aration or otherwise;
(b) Default'm;the due and punctual payment of any installment°of interest on
y
an .Bond when and as,such interest installment shall become due:and:payable;
(c) Default bythe City in the observance of.any of the•covenants,,agreements or
conditions on its part:in this Indenture or in any Parity Bonds Instrument or in the
Bonds contained, and such default shall have•continued for a period of-sixty (60) days
after the City'shall have been given notice in writing of such default by the Trustee; or
(d) The filing by the City of a petition or answer seeking reorganization or
arrangement under the federal .bankruptcy laws or any other applicable law of the
United States:of America, or if a court of competent:jurisdiction shall approve;a.petition,
filed with or without the consent of the City, seeking reorganization'under the'federal
bankruptcy laws or any other,applicable law of the United States of America, or if,
under the provisions of any other law for the relief or aid of debtors, any court of
competent jurisdiction shall-assume custody or control of the City on of the whole or any
substantial part of its property_ •
Upon the occurrence of an Event of Default, the Trustee may, with the consent of the
Municipal Bond.Insurer„and;shall, at the directiowof the.owners of a-majority of the principal
amount of the Bonds; with'the consent of theMun cipalYBond Insurer, by written notice to the
City, declare the principal of the Bonds-to be immediately due and payable,,whereupon.that,
portion,of the,principal,of the,Bonds thereby-coming due and thereariterestthereon accrued to
the date of payment shall,without further„action,becomes and be immediately due and,payable,
anything in this Indenture or in the Bonds to the contrary notwithstanding., This provision, •
however, is subject to-the condition that if, at any time after the principal of the Bonds shall
have been so declared;due and payable and before',any judgment,or decree for the payment of
the moneys.due shall have been obtained or entered, the City shall deposit with the Trustee a
sum sufficient to pay all of the;principal'of and interest on the Bonds having come due prior to
such decl'aration,.with"intefeston such overdue principal and interest calculated at the rate of
interestper annum then.borne by the Outstanding,Bonds, and the reasonable fees and expenses
of the Trustee and those of its attorneys,'and any and all other defaults known to the Trustee
(other than in the payer ent of'the principal,of and interest on the Bonds having come due and
payable solely by reason of such declaration) shall have been made good or cured to the
satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been
made therefor, then, and.in every such case, the Owners of a majority in aggregate principal
amount of the Bonds at the time Outstanding may, by written notice to the City and to the
Trustee, on.behalf of the Owners of all, of the Outstanding Bonds, rescind and annul such
declaration and its consequences. However, no Stich:rescission and annulment;shall extend to
-47
•
• affect any subsequent default, or shaltimpair or exhaust any.right'or power.consequent
thereon.
SECTION 8;02`.,:Application of Funds Upon Acceleration. All amounts+received by the
Trustee pursuant to any'right given or action taken by the Trustee under the provisions of this
Indenture ,shall be applied•by.the Trustee in the following order upon presentation of the
, several,Bonds, and the stamping thereon of the amount of the payment if only partially paid, or
upon the'surrender thereof ifftilly paid-
First to the payment of the costs`�and expenses of the Trustee and of Bond
Owners in.declaring,such Event,of-:Default,including reasonable compensation to their
agents, attorneys and counsel, and to the payment of the costs and expenses of the
Trustee; if any, in carrying out the provisions of this Article VIII, including reasonable
compensation to-its agents,attorneys and counsel;and
Second, to the payment of;the whole amountathen owing and unpaid upon the
Bonds for interest and principal; with interest;on such overdue amounts to the extent
permitted by law at the rate of interest then borne by the Outstanding 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
interest on overdue•amounts ratably in proportion to .the'aggregate of such interest,
principal and interest on overdue amounts:
SECTION 8.03. Other Remedies; Rights of Bond Owners: Upon the occurrence of an
Event of Default, the Trustee may pursue any available remedy, in addition to the remedy
specified in Section 8.01, at law or in equity to enforce the payment of the principal of,
premium, if any, and interest on the. Outstanding Bonds, and to enforce any rights of the
Trustee under or with respect tothis Indenture:
•
If an Event of Default.,shall have occurred and be continuing and if requested;so to do
by the Owners of at least twenty-five percent (25%)' in aggregate .principal amount of
Outstanding Bonds and indemnified as provided in Section 6.02 (1), the Trustee shall be
, obligated to exercise such'onepr more of the rights and'powers conferred by this Article VIII,as
the Trustee,'being advised by-counsel„shall deem most expedient in the interests of.the Bond
Owners.
No remedy by the terms of this Indenture conferred upon or:reserved to the Trustee,(or
to the Bond Owners)rasintended to be exclusive of any other remedy;but each and every such
remedy shall be cumulativerand.shallbe in addition to any other remedy-given to the Trustee
or to,the Bond Owners hereunder or now or hereafter existing at laws or inequity:
No delay or omission to exercise any right or power accruing upon any Event of Default
shall impair any such;right or power,or shall be•construedto be a waiver of any such Event of
Default or acquiescence therein,such right or power may be'exercised from time to time as
often as may be deemed'expedient.
Notwithstanding any other provisions of the Trust Indenture; the Municipal Bond
Insurer shall-have the right, so long as it is notan default under the Municipal Bond Insurance
-48-
Policy, to direct the, remedies to be taken upon any Event of 'Default hereunder and the ak
Municipal Bond Insureds consent shall;be.required for remedial action taken by the Trustee or
the Authority hereunder.
SECTION 8:04: Power of Trustee to Control Proceedings: In the.event that the Trustee;
upon the happening of an Event of Default, shall have taken any action,kby judicial proceedings
or otherwise,.pursuant to its duties hereunder, whether upon its own discretion or upon the
request of;the Owners of a-rnajority,in principal amount of the Bonds then Outstanding;.it Shall
have full power, in the exercise of its discretion for the best interests Of the Owners;of,the
Bonds, with respect to the continuance, discontinuance,withdrawal, compromise, settlement
other disposal of such action,.provided,..however, that the Trustee shall 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 tithe:there.has;.been
filed with it4a written request signed by the Owners of°a majority'in principal amount of the
Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise,
settlement mother disposal of such litigation. Any suit;.aetion or proceeding which any;Owner
of Bonds shall have the right to bring to enforce any right,or remedy hereunder may be brought
by the Trustee for the equal. and protection,of all Owners,of Bonds similarly situated
and the Trustee is hereby appointed (and the successive respective Owners of the Bonds:issued
hereunder, by taking and holding the,same, shall be conclusively deemed so to have appointed"
it) the true and lawful attorney-in-fact;of the respective Owners of the-Bonds for the,purpose of,
bringing any:such•suit,action:or'proceeding and to do and'perform any andrall acts and things
for and on behalf of the respective Owners of the Bonds as a class or classes, as may be
necessary oradvisablein the opinion of the'Trustee as such attorney-in-fact. •;
SEC-TION'8:05;; Appomthaent of Receivers Upon the occurrence of an Event of Default
hereunder,.and upon the filing of a suit or other commencement of judicial•proceedings to
enforce the:rights of,the Trustee and of the Bond Owners under this Indenture,the Trustee shall
be entitled- as a matter 'of right, to the appointment of a receiver or receivers of the Net
Revenues and other amounts pledged hereunder;,pending such proceedings, with such powers
as the court-making,such appointmentoshall confer.
SECTION 8:06. Non-Waiver. Nothing in this Article VIII or in any other'provision of
this Indenture, or in the Bonds, shall affect or impair the obligation of the City, which is
absolute and,unconditional, to pay the,thtereston and principal of the Bonds to,the respective
Owners of the Bonds at the respective dates of maturity, as herein provided', out of the
Revenues and other>moneys herein;pledged`for such payment.
A waiver of any default or breach of duty or contract by the Trustee or any Bond
Owners shalt:not affect•any subsequent default.Or breach of duty or contract, or impair any
rights or remedies on any.such,subsequent default or breach. No delay or omission of any
Owner of any of the Bonds to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver of any.such default or an
acquiescence therein; and every power and remedy conferred upon the Trustee or Bond
Owners by the Bond Law or by this Article VIII may be enforced and exercised from„time to -
time and as often as Shall be deemed expedient by the Trustee or the Bond Owners,?asthe case
may be.
•
-49-
if a suit,raction.or proceeding'to'enforce any right or exercise any'remedy:is abandoned
• or determinéWadversely to the Bond Owners, the City and the;Bond Owners shall be restored
to their former positions,,rights.and remedies as if such suit; action or proceeding had not been
brought'or taken.
SECTION 8:07. Rights;and Remedies of Bond Owners:. No Owner of any Bond issued
hereunder shall have the right;to institute any action:or proceeding at law or in equity, for
any remedy under or upon tl isdndenture, unless (a) such:Ownershall have 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 shall have made
written request upon the Trustee to exercise the powers hereinbefore granted or to institute
such.action,:suit or proceeding in its own name; (c),said Owners shall 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 shall have refused
or omitted,to comply,with such request for a period of sixty (60) days after such written request
shall have been received by,and:said<tender of indemnity shall have 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 Bonds of
any remedy hereunder; it being understood and-intended thatno one ormore Owners of Bonds
shall have any'right im any inanner'%hatever by his or their action to enforce any right under
this 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
manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner'of any Bond to receive payment of';the principal of and interest
and premium (if any) on such Bond as herein provided or-'to,institute suit for the enforcement
of any such payment, 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.
SECTION 8.08. Terminationof Proceedings. Incase the Trustee shall have proceeded to
enforce any right under.this Indenture by`the appointment of a,receiver or otherwise, and such
proceedings shall have been discontinued or abandoned.for any reason, or shall have been
determined adversely, then and in-every such case,'the City, the Trustee and the•Bond Owners
shall be restored their former positions and rights hereunder,respectively, with regard•to:the
property subject to this Indenture, ntakens; remedies and powers of the Trustee shall
continue as if no suc pro eedings had bee :
SECTION ift09. Municipal Bond Insurer as Third-Party Beneficiary. To the extent that
this Indenture confers upon or gives or grants to the Municipal Bond Insurer;any right, remedy
or claim under or by reason of this Indenture, the Municipal'Bond Insurer is hereby explicitly
recognized as being a third-party beneficiary hereunder and may enforce any such right
remedy or claim conferred, given.or granted hereunder.
• SECTION 810., Right's of Municipal Bond Insurer. Anything in this Indenture to the
contrary notwithstanding, upon.the occurrence and continuation of an Event of Default, the
Municipal Bond,Insurer shall be entitled to control and direct the enforcement of all rights and
remedies grantedhereunderto the Bond Owners, or to the Trustee for the benefit of the Bond
•
50
•
■
Owners, including but:not-liinited,to, rights and remedies granted pursuant to Section 8.01 and •
8.03 and, including but not limited to„the right,,M,approve all waiversof any Events of Default.
The rights granted;to the Municipal,Bond Insurer hereunder shall be deemed terminated and.
shall not be exercisable by the Municipal Bond Insurer during any period "during`which.
Municipal Bond Instirer shall be in default under the Municipal Bond:Insurance Policy.
SECTION 8:11. Effect on Municipal Bond:Insurance Policy. Notwithstanding any
provision of this Indenture, in determining whether the rights of the Bondholders will be
adversely,affected.by any action taken pursuant to the terntswand,provisions'=of`this,Indenture,
the'Trustee shall consider the effect on the Bondholders as if there were no Municipal Bond
Insurance.Policy.
•
•
•
• •
-51-
ARTICLE IX
• MISCELLANEOUS .
SECTION 9:01. ,Limited Liability of City. Notwithstanding anything-:in,this Indenture
contained/the City:shall:not be 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 any premiums upon the redemption thereof; or for the;performance of any covenants
herein contained (except to the extent any such covenants are expressly payable hereunder
from the Gross Revenues). The City 'may,, however, advance funds for any such purpose,
provided that such funds aresderived from a,source legally available for such purpose and may
be used by the City'for such purpose without incurring indebtedness.
SECTION 9.02. Parties Interested.Herein:
(a) Nothing in this. Trust 'Indenture expressed or 'implied is intended or shall be .
construed to confer or to give to, any person or entity,.other, than the'City, the'Trustee,
the Municipal Bond Insurer and the Owners any right, remedy:or claim under or by reason of
this Trust Indenture, or any covenant, condition or stipulation hereof, and all covenants,.
stipulations, promises and agreements in this Trust Indenture contained by and on behalf of the
•
City shall be:for the sole and' ezdirsive benefit of the City, the Trustee, the Municipal Bond
Insurer and the Owners.
(b) Notwithstanding any other provision of this: Trust Indenture, in determining
whether the rights of the)Owners will be adversely affected by,any action taken pursuantto the
terms and provisions of this Mist 'Indenture, the Trustee.'shall consider the effect on the
Owners as if there.was'no Municipal Bond'InsurancePolicy. '
SECTION 9.03: Discharge.of Indenture. If.the'City shall pay arid discharge•any or all of
theOutstanding Bonds in any one ovi die of the following,ways:
(a) by well and truly paying or:causing to be paid the principal of and interest
and.premium (if any) oni such,Bbads, as':ai d when the same become due,and payable;
(b) by depositing'with/the Trustee, in trust, at or before maturity; money which,•
together with the available amounts then on deposit in the `funds and accounts
established,pursuant to this Indenture, is fully sufficient•to pay such Bonds, including
all principal,.interest and redemption premiums; or
(c) by depositing with a qualified-escrow holder,in trust, Defeasance Obligations
in such amount as the City (verified by an Independent Certified Public Accountant)
shall determine will, together with the interest to accrue thereon and available moneys
then on depositnn.the Funds and Accounts established pursuant to this Indenture, be
• fully sufficient to pay arid. discharge the indebtedness on such Bonds (including all
principal, :interest and redemption premiums, if any) at or before their respective
maturity dates;
-52-
and if such Bonds are to be redeemed prior to the maturity thereof,notice of such redemption
shall have been mailed pursuant to Section 2.02(d) or provision satisfactory to the Trustee shall, ;•
have been made for the mailing, of such notice, then, at the election of the City, and
notwithstanding that any of such Bonds shall not have been surrendered for payment, the
pledge of the Net Revenues:'and other funds provided for in this Indenture with respect to such
Bonds, and all,other pecuniary obligations of the City'under this.Indenture:with respect to all
such Bonds, shall:cease:and terminate;,:except+.only the:obligation of the City to pay or cause-to
• , be paid to:the Owners of Such,Bonds not so surrendered and paid all.sums.due thereon from
amounts set aside for such purposeas aforesaid, and all expenses and costs of the Trustee.
Notice of such`election shall be filed.with the Trustee.
Any funds'thereafter held by the Trustee, which are not required for said purposes,
shalt be paid,over to the City.
•
Refunding bonds may be issued at any time without regard to whether an Event of
Default exists.
To accomplish defeasance the City shall cause to be delivered (i) a report Of an
Independent Certified,Public Accountant;:verifying the sufficiency of the escrow established to
pay the Bonds-in full.,on the:maturity or,earlier redemption date ("Verification'), (ii) an escrow
deposit agreement, and,tin), opinion.:of;nationally,recognized bond counsel' o the-effect that
the Bonds are no,longer "Outstanding" under this Indenture; each Verification and defeasance
opinion shall beacceptable in form and substance,,and addressed, to'the City and the,Trustee:
Notwithstanding anything'.herein to the contrary, in the event that the principal of
and/or interest,-on the Bonds,shall be paid by the Municipal ,Bond Insurer'pursuant to the
Municipal Bond Insurance Policy, the Bonds shalt remain Outstanding for all purposes;-not,be
defeased or otherwise satisfied and not be,considered paid by the City,_and theassignment and
pledge of the Tax'Revenues and all covenants, agreements and other obligations of theiCity to
the registered'owners shall continue:to exist and shall run to the benefit of the;Municipal:Bond
Insurer, and.the,Municipal,Bond Insurer shall be subrogated to the•rights of such registered.
owners.
•
SECTION 9.04. Content of Certificates. Every'certificate with respect to compliance
with a condition or covenant provided for in this Indenture shallinclude (a) a statement that
the person or persons making or giving such certificate.have read such covenant or condition
and the definitions herein relating thereto;(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such
certificate are based; (c) 'a statement'that; in the opinion of the signers, they have made or
caused to be made such examination or investigation as'is;necessary to enable'them to express
an informed,opinion as to whether or not such covenant or condition has been complied with; •
and (d).a'..statement as"to whether, in the opinion ofthe'signers, such condition or covenant has
been,complied with.
Any such certificate made or given by an officer of-the City may be based, insofar as it
relates to legal matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with respect to the-matters
upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of
reasonable care should have known that the same were erroneous. Any such certificate or
-53-
•
• opinion or representation made or givensbycounsel may be`based,insofaras it relates to factual
matters, on information, with respect to which is in the possession of. the City, upon the
certificate or opinion,of or representations by an officer or officers'of the,City, unless such
counsel knows that the certificate or opinion or representations' with respect to the matters
upon which his certificate; opinion or representation Maybe based, as aforesaid, are erroneous,
or in the'exercise of reasonable tare should have.known that the sane were erroneous.
SECTION 9.05. Execution of Documents by :Bond:Owners. Any request, consent or
• other instrument required by'this Indenture to be "signed and executed by Bond Owners may be
in any number of'concurrent writings of substantially similar tenor and may be signed or
executed by such Bond Owners"in,person or by agent or agents duly appointed in writing.
Proof of the execution of any such request, consent or other instrument or of a writing
appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be
conclusive in favor of the Trustee and 01 the City if made in the manner provided in this
Section 9:05.
The fact and date of the execution-by any person of any such request, consent or other
instrument or writing may be proved'by the affidavit of a witness:of such execution or by the
certificate of any notary public or other officer of any jurisdiction, authorized by the laws
thereof to 'take acknowledgments of deeds, certifying that the person signing such request,
consent or other instrumentor writing acknowledged to him;the execution thereof
Theownership of Bonds'shall be provided`by the Bond Registration Books.
Any request, consent or vote of the Owner of any Bon
t d: shall bind every future Owner
of the same Bond and the.Owner:of anyBond issued in exchange therefor or in Iieu thereof,in
respect of anything done or suffered'to be done by the Trustee or the City in pursuance of such
request,consent or vote.
In determining whether the Owners of the requisite aggregate principal amount 'of
Bonds have`concurred in iany demand, request, direction; consent or waiver under this
Indenture, Bonds which'are owned or held by or for the account of the City (but excluding
Bonds held in any employees' retirement fund) shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, provided, however, that for the
purpose of'determining whether the Trustee shall be protected in relying on anysuch:demand,
request, direction; consent or waiver, only Bonds which the Trustee knows to beso owned or
held shall be'disregardell
•
In lieu ofaobtaining°any demand,,request, direction, consent-or waiver in writing, the
Trustee may callsand hold a'meeting of the Bond.Owners upon such notice and in accordance
with.such-rules and obligations as'the Trustee'considers fair and'reasonable for the purpose of
obtaining any such action.
SECTION 9.06: Waiver of Personal Liability. Norofficer;eagent or employee of the City
shall be individually or personally liable;forthe payment;of the interest on or principal of the
•
Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the
performance of any official duty provided',by law.
54
SECTION 9.07 Partial.invalidity: If any one ormore:of the covenants,or agreements,.or"
portions thereof, provided,in this-Indenture on the part of the City (or of the-Trustee) to b_ e •
performed should be contrary to law, then such covenant or covenants, such agreement or
agreements, or:such portions thereof,"shall be null and.void and shall be deemed,separable
from the remaining,covenants and agreements or portions thereof and shall;in no,way`affect
the validity of this Indenture or of the Bonds;butthe Bond.Owners shall,retain all rights and
benefits accorded to them under the Bond Law or any other:applicable provisions of law; The
City hereby declares that it Would have,entered:into this Indenture and each and every other
section, paragraph, subdivision,;sentence,clause and phrase hereof and would haveiaiithorized
the issuance of the Bonds pursuant hereto irrespective:of'the fact that,any one or"more?sections,
paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the,application
thereof to any person or circumstance may be held to be unconstitutional, unenforceable or
invalid.
SECTION 9.08. Destruction of Cancelled Bonds: Wheneverin this,Indenturerprovision'
is made for the surrender to the City of any`Bonds which have been paid or cancelled pursuant
to the provisions of this Indenture, the Trustee shall destroy such Bonds and furnish to the.City
a certificate of such destruction.
SECTION 9.09. Funds and„Accounts. Any Fund or Account•required by:this-Indenture.
to be established and maintained by the City or the Trustee maybe established and-maintained.
in the,accounting records of the City or the Trustee, as the case may be, either:asa Fund
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 or as an Account All such records.
with respect;to`all such Funds and Accounts held by the,City shall at all;times bermaintained in
accordance with generally-accepted accounting principles and all such.records withs-respect to
all such Funds and Accounts held by the'Trustee shall be at all times maintained in accordance
with industry practices; in each case with due?-regard'for the protection of the security of the
Bonds and the rights of every Owner thereof.
SECTION 9.10:. Notices: Any notice;!request, complaint, demand, communication;or'
other paper shall be sufficiently given and shall be deemed given when delivered or mailed by
registered.or.certified mail, postage prepaid, or sent by telegram,addressed+as follows: if to the
City, to"City of Petaluma, City:Hall,11 English Street, Petaluma, California 94952, Attention:•
Finance Director; and if to the Trustee,.at CCC; , California"9_
Attention: Corporate:Trust Department. The City and the Trustee may designate any further or
different addresses:to which subsequent-notices,;certificates or other communicationsgshall be
sent.
SECTION 9.11.;Notices;to be,Given to the:Municipal Bond.Insurer. While the,Municipal
Bond Insurance Policy is'in, effect, the City shall furnish, or ,cause to be furnished, the
Municipal Bond Insurer:
(a) a.copy of any notice to be"given to the Owners and any certificate rendered
pursuant to.this'Trust Indenture-relating to the security for the Bonds,
(b) notice of of the Triustee;and
-55-
(c) such additional,;information the Municipal Bond Insurer may reasonably
Imprequest.
The Trustee'shall notify.the Municipal-Bond Insurer of any failure of the City to provide
notices and Certificates required to be provided by the City to the Trustee"hereunder. The
Trustee shall notify S&P of all consents given by the Municipal Bond Insurer hereunder.
The City will permit the Municipal Bond Insurer to discuss the affairs, finances and
accounts of the City or any information the Municipal Bond Insurer may reasonably request
regarding the security for the Bonds with appropriate officers of the City. The Trustee or the
City, as appropriate, will peri ut the Municipal Bond Insurer, to,have access to the Enterprise
and have access to and.to make copies of all books and records relating to the Bonds at any
reasonable time upon reasonable notice..
Notwithstandingany other provision of this Trust Indenture, the Trustee shall, as soon
as practicable, notify the Municipal Bond Insurer If a Responsible 'Officer of the Trustee has
actual of the occurrence^,of any Event of Default.
SECTION 9:12. Unclaimed Moneys: Anything in this Indenture to the contrary
notwithstanding, any moneys held by the Trustee in trust for the;payment and discharge of any
of the Bonds which remain`unclaimed for two (2) years after the date when such Bonds have
become due and payable, either at their'stated maturity,dates(or by call for earlier redemption,
• if such moneys were held by the Trustee at such date,, or. for two' (2) years after the date of
deposit of such moneys if deposited withthe Trustee after said date when such Bonds become
. due and payable, shall, at the Request of the City,be repaid by the Trustee to the City, as its
absolute property and free from trust, and the Trustee shall thereupon be released and
discharged with respect thereto and the Bond Owners shall,look only to the. City for the
payment of such Bonds; provided, however, that before being required to make any such
payment to the City, the.Trustee shall, at the expense and direction of the, City, cause to be
mailed to the.Owners of aThsuch Bonds, at their respective addresses appearing on the Bond
Registration Books, a notice that said moneys remain unclaimed and that, after a date named in
said notice, which-date-shall not,be less than thirty(30) days after the date of mailing of such
notice, the balance of such moneysthenaindaiined will`be.returned to the City.
•
-56-
IN WITNESS WHEREOF; the CITY OF PETALUMA.has caused this Indenture to be
signed in its name by its City Manager and itsseal`to be affixed hereon and attested byits'City
•
Clerk, and CCC, in token of its acceptance of the trust created hereunder, has caused this
Indenture';to be signedrin its corporate name by its officer identified below, all as of the-day and
year first above written.
CITY OF:PETALUMA
•
By •
CityManager
[S'E A.L]
•
Attest: •
By
City Clerk
CCC,
as Trustee •
By
AuthorizedOfficer
•
-57-
•
°: C C
. 9. PRELIMINARY'OFFICIAL STATEMENT DATED ,2001
e f'w (Draft as'of June 4,2001) G:\Petaluma.cit\w`ate!WatRef:po8db.wpd'
a c _
°o 2- NEW.MONEY/REFUNDING ISSUE-BOOK ENTRY ONLY . RATING:
o
Moody's:
• m
° (See"RATING"herein)
uy „ In.the opinion ofJones'Ilall,A-Professional Law Corporation,Bond.Counsel,subject,however to certain qualifications described herein,
0 2 under existing:law, the interest on'the Bonds is excluded from gross,income foe 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,although for the purpose ofcomputing the
36. o alternativeminimlm tax imposed on certain corporat ions,-siich interest is taken into account in determining certain income and earnings. In the further
E 2 0 opinion of Bond Counsel,such interest is exempt from California personal income Taxes.
E E .=
F S *
` a- .
CITY OF PETALUMA.
._ (SONOMA COUNTY,CALIFORNIA)
. a WATER-REVENUE-BONDS:
e u o SERIES 2001
S `c
.0 m o
r, H.�, Dated: , 2001 Due: November 1,as shown below
E e o The City of Petaluma,Water RevenuelBonds,Series 2001(the"2001 Bonds")will be issued by the City of Petaluma(the"City")to refund
r '° o certain 1990 Certificates of Participation and make improvements to.its Water System,.AS,more fully as described herein. The 2001 Bonds are
r Oe special obligations of the City payable solely from a.pledge of and lien upon the Net Revenues(as defined herein),received by.the City from the
, ,. , ownership and operation of its Water System"(as`des'cnbed herein).'See"SECURITY-FOR THE 2001 BONDS—Pledge of Net Revenues".
n -,
E c The,2001.Bonds are being issued to(i)refund and defease the 1990 City of Petaluma Zone•IV Water System Improvements Certificates
°- 0 of Participation,(ii) make improvements to the Petaluma municipal water,system,(iii) a reserve fund for the 2001 Bonds and(iv)finance the
E
.
i▪ _ costs of issuance of the 2001 Bonds.
`- E .
I' u ..1:0: Interest on the 2001 Bonds-is:"payable on November 1,:2001,and semiannually thereafter on-May 1 and November I of each year(the
r
F m 3 "Interest Payment Dates") The 2001 Bond_„,. be Issued as fully registered Bonds and wdl�initially be subject to the Book-Entry System (as
A .^ described-herein)of registration and transfer. Under the Book-Entry System,the 2001 Bonds,when delivered,will be registered in the name of Cede
E y. &Co.as nominee of The Depository Trust,Company,;New York,New York("DTC"). DTC will act as securities depository of the 2001 Bonds.
The beneficial ownership interests of individual purchasers of the 2001 Bonds will be recorded through the records of a DTC Participant(a securities
!,7 broker,bank,trust company,clearing corporation or certain other types of organization),in amounts equal to S5,000 or an integral multiple thereof.
„.q c Individual purchasers will not receive securities:bonds representing.their beneficial owriership';interests in the 2001 Bonds purchased.
C u m
°- N .__ The 2001-Bonds are subject to'optional and special mandatory redemption:as described-herein.
1 o ,
l-
0 -0 e ';
1 0 w e, Thefollowing firm,serving as financial advisor to the City,has structured this issue:
�, y
-L'^ -.5. KELLING,NORTHCROSS&NOBRIGA
y _
U ° .
m m .
• ° r MATURITY SCHEDULE
° s. Maturity Principal* Interest Price Maturity ':Principal* Interest Price
c m (November ii Amount Rate or Yield
{NOVembeiiL .,Amount Rate or Yield
a
0 `o , 2001 2017
S ' : -2002'-- 2018 .
_ n 2003 2019
c b 2004 2020 •
° 2005 2021.
... ) ° 2006 2022
LE
2007 (2023
E 0 2008 ';2024
2 2 `°. 2 2009, '2025
• f 2010 ' 2026
� "� o'r 2011 .2027'
A., 2012 '2028
• °,o e 2013 2029 .
E k z 2014 -2030
m?,'fa E n 2015 2031
� '- ' 2016 ei ,
es
m (plus accrued interest from August I,2001) •
E. °
C The-Bonds.are_offered when,as and ifexecuted and delivered:and accepted by the Underwriter,subject to the approval as to their
9
s rs legalitvbyJones'1 all,AProfessional LawCorporation,.SanFrancisco,California,.Bond.Counsel,and certain other conditions. It is anticiipated that
' 0 ce the Bonds in book-entry form b
will'be available for delivery through DTC in New.York,New York,on or about 2001.
, n, v
-c yo •
C w O
i -re ° 3
*Preliminary; subject-to change.
THIS COVER PAGE CONTAINS CERTAIN.INFORMATION FOR QUICK-REFERENCE ONLY IT IS NOT A SUMMARY OF
THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE -
MAKING OF AN INFORMED INVESTMENT DECISION.
Dated: 2001
•
•
•
a
*Preliminary; subject to change.
•
•
No dealer,broker,:salesperson!orotherpersonhas been authoiized'bythe:City to give any information or to
make any representations with respect to the 2001,Bonds other than those contained in this OfficialStatement
and, if given'-or made,,'such other information or representations must not be relied upon,as having been
•authorized by any of'the foregoing. .Thiss Official Statement does not constitute an offer to sell or the
solicitation of any offer to buy'nor shall there be any=sale of the 2001 Bonds by any person in any jurisdiction
in which it is unlawful for such person to make such'anoffer, solicitation or sale.
•
This Official 'Statement shall not,be construed as a contract with the purchasers of the 2001 Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, •
whether or not expressly so desedbed herein;;are intended solely'as such and are not to be construed as
representations of facts.
When used in this Official Statement and in any continuing disclosure by the•City, in any press release and
in any oral statement made.with the approval of an authorizedofficer•of the City,the words or phrases will
likely result,""are expected to,""will continue;'"is anticipated,""estimate, "project,"`.`forecast,""expect,"
"intend" and similar expressions identify "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of'1995. Such statements are subject to,risks and uncertainties that could•
cause actual results to differ Materially from-those contemplated in such forward-looking statements. Any
forecast is subject to such.uncertainties. Inevitably,some assumptions used to develop the forecasts will not
• be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be
differences between forecasts and actual results,and those differences may be material.The information and
expressions of opinion herein are subject to change without notice,;and,neither"the delivery of this Official
Statement•nor any sale made hereunder shall,under any circumstances,give rise to any iniplication that there
has been no change in the affairs of the City since the date hereof.
The information contained in':this'OfficialStatementhas'been furnished by the City and other sources which
are believed to be reliable.-Summaries and references to statutes and documents in this Official Statement
do not purport to be comprehensive or definitive and are qualified'in their entireties by reference to each such
statute or document.The information and-expressions of opinions herein are subject to change without'notice
and neither delivery of,this Official'Statement any sale:made liereundershall, under any circumstances,
create any implication that,there has beenno change'in the affairs of the City or any other parties described
herein since the date hereof.
IN CONNECTION WITH THIS OFFERING,THE:UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH'STABILIZE ORMAINTAIN THE MARKET PRICE OF THE 2001 BONDS
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY THE
UNDERWRITER MAY OFFER AND SELL THE 2001 BONDS TO CERTAIN DEALERS AND
DEALER BANKS AND.BANKS ACTING•AS,AGENT AND OTHERS AT'PRICES:LOWER THAN
THE PUBEIC'OFFERING:PRICES STATED ON THE COVER PAGE HEREOFAND:SAID PUBLIC
OFFERING PRICES.MAY,BE CHANGED FROM'TIME;TO TIME BY THE UNDERWRITER.
THE 2001 BONDS'HAVE NOT::BEEN'REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED;;IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE 2001
BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE.
• The execution and distribution of this Official`Statement has been authorized by the City.
CITY OF PETALUMA, CALIFORNIA •
CITY COUNCIL MEMBERS
•
E. Clark Thompson
Mayor
Janice Cadet-Thompson Bryan Moynihan
Vice,Mayor Council Member
Michael Healy Michael O'Brien
Council Member Council Member
MattMaguire Pamela Torliatt
Council Member Council Member
CITY OFFICIALS
Frederick C; Stouder Richard Rudnahsky
City Manager City Attorney
•
Gene P. Beatty William J. Thomas •
Assistant City Manager - • Finance Director
Beverly J. Kline, CMC Tom;Hargis
City Clerk Director of Water Resources
and Conservation
•
SPECIAL SERVICES
Bond Counsel
Jones Hall,A Prbfessional.Law:Corporation
San Francisco, California
Financial Advisor
Kelling Northcross and Nobnga
Oakland; California
Trustee
TO COME. ,
California
Verification Agent
TO COME
•
LOCATION MAP
'\ . \
y
Petallinla t —
•
tY •;,,• V9J 1
i Lr.l'd 1
ki GX v� 14111 -,4, ,VVI : f,
•1
u J !"plt 4'u�IIII I t
•
I � ,� .Ir�4�pl udr !of ` i- ^L t .
"u,. x u 7 �"'.�ul t ! pru 9
}r? 9 n ..—,� Irl w
,, 1! +'ryu' s „c � �r,l tom. k
a ` ''.''L.:11:''':144..3.'n^.;
'wedE V7� f l��L � 1�6 �'f yf
y3 ,10,!;t: f llw1 3 i r -.P '$r I r: i5 ! ■
13 vl ah l tJ'FwIII !r }
13 '�,� puq k I n��Lyl c,-).
r,�,n" 9YUt��lnl ,; � uW 'ars�l�Y���lll
AEI J ,- AI £ 1i.11^ .'
_II Sal 1 Franc95C ) , o0
nJ1 on„t y w' i¢ )GI M{, ul1 4 M I ,-'i'' - I
.s'as ill !r A�rfi� _ts £5!
yll n 131°wp t0 t-,. �}'ke��,.' .�yn�,w� '
. -g11 P!!I - ; r=0, $ E'3 '1u 'I f
PI ' >'ts Sir 1
aua Q ,� y
Iw itpi1: :ice S F� , III �� IIVI IIlg V w
Y �rvd .6Tf�l� tai#� —}
I14s:. 3 1[:.:3F "*' fx ^!may x t a;�yilll
•
r p s ''� 16}� —.
i , Y ua r '9i 111.
'"f F r x'r
� q Mb80
i7§ �VV 7C 26VMI
•
It' 1r! 1 � ,. 10 f
i xw k��'fl
t
,. L r lEr f..
i r •
�s '
Ida- 31 ! '` ''� 13 ° l''''III '
t
�- ! -i V.I �r ,„ f _
o �FI Y� 1 -..J z
ru n u.-r�m �;t3 rvu f - a in. J •a. s ",
•aS i fi a f � ek aa3a ;��- z "�� 3 F !`JTf' t :=',F:'.L-,
TABLE-OF CONTENTS •
Page
INTRODUCTION 1
Authority 1
Purpose 1
Security for-theBonds - 1
Descnptiom'of the Bonds 2'
Offering and Delivery,of the Bonds 3
Verification of*Mathematical Accuracy , 3
Professionals>Involved in the Offering 3
Continuing Disclosure _ 3
Other Information 3
THE 2001,BONDS . q
General .-.:. .:. . . . . . . . . . . . . . . . . . . 4
Transfer and Exchange 4
2001 Bonds Mutilated, Destroyed,.Stolen or Lost • 3 5
Optional Redemption 5
Purchase of Bonds•in Lieu of Redemption 5
Special Mandatory Redemption from Insurance or Condemnation Proceeds 6
Notice:of.Redemption 6
Book-Entry-Only System 7
• FINANCING •PLAN 7
Es`tiiiiated Sources and Uses of Funds 7 •
General ... ... . . . . . . . . . .
ds . . : . . � 7
THE REFUNDING PLAN g
Annual Debt Service - 9
SECURITY FOR.THE BONDS . . . ... . ._ ... ... . . . . . . . • . . . . ... • • • • •_ . . . . . . . . . . . . . . . . , 9
Pledge of Net Revenues 9
RateTCovenant . . , . 10
• RateStabilization•Fund -- 11
Parity and Subordinate Bonds , . - 11
Reserve•Account 14
Municipal Bond Insurance Policy 14
BOND'INSURANCE 15
Municipal Bond Insurance Policy . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . :- 15
THE CITY 15
General - 15
THE WATERtSYSTEIv 15 .
Water Supply 15
Distribution 17
Regulatory Issues . : : 17
Summary of Water System;Physical Plant . 18
Capital Improvement ProgramSummary 18
Historical/Projected Operations • 20 MI
Major Rate,Payers , ,- , 21
Rates and Billing 22
•
ConnectionFees . . . ; . . . , . . 24
Management 25
Significant Accounting-Policies 26
Balance Sheet . _ 27
Income'Statement 28
Debt Service Coverage - 29
RISK FACTORS RELATING TO,THE BONDS 29
Limited Obligations 29
System Expenses 4 30 .
Limited Recourse on Default 30
Limitations Oh Remedies 30
Regulatory42isk '. 30
Initiatives 31
Bankruptcy 31
Tax Exemption of the 2001 Bonds 31
Additional Obligat o s` 31
Seismic Considerations 32
Flood Considerations . 32
Right to Vote on Taxes Act 32
investment of City.Funds 34,
LEGAL MATTERS 34
Approval of Legal Proceedings 34.
Absence of Litigation 34
Tax Matters 34
RATINGS 36
VERIFICATION OF MATHEMATICAL,ACCURACY 36
CONTINUING DISCLOSURE 36
UNDER-WRITING 37
FINANCIAL ADVISOR 37
• MISCELLANEOUS - . . 37
•
APPENDIX A SUMMARY'OF:CERTAIN,PROVISIONSOF THE INDENTURE OF TRUST . -A;1
APPENDIX"B GENERAL AND'ECONOMIC INFORMATION ABOUT
THE CITY OF PETALUMA B-1
APPENDIX-C EXCERPTS FROM THE COMPREHENSIVE ANNUAL FINANCIAL
REPORT OF THE CITY FOR THE FISCAL YEAR
ENDED JUNE 30,2000 . : . . .
APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINION D-I
APPENDIX E FORM OF CONTINUING DISCLOSURE'CERTIFICATE E-1
APPENDIX F DTC AND,THE.BOOK-ENTRY ONLY SYSTEM F-1
APPENDIX G SPECIMEN'MUNICIPAL BOND INSURANCE POLICY G-1
•
OFFICIAL STATEMENT •
CITY OF PETALUMA,CALIFORNIA
(SONOMA COUNTY,,.CALIFORNIA)
WATER REVENUE BONDS;SERIES 2001'
INTRODUCTION
Thepurposeof this;Official Statement;,which include's'thecoverpage and appendices hereto; is to
set forth certain information=in connection with the,sale',by the City of Petaluma, California (the"City") of
m,.
its Water,Revenue Bonds Series.2001(the "2001'-Bonds'). Certain capitalized;terms;used in thisfficial'
Statement and`not other vise defined have the meanings set forth herein under"SECURITY FOR THE
2001 BONDS--Definitions"and"APPENDIX A-Summary of Certain Provisions of the Indenture
of Trust".
Authority
The 2001 Bonds are being issued pursuant to the Charter of the City and the provisions of •
Chapter 4.08'(commencing with Section 4.08.010) of the Petaluma-Municipal Code(the"Bond Law''),-and
pursuant to the.tenns and conditions of an Indentureof Trust,dated as of August 1, 2001(the "Indenture"),
by and between the City and , as trustee (the"Trustee").
Purpose
The'2001 Bonds are being issued to(i)refund and defease the 1990 City of Petaluma Zone'•IV Water-
Systemdmpovements'Certificates,of Participation (the"Prior Certificates"),"(ii)make improvements to the
Petaluma municipal water system,,(iii)fund a-reserver fund,for the 2001 Bonds rand(iv) finance the-costs of
issuance of the 2001 Bends. See`THE FINANCING PLAN"herein.
All references to and summaries of provisions of the Indenture are qualified in their entirety by
reference to the full Indenture, copies ofwliich•are available for inspection.at the offices oft!e City.
•
Security for the Bonds
•
Pledge of Net Revenues: The 200lBonds are•special obligations of the City, and are secured by
amounts held.from time to time in the Debt Service Fund (as defined herein) and, subject to certain
restrictions set;forth;in the'Indenture, a pledge of and Lien on certain Net Revenues(as defined,herein),
generated by the City's Water System.
Neitherthe generaLfnnd,the fullfaith,and credit,mor-the.taxing power of the'City;the State
of.California(the "State") or any other political subdivision thereof ispledged'.to the paymentaof
•
allkw
• the2001:Bonds. 'The.2001 Bonds are not secured a legal:or-equitable pledge of or charge,lien
or encumbrance upon any property of the City or any of its income or receipts'except the Net
Revenues.
Bate Covenant:The City covenants in the Indentur=e that it will fix, prescribe, revise and collect
Charges(as defined herein)for the Water System in each Fiscal-Year which,along with moneys transferred
from any rate stabilization fund for the Water System,should one,,be established,are sufficient to yield Net
Revenues of the Water Sytem at least equal to 125%-of,debt service.on the'2001 Bonds and any panty
bonds'arid'sufficient to yieldNet Revenues(excluding connection.fees and money transferred from any rate
stabilization fund should one be established) of the Water•System at least equal to 100% of debt service on -
the 2001 Bonds and any parity bonds. See "SECURITY FOR THE 2001 BONDS - Pledge of Net
Revenues and Rate Covenant" herein.
Issuance of Parity Bonds: The Indenture provides that theCity may issue additional Bonds on a
parity with the 2001 Bond, (herein, `'Parity Bonds,"°and`which, together with the 2001,Bonds, are referred
to herein as the "Bonds"). See "SECURITY FOR THE^2001 BONDS— Parity•and;Subordinate ,
Bonds"herein.
Reserve Account. To:further secure the payment of the principal of and interest on the 2001 Bonds,
the Indenture establishes the Reserve Account to beheld'by the Trustee:.'The Indenture defines the Reserve
Requirement to be equal to the lesser of-(i)Maximum Annual Debt Service, (ii).10 percent of the principal
amount of the 2001 Bonds or (60125-percent.of Average Annual Debt Service on the 2001 Bonds: See
• "APPENDIX A — Summary, ofiCertain Provisions.of th&Indenture of Trust"and "SECURITY
• FOR THE 2001 BONDS Reserve Account" herein:,
1114nicipal Bond Insurance: Concurrently with issuance of the 2001 Bonds, (the
"Insurer") will issue its Municipal Bond.Insurance;Policy (the "Policy");foi the 2001 Bonds. The Policy
unconditionally guarantees the payment of that portion of the phneipal.of and interest on the 2001 Bonds
which has become due for payment,but which is unpaid. See"SECURITY FOR THE 2001 BONDS—
, Municipal Bond Insurance Policy,"'"BOND INSURANCE" and "APPENDIX G — Specimen
Municipal Bond Insurance Policy 4
•
Description of the Bonds
Optional Redemption. The,2001 Bonds are subject to optional redemption prior to maturity,
beginning on November s 1,20_. See"THE 2001 BONDS—Redemption—Optional Redemption"
herein. .
SpecialMandatory Redemption. The 2001 Bonds are subject to redemption from the Net Proceeds
of hazard insurance or government taking by eminent dornairi'proceeding prior„to maturity. See"THE,2001
BONDS-'Special Mandatory Redemption from Insurance:or Condemnation-Proceeds” herein. •
Denominations.,'The 2.001' Bonds will be executed and delivered in denominations of$5,000 or any
integral multiple thereof.'
• 2
. Transfers and Exchanges. The 2001,Bonds will be executed and delivered infiilly registered form •
and may be transferred;or exchanged upon presentationand'surrender atthe principal corporate trust office
of the Trustee. See"THE 2001 BONDS—General and Transfer and Exchange"herein
Payments.of Principal and,Interest. Interest on the 2001 Bonds is payable rSendannually on each
May 1 and November 1, coinmencingNovember 1,2001 by check-of the Trustee mailed to the registered
Owners thereof At the option,of any Bond owner of at least 51,000,000 in aggregate principal amount,
interest will be transmitted by;wire transfer to an account designated by such Owner: Principal,of the 2001
Bonds is payable upon,surrender at the principal corporate trust office of the Trustee. See "THE'2001
BONDS=General"'herein.
Offering and Delivery,of the Bonds
The-2001.Bonds are offered when,as and if executed and delivered, subject to approval:by Bond
Counsel. Itis anticipated that<.the 2001 Bonds in book-entry form will be available for deliv e_ry in New York,
New York on or about- , 2001.
Verification of-Mathematical Accuracy
, independent certified public accountants;will deliver a report
verifying the matheniatical accuracy of certain computations relating to the yield and sufficiency of funds to
be held in escrow to refund the Prior Certificates. See "MISCELLANEOUS Verification •of
Mathematical Accuracy" herein.
Professionals'Iuvolved:in'theOffering;
•
Kelling, Northcross & Nobriga, Oakland, California, is acting as the City's financial advisor with
respect to the 2001 Bonds. The,proceedings of the.City in connection with the issuance of the 2001 Bonds
are subject the approval as to their legality ofJones Hall,A Professional Law Corporation,-San Francisco,
Califorma,Bond Counsel to the City. ,San Francisco,California,will act as Trustee
under the Indenture: The Financial Advisor, Bond Counsel and Trustee will receive compensation from the
City contingent;upon the sale, issuance and delivery of the 2001 Bonds.
Continuing Disclosure-
The City will,undertake pursuant to the Indenture and a Continuing Disclosure,Certificate,to provide
certain annual financial information and,notices of the occurrence of certain,events, if material. 'See
"GONTINUING'DI SCLOSURE" herein.
•
•
Other.Information
This Official Statement speaks,only as of its date, the information contained herein is subject to
change.
3 •
•
Copies of documents referred'to herein and information concerning the Bonds are available for
inspection at the offices'of the City;Finance Department, 11 English'Street,Petaluma,CA 94952. Telephone:
(707) 778-4352. The'City may impose a charge for copying,mailing.and handling.
THE 2001 BONDS
General
The 2001 Bonds will.be dated+August 1,2001and are to:beissued in the aggregate principal amount,
bear interest at the rates per annum and mature on the dates set forth on the'cover page hereof
The 2001 Bonds are deliverable,in fully registered form in the denomination of$5,000 each or any
integral multiple thereof, and when issued will be registered-in the name'of Cede & Co. as nominee of The
Depository Trust Company,New York New York("DTC). Benefcial'owners of the 2001 Bonds will not
receive physical bonds representingthe2001 Bonds purchased,but will receive a credit balance on the books
of the nominees mf such beneficial owners. So long,as Cede.& Co. isithe registered holder of the.2001
Bonds,principal of and'premium;;if;'any, and interest evidenced and represented:by the 2001 Bonds,will be
paid the Trustee directly, to DTC,which will in turn remit such principal'premium, if any, and-interests to its
participants for subsequent disbursement tonthe beneficial owners of the 2001 Bonds as.described herein._
See "THE 2001 BONDS -'Book-Entry-Only System." Principal of and premium, if any,,on the.2001
Bonds will be payable at maturity or prepayment upon surrender thereof at the principal corporate trust office
of the Trustee. -
Interest on the 2001 Bondsiis payable on each Interest Payment Date to the person whose name
. appears on the Bond Registration Books as of the Record Date immediately preceding the applicable Interest
Payment:Date, such interest to be paid=by check or,draft of the Trustee'.mailed by first class mail to-the
Owner or at the option of any Owner of at least$1,000,000 aggregate principal amount of the 2001 Bonds
with respect to which written instructions have,have been filed with'the Trustee prior to the Record Date,;by wire
transfer,at the address of the owner as itappears on the Bond Registration Books. Principal of and premium_
(if any)on any 2001Bond will he,paid upon presentation and surrender;thereof at the corporate t ust=office
of the Trustee. Both the pnncipal`;of and interest and premium(if any)on the 2001 Bonds will be payable in
lawful money of the United States of America
So long as Cede & Co:, is the registered holder of the Bonds,references herein to the holders
or owners or registered holders or owners of the 2001-Bonds shall mean Cede&'Co.iand;shall not mean the
beneficial owners of the,2001'Bends.
•
Transfer and.Exchange •
•
•
Any.2001Bond'may, in accordance with its terms,be transferred upon the Bond Registration Books
by the person in whose,name it is registered, in person or by his duly authorized attorney,upon surrender of
such 2001Bond for cancellation,yaccompanied by delivery of a written instrument of transfer in a form
approved by the Trustee,duly executed. Whenever any 2001Bond shall be so surrendered for transfer, the
City shall execute,and-the Trustee shall,thereupon authenticate and deliver to the transferee a new 2001Bond
4
or 2001 Bonds of like ,tenor, maturity, and aggregate principal amount. No 2001,. Bonds, the notice of
•
redemption of which has been mailed pursuant to the redemption provisions of the Indenture,-shall be subject
to transfer.
2001 Bonds may be:exchangedatthe Trust Office of the Trustee,for 2.001 Bonds of the same tenor
and maturity and of Other authorized denominations:
2001 Bonds Mutilated,Destroyed, Stolen or Lost
If any 2001 Bond shall become mutilated,the City, at the expense of the Owner of said 2001 Bond,,
shall execute,and the Trustee shall thereupontauthenticate and deliver;a new=2001 Bond of like maturity and
principal,amount in exchange and substitution for the 2001 Bonds so mutilated,but only upon!surrender to the
Trustee of the 2001 Bond so mutilated. Every mutilated J
Every 2001 Bonds so surrendered to the Trustee shall be
canceled by,it,and delivered to,or upon the order of,the City. If any 2001 Bondissued shall be lost,destroyed
or stolen,evidence of such doss,,destruction or theft may be;submitted to the.Cityand the Trustee and if such
evidence be satisfactory,to-them,indemnity satisfactory to them shall be given,the City,atthe expense of the
Owner, shall execute,,;and the Trustee shall thereupon authenticate and deliver,,,a new 2001Bond`of like
maturity and principal amount urlieu of and in;substitution for the;2001Bond so,lost, destroyed or stolen,(or
if any such,2001Bond'ushall:have matured'o 'shall,have.,been called for redemption, instead.of:issuing a
substitute 2001Bond•the Trustee may pay the same without surrender thereof upon,receipt of indemnity
satisfactory to the Trustee). The.City may require'payment of a reasonable fee for each new 2001Bond
issued and'of the expenses which may be incurred bythe;City and the,Trustee. Any 200lBond issued in>lieu
the part, 0lBo d alleged be lost,st, the 2001 or stolen shall constitute an original contractual obligation on.
of any 2001Bond alleged to be lost,destroyed
Bond alleged:to be lost, destroyed or stolen be attany time •;
enforceable by anyone,and shall be equally:and proportionately entitled to the'benefits of the Indenture;with
all other 2001 Bonds:secured by the Indenture.
Optional Redemption
The 2001 Bonds maturing on or before November 1, are not subject to optionalredemption
prior'to maturity. The 2001-Bonds'maturing;on or after November 1, are to:redemption,pnor
to their respective maturity dates,at the option' the Ci_ty,,as a whole,or in parfin such order of maturry as
shall be designated by the City and in the'absence of such direction, pro'rata among maturities and
within a maturity, from any source ofavailable funds, On any date on or afterrNovember 1, , at the
followingRedemption:Pnces (expressed as:pereentages<of the principal amount of the 2001 Bondato be
redeemed), plus accrued interest thereon to the date dfredemption::
Redemption Dafe Redemption.Price
November I;, through October:31,
November 1,. and thereafter
• 5
•
Purchase of-Bonds in Lieu of Redemption '
In lieu ofoptional redemption,.ail-founts:in the Redemption Account ofthe,Debt Service Fund may-
be used:for the purchase of Bonds at;public or private sale as and when and at such prices(including
brokerage and other charges;but excluding accrued interest,which is payable from the DebtService Fund)
r
as the City May determine, butt not to exceed.the principal amount ouch Bonds plus theeredemption
premium applicable on the next ensiting optional redemption date. '
Special Mandatory Redemption from Insurance or Condemnation Proceeds
The 2001 Bonds are subject-to redemption asa whole on any dates or in part-on any date in such
order of matinity as:shall be designated ay'the City,and in the absence of,such designation pro rata among
maturities and by lot within a maturity,;to+the extent of the Net Proceeds of hazard insurance:not used to
repair or rebuild the Water System or the;Net Proceeds of condemnation;awards received with respect to
the Water System to be used for such purpose; at a Redemption Price equal to the principal amount of the
2001 Bonds plus interest accrued thereon to the date fixed for redemption, without premium.
Notice of Redemption
Unless waived by any-Owner of 2001 Bonds to be redeemed, notice of any redemption of
2001 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 30 days and not more than 60 days;prior to the date fixed for redemption to the
Owner of the 2001Bond or 2001 Bonds to be redeemed at the addressshown.on the Bond Registration
Books;.provided,that neither the failure to receive such notice nor any immaterial defect in any notice will
affect the sufficiency of the proceedings for the redemption of the 2001 Bonds.
All notices of redemption must be dated and state the following:
(i) the redemption date,
(ii) the Redemption-nice,
(iii) if fewer than all Outstanding 2001 Bonds are to be redeemed,the identification(and, in the
case of partial redemption -therespective principal amounts)of the 2001 Bonds to,be redeemed,
(iv); that on the redemption date the Redemption Price.will become,due and payable with respect
to each such=2001Bondor 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 2001 Bonds'are to be surrendered for payment Of the
RedemptionPrice, which places of payment may include'the corporate trust office of the Trustee:
•
At least ones(I),day prior to any redemption date, the City must deposit with the Trustee,an amount
of money sufficient tniay the Redemption Price of all the 2001 Bonds or portions of'2001.Bonds which are.
to be redeemed pursuaritto an Optional Redemption;a Purchase of Bonds in Lieu of Redemption,or a Special
Mandatory Redemption from Insurance of Condemnation Proceeds on that date.
• 6
So long as the 2001 Bonds are held only in the book-entry system of DTC,notice.of redemption will .•
be sent to Cede.&,Co.,as nominee for DTC,and will not be sent tto the beneficial owners of the 2001 Bonds.
•
Book-Entry:-Only System •
•
While the 2001 Bonds are subject to the book-entry,system,,the principal,interest and any redemption,
premium with respect to:a 200 Mond will be paid by the Trustee to The Depository' Trust Company; New
York, New York ("DTC'), which in turn is obligated to remit such payment to its DTC Participants-for
subsequent disbursement to•Beneficial Owners of the-2001 Bonds;as described_in"APPENDIX F—DTC
and the'Book;Entry,Only System"-herein.
•
•
• FINANCING PLAN
General
The 2001 Bonds are being issued for the purpose of(1)refunding and defeasing the Prim'
O making"iinprovemehts tothe Petaluma municipal water-system,(iii)funding the'Reserve Account and(iv)
paying certain costs of issuing the 2001 Bonds.
•
•
7
•
•
Estimated'Sburces and Uses of Funds
The:following;table sets forth the estimated sources and uses of funds for the 2001 Bonds(exclusive
of accrued interest):.
•
PETALUMA WATER-REVENUEBONDS,
Estimated Sources and Uses of Funds
Souices•of Funds
Principal Amount of 2001. $ *
Prior Bonds(b) •
Less Original Issue Discount ,
Less Underwriter's Discount
Total Sources
Uses of Funds
Escrow Fund
Project Fund
[Debt Service Fund]
Reserve Account
Cost of Issuance Account t''
Total Uses
ni Represents amounts to pay fees of rating agencies,Trustee,,bond counsel,:financial advisor,printing,municipal bond insurance
and[surety premium]and other miscellaneous costs of issuing Abe 2001 Bonds.
(b) Prior Bonds include money held by the Trustee for the Prior Bonds
THE REFUNDING PLAN
A portion of proceeds.of the-Bonds will be deposited with
as escrow bank(the "Escrow Bank"). Such portion of the proceeds,:together with other moneys on deposit
in the funds and accounts established for<the Prior Certificates,will be used to provide for the payment of the
Prior Certificates through November;1,2001,and to redeem the outstanding Prior Certificates maturing after
November 1, 2001 in full on November 1, 2001 attthe redeinptionprice of 100% of the principal amount
thereof plus accrued interest.
Upon,delivery;of the 2001 Bonds,the City will make arrangements to take all actions required by the
defeasance'provisions'of the Trust-Agreement for the Prior Certificates to the end that the Prior Certificates
will no longer,be deemed to be outstanding thereunder and all obligation of the City for the Certificates will
be defea"sed. ,an independent firm of certified public accountants;will verify the
arithnietical accuracy ofcertaincornputations relating to the:sufficiency of amounts to be,deposited with the
Escrow Bank and subsequent:earnings thereon to be used to meet the Prior Certificates' defeasance
requirements: See"VERIFICATION OF MATHEMATICAL ACCURACY-" herein.
•
8
•
Annual Debt Service
Set forth below'isthe annual debt service on the 2001 Bonds,based on the interest rates and maturity
schedule set forth on the cover of this Official Statement(assuming no optional redemption).
PETALUMA4ATERREVENUE2001 BONDS
Annual Debt Service
BondhYear:Ending Bond Yea?
,November 1 Principal Interest Total.
2001
2002
2003 •
2004
2005
2006
2007
2008
2009
,2010
2011
2012
2013
.2014
2015
2016
2017;
2018 .
2019
2020,
2021.
2022
20231`
2024.
2025
2026
2027
208
2029
2030'
2031
Total
•
•
•9
SECURITY FOR THE BONDS
•
Pledge'of Net Revenues
General. The 2001 Bondsare special obligations of the City and,.pursuant to the Indenture,there
is pledged for the benefit of the owners,of the 2001 Bonds that portion of,certain Net Revenues which is
necessary to pay the principal(and,redemption premium,if any) of and interest on the 2001 Bonds in any
Fiscal Year, together with all moneys on deposit in the Debt Service Fund and the,Reserve Account.
"Net Revenues"are`defined in the Indenture to mean,for anyperiod of computation,the amount of
the Gross Revenues received from the Water System during such period'lessthe'amount of Maintenance and
Operation Costs of the'Water.System becoming payable during such period.
"Gross Revenues"are definedas, for any period of computation,all gross`charges received for,and
all other gross income and revenues derived by the City from,the ownership or operation of the Water
System or otherwise arising from the Water System during suchperiod, including but not limited to (a) all.
Charges, as'defined herein;received by the City for use of the Water,System,;(b) all receipts-derived from
the investment,of funds held by the City or the'Trustee:under the Indenture,(c)transfers from(but exclusive
of transfers to) any stabilization reserve accounts and(d)allrmoneys received;by the City from other public
entities whose inhabitants are served pursuant to contracts with the City
"Maintenance:and Operation'Costs" are defined in the Indenture as the;reasonable and necessary
•
costs spent or incurred by.the City for maintaining and operating the Water System'calculated in accordance
with sound accounting principles Maintenance and Operation Costs include the cost of purchasing,treating,
and distributing'of water;and all reasonable and'hecessary expenses of management and repair and other
expenses to maintain and preserve the Water System in good!repair and.working'order. Maintenance and
Operation Costs further include all reasonable and necessary administrative costs of the City attributable to
the Water System and the;2001:Bonds, such as salaries and wages and'the necessary contribution to
retirement of employees,overhead,'insurance,taxes(if any),expenses,compensation and indemnification of
the Trustee,and fees of auditors,accountants;attorneys or engineers,and all other reasonable and necessary
costs,of the City or charges required to be paid by it yto comply with the terms of the 2001:Bonds.
Maintenance and Operation'Costsldo not include depreciation, replacement and obsolescence charges or
reserves therefor and amortization of--intangibles or other=bookkeeping;entries of a similar nature.
"Charges" is defined in the Indenture as fees, (including connection fees)tolls, assessments,rates
and rentals prescribed under the Bond Law or any other law of the City or the State levied by the.Council
for the Water-System-furnished by'the City.
The general fund of the City is not'liable and the credit or taxing power of-the:City is not
pledged for the payment ofthe principal or,,redemption,price of and interest on.the;2001 Bonds.
The owner of the 2001 Bondsicannot compel the exercise of the taxing;power by-the,City or the
forfeitureeof its property. Theprincipal or"redemption price'of' and interest on'the=2001 Bonds are
not a debt of,the City,nor adegal:or:equitable pledge,charge,lien or encumbrance, upon any of its
property,,or upon any of its income, receipts, or revenues except the Net Revenues.
Flbw.ofF,unds. TheCity covenants and,agrees:in the Indenture that all Gross Revenues will be
received and held by the-City in trust,and will be deposited by the City in the Water Utility Fund which has
been'created and now'ezists in the city treasury.
10
•
•
All Gross Revenues will be transferred, disbursed, allocated and applied solely to the uses and
purposes set forth„and;shall be accounted"for!separately and apart from all other money,:funds,accounts or
other resources of the City.
Rate Covenant
The,City has covenanted in the Indenture to fix,prescribe,revise and collect Charges for the Water
System during each Fiscal Year which the 2001 Bonds are outstanding,(together with other ftihds transferred
froin a rate stabilizationf ind or account if established for the,Water System)and which are lawfully-available
to the City for,payment of any of the followinglamountsduring such Fiscal Year which areatleast sufficient,
after making=allowancesfor contingencies and error in the•estimates; to pay the following amounts in the
following order:
(a) all Maintenance and.Operation.Costs with-respect to the Water System,„as applicable,
estimated by the City to become due and payable in such Fiscal Year,,
(b) the principal of andinterest on the Outstanding Bonds payable'from the Net Revenues'of the
Water System,as applicable,,becomingdue and payable during;such Fiscal Year including
the redemptionipnceof Term;Bonds>subject to redemption dunng such Fiscal Year;
(c) all other payments required for compliance with the Indenture•and the instruments pursuant
to,which any:Parity Bonds with respect to the Water System,as applicable(as defined below
in"Parity and Subordinate Bonds") shall have been issued; and
(d) • all payments required to:meet.any other.obligations.of.the City which are charges, liens,, •
encumbrances upon or payable from the Gross Revenues or the Net Revenues of the Water
System .asapplicable.
•
`In addition,the City:has covenanted in the,Indenture:to fix,prescribe,revise and collect Charges for
the Water System during each Fiscal Year which, together with`transfers, if any,from a rate stabilization
fund or account if established are:
(a) sufficient;to;yield:Net;Revenu'es of the.Water System at least equal:to 125 Percent of the
principal of and interest on the Outstanding-Bonds-payable-from the-Net Revenues df the
Water System,becoming;due and payable during such Fiscal Year,including,the redemption
price of Tenn Bonds subject to redemption during,,such Fiscal Year; and,
(b) sufficient to yield Net Revenues of the Water System, after deducting Water Connection
Fees and transfers from any stabilization;fun8 (should one be established) from Net
Revenues, at least equal to 100 percent of the principal of and interest on the Outstanding
Bonds payable from the Net Revenues of the Water System,becoming due and payable
during such Fiscal Year including the redemption price of Term Bonds subject to redemption
during such Fiscal Year .
•
.�
•` Rate,Stabiliiation Fund
The Indenture provides for transfers from a rate stabilization fund or account, should one be
established, to be treated as Gro ss•Revenues under the terms of the Indenture. At:present no such fund or
account has been established-
Parity and Subordinate Bonds
In addition to.the 2001 Bonds, the City may issue or incur other loans,advances or indebtedness
payable from Net Revenues to be derived from the Water System to provide financing,for such Systems, in
a principal amount as shall be determined by the City:.
Parity Bonds. The'Cityimay issue;or incur any Parity Bonds (defined in the Indenture as bonds,
notes or other obligations(Including:withou(limitation long-term contr`acts,,loans, sub-leases or other legal
financing arrangements)!of the City.payable from and secured by:a:pledge of and lien upon any of the Net
Revenues of the Water'System,as applicable)subject to the following specific conditions precedent, among
others:
(a) The City shall be in compliance with all covenants set forth`in the Indenture.
(b) The Net Revenues:of the Water System, calculated.on souridaccounting,principles, as
shown by the books of the City for the latest Fiscal Year or any more recent 12 month period
selected by the City ending not more than 60 days prior to the adoption of the Parity,Bonds
• Instrument pursuanfto which such Parity Bonds are issued, as shown by the books of the
City,plus„at-the,option of the City, any or all of the items'listed in clauses(i)and(ii)below
shall,at least equal 125 percent of Maximum Annual'Debt Service, with Maximum Annual
Debt Service calculated on all Bonds to be Outstanding immediately subsequent to the
issuance ofsuch Parity Bonds which have a lien on Net Revenues of the Water
The items any or all•of which may be added to such Net Revenues for the purpose of issuing
or incurring;Parity Bonds are the,following:
(0 An allowance, for Net Revenues from any additions to or improvements or
extensions of the Water System to be made with the proceeds of such Panty Bonds,
and also for Net,Revenues from,any such additions, improvements or,extensions
which have been made from moneys from any source but in any case:which,during=
all or any part of such Fiscal Year or such 12 month;period,were not in service,all
in an amount equal,to/90,percent of the estimated additional average annual Net
Revenues to be derived from such additions, improvements and:extensions for the
first. 36 month period in which each addition, improvement or extension is
respectively to be in operation, all as shownin.the written report of an Independent
Consultant engaged by.the City; and
(a) An allowance for earnings arising from any increase in the Charges which has
become effective prior to the incurring of such additional indebtedness but which,
during all or any part of such-Fiscal Year or such 12 month period,was not in effect;
in an amount equal to the amount by which the Net,Revenues would have been
increased if such increase in Charges had been in effect during the whole of such
• 12
Fiscal Year or such 12 month,period, all as shown;in the written report of;an •
Independent Consultant engagedby die City; and
(c) The resolution, trust indenture or installment'sale.agreement!providing for'the-issuance of
Parity Bonds must provide that:
(i) The proceeds of the Parity.Bonds will be applied to the acquisition; construction,
improvement, financing or refinancing of additional facilities, improvements or
extensions of existing facilities within the Water System,or otherwise for facilities,
improvements of-property-which the Citydetermines-are of benefit the Water
System, or for the purpose of refunding any, Bonds in whole or,m part,including all
costs (including costs of issuing{the Panty Bonds and including capitalized interest
on the Panty Bonds during any period which the City"deems necessary or advisable)
relating thereto;
Cu) Interest on the Parity Bonds.will be payable on an InterestiPaymentDate;
(iii) The`pr ncipal of the Panty Bonds will be payable on May 1 in,any year in,which
principal is payable;and
(iv). Money or a Qualified Surety Bond(see Reserve Account"below)`will be'deposited
in reserve account`for such Parity Bonds from the proceeds of the sale of"such
Parity Bonds orotnerwise'equal to the Reserve Requirement:
State Loans. Provided the City is in compliance with all covenants set forth in the Indenture,the City •
may borrow money from the State to finance iinprovetnents to.the Water System=without complying with the
provisions set forth in(c)(ii),(iii),and(iv)'above and the obligation of the City to make payments to the State
under die loan-agreementmemorializing said'loan ("State Loan")(except as expressly permitted under the
Indenture)may be treated as Panty Bonds,provided that the City shall not make a payinenton the State Loan
to the extent it would have;the effect of causing the City to fail to make timely payments on the Bonds; In
the event the City's-Water Utility Fund does not contain sufficient;funds to make the full amount of payments
onthe Bonds and such State Loan,the City shall make payments on the Bonds and the State'Loan on a pro
rata basis:
Subordinate Bonds: The Indenture authorizes.the City to issue Bonds secured by Net Revenues
of the Water System on a basis subordinate to the pledge of Ne •Revenues to the 2001 Bonds provided that:
(a) The City shall'be'in compliance with:all covenants'set;forth'in thelndenture.
(b) Net-Revenues; as calculated in (b) above, shall,at least equal 100.percentiof.Maximum
• Annual Debt,:Service with Maximum Annual Debt Service calculated on all'Bonds to be
outstanding immediately subsequent to the issuance of such Subordinate Bonds which have
a lien on Net Revenues of,the Water System- The items,any'or all of which maybe added
to;such Net Revenues for-the purpose of issuing or incurring Subordinate Bonds are the
following:
CO An allowance for Net Revenues, any additions to or improvements or
extensions of the Water Systeinto-be,madewith the proceeds of such Parity Bonds, '
and also for Net'Revenues fromany such additions; improvements or extensions
13 •.
•
•' 'which have been fnade from moneys from any source.butInany case which, during
all or any part of such Fiscal YediE or+,such 12'month period,were not in service,all
inuan amount equal to 90 percentsof•the estimated additional,average annual Net
Revenues to be derived from such additions,-improvements and extensions for the
first 36 month period in which each addition improvement or extension is
respectively to be:in operation,all as shown in'the written report of an Independent
Consultant engaged by the City; and
(ii) An allowance for earnings arising from any increase in the Charges which has
become effective prior to the,incurringofsuch additional indebtedness but which,
during all or anypart of such Fiscal Year or such 12 month period,was not in effect,
in an amount equal to the amount by which the Net'Revenues would have been
increased if such increase in Charges hadbeen in effect during the whole of such
Fiscal Year or such'12 month-period;-all as shown in the written report of an
Independent Consultant'engaged by the City;and
(c) Interest on theiSubordinate'Bonds will be payable on an Interest Payment Date.
•
(d) Principal on the Subordinate Bonds will be payable on May 1, in any year in which principal
is payable.
(e) The proceeds',of the Subordinate Bonds will be+applied to the acquisition, construction„
improvement,financing or refinancing of additional-facilities,improvements or,extensions,of
existing facilities within the Water System, or otherwise for facilities, improvements or
•; property-which the City determines are of benefit Mille Water System, or for the purpose
of refunding any Bonds in whole or in part;including all costs;(including costs of issuing the
Parity Bonds and including capitalized interest on the Parity:Bonds during any period'which
the City deems necessary or advisable)'relating thereto.
Reserve Account
General: The Indenture provides for establishment of a Reserve Account. The Reserve
Requirement may be satisfied'either with a cash deposit into,theReserve Fund or by delivery to the Trustee
of a Qualified Surety Bond(as defined below):
Qualified Surety.Bond. "Qualified Surety"Bond is defined Reserve Account Surety Bond
and any other i revocable standby or direct-payiletter,of creditor Surety bond issued by a commercial bank
or insurance company and deposited with the Trustee pursuant to the Indenture;;provided that all of the.
following requirements are-met at the time of acceptance thereof by the Trustee: (a) the long-term credit
rating of such,bank`or insurance company is"A"or better from each rating agency• then maintains a
rating on the Bonds; (b)isuch,lettefof credit or surety bond has a;term of.at least.twelvei(12) months,
(c) such letter of creditor surety'bond has a stated amount,at least equal'to the portion,of the Reserve
Requirement with-respect-to which funds are proposed to be released pursuant-to the Indenture,.and(d)the,
Trustee is authorized-pursuant to the-terms of such letter.of credit or surety.bond to draw thereunder an
amount equal to.any'deficiencies which may exist from time to time'in the Debt Service Fund for the purpose
of malcing payments required• ursuant to the Indenture.
• 14
■
Use ofthe Reserve Account. If at any trmethere are insufficient amounts.in the Debt Service Fund •
to pay principal and redemption.price of or interest on the 2001 Bonds,,the Trustee.will withdraw from the
Reserve Account the amount of Accannt thei amount of the deficiency: Any amounts-m.the Reserve Account=in excess of the
Reserve Requirement (whether derived from interest or gain on investments or otherwise) will,
on of each year;be paidby'the Trustee tathe City for deposit in the`Water,Utility Fund.
Municipal Bond;Insurance Policy
Concurrently with issuance of the 2001 Bonds,. (the-Insurer")will issue
its Municipal'Bond Insurance Policy for the 2001_Bonds(the"policy"). The Policy unconditionallyguarantees
the:payment of that portion of the principal of and interest on the;2001 Bonds which has become due for
payment, butt which is;unpaid. There follows'under the capt ion "Bond Insurance",certain information
concerningthe Insurer;and the terms of the Policy,relating to the 2001 Bonds which has been supplied by the
Insurer.No representation is made by the,Underwriter or the City as to the accuracy or completeness of such
information, or the absence of material adverse,changes therein at any time subsequent tathe date,hereof.
BOND INSURANCE
The following information has -been furnished by (the
"Insurer for use in:this Official Statement Reference.is made to Appendix for a specimen of the fb
Insurer'spolicv.
Municipal Bond:Insurance Policy
TO COME
THE.CITY
•
General •
The City is located in Sonoma^County,approximately,40 miles north of the City of San Francisco.
The City has.a current population of approximately 53,000: It is part of the San Francisco Bay metropolitan
area and'the entranceto:California's renowned'wine grape growing region .'
The City was incorporated in 18'58;- Its first Charter was granted by the State of California in 1947,
and Petaluma continues to operate as a charter city`Municipal are conducted under the Council-
Manager forth of government: The seven Council Members are elected atlarge for'four-year, staggered.
terms. The Mayor and Council members are elected at large. The Council elects one of its members to be
15 •.
•
•` Vice Mayor. The Mayorpresides..over all Council meetings:. The•City Manager-us responsible for the
operation of all municipal`fupctions:
For general,economic and demographic informationregarding;the City,'see"APPENDIXB—City
General Information.and'Ecoiio nits'-':
THE WATER SYSTEM
The 'City's Water System serves the City of Petaluma and approximately 1,000 connections in the
unincorporated area west of the cityrApproximately 91%dof the"City's1water is purchased from the Sonoma
County Water Authontyunder a long-term contract:The balance of water is'derived from wells operated by
the City.
Water Supply
Sonoma County Water-Agency. The City's derives most of its water through purchases from
the Sonoma County Water Agency (SCWA), a countywide special disirictFcreated by the,State in 1949.
SCWA is responsible;for;domestic water supply'delivey to eight,prime contractors:the Cities of Santa Rosa,
Petaluma, Sonoma, Rohnert Park, and Cotati; Valley of'the Moon, Forestville, and North Mann Water
Districts; and approximately 75 additional customers including Marin,Municipal Water District and the Town
of Windsor. The Board of Director's for SCWA are the members of the Sonoma.County Board of
Supervisors.
SCWA has two principal water.supply functions: deliver.and flow regulation. SCWA constructs and
operates a water transmission'system that°delivers water to public and'investor-owned water distribution
systems, pursuant to an Agreement flif Water Supply to which Petaluma is a party. SCWA also SCWA
regulates the flow of the Russian River for the benefit of agricultural,,municipal and in-stream beneficial uses.
This function is carried out pursuant to Decision,1610 of the State Water Resources Control Board(S WRCB)
adopted April 17, 1986. Decision 1610'amended the appropnative water rights permits then held by the
Agency and established the cnteriaifor the:coordinated operation of two federal flood control projects. The
two federal projects are the Coyote Valley:`Dam Project on the EastiFork Russian River,'which forms Lake
Mendocino,and the Warm.Springs>•Dam Project on Dry Creek, wliich>fonns'Lake Sonoma. The Agency
controls the water supply storage space of these U.S.Army Corps of Engineer's projects under,contracts,with
the United States;Government-:
The principal source of water for SCWA's water transmission system is the natural flow.of Dry Creek
and-the Russian River in the'Russian River water shed; augmented by diversions fro/dale Eel River made by
PG&E's•Potter Valley Project and;stored'inLake Pillsbury.on the Eel River. The SCWA holds senior
appropriate water rights for much of the water that is available in the Russian River during all but high rainfall
months. The,AgencyoPeratestwo;major,reservoir for purposes of flow regulation and water storage on the
Russian River-watershed:Lake Mendocino,northeast of Ukia, and Lake Sonoma, northeast of Healdsburg.
Lake Sonoma•typically contains over 75,0000 acre-feet of water, while Lake Sonoma typically contains over
153,000 acre=feet of water. A secondary source of water for the=Agency is its three production wells located
west of the City ofSanta'Rosa, near'the Laguna de Santa:Rosa.
11111 16
•
•
The SCW.A:aqued_uctcames Russmn'River,water,from°Ranricybellector wells located in the Wohler
and Mirabel areas to.Petaluma and North Mann. Each Ranney collector well consists of.a 13=foot inside
diameter with 16=foot+outside diameter concrete caisson extending80 to 100 feet1deep into the streambed
gravel.!Perforated horizontal intake pipes extend radiallyifrom the bottom of each caisson,to a maximum of
175 feet into,the aquifer..,except for chemical addition at the'Wohler Maintenance Yard for disinfectiomand
corrosion:control,the water is:untreated: Water quality samples representative:of thesupply tojPetaluma are
taken attfie•McNear turnout. The aqueduct supply consistently has constituent levels which are within
recommended and required limits for general physical, mineral, organic, and inorganic elements.
The City receives waterahrough eightaqueduct,turnouts on the SCWA Petaluma Aqueduct:
,SC W A has certified an EIR for a Water Supply and Transmission System Project(WSTSP)to expand
use of the water supply provided byLake Sonoma and SCWA's water transmission system`in order to provide
region. Currently the SCWA requires 60,000 to 65,000 acre'feet annually for these general is seeking to
the amount of water necess to su ort develo mentalread authorized ex_
these users,.It is seeking to
increase its diversions to 101,000 acre feet a year,as well as assist in providing for 6,600.acre:feet of additional
conservation. The principal source of the'additional water will come from increased releases of water stored
in Lake Sonoma..Studies by'SCWA, based:on the direst.three-year historic.sequence for the Russian:River
• (1990-19425..indicate that-the minimum available water supply for;such'a three-year period in the future;wo ild
be I 30,485acre feeta year.
The greatest uncertainty with regard to the log term reliability of SCWA's Russian River,watereis
supply is the possibili y;of a future decommissioning of PG&E's-Potter Valley.Project(PVP.).-:For almost 100
years the PV,P has diverted.water from the Eel.R iver into the East Fork Russian River for purposes of.power •
generation. [Status/update]
Prior torthe execution of Amendment 11 to the Agreement:for:Water Supply,Petaluma,was`entitled
to a maximum of 17.0 million gallons day,without any annual limit With the<Eleventh Amended Agreement
for Water.Supply, dated as off.January.36', 20010the City's:entitlement wasincreased to 21 8'mgd for the
maximum rrionthlydemand, with an,annual-limit of 13,400 acre feet: In 2000, the City used 10,389 ac-ftof
purchased water supply„plus'used mgd during the month of maximum demand. In2000,the:average.
demandin the mazii iiim Month reached 17l55smgd [CHECK).
Local`production. The:City has 11 operational,groundwater wells•with a rated production capacity,
of 54 mgd:.and along-term reliable capacityofapproximately 3.2 mgd. These wells'are currently used,
primarily to'provide.peaking capacity'during.the suminermonths.
Distribution
The City maintains over 229-miles of transnnssion,and distribution pipeline. The distribution system
includes 6 treated water reservoirs;and 4 tanks;with a combined volume capacity of approximately 13 million
gallons. Elevation of these:reservoirs range from 139 feet to:368 f eet. T here are 21 booster pumps in the
system with a combined:11,410,gallon per-minute flow by pump.
•
The:existing,distribution system;is divided into fne pressure zones. Zones I, II.and IV are:-supplied
by turnouts off of SCWA's Petaluma Aqueduct:Zones III and V,at higher,elevations,are supplied bybooster'
stations:connect to,tlie lower elevation zones. •
t7
•
Major distribution lines:.consist of various 8, 10, 12 and.l6.inchipipesconnectedto'smaller local lines.
A program to replace afew miles of old steel pipe each year was started in the 1970's. This program is still
in.progress. It is expected, according to the engineer's report, that new asbestos cement Pipe will not be as
adversely-affected by localsoilconditions. '[STATUS?] '
Regulatory Issues
Drinking Water Standards.. The applicable drinking water standards for,the system are contained
in the California Domestic Water Quality and Monitoring'Regulations,Title 22 of the California Administrative
Code. These regulations incorporate the requirements of the U.S.Environmental Protection Agency(EPA)
in conformance with the Safe Drinking Water Act(PL 93-523). The standards specify water quality sampling
frequencies and locations as well as maximum concentrations of chemical constituents: They are continuously
being revised and amended.
The City's water system is operated a=permit issued by.the California Department of Health
Services. The state regulations contain requirements'for both primary and secondary drinking water standards.
The primary, standards,pertain,to those,contaminants which, if exceeding the__maximum contaminant levels .
(MCL),would presenta risk to the health of humans,when continually.used Tor'drinking or culinary purposes.
The secondary standards pertain to contaminants which,if in excess°of the maximum contaminant levels,may
be objectionable to an appreciable number of people,but are generally not hazardous to health [CHECK]]
• Summary of Water System Physical Plant
The following is a summary of inajor.capitalimprovements that have been made to the Water System:
Table:1
MAJOR CAPITAL IMPROVEMENTS,
Date Description Cost
•
• 18
Capital Improvement;Program.Summary •
The.City's program over the next 5years(through FY 2005/06)totals approximately 595 million,and
includes ongoing improvements to its water mains and.wells,improvement projects-associated with major;street
projects„construction of replacen ent,corporation•yard,and construction;of anew reservoir.
The:City is currently updating its General Plan This update, which is expectedto be completed by
2004 will include an updated Master Plan for the Water System. Capital improvements to the Water System,
are managed ihrouglr the City's Five,Year'Capital Improvement;Program-(CIP).
•
The,CIP through Fiscal Year'2005/06;is set forth-in Table;2,below.
Table 2
CITY,OF PETALUMA
-WATER'UTILITY
CAPITAL IMPROVEMENT PROGRAM�FORECAST
(Thousands of Dollars) ' •
01/02 02/03. .03/04. 04/05! 05/06 TOTAL •
Street Resurfacing 178 105 105 105 .105, 598
Water Main Improvements 280 400 400 400 400 1,880
New Wells 420 260 260 260 260 1,460'
Corporate Yard Replacement. . 895 �0 0 0 0 895
Telemetry imp Ended.00-01 0 0 0 0 0 '0
Casa Grande Landfill Monitoring 3 3 3 3 3 MI5
Corona/Ely Water Main:
• Historical/Projected`Operations
The following table reflects a historical andfive=year;projected record:of water distributed by the
Water System.
Table 3
CITY OF PETALUMA
Water System
Average day demand Maximum day;dernand Maximum day to day
Year (mod). (mod) averaee-dav demand(ratiol
1990. 7.65 12.4 1.62
1991. 7.16 11.2 1.56
1992 7.40 12.2 1.65
1993 ' 7.64 14.6 1.91
1994 8.33 14.6 1.75
1995. 8.50 -15.8 1.86
1996, •8.79 17:1 1.95
199T 9.46 =18.2 1.92
1998 8.80 18,5 2.10
1999 9:87 17:3 1.75
2000 9.58 17.9 1.87
Projected Project Projected
• 2001 9.86 18:4 1.87
2002 10.15 18.8. 1.85
2003 10.43 19.3 1.85
2004 10.72. 19.8 1 85
2005 11.00 120.21 • 1.84
Source: City of.Petaluma
• 20
•
•
Major Rate Payers r
The.op ten ratepayers,of the,City's'portion of the Water System,as listed below,represent the
City's user charges;revedues for Fiscal Year 1999-00.
Table 4
Cr1YiOFPETALUMA
WATER SYSTEM
Top 10 Rite Payers(Fiscal Year 1999100
(in,alphabetical order)
Name Business Total Charts
USCG-FIN.,CNTR.. 11;915 15;966_10'
Clover Stornetta Farms:Inc. 4,456; 5,971.04.
Dairy Farmers of Inc. 4,072 5;456:48.
Pomeroy Corp. 2;922 3,915:48:
Pet High School 1,698, 2;275.32
Lace House Laundry 1,662 2,227.08,
U.S.Filter 1,630 2;184120
Leisure.Lake Mobile Home'Park 1,424: 4;908:16
Sandalwood Mobile home Parkl 1,324 1,774:16"
Petaluma 1,256 1.683:04.
Total Top Ten 43,361.06
Total 1999/200User,Charges •
•
Source: City ofPetaluma
The''following table reflects the number of:watercustomers by class for the fiscal years 1995-96
through 1999/2000.
Tables
CITY OF PETALUMA
WATER SYSTEM
Water-Use'BySector
(Acre-feet/year)
•
Water:Use".Sector 1990 1995 2000
Single,family residential 4;957 5,240 6;286
Multi-family:residential 582 592 '824
Commercial 1,766 1;690 2,473•
Industrial 101 . • 422 309
Institutional and Governmental 520 507 412
Subtotal 7,926 8;451 10;304
Unaccounted for losses 644" 865 896
Total 8;570 9,316 11,200
21 IIIF,
•
Source Sonoma County Water Agency;Urban Water Management 2000.
In 2000 residential demand-represented 63% of total water`demand,..coniniercial,represented 22%,
industrial demand was 3% and publididemand unaccounted was 12%: [UPDATE],
Rates and Billing
The City Council sets,Utility rates for each',utility system. Water service charges to City utility
customers are collected with municipal water bills and enforceable'by discontinuance of water service. The
City collects utilitycharges by means of a single bi•monthly water and wastewater bill to each customer listing
charges for each service provided. Overtke.pastfive years, uncollectible accounts for all utilities have
averaged approximately percentlof,the amount'billed.
Water service charges are;based on-the utilization. All costs for water service are allocated to these'
categories. Customers are charged'a,flat,monthly fee based on meter,size and a commodity fee based on the
amount'of water used.
The City's fixed rate'minimum service charges have remained the same since 1994, and are as set
forth below:
•
Table 6
Metered'Service Minimum Monthly Service:Cliarges
•
Fixed charge'($/mouth)
5/8 or 3/4 inch $3.00
1 inch $3.60 •
inch $6.00
2 inch $8.70
3 inch $1'6.80
4:inch $21.60 •
6 inch $31.20
8 inch $43.20
10,inch $60.00
Source: City of Petaluma '
• 22 •
City charges■additional amounts based on water consumption. Commodity charges have been
increased in 1994, 2000, and'in,2001. The-most recent increase, from $134"per'100',cubic foot to?$1.80•per
100 cubic foot ,willlincieasetthe average monthly retail water charge for a single-family home in Petalu ma
from ';$22:00' to $28.35:
Table 7
Water Consumption Charges
(per 100 cubic feet)
Fixed'charec($/monthl .-Jul01 Oct-00 Dec-94
.1:80. . 1.34 .1:08.
Source:. City;of Petaluma -
•
The primary factors behind the need;for a rate increase are a 19%increase in the:cost of purchasing
water from;thelSonoma;County Water Agency (and.increase imtheir charges instituted primarily to finance
their Watef Supply and Transmission System Project), an estimated 50%increase in electrical costs and
funding needs for the Water System 5 Year Capital Improvement Program
Prior-to adopting the most e City issued a public notice on the proposed changes to all
water customers. Forty-five days later the City.heldsa series'of publicmeetings'and hearings on the rates.
Public meetings on the rate charges were held on and A listing '
of proposed charges"were"published in:a,local newspaper on and and,;were
available at the City Cl'erk's office: (See "RISK FACTORS RELATING TO THE BONDS—Rights
to Vote'on.Taxes Act?' hereti)u]
The City has retained consultants who will be.conducting a comprehensive rate 'study, and are
expected to recommend further'modificationsto the City's water rates.
•
•
•
23 •
•
•
The history of rates adopted'is set forth below:
Table 8
.Service Charges
Fixed'charge.($/month) -Jul-01 Oct-00 Dec-94
5/8 or 3/4 inch • 3 3
1 inch 3.6' 3.6
1.V inch 6 6
2inch 8.7 8.7
3 inch. 16.8 16.8
4 inch 21.6 21.6
6:inch 312, 31.2
8 inch 43.2 432
10 inch 60 60
Consumption Char¢e.(S/100 cubic feet) 1.34 1.08.
•
Source: City of Petaluma
Connection Fees
Connection fee charges are assessed for new connections to:the City's Water System or for
rebuilding.remodeling or expansion of existing facilities that increase flow water from system.Rates are based
on.the meter-Size and estimated flow factor and meter type. There is.atseparate set ofco_nnection fees
.. WM.IE!rA
established`for Zone IV.[CHECS]
•
•
•
• 24
•
Currentand`hitorical rates are set forth below: •
Table;9
CONNECTION-FEES
' Zone IV
Meter.Size(inches) Flow Factor Jan-91 Mar-88 Jan-91:
3/4 inch 1 2,310 1,635 .3,435; -
1 1.7 3,927 2,196 5,840
L% 3.3 7,723 2,732 11,336
2, 5.4 '.12,423. 3,217 18,206
2. 5.4 12,423- ,18,206'
2. 5.4 12,423 18,206'
3 10 23,100 34,350
3 10.7 24,7.17 36,755
3 10.7 27,027 40,190
4 16.7 38,577 57,364
4 20 46,200
6 33.3 76,923 •
6 • 41.7 96,327
8 53.3 12,312
Source: City of Petaluma
•
•
25 •
it
•
• • The following,table compares the City of Petaluma's'Wateriates to those ofneighboring communities.
Table,l0
• CITY OF PETALUIVL4
WATER SYSTEM
Residential Rates and Comparison with Sonoma_County:Surrounding Communities
(February'2001) .
•
Estimated Annual Cost r2l
Commodity
Agency Ratc/CCFi't Commodity: Service Charge Taxes Total
Cotati $0.875 - .S148.78' 5 83.40 S 0:00 $232.18
Forestville Water Districtm 1.608. .144:39 129.00 0.00 273:39
Petalumat'-t . 1.800 306:00' 36:00. - 0.00 342.00
Santa Rosa 1.728; 293-.74 48:84 0.00 :342.58
Sonomat`1 1.760 264.63 50.00 0:00 324.63
No.Maria Water District 1.053 1,79.01 '54:00 18:76 251.77
Valley of the Moon 1.952 331.89 36:00 0.00 367.89.
Average S317.04.
(I) Water consumption rate per.one,hundred'cubic:feet.
(2) Annual consumption is calculated ai.170 ccf/year. •
(3) 10,000 gallons(1,337 cubic feet)is included as partly bimonthly minimum cha ge,
•
(4) Alternate rate increase.
(5) First 6,000 gallons bimonthly®$C40/1,000,additional @.52.35/1;000
Source: City of Petaluma
•
Management
•
To provide focused management of all'water;related utilities;the City restructured effective January 1,
2001 to form- he Department o •Water-•Resources and Conservation. This.Department is responsible for
operation and maintenance of the Water System including transmission and distribution, groundwells,
treatment;reservoir's,and booster pumpsias•well as water conservation efforts: This Department is
by the following ind victuals,among:others:
Thomas.S..Hargis: As•Department'Director,;Mr.,Hargis manages the day-to-day operation of the
Department, Mr. Hargis is a registered professional engineer in California. Mr..Hargis''''s prior
positions within the City included Public Work Director and Director of the Engineering Depattnient.
• Michael Ban. As Utility Engineering Manager, Mr. Ban manages the engineering division of the
Department. Mr.Ban islregistered-professional engineer in California
Steve Simmons;, As Utility Operations and Maintenance Manager, Mr. Simmons manages the
operations,and"maintenarice;division of the Department. Mr: Simmons's prior position with the City
included Public Work Superintendent
• 26
The Cityemploys approximately,30-full-time equivalent employees to operate its water resources and •
conservation utilities All of these 'employees, excluding those in the management classification, are
represented by the American Federation of State,County and Municipal Einployees'(AFSCME)in all matters
pertaining to wages, benefits.and working conditions. The current agreement with this union expires on
June 30,:2002. The+City's'wage and fringe benefits are generally comparable to those'offered by other local
public-agencies.,
The City's`Finance`Depatlrirent.is responsible lfor Customer Services and billing:
Significant,Accounting,Policies
The City's Comprehensive.Annual Financial Report is audited by Pisenti &BrinkerLLP, Petaluma,
California, in accordance with generally,accepted auditing standards and contains opinions'that the,financial
statements present fairly the financial position of the various funds maintained by Petaluma>'See"APPENDIX
C - Excerpts from`the,Comprehensive Annual Financial_Report of the City for the Fiscal'Year
Ended June 30;2000.'' The report includes certain notes to the financial statements which may not be fully
described below. :Such notes constitute an integralipart of the audited';fmancial statements. Copies of this
report and prior year's reports are available onr request from the Finance Department, City of Petaluma, 11
English Street,Petaluma,California 94952: Governmental accounting systems are organized and operated on
'a fund basis: A fund is defined as an-independent fiscal and accounting entity with a self-balancing set.of
accounts,recording cash and other financial resources,together with all related liabilities and residual equities
or balances,and changes therein. Fundsi are segregated for the purpose of carrying on specific activities or
attaihihg certain objectives in accordance with`special regulations and restrictions. •
The Water System is accounted for as an enterprise'fund Enterprise funds are used to account for
operations ,(i) that are fiuianced and operated in a manner similar to private busmess;enterpnses (where the.
intent of the governing'body is that the costs((expenses,including depreciation)of providing goods or services
to the general public on a,continuing basis be financed or recovered primarily through user charges) or(ii)
where the governing,body has decided that periodic determination,of revenues earned, expenses,incurred
and/or net income is appropriate for capital maintenance.public policy,management control,accountability or
other purposes. The City uses the accrual basis of accounting,with,respect to The enterprise funds. Revenues
are recognized when earned,and expenses'are recognized when incurred. Wafer System revenues are used
to pay operating costs,.bondTdebtlservice, capital expenditures,and reserve accumulations.
The City has not requested nor did the.City obtain permission from Pisenti&Brinker LLP
to include the1audited,financial statements as an appendix'to;this Official Statement. Accordingly,
Pisenti & Brinker LLP'has-not performed any post-audit review of the financial condition or
operations of the City. •
•
27 •
•
I
•
• Balance Sheet
The following tables set,forth the balance sheets of the City's Water Utility Fund for the last five fiscal
years. These numbers are excerpted from the'audited financial l;statements of the City which were prepared
in accordance with.generallyaccepted accounting principles.
Table3l. •
C11'Y.OF,PETALUMA.
WATER SYSTEM
Balance Sheet.
Fiscal Years 1996 through 2000
1997 . 1998 1999 2000
ASSETS
Cash and Investments '$ 3;454;092 $ 3,467,131 $ .3,217;1,10 $ 4,283,148
Cash and Investments w/Fiscal.Agent. 627;249 624,049 619,584 636,140
Accounts Receivable 348,343 267,136 372,719 429,017
Interest Receivable 56;772 76,362 41,120 61,957
Allowance for Doubtful Accounts (13,675) (7,300) (8,700) (10,800)
Due from Other Governmental Agencies - - - -
Loans Receivable-Other Funds 105,637 - 96,818 87,381 77,284
Inventory of Supplies 132;408 149,373 132,435 138,932
• Deposits and Prepaid Items - - -
Property,Plant and Equipment
17,381-,159 19,468,923 • 20,295,895 21,024,927
Accumulated Depreciation ,(6,335,768) (6,801,542) (7,383,276) (7,956,588) .
Construction in.Progress - 1,102,128 488,673 421,741 114,614
Unamortized Bond Issuance Costs 80:350 75,736. 71.123 66.509
TOTAL ASSETS ;$16,938,695 $17905.359.. 817 867 132 $18:865 140
LIABILITIES AND FUND EQUITY -
Liabilities: .
Accounts Payable : 513,593 $ 760,863 403,202 $ 717,978 .
Interest Payable 67;013 65,001 57,176 54,463
Current'.Maturities of Long-term-Debt .180,000 195;000 200,000 505,000
Loans Payable to Other Funds - - - -
Customer Deposits 49,650 48,950 53,719 58,100
Compensated Absences 101;688 91;571 ' 108,460 159,730
Long;Term Debt 5515;,000 5620,000 5;070,000 4,440,000
Unamortized-Bond Discount (108;;8471 (102;5971 (96.3481 (90;0981
TOTAL LIABILITIES 6,618;097 6;678,788 5,796;209 5,845,173
FUND EQUITY
Contributed'Capital 1,442 1,096 750 404
Retained Earnings:
Reserved-for Capital - - - '1,478,629
Unreserved 101319353 1 4,225;475 12.070.173 11.540,934
Total Retained Earning 10319,153 1 1 225-,475 12.070.173 13':019:563
TOTAL FUND EQUITY - 10;320,595 . 11,226,571 12,070,923 13,019,967
TOTAL LIABILITIES AND FUND EQUITY $16;938,692 ' 517;905:359 $17,867,132 $18:865;140
(I) Beeinning-in=Fiscal-year2000,unexpensed connection.fee income was reserved for future capital expenditure on the systems
•
balance sheet.
28
•
•
•
Source: 'City of PetalumaComprehensive Annual!Financial.Reports, 1996-2000:
•
•
29
1 .
Income Statement
The following;tables set:forth the statementsrof revenues; expenses andchanges imretained earnings
of the Water Utility,Fund for,the four most recent fiscal years,These numbers are excerpted from the audited
financial statements of the City-which were prepared in accordance with generallyiaccepted accounting
principles. .
Tattle 12
CiLY OF-PETALUMA
WATERSYSTEM
Statement of Revenues,Expenses and`Changes-in Retained Earnings .
Fiscal Year Ended June 30/1997 through June 30,1000
' 1997 2': 4999 20140
OPERATING REVENUE:
Charges for Sales '$5;222;446 $4,938,667' $5,565,788
Charges for Services. 149,147 191,031 156,797 415;246
Connection-Fees 933,964 11271,880 1,177,459 7;313;977
intergovernmental 990 - -
Other Revenue 92374 '47 081 _. - -
TOTAL.OPERATING REVENUE 6;399,121 6,448,659' 6;464,446 7;095,011
OPERATING EXPENSES: .
• Purchase`ofWater and Fuel 3;073,459 2,697146
Contractual-and Professional Services 134,888 198,320' -
Salaries and Employee Benefits - • 1,750,975 981,254 • - - .
Cost of Sales 2,855,343 3;;188;827
Cost.of Services - - 1,_097,631 1,346;260
General and Administrative • - - 901;801 926,553
Depreciation and,Amortization 485,147 543,525 592;598 584,175
Liability and Property`Insu'ranee 60;300 60,300• -
Abandonment of Construction-Project - - -
Other Expenses 746'505 806.417 - -
TOTAL OPERATING EXPENSES 5;651,274 3,286,962 5;449,373 6,045,815,
OPERATING INCOME .747;847. 1,161,697' 1,015,073 1,049,196
NONOPERATING REVENUES(EXPENSES) - •
Intergovernmental - - 3,883 -
InvestmentEarning and Rent 256,392 .231;077 195;241 245,51,8.
Transfers'Out •(87;000) (87,000) -
tnterest Expense (411-;2281 (399,7981 (369;8451 - (345,6701
TOTAL NONOPERATING REVENUES (241;836) (255,721) (174;604) (100,152)
(EXPENSES)I
NET INCOME S •506;01f $. 905;976-. $ 840;469 $ 949,044
50 Categories for.expenses were reclassified in the City's 2000 ComprehensiverAnnual.Financial Report.
Source: City of Petaluma(ComprehensiverAnnual Financial Reports, 1996-2000:
• 30
•
Debt,Service..Coverage •
The followingtable shows estimated.debt service coverage for the Water System..
Table 13
CI IY OF PETALIMA
WATER SYSTEM -
PROJECTED DEBT SERVICE COVERAGE
2001 2002 2003 2004 2005
REVENUES •User Charges S6101r296 $8,471,746 $8,471,746 $8,471,746
•Connection:Fees 979.200 570,000 570,000 570,000
Charges for Service. 173;550 200,000- 200,000 .200;000
Other 638300 523 000' 523-000 523.000
Total Revenues 7,892;246 9,764,746 - '9,764,746 9364,746'
EXPENDITURES9l 6,197-,050 7,323,843 7,426,873 7;532,993
Net Revenues' 1,695;196 2,440,903 2,337,873 '2,231,753
Debt Service 25 years, 502;815 809;902 809,902 '809;902
Coverage 3.37" 3.01 2.89 2.'76 •
..Net Revenue w/o Connection Fees. (95,745)' I,147,903 1,044,873 938,753
,Debt Service.Coverage w/o connection (0:190) 1.683 1'532 1".375
fees
Assumes 3%per annum growth- UPDATE - •
Source: City of Petaluma.
RISK'EACTORS RELATING TO TAE BONDS
Payment of principal of and interest-.on the 2001.Bonds depends primarily upon the-revenues derived
from operation of the Water System and, if necessary, from moneys on deposit in the;Available Reserves.
Some of the events:which could affect the revenues received by Water-System and/,as well as issues that
could affect-the:availability of moneys imany reserves, are et forth below. The following discussionofrisks
is not meant,to bean exhaustive list of the risks,associated with the purchase of the 2001 Bonds and the order
in which the nsks;arediscussed does not,neeessarilr-tefleet the relative importance of the various1risks.
Limited Obligations
The 2001 Bonds are limited,obligations,of the;City:and are.not secured by.a.legal or equitable,pledge
or charge:or lien+upon any property of the City or any yf its!income or receipts;except the Net Revenues.The
obligation of the-City to pay-debt service-on;the 2001 Bonds;from Net Revenues does not constitute'an
31
II
•
• obligation of the City to levy or pledge any form of taxation or for whichthe'City has levied or pledged any
form of taxation.
The City is obligated under the Indenture to make debt service payments solely from Net Revenues.
There is no assurance that the City;cansucceed in operating the Water;System.such that the Net Revenues
in the future will be-sufficient.for thatpurpose. See also "Right to Vote on Taxes,Act" below.
System Expenses
There can be no asrance':that the City's expenses for the Water System u t will be consistent with the
descriptions in this Official,Statement. Changes in technology, changes in quality standards,loss of large
customers,increased or decreased"development,increases in the cost Of operation and/or other expenses could
require increases in rates or charges in order to comply with the City's rate covenant in the Indenture.
Limited Recourse on Default ,
Failure by the City to pay debt service on the 2001 Bonds constitutes an event of default under,the .
Indenture and the Trustee is permitted to pursue remedies at law or in equity to enforce.the City's^obligation
to make such payments.Although,the Trustee has the right to accelerate the total unpaid pnncipal amount of '
the debt service on.the 2001 Bonds,there is no assurance,that the City would have sufficient funds to pay the
accelerated amounts. See also "Right to Vote on Taxes Act" herein:.
Limitations on Remedies
The ability of the City to comply with its covenants under the Indenture and to generate Net Revenues
sufficient to pay principal of and interest with respect to the2001.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,taxpayersor persons obligated to pay,assessments,fees and charges. See"Right
■
to Vote,on Taxes Act" below. Furthermore,the remedies available to the owners of the 2001 Bonds upon
the occurrence of atievent of default under the Indenture are in many-respects dependent upon judicial actions
which are often subject to discretion and'delay and could prove both expensive and time,consuming to:obtain. _
In addition;to the limitations on remedies contained in the Indenture,the nghts and obligations under the
Indenture may be subject to bankruptcy„insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium;and other laws,relatuig to or affecting creditors"rights,to the application of equitable,principles,
to the exerciseitfjUdicia discretion in appropriate cases and.to llriiitations on legal remedies against cities in.
• the State of California.The opinion to be delivered by Bendtounsel concurrently with the issuance of the 2001
Bonds will be subject to such limitations and the various other;l_egalopinions to be delivered;concurrently with
the issuance of the 2001 Winds will be similarly qualified. See"APPENDIX D—Proposed Form of Bond
Counsel Opinion". In the event the City fails to comply with its covenants the Indenture or fails to pay
principal of and interest dueon the 2001 Bonds, there can be no assurance of the availability of remedies
adequate.to.protect the interest of the holders of the 2001 Bonds.
Regulatory Risk
32
Laws and regulations.governing the diversion-and storage of surface waters;as well,the treatment O
municipalwater suppliers,are enacted and!promulgated;by government agencies on the federal,state and'local
levels. Compliance,with these laws and regulations may be costly, and may reduce the amount of water,that
can be diverted or stored,on the Russian-River and Eel River,Watersheds, the primary source.of the City's
water.
Although the District has covenanted in the•Indenture'to fix, prescribe, revise and collect Charges for the'
Water System duringieach;Fiseal Year which are at-least,sufficient to pay operating:and maintenance
expenses, to pay debt;service, and meet certain,coverage requirements, no assurance can be'given that the
cost of compliance with,such laws and regulations will not adversely affect the ability of the District to
generate Net Revenues in the amounts required by the Indenture and to pay'debt service(on,the Bonds
Initiatives
In recenteyears several initiative measures,have been proposed or adopted which aff ectthe ability of
local governments to increase.taxes and rates.There is no assurance that the electorate or;the'State legislature
will not at some future time approve additional limitations which could affect the ability of the City to_implement
rate increases which could reduce Net Revenues and adversely affect the security for the 2001 Bonds.,See
"Right to Vote on Taxes:Act"below.
Bankruptcy
The;rights andrerriedies,provided in.the;Indenture may be limited'by and are subject-to,the
of federal bankruptcy laws,to other,laws or equitable-principlesthat may affect the enforcement of creditors'
rights,to the,exercise of judicial discretion in'appropnate cases,and to limitations on legal remediesiagainst
public agencies-in the State of California. The:various,opinions of counsel to be delivered with respect to the
2001 Bondsand the Indenture, including theopinion of.Bond Counsel,:will be similarly qualified. If the City
were to file a-:petition under Chapter 9 of the',Bankruptcy Code, the'Owners of the,2001 Bonds and-tbel,City
could be prohibited from talang:any,steps'to;enforce'their rights tinder the Indenture.
Tax,Exemption of the 2001 Bonds
The City has covenanted in the Indenture,that it will take alhactions'necessary to-assure the exclusion
of interest with respect to the°2001 Bonds from die,gross income of the Owners oithe 2001 Bonds,to the
same extent as such interest!is permitted toaie,excludedfrom gross income under the Internal Revenue Code
of`1986:If the City fails to comply the-foregoing tax covenant,the interest component of the Installment
Payments evidenced by the,200I Bonds maybe includable,in the gross income of the Owners thereof;for
federal tax purposes. See "TAX MATTERS" herein.
Additional',Obligations;
The Indenture permits the issuance of Bonds'secured'by Net Revenues on a parity basis and/or a
subordinate'basis to the 2001 Bonds. The City anticipates issuing such additional bonds. Such additional Bonds
Would increase debt service payable from NetRevenuesandcould adversely affect debt servicecoverage.
33
•
• 'with respect to the 2001 Bonds;,In such•event,.howeven,.the"Rate Covenant desonbed herein will remain in
effect. See "SECURITY FOR THE 2001 BONDS —Rate Covenant" herein.
Seismic Considerations
The City,:like much of:California, is subject:to seismic activity thatecould result in interference with
operation of the Systems: There are several:major active fault zones transecting Sonoma County that could
cause"strong ground Thotidn'at-stile site of the various;facilities constituting the Systems during their,useful
life. The closest major fault is the Rodgers Creek fault,which is approximately 4.5 miles northeast of the City.
If there•were to be an occurrence of severe seismic,-activity in the area of'the City, there could be an
interruption in the service provided,by the•Systems resulting-ima;temporary:reduction mthe:amount of Net
Revenues available to pay-the principal of and interest 2001 BONDS whemdue.
Flood Considerations
The Petaluma River Basin is situated in Sonoma and Marin Counties,'on the northwestern shore of San
Pablo Bay; 'The:Petaluma River:and its tributaries drain an area of about 446 square miles, of which
113 square miles (77%)are in Sonoma County and,33 square miles(23%) are in Mann County. The basin-
is pear-shaped and has a length of about 19 miles,oriented in a northwest-southeast direction,and a maximum
width of about 13 miles:. The City of Petaluma is loeated near"the center of the;basin. The Petaluma River,
from its source at the confluence of Liberty Creek and Willow•Brook in the northwest-portion of the,basin,
flows generally in a southeasterly direction through the middle of the basin for about 18 miles,passing through
Petaluma;and emptying'into San Pablo Bay.
•
Several locations along the Petaluma River have historically experienced water surface elevations that
exceed the top of the channel banks during extreme weather events. These areas include the Payran Reach,
the Denman Reach and the Willow-Brook Reach. The City haaimplemented many projects to mitigate the
potential of these events,the most project is the widening of the Petaluma River Channel,which'is being
constructed in coordination withe the US Army Corps of Engineers. Completion is anticipated in the
Year 2003. .
Right to Vote on Taxes Act
General. On November 5, 1996,-the voters of the State approved Proposition 218,the,so-called"Right
to Vote on Taxes.Act:"Proposition 218 adds Articles XIIIC and X11113 to the State Constitution,;which affect
the ability of local',governments to levy and collect both`existing and future taxes assessments, fees and
charges. Proposition 218, which became effective on November 6, 1996(although application of some of its
provisions was deferred'until July 1, 1997)changes, among.other.ithings, the procedure'for the imposition of
new.or increaseddfees or charges.
. Article XIII C Article XIII Crequires that all new•local taxes be submitted to the electorate for
approval before such taxes become effective. General taxes, imposed for general governmental purposes of
the:City, require:a majority vote, and special taxes, imposed for specific purposes, require a two-thirds vote.
Under Proposition 218,the City can only'continue to collect taxes that were imposed,after January 1, 1995 if •
they were approved by the!voters:by November 6, 1998.
0 34
a
ArticleXXIIPD. Under Article XIHD;revenues derived from a"fee"or"charge"(defined as"any
other than an add valorem tax,a speciahtax or an assessment,imposed by a[local government]upon a parcel
or upon,a person merely as an incident of property ownership,including user fees or.charges'fora property
related service")may not exceed the funds required to provide the property-related service",and may not be
used for any:purpose:other than that for which the.fee or charge was.imposed. Further, (i)'the amount,of a
"fee-' or"charge may not exceed the proportional cost of the service attributable to the parcel, (ii)no`,`fee"
or-`charge"may be imposed for a service unless•that service is actually used by,or is immediately available
to, the owner'of the property in question and (iii).no "fee"' or "charge" may be imposed for general
governmental services where the service is'"available to the,public.at large in substantially the samemanner
as it is to theproperty owners." ,Allnew and existing property-related,fees and charges must conform to•
specific requirements and prohibitions,set-forth.in the Article. Further,'.before any property-related fee or
charge'may'lie imposed or:increased,written notice must beigiven to the record owner of each parcel of land
affected by suck fee or charge.,The City must then hold a hearing upon theproposed imposition or:increase;
and if written protests,against the proposal are'presented by •Majority of the owners of the identified parcels,
the City may not impose or increase the fee or charge. Moreover,except for fees or charges for Water,water
and refuse'collection,services(or fees for electrical and gas service,which are exempt from-Proposition 218),
no property-related fee or charge may be imposed or increased without<majonty approval by the property
owners subject to the fee or charge or,at the"option of the local agency,two-thirds;approval,by thoseresiding
in the affectedmrea'and`voting atithe election. (See "THE WATER SYSTEM —;Rates and.Billing"
herein.)
Applicability.to the Water System The City believes that Proposition 218 does not apply to its existing
structure'of Water System service charges because the service charges are not imposed upon a parcel of land
or charged merely as an"incident of ownership',but instead area commodity-based charge imposed on the
user based upon the user's consumption ofa measurable commodity;Moreover,the service charges are sized
to recover,the City's!reasdnable:or actual costs,in providing.service. Accordingly, the Ctty;is not required to
follow,the:'procedures,described in the,previous paragraph when increasing its Water rates. Although the
California,Attorney.General has similarly concluded that water rate based upon She;level of consumption is
not governed by Proposition 218'(see 97 Cal. Op. Any Gen.No 302(July 14,1997)),it,should be noted that
no court has;addressed'ithe issue and-the principal drafters of Proposition 218 have publicly challenged the
conclusion of the Attorney General.
Repeal or Reduction of Existing,Rates. Under Article XIIIC, Section.3, the initiative power is
expressly extended to matters of local taxes,assessments;fees and charges.This means that the voters of the
City could,by future initiative,repeal or reduce existing local taxes;assessments,fees and charges.This power
is arguably limited in the case of levies directly pledged to bonded'indebtedness, such as'the Net Revenues of
the Water-System securing the 2001 Bonds.
Legislatiomadopted by the State Legislature in 1997 provides;that Article'XIIICshall not be•construed,
to mean that owner or beneficial owner of a municipal,security assumes the risk of, or consents,to, any
initiative measure which would;constitute;an impairment of contractual nghts under the Contracts'Clause.of
the-United States.Constitution.However,,there;can be no assurance:that the voters!of the,City'will not,in the
future,•approve an initiative which attempts to reduce water rates or'curtail their,,increase:
•
35
•
•
Conclusion. The City is`unable to predict how=Article XIIIGkand Article<XIIID will be;interpreted by
the courts'and what,if any,implementing legislation will be enacted.Bond Counsel has advised that,there can
. be no assurance that Article XIIIC and Article XIIID will not limit the ability of the.City to impose,levy,charge
and collect fees and charges sufficient to enable the City to comply with its covenants under the Indenture or
that the ability of the City to generate Net Revenues sufficient to pay principal,of and interest.on the 2001
Bonds wills not be adversely.affected. Further, in such event, there can be no assurance of the availability of
remedies to protect fully the'interests,of the holders Of the 2001 Bonds. .
Investment of City Funds
Gross Revenues collected by the City will beheld and invested by the:City:in accordance with the
City's adopted investment policies. For more.information.about the City's investment policy as well as
information about recent investment performance of the,City s pooled investment funds,See"APPENDIXB
—Cityof Petaluma General Information and Economics."
• IEGALMATTERS
Approval;of Legal Proceedings
0 The-legality of the'sale,execution and delivery of the 2001 Bonds.is subject to the approval of.Jones
Hall, A Professional'Law.CorporationySan Francisco,California,acting as BondCounsel. A proposed form
of such'legal'opinion is,attached,hdreto as APPENDIX D.
Payment of the Tees and expenses Of Jones Hall is contingentupon•issuance of the'2001_Bonds.
Absence of Litigation
At the time of delivery of and'payment for the 2001 Bonds,the,City will certify that there is no action,
suit,proceeding, inquiry or investigation, at law or in equity,before or by any court,regulatory agency public
board or body,pending,or',,to the;laiowledge of the City, threatened against the City affecting the existence of
the City or the titles of its officers to their respective offices or seeking to restrain or to enjoin the sale or
delivery of the20011:Bonds,,the application of the proceeds thereof in accordance.with the Indenture, or,the '
collection or application'.of any Net Revenues provided for the payment of the 200Y Bonds, or in any way
contesting_or affecting.the validity;or,enforceability of the 2001`Bonds,,the Indenture,,any action of the City`'
contemplated by any of the said documents,:or,the collection or application of any:revenues provided for the
payment of the 2001 Boiids,Of in any way contesting the completeness or accuracy of this Official Statement.
or any amendment orsupplement thereto, or contesting the powers the City or its authority with respect to
the 2001 Bonds or any action, City contemplated by any,of said documents.,
• 36
r
Tax Matters
In theopinion'of„lopes Hall,A Professional Law Corporation,San Francisco,California;Bond Counsel, O
subject,however to the qualifications set forth below,under existing law,the interest on`the Boridsiisi excluded
from gross income for federal income'Tax purposes and.such interest is not an item'cif tax preference for
purposes:6f the federal alternative minimum+tax imposed on individuals and corporations,provided,however;,
that,for the purpose of computing the alternative minimum tax imposed on corporations(as defined for federal
income tax purposes), such interest is:taken into account in determining certain�'income and earnings.
Tne,opinions',set forth in the preceding paragraph are subjectlto the condition that the City.comply with
all requirements of the Internal Revenue,Code of 1986 (the 'Code')that must be;satisfied subsequent to the
issuance of the Bonds'injorder that such interest be or continue to be,excluded+from gross income,fonfederal
income tax purposes The City has covenanted to comply with each such requirement. Failure to comply with
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 Bonds.;
If the initial offering price to the public(excluding Bond houses,and brokers).at which a Bond-is.sold
is less than';the amount payable at maturity thereof,then such difference constitutes 'original issue discount"
for purposes of federal income taxes and State of California personal income taxes If the initial offering price
to the public (excluding,bond houses and brokers) at which each,Bond is sold'is greater than'tfie amount
payable at matunty thereof then-such difference constitutes "original issue,premium"for"purposes Of federal
income taxes-and State of California personal,incometaxes.De miniinis original issue discount=is disregarded.
. Under the Code,original issue,discountis 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 O
over the tern to maturity of the Bond on the,basis of a constant interest rate compounded o h in eacnterest'or,
principal payment date(with straight-line:interpolations'between compounding dates). The amount of original.
issue discoilbt accruing during each period is added`.tothe adjusted basis of such'Bonds to'determine taxable
gain upon disposition(including sale,redemption,or payment on maturity)of such Bond. The Code.contains
certain provisions"relatmg,to the accrual of original issue discount in the case ofpurchase`fs'Of,the'Bonds',who`
purchase the Bonds after;the initial offering of a substantial amount of such maturity: Owners of such Bonds
should'consult their,own tax advisors with respect to the tax consequences of ownership of Bonds with original
issue discount,including the treatment of purchasers who do not purchase in the original offering,the
of a deduction for any loss on a sale or other disposition,and the treatment of accrued original issue discount
on such Bonds under federal individual and corporate alternatrvemir itnu n taxes.
Under,the Code,Original issue premium is amortized on an annual basis over the term of the Bond(said
term being the shorter of the Bond's maturity date or its call date). Theamount of original issue premium
amortized each year reduces the adjusted,basis,of the owner of the Bond"for purposes of determining taxable
gain or loss upon disposition., The amount of original'issue premium on a Bond is amortized each year over
the term to maturity of the Bona on the basis of a constant interest rate compounded,onieach interest or
principal payment date,(with'straight-line interpolations'between compounding dates). Amortized Bond
premium is not deductible:for federal income taxpurposes. Owners of Premium Bonds,including purchasers
who do not purchase the original offering,,should consult their own tax advisors with';espect to State of
California personal income tax and federal income tax-consequences of Owning such Bonds.
In the further opinion of Bond Counsel,interest on the Bonds is exempt from California Personal•income
taxes.
Owners of the Bonds should also be aware that the ownership or disposition of,or the accrual or receipt
of interest-on, the Bonds may have federal'or state tax consequences'other than as described above:,Bond
37 -
•
.' Counsel expresses no opinion_regarding z any'federal or state tar consequences.arising with respect to the
Bonds other thatfas-expressly'described above;.
•
RATINGS
Moody,'s Investors Service,Inc.("Moody's")-has assigned its municipal bond rating of" ",to the
2001 Bonds the understandin that u on delive of such 2001 Bonds'a policy insuring the payment when
�=..,m g. P . - rY P g P Ym
due of the principal of and interest on the 2001 Bonds will be issued by thelnsuret]
[Ifi'addition,Moody's has assigned underlying.ratings(without-regard to tlieMunicipal Bond Insurance
Policy)of" ", to the 2001 Bondti]
Such ratings reflect only the views of such organizations and`an explanation of the significance of such
ratings may be obtained from Moody's and.Standard'& Poor's. There is no assurance that such ratings will
continue'for any given period of time,or that such ratings will not be revised downward'or withdrawn entirely
by such organizations, if in their judgment,circumstances so warrant. Any such_downward revision or
withdrawal of such ratings mayThavemif adverse effect on the market;pfice,ofthe 2001 Bonds.
• VERIFICATION OF MATHEMATICAL ACCURACY
•
•
independent certified public accountant , upon delivery of the
Certificates will deliver a;report verifying (a) the mathematical sufficiency,of the anticipated receipts in the
Escrow Fund to pay,-when due;theiprincipal, whether at maturity or upon prior'Prepayment, interest and
Prepayment premium requirements of theiprior.Certificates, and (b) the mathematical computations of the
yield on the Certificates and the cyield on the investments,purchased with:a portion of the proceeds of the
Certificates.
•
The report of will include/the statement that the scope of their
engagement:is limited'to verifymg'mathematical accuracy, and that•they have no obligation to update their
report because of events occur'ring, or data'or'information coming to their attention,subsequent to the date of
their report. -
CONTINUING DISCLOSURE
The City has°covenanted,for the benefit of the,holders and beneficial owners of the 2001 Bonds to
provide certain'financial information and operating data relating to the City(the'`-`Annual Report'')by no later
than each March 1 following the end of the City's fiscal-year(which fiscal year currently ends on.June 30),
commencing with.the=Annual Report for the 2000/01 Fiscal Year,and to provide notices of the occurrence of
certain enumerated events,if material. The City will file, or cause to be filed, the Annual Report with each
• Nationally Recognized Municipal Securities Information Repository,and with the appropriate State information
38
r
•
repository,.if any,wither copy to the Underwriter.The City will file,,or.cause to beifiled,the notices of Material
events with the Municipal Securities Rulemaking Board(and with-the appropriate State information repository,
if any), with a copy toitle Underwriterr'The-specific nature of the information to be contained in the'-Annual
Report or the notices,of material events is set forth below in"APPENDIX E;Form of Continuing'Dissclosure
Certificate:"These covenants have been-made,in order tmassist;the Underwriter in complying with S.E.C.
Rule 15c2-l2(b)(5). The City has never failed to comply,in all material respects,with an undertaking pursuant
to said Rule.
UNDERWRITING
•
The , (the'"Underwriter")'has-agreed to purchase the 2001 Bonds,at,"a
purchase price of$ plus accrued interest thereon from _ ,2001 to the;date'
of delivery of the •Bonds. The initial public offering.prices of the Bonds as Set forth on the inside cove<page,
may be changed:from time to time by the Underwriter: The Purchase Agreement relating-to the Bonds
provides that all Bonds are purchased, if any are purchased,the.obligation to make•such purchase is subject
to certain terms'and conditions,set forth in said Purchase Agreement,the approval'of certain legal matters by
Counsel and certain,other conditions.
The Underwriter may offer and,sell'the Bonds to,certain dealers,banks acting'as agent andothers,a t •
prices lower than saidpublic offering prices. The offering prices.may be changed from timeto time:
FINANCIAL ADVISOR.
The City:has entereddnto an agreement with Kelling,Northcross&Nobriga(the"Financial rAdvisor')
whereunder the'Financial Advisor-provides financial advisory services to the City with respect to.preparation_
and sale oftheBonds. The Financial Advisorhas read anpart cipated in the drafting of certain portions of this
Official Statement and has.supervised the completion and editing thereof The Financial;Advisor.'has not
audited, authenticated or otherwise'verified(the information set forth in the Official Statement,.or,any other
related information available to the Issuer,with respect to accuracy and completeness of disclosure=of such
information, and the Financial,Advisor makes no guaranty, warranty or other representation respecting
accuracy and completeness of the Official.Statemeni or any other matter related'to the Official Statement.
MISCELLANEOUS
Insofar as any statements made in this Official Statement involve matters of opinion or of estimates,
whether or not expressly stated, they are set forth as such and not as representations, of fact No
representation is made;'that any ofsthe statements wiff be realized. Neither this Official Statement nor any
statement which may have been made verbally or in writing is•tobe construed as a contract with the
of the 2001,.Bonds.
•
i9
•
•
•
• During the'initial,offering period for;the 2001 Bonds, copies of the Indenture may be obtained, upon
written request, from the City:After;issuance'of the 200E Bonds,copies of such documents may be obtained
from the Trustee.
The execution and delivery<ofthisOfficial Statement have been duly authorized by the City Council of
the City.
CITY OF.PETALUMA
By:
City Manager
APPENDIX A
SUMMARY.OF CERTAIN PROVISIONS
OF THE INDENTURE OF TRUST
•
•
•
•
• 40 •
O
APPENDIX B' •
• . GENERAL..INFORMATION AND ECONOMIC
INFORMATION ABOUT
CITY OF PETALUMA
Appendix B- l
•
•' CITY+OF;PET•ALUMA
GENERAL INFORMATION AND ECONOMICS
• Population
The following table summarizes populatioh figures for the City and for,the-County.
.CITY OF PETALUMA-AND SONOMA COUNTY
Population
Year City of Petaluma Sonoma County
1970 24;870 204,885
•
1980 33,834- ,299,681
1990 43;184.. '3 88,222
1997 49;200. 428,600
1998 50,400 437,100
1999 51,700 443,700
2000 53,000. 450,000
• Source: The 1970, 1980,and 1990 totals'are U.S.Census figures. The figures for the years 1997 through 2000 are based upon adjusted
' January.! estimates provided by the`State:
•
Employment
•
•
•
•
•
•
•
• Appendix B-2
i
•
The following :table, summarizes. historical employment and unemployment in the Santa Rosa.
Metropolitan Statistical Area,comprised of Mann and Sonoma Counties.
SANTA ROSA METROPOLITAN:STATISTICAL'AREA •
Civilian tabor Force,Employment and Unemployment -
Annual Averages
1996. 4997 1998 1999 -2000'
•
Civilian Labor.Forcefa -230;060 .239;60 247,000 25Q800 259,500
Civilian Employment 219,900 230,600 238,800 244;100 252;600
Civilian Unemployment 10:100 9_000' 8200 - 6700. 6900
Total 460;000 479,200 494,000 501,600 519;000'
Civilian Unemployment.Ratetbl 4.4% 3:_8% 3.3% 2.7% 2.6%.
to . .
Based on place of work residence;:March 2000:Benchmark.
(b) The unemployment rate is calculated using unrounded data
•
Source: .California Employment Development Department,Labor,Market Information Division
•
The following/table:summarizes the,historical numbers.of workers'by'industry-in the Santa Rosa
O.
Metropolitan"StatlsticalArea,comprised of Mann and Sonoma Counties.
•
•
•
'SANTA ROSA METROPOLITAN STATISTICAL AREA
Estimated.Number of,Wage.and'Salary,W orkers by Industry°t'
1996 ,1997 1998 .1999 2000
Wage'and Salary_Empl oyment(b)
Total,.All Industries 163,300 171,600 179,600 185,700 193,600 _
Total Farm .5,800 6;200 6;500 6,400 7,000
Mining .500 500 400 . 400 400
Construction '8,300 9;300 10,200 12,100 13,500
Manufacturing 23;600 ':2600 28;100 29,600 31,400
Transportation&Public Utilities. 5,900 6;100 6,400 6;200 6,300
Wholesale.Trade 7;200 7;700 8,000 7;000 7,000
'Retail',Trade 33,200 '33;600 3400 35,200 35;800
Finance,,Insurance&Real Estate 9,500 9;600 9,900 10,300 10;200
Services- 44,400 47;400 49300. 51,800 54,400
Government' 25,000 25;200 25,600 26.600 27,700
•
t°' .Based on place of work: -
(b) March-2000 Benchmark
Source: California Employment Development Department.
•
Appendix B:-.,3
•
. .
Largest Employers
The following table represents the ten largest private employers in the City:
•
• CITY OF.PETALUMA
Largest Employers
2000
Comnanv .Product/Service Emolovees.
Kaiser Permanente Health-Maintenance.Organization 1',217°t
SOLA Optical Eyeglass Lenses 862
• Advanced Fibre Communications Telecommunications Equipment 800
Uriited,States Postal Services MailService.- 775
Petaluma Valley Hospital Medical Service 736
Petaluma City Schools Education 715
Hansel Enterprises Auto Sales 460
Alcatel USA Fiber Optics Equipment 440
City of Petaluma City.Government 305
North Bay Construction Construction 300
Source: Petaluma Chamber of Commerce and telephone survey.
Construction Activity
A five-year history of building nelnritvaluations for the City is shown below:
•
CITYOFPETALUMA
.Building Permit Valuations -
(Dollars in Thousands)
Year Residential Unitsl'1 Residential Valuationsjbl •
1996 176, 522;201
1997 456 59,785
1998 571 69,379
1999 587 , 76,823
2000 300 42,653
•
!e� Does:not include alterations and additions.
(5) Includes all residential building activity.
Source: "California'Buildiing Permit Activity,-Economic Sciences Corporation.
• Appendix.B-4
•
•
•
•
Public Utilities
Water is purchased•from the Sonoma County Water.Agency(the "SCWA"). Garbage services are
furnished by Empire Waste Management. •
Commercial Activity •
The following table summarizes historical.taxable transactions in the City and_the County.
CITY OF P_ETALUMA AND SONOMA.COUNTY
Taxable Transactions •
(Dollars in Thousands)
•
City of Petaluma _ Sonoma County;
Year • Outlets Taxable Transactions. Outlets. Taxable Transactions, - - .
-1995 1,879 531,113 16,113 4!222;495
1996 1,947 .597,949 16321, 4;569,7.15
1997 1,992 662;587 16,175 4;989;880
1998 2;036 726,250 16,195 " 5;383;612
1999 2,037 600,992 16,600 6;017;754
Source:+State Board of Equalization. • - 0
•
•
•
•
Appendix B-5
i.
•
•' .
- Median;HouseholdIn-In-Come
Effective.Buying Income.(EBI) is defined'+as€money income less personal income tax and non-tax
payments, such as fines, fees,or penalties. The following table summarizes historical median household EBI
for the City and the County.
CITY'OF PETALUMAAND SONOMA COUNTY
Median Household Effective BuyingIncome,
City 6Petaluma Sonoma County
Year1a1 Median EBI Median EBI
1996 $40,432 $35,957
1997 41,818 '37;182
1998 43,449 38,503
1999 44,736 39,309
2000 47;539 42,479
91 As.ofdanuary I.
Source: "Survey of Buying Power",Sales and Marketing Management Magazine.
SCity Investments
Under the provisions of the City's Investment Policies,,which were.adopted in March 1999 and 2001,
and in accordance with California Government Code Section 53601, the,City may invest or deposit in.the
following types of investnfents:
Local Agency Investment Pools (State LAIF or County'Investment Pool)
Certificates of Deposits placed with commercial,banks and/or savings'anct loan associations
Negotiable Certificates"ofDeposit
Bankers Acceptances
Securities of the U.S..Government, or its Agencies
Repurchase Agreements
' Commercial,Paper
Appendix B-6
C
•
The City's cash'and investments as of January 31,2000' are set•forth in the table below. O
CASH AND INVESTMENT.PORTFOLIO,
January 31,2001
- Weighted •
Market Par Value Percent of Days to Estimated
Value 'LCostl Portfolio.. 'Maturity Annual Yield
Investments.Managed.by City,Treasurer
Local Agency Investment Fund .$37,447,943 S36,973,346 .55.67% 1. 6.252%
Federal Agency'Securities 10,546,550 10 500,000 15.81 1,034 6.38
California Asset ManagementProgram '747.318 747:318 1_13 1, 6.31
Subtotal 48,741,811 48;220;665 72.61
Investments Managed by,Fiscal.Agents
California Asset Management,Program 17,629,101' 17,629,101 26'.55 1 6:31.
First American Treasury:Obligations 147;523 147,523 0.22 d, 5188..
Wells Fargo Money Market. 444 444 (for) I 5.42'
Chase Vista 10,235 10,235. 0.02 1 5:52
Union Bank 16;643 16;643 0.03 1 5.63'
Cashheldby Trustees 1,110 :1.110 0.00 1
Subtotal 171805,056 17;805;056 26.81
Checking Accounts' 384'972 384,972. .658 1
•
Total Cash.and Investments. $ 661931;839 $:66;410;693 100.00% .
. Source: 'City of Petaluma
Retirement Programs
The City offers retirement benefits,.1p all employees. There are two separate plans:; `the•California
Public Employees;Retirement System, which is.offeredto employees who work-in exces •of E,000 Jinurs per
year and the Public Agency Retirement System Which is offered'to employees who work less than 1,000 hours
per year. _
•
California'Public=Emao ees Retirement S stem
The City of Petaluma contributes to the°California Public Employees Retirement System(PERS"),an
agent multiple-employer defined benefit pension plan.,PEAS provides retirement and disabilitybenefits,annual
cost-of-living adjustments, and,death;benefits to plan members and'beneficiaries. PERS ragt`stas,a common
investment and administrative agent for participating public entities within the State'of California. Benefit
provisions and all other requirements are,established by state statute and city ordinance. There are two PERS
plans' 1)Miscellaneous'and2)safety winch covers fire and police only
PERS participants are required to contribute 7% for miscellaneous employees and 9% for safety
employees of their annual covered salary. The City is required to contribute an actuarially'determined rate;
the current rate(as of June 1999)!is 4.185/n.for,miscellaneous employees and 9.014% for safety;employees,
Appenu x,13-.7 lb
•
•
of annual covered payroll.. The contribution r8quireinents of plan members,and•theCity are established and
may amended byPERS.
As of June 30,1998(the most recent actuarial information available),the,total pension benefit obligation
for Miscellaneous employees of;the City was $25,471,687,.,net assets available for plan benefits were
$30,925437 and the net assets available for plan benefits exceeded the total pension benefit,obligation by
$5,453,730. The total pension benefit obligation at that time for safety,;employees of the City was$43,013,000,
net assets`available for plan benefits;werel$45,690,000 and the net assets available for plan benefits exceeded
the total pension benefit obligation by$2,677,000.
Public Agency Retirement
The City of Petaluma contributes to the Public Agency Retirement System/Alternative Retirement
System ("PARS"), a public agency multiple-employer defined contribution pension,trust PARS provides
benefits at the time of retirement, total disability or death. PARS,acts as a common investment and
administrative agent for::-participating public agencies: Benefit provisions and all otherrequirements are
established by federal statute and city resolutions. .
Participants are required to contribute 7%of their annual salary The City is required to contribute 0.5%
of the annual salary of covered.participants. The contributiciffrequirements were established in the Adoption
Agreement. For the year ended:June 30, 2000, the City contributed $2;40.0 and the covered employees
contributed$33,441 which met the:requirements of the plan:,
• .
•• Appendix B-8
APPENDIX C
EXCERPTS FROM THE COMPREHENSIVE e
ANNUAL FINANCIAL REPORT •OF THE CITY FOR THE FISCAL YEAR ENDED JUNK 30,2000
•
•
Appendix C- 1
•
ii
•
APPENDIX'.D
PROPOSED FORM OF
BOND COUNSEL OPINION
Appendix D- 1
PROPOSED,FORM.OF
BOND COUNSEL OPINION
[LETTERHEAD OF JONES.HALL]
•
Appendix Dr 2
•
•
APPENDIX E
• FORM OF
CONTINUING DISCLOSTIRE CERTIFICATE
.41 Appendix E- 1
•
•
•
APPENDIX F
DTC AND'THE'BOOK=ENTRY ONLY=SYSTEM•
•
Appendix F-_I S.
•
DTC AND THE;BOOK-ENTRYtONLY SYSTEM
The following description of the proceduresiand,record-keeping,with'respect to beneficial ownership
interests in the 2001 Bonds,payment of principal,interest and other,payments•with respect to the'2001 Bonds
to Participants or Beneficial Owners,confirmation transfer of beneficial ownership-interests°in such 2001
' Bonds.and other related transactions by•and between DTC, the Participants and the Beneficial Owners is
based on information provided by Accordingly,the City takes'no re'spon'sibility for the accuracy thereof.
DTC will act;as^securities depository for the 2001 Bonds. The 2001 Bonds,will be issued as fully-
registered securities registered iii the'name of Cede&Co:(DTC's partnership nominee).One fully-registered
Bond will be issued for each maturity of We 2001 Bonds;:each in the initial aggregate principal amount of such
maturity; and will.be,deposited.with:DTC.
.
DTC is a limited-purpose;trust company-organized under the New Law, a'"banking
organization" within the meaning of the New York Banking Law, a_meniber`of the Federal Reserve System,
a "clearing corporation" within the meaning.of the New YorklJniform"Commercial,Code, and a "clearing
agency":registered pursuant to;the provisions'of Section 1 7A of the Securities Exchange Act of 1934. DTC
holds securities that its?participants;,("Participants") deposit=with DTC: DTC also facilitates the settlement
among Participants of securities,transactions, such as transfers and pledges, in,deposited.securities through
electronic computenzed book-entry changesinParticipants'accounts,therebyeliminatingtheneedforp hysical
movement of,securities-bonds. "Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing companies,and certain other organizations'. DTC is owned`by a number of its Direct
Participants and by the New-York Stock Exchange,Inc ;the.American Stock Exchange,Inc.,and the National
Association of Securities Dealers,Inc.Access+to the DTCsystem is also available to others such as securities
brokers and dealers, banks'and`trust companies that clear through or maintain a;custodial relationship with a
Direct Participant,either directly or indirectly("Indirect Participants") The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Bonds under the•DTCsystem must be made by or through Direct Participants,which will
receive credit for the 2001 Bonds,on DTC's records. The ownership interestof each Beneficial Owner is in
turn to be recorded on"the Direct and Indirect Participants';records.BeneficialOwners will not receive written
confirmation from DTC of their purchase,but Beneficial Owners are expected to receive written confirmations
providing details of the transaction,as well as periodic statements of their holdings,from,the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.Transfers,of ownership interest _
in the'2001 Bonds are to°be-accomplished by entries made on the books'of Participants acting on behalf of
Beneficial,Owners. Beneficial.Ownerswillrnot-receive bonds representing their ownership interests in 2001
Bonds, except'in event that+use of the book-entry system for the.2001'Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Participants with DTC^are registered in the
name of DTC s'partnership,nominee, Cede& Co. The deposit of Bonds with DTCandtheir registration in.
the name of Cede,&',Co. effect rio change,in,beneficial ownership: DTC has no knowledge of-the actual
Beneficial Owners,ofthe'2001 Bonds;"DTC'srecords reflect only the identity of the-Direct yarticipants to
whose accounts such Bonds are credited,which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on'behalfof their'customers.
Conveyance of notices and_other communications by DTC to Direct Participants,by Direct Participants '
to Indirect Participants, and by Direct'Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them;subject to any statutory or regulatory requirements as may be in effect
from time to time.
• Appendix F-2
Redemption noticeswill be-sent to,Cede &Co.If less tliansall of the 2001 Bonds within a maturity are
being prepaid,DTC's"practice--is to determine'.by lot the amount of the interest of each,Direct Participant in
such maturity to be prepaid.
Neither DTC nor Cede & Co. will consent or vote with-respect to 2001 Bonds:,Under its usual
procedures,,DTC mails an Omnibus-Proxy to,the Ci y as soon as possibleafer the record date.The Omnibus
Proxy assigns Cede & Co 's consenting-or votingi rights`to,those:DirectParticipants to whose accountstne
2001 Bondsiare credited'on the record date^(identified in•a,listing,attached-tothe Omnibus Proxy):
Principal and interest payments with respectto the 200 I Bonds will be made to DTC DTC's•practice •
is;to credit/Direct Participants' accounts on the payment date ins accordance'with,theirlrespective:holdings
shown on'DTC's records unless DTC has reason"to believe'that it.will not recei've paymentona payment date.
Payments•by Participants to Beneficial Owners will be governed.by standing instructions'.and customary
practices,as is,the case;withsecurities held for the:accounts of customers in bearer form,or registered in
"street name," and.will beathe responsibility Of such•Participant and not of'DTC,''the Trustee or the•City,
subject to any statutory or regulatory requirements as may be in effect from time to time Payment of principal,
and interest to DTC is the responsibility of the,City or the Trustee, disbursement:of suchpayments•to,Direct
Participants will be the responsibility of•DTC, and disbursement of such payments to the'Beneficial'Owners
willbe the,responsibilityofDirect and IndirectParticipants .
The'City and the.Trustee cannot and`do not give• ny assurances that DTC will distribute•to Participants;
or
rth to;DTGora is or o er as will di tribute payments of principal or;interest with respect to the 2001 Bonds,
p g ed Owner, or any redemption or other notices, to the Beneficial
Owners, or that they will do so on a'timely basis or will serve•and act in the manner described in this Official
Statement. The City and:the Trustee are not responsible;or liable for the failure of DTCtorany Participants
to,make any payment or give any notice to.a Beneficial.Owner with respect to the.2001 Bonds or any error •
or delay relating:thereto. •
DiscontinuancerofDTC Service. In the event that (a);DTC determines•not:to continue to:act as
securities depository;for the 2001 Bonds,•or(b)the City deterniinesjo remove DTC from its functions°as.a°
depository;DTC's role as securities depository for the 2001 Bonds and use of the book-entry system,will:be
diScoritinue&If the City-failsito select_a'qualified securities',depository-to•replace;DTC,'the'City:will cause3he
Trustee to:execute and deliver new Bonds an-fully registered;forms ins such denominations numbered-in the
manner•deiermine&b ,`,the Trustee and-registered in,the names:of such?persons as are requested by the
Y g =
Owners thereof. Upon.such registration, such,persons in whose names the 2001 Bonds are
Beneficial oll
g becoine;the•registered'Owners•of the 2001 Bonds forall purposes.
Transfer and Exchange of Bonds. Thefollowing provisions regarding the exchange and-transfer of
the 2001' Bonds apply only during,any•penodin which the 2001' Bonds•are notsubject.to-DTC's book-entry.
system. While•the 2001 Bonds'are subject to;DTC's•book-entry.:system;,their exchange and'transfer will be
effected through DTC.and the•Participants,,and will be.subject to the procedures, rules and requirements
establishedby DTC. •
•
Thesregistration of any Bond>may,,in accordance with its terms, be•transferred upon,the'Registration.
Books by the person in whose name it is registered,in person or by his_duly authoriied'attomey;upon surrender
of such.Boid;for cancellation at the Corporate Trust Office of the Trustee,in San,Francisco,iCalifotnia,
accompanied by•delivery<of a written instrument of transfer in a form approved by the Trustee•duly executed. .
Whenever any Bond or Bonds shall be surrendered for-registrationyof transfer; the Trustee shall execute„
Appeudia F-3 •
•
• authenticate and deliver a new Bdnif or Bonds of the same maturity and aggregate principal amount, in any
authorized denominations:
Bonds maybe exchanged at the Corporate Trust Office of the Trustee, for a like aggregate principal
amount of Bonds of other authorized denominationsiof the same maturity. The City shall pay any costs of the
Trustee incurred in connectioriwith such exchange, except that Truste&may-require the payment by the
Bond Owner requesting,such exchange of any tax or other governmental charge required to be paid with
respect to such exchange.
•
•
• Appendix F-4
•
•
APPENDIX G
SPECIMEN MUNICIPAL•BOND INSURANCE POLICY •
•
•
•
Appendix•G-'1 �•
•