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 City of Hermosa Beach --- 09-23-97
ADOPTION OF RESOLUTION PROVIDING FOR THE ISSUANCE OF $400,000 PRINCIPAL AMOUNT OF LOWER PIER AVENUE ASSESSMENT DISTRICT, LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 1997
RECOMMENDATION
The City Council has followed all of the prescribed procedures to set up the assessment district, order improvements and provide for assessments, as outlined in the attached resolution.
ANALYSIS
The resolution provides for issuance of limited obligation bonds in the principal amount of $400,000. The bonds are secured by a first lien against the real property in the Assessment District and will be re-paid from assessments levied in the same manner as real property taxes. Neither the credit nor the taxing power of the City is pledged for the payment of the bonds or interest. The only obligations of the City are those administrative duties related to the collection and disbursement of assessments.
The purchase contract, approved as part of the resolution, provides for sale of a single bond in the principal amount of $400,000. Mark Northcross of Project Finance Associates, who served as our financial advisor on the COP's for the greenbelt purchase and the defeasance of the those COP'S, has tentatively arranged for the sale of the bond to ABN-Amro at an interest rate of 6.5%. ABN-Amro is a AA rated, international Dutch bank who is very active in the municipal leasing market. They have recently expanded their interests to include small assessment districts. Mr. Northcross' letter verifying that the rate is a reflection of the current market is attached.
In arranging for the sale of the bond to a single buyer, the City avoids additional costs of approximately $20,000, which would otherwise be necessary for disclosure documents, printing costs and underwriters discounts. The financial advisor fee will be the only additional cost associated with issuance of the bonds, other than the interest paid by the property owner.
PROJECT FINANCE ASSOCIATES, LLC
September 18, 1997 Ms. Viki Copeland Finance Director 1315 Valley Drive Hermosa Beach, CA 92054-3885
Dear Viki; I have reviewed the terms of the proposed purchase of the Lower Pier Avenue assessment bonds by ABN-Amro. The bank proposes to buy the bonds at an interest rate of 6.5% for a period of 20 years. The bonds are callable on any interest payment date at a premium of 3%. Under current market conditions, the interest rate on unrated assessment bonds ranges from 6% to 7%, depending on the amount of developed property in the district and the diversification of ownership. While this district is fully developed, with only 18 assessed parcels, ownership would be considered concentrated. Also, an interest rate in that range assumes an underwriter's discount of at least 2% and an issue size over $1 million. Consequently, with an interest rate pegged to the middle of the current range for assessment bonds, I believe that the proposal from ABN-Amro is fair and reflects the market. Note also that there is no underwriter's discount. Furthermore there are no expenses for official statement preparation or for a paying agent. All of these factors combined save the City an additional $20,000, by my estimate. Please call me if you have any further questions on this matter. Very truly yours, Mark Northcross Principal
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH PROVIDING FOR THE ISSUANCE OF $400,000 PRINCIPAL AMOUNT OF LOWER PIER AVENUE ASSESSMENT DISTRICT, LIMITED OBLIGATION IMPROVEMENT BONDS, SERIES 1997. RECITALS: A . The City Council of the City of Hermosa Beach, California (the "City Council") by its Resolution No. 96-5811, as amended, (the "Resolution of Intention") declared its intention to form the Lower Pier Avenue Assessment District (the "Assessment District") pursuant to the provisions of the Municipal Improvement Act of 1913 (California Streets and Highways Code Section 10000, et seq.) (the "1913 Act") and ordered the City's Director of Public Works to prepare and file a report with the City Council and provided that serial bonds or term bonds, or both, would be issued thereunder pursuant to the provisions of the Improvement Bond Act of 1915 (California Streets and Highways Code Section 8500, et seq.) (the "Bond Act").
B. The City Council by its Resolution Nos. 96-5817 and 96-5825 preliminarily approved the Engineer's Report, as modified (the "Engineer's Report").
C. Following notice duly given in accordance with law, the City Council held a public meeting and a public hearing regarding the Resolution of Intention and the Engineer's Report.
D. Following the public hearing, pursuant to its Resolution No. 96-5836, the City Council confirmed the assessments for the Assessment District and ordered the proposed improvements set forth in the Engineer's Report to be made (the "Project").
E. Notice to property owners of the recordation of the assessment and of the 30-day period within which assessments were to be paid in cash has been duly given an the 30-day cash collection period has expired.
F. The City Council desires to issue City of Hermosa Beach, Lower Pier Avenue Assessment District, Limited Obligation Improvement Bonds, Series 1997 (the "Bonds") under and pursuant to the Bond Act to represent those assessments which remain unpaid. The official who has been designated as the collection officer for cash payments of such assessments has filed with the City Clerk a list of all assessments which remain unpaid.
G. ABN-AMRO has offered to purchase the Bonds from the City.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
SECTION 1 . DEFINITIONS; RULES OF CONSTRUCTION; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY.
Section 1.1. Definitions. The following terms shall, for all purposes of this Resolution and of any Supplemental Resolution and of the Bonds, and of any certificate, opinion or other document herein mentioned, have the following meanings:
"Assessment" means the assessment levied by the City pursuant to the Bond Act under the proceedings taken pursuant to the Resolution of Intention, constituting a first lien and charge upon the real property within the Assessment District. "Assessment District" means the Lower Pier Avenue Assessment District in the City. "Assessment Installments" means the installments of principal, interest and premium, if any, to be paid on the unpaid Assessment by the owners of real property within the Assessment District. "Authorized Investments" means any obligation in which the City may lawfully invest its funds. "Authorized Representative of the City" means the Mayor, the City Manager and any other person designated by such officers and authorized to act on behalf of the City pursuant to this Resolution or any Supplemental Resolution. "Bond Act" means the Improvement Bond Act of 1915, being Division 10 of the California Streets and Highways Code, commencing with Section 8500. "Bond Counsel" means the law firm of Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, or another firm of attorneys of favorable national reputation in the field of municipal bond law. "Bond Date" means the dated date of the Bonds, which shall be the Closing Date. "Bonds" means the limited obligation improvement bonds authorized by and at any time Outstanding pursuant to the provisions of this Resolution and as designated pursuant to Section 2.3 hereof. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State or the Federal Reserve System are authorized or obligated by law or executive order to be closed. "City" means the City of Hermosa Beach, California. "City Council" means the City Council of the City. "City Treasurer" means the City Treasurer of the City. "Closing Date" means the date of delivery of the Bonds to or upon the order of the Purchaser. "Code" means the Internal Revenue Code of 1986, as amended. "County" means the County of Los Angeles, California. "Federal Securities" means those securities described in Sections 1360 and 1360.1 of the California Financial Code and includes United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans so long as the loans are obligations for which the faith and credit of the United States are pledged for the payment of principal and interest. "Fiscal Year" means any twelve-month period extending from July 1st in one calendar year to June 30th of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the City as its official fiscal year period. "Improvement Fund" means the fund by that name created and established pursuant to Section 4.1 hereof. "Independent Public Accountant" means any certified public accountant or firm of certified public accountants appointed and paid by the City, who, or each of whom (i) is in fact independent and not under domination of the City; (ii) does not have any substantial interest, direct or indirect, in the City; and (iii) is not connected with the City as an officer or employee of the City but who may be regularly retained to make annual or other audits of the books of, or reports to, the City. "Interest Payment Date" means March 2 and September 2 in each year, beginning March 2, 1999 and continuing thereafter so long as any Bonds remain Outstanding. "Maturity Date" means the date specified in any Bond on which the principal of such Bond becomes due and payable. "1913 Act" means the Municipal Improvement Act of 1913, being Division 12 of the California Streets and Highways Code, commencing with Section 10000. "Outstanding", when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.7) all Bonds theretofore executed, issued and delivered by the City under this Resolution except (i) Bonds theretofore cancelled by the City Treasurer or surrendered to the City Treasurer for cancellation, (ii) Bonds paid within the meaning of Section 6, and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered pursuant to this Resolution. "Owner" when used with respect to any Bond, means the person in whose name the ownership of such Bond is registered on the Registration Books maintained by the City. "Principal Payment Date" mean September 2 of each year, commencing September 2, 1999. "Project" means the works and improvements described in the Engineer's Report for the Assessment District, approved by the City Council by its Resolution No. 96-5836 and to be financed in part with the proceeds of the Bonds. "Purchaser" means ABN-AMRO. "Record Date" means, with respect to any Interest Payment Date, the fifteenth day of the calendar month immediately preceding the month in which such Interest Payment Date occurs, whether or not such day is a Business Day. "Redemption Date" means, with respect to any Bonds, the date on which such Bonds have been called for redemption pursuant to the terms of this Resolution prior to their Maturity Date. "Redemption Fund" means the fund by that name created and established pursuant to Section 4.1 hereof. "Registration Books" means the records maintained by the City Treasurer pursuant to Section 2.9 hereof for the registration and transfer of ownership of the Bonds. "Resolution" means this Resolution and includes subsequent amendments hereof and any Supplemental Resolution. "Resolution of Intention" means Resolution No. 96-5811, as amended, of the City Council referred to in the recitals hereof. "State" means the State of California. "Supplemental Resolution" means any resolution adopted by the City Council amendatory of or supplemental to this Resolution. "Tax Certificate" means the Tax Certificate dated the Closing Date relating to the requirements of certain provisions of the Code, as each such certificate may from time to time be modified or supplemented in accordance with the terms thereof.
Section 1.2. Rules of Construction. All references in this Resolution to "Sections," and other subdivisions, unless indicated otherwise, are to the corresponding Sections or subdivisions of this Resolution; and the words "herein," "hereof," "hereunder," and other words of similar import refer to this Resolution as a whole and not to any particular Section or subdivision hereof.
Section 1.3. Authorization and Purpose of Bonds. The City has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines that all things, conditions and acts required by law to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the City is now authorized, pursuant to each and every requirement of law, to issue the Bonds in the manner and form as in this Resolution provided. The City Council hereby authorizes the issuance of the Bonds pursuant to the Bond Act and this Resolution to represent unpaid Assessments in accordance with the List of Unpaid Assessments attached hereto as Exhibit A for the purpose of financing the Project.
Section 1.4. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Resolution shall be deemed to be and shall constitute a contract between the City and the Owners 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 or 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.
SECTION 2. THE BONDS.
Section 2.1. Equality of Bonds, Pledge of Assessment Installments. The City hereby pledges, in trust for the protection and security of the Owners, all of its right, title and interest in the Assessment Installments, and all other funds, accounts and sub-accounts created hereunder for the payment of principal of, premium (if any), and interest on the Bonds. Pursuant to the Bond Act and this Resolution, the Bonds shall be and are equally secured by a pledge of and lien upon the Assessment Installments, and the amounts on deposit in the aforementioned funds and accounts.
The Bonds and interest thereon are not payable from the general funds of the City. Neither the credit nor the taxing power of the City is pledged for the payment of the Bonds or the interest thereon, and no Owner of the Bonds may compel the exercise of any taxing power by the City or force the forfeiture of any of its property. The principal of, and premium (if any) 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.
Section 2.2. Collection of Assessments. The unpaid Assessment Installments shall be payable in annual series corresponding in number to the number of serial maturities of the Bonds issued. An annual proportion of each unpaid assessment shall be payable in each year preceding the date of maturity of each of the several series of Bonds issued, sufficient to pay the Bonds when due, and such proportion of each unpaid Assessment Installment coming due in any year, together with the annual interest thereon, shall be payable in the same manner and at the same time and in the same installments as general taxes on real property are payable, and become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes on real property. Nothing in this Resolution or in any resolution supplemental hereto shall preclude the redemption prior to maturity of any Bonds or the payment of the Bonds from proceeds of refunding bonds issued under any law of the State.
Section 2.3. Issuance of Bonds to Represent Unpaid Assessments. The Bonds, in the aggregate principal amount of $400,000 shall be issued as provided in this Resolution upon the security of the Assessment in accordance with the provisions of the Resolution of Intention and the Bond Act and the proceedings conducted thereunder. The Bonds shall be designated "City of Hermosa Beach, Lower Pier Avenue Assessment District, Limited Obligation Improvement Bonds, Series 1997." The Bonds shall be issued only in fully registered form without coupons in the denomination of $5,000 or any integral multiple thereof. The Bonds shall be serial bonds and be dated the Closing Date and shall bear interest at the rate of 6½% per annum (calculated on the basis of a 360-day year of twelve months) and shall mature on September 2 in each of the years and in the amounts as follows as follows:
Section 2.4. Medium and Payment. Principal of, and premium (if any) and interest on the Bonds shall be payable in lawful money of the United States of America. Interest with respect to each Bond shall accrue from the Bond Date. Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from such Interest Payment Date, or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the Bond Date; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment. Principal of and interest on any Bond shall be paid by check of the City mailed by the City Treasurer on or before the Interest Payment Date by first class mail, postage prepaid, to the person whose name appears in the Registration Books as the Owner of such Bond as of the close of business on the Record Date, to the address that appears on the Registration Books, provided that the payment of principal of the Bonds on the final maturity date and the payment of the principal of the Bonds and any premium due upon the redemption thereof shall be payable upon presentation and surrender thereof at maturity or earlier redemption at the office of the City Treasurer.
Each Bond shall bear interest until its principal sum has been paid; provided, however, that if at the maturity date of any Bond, or if at the redemption date of any Bond which has been duly called for redemption as herein provided, funds are available for the payment or redemption thereof in full accordance with the terms of this Resolution, the Bond shall then cease to bear interest.
Section 2.5. Form of Bonds and Certificate of Authentication and Registration. The Bonds shall be sold to the Purchaser and shall be initially issued in the form of a single fully registered bond in the denomination of $400,000, registered in the name of the Purchaser. The form of the Bond, the form of the certificate of authentication and the form of registration thereon shall be substantially in the form attached hereto as Exhibit B and incorporated herein by this reference. The Bonds may be printed, lithographed or typewritten and may contain such reference to any of the provisions of this Resolution as may be appropriate.
Section 2.6. Execution and Authentication2.6. Execution and Authentication.6. Execution and Authentication.6. Execution and Authentication
. The Bonds shall be executed by the manual or facsimile signature of the City Treasurer and attested by the manual or facsimile signature of the City Clerk and the seal of the City (or a facsimile thereof) shall be impressed, imprinted, engraved or otherwise reproduced thereon. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed have been authenticated and delivered by the City Treasurer (including new Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds may, nevertheless, be authenticated and delivered as herein provided, and may be issued as if the persons who signed or sealed such Bonds had not ceased to hold such offices.
The Bonds shall bear thereon a certificate of authentication and registration, in the form set forth in Exhibit B hereto, executed manually by the City Treasurer. Only such Bonds as shall bear thereon such certificate of authentication and registration shall be entitled to any right or benefit under this Resolution, and no Bond shall be valid or obligatory for any purpose until such certificate of authentication and registration shall have been duly executed by the City Treasurer.
Section 2.7. Registration of Exchange or Transfer. The registration 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 or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the City Treasurer, accompanied by delivery of a written instrument of transfer in a form acceptable to the City Treasurer and duly executed by the Owner or his or her duly authorized attorney. Bonds may be exchanged at the office of the City Treasurer for a like aggregate principal amount of Bonds of other authorized denominations. The City will not charge for any new Bond issued upon any exchange, but may require the Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. Whenever any Bond or Bonds shall be surrendered for registration of transfer or exchange, the City Treasurer shall authenticate and deliver a new Bond or Bonds; provided that the City Treasurer shall not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding the date of any selection of Bonds to be redeemed, or (ii) any Bonds chosen for redemption.
Section 2.8. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become mutilated, the City Treasurer, at the expense of the Owner of such Bond, shall execute, and the City Treasurer shall thereupon authenticate and deliver, a new Bond of like series, tenor, maturity and aggregate principle amount in authorized denomination in exchange and substitution for the Bond so mutilated, but only upon surrender to the City Treasurer of the Bond so mutilated. Every mutilated Bond so surrendered to the City Treasurer shall be cancelled and destroyed. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the City Treasurer and, if such evidence be satisfactory to the City Treasurer and indemnity satisfactory to the City Treasurer shall be given, the City Treasurer, at the expense of the Owner, shall execute, and the City Treasurer shall thereupon authenticate and deliver, a new Bond of like series and tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond the City Treasurer may pay the same without surrender thereof upon receipt of indemnity satisfactory to the City Treasurer). The City Treasurer may require payment of a reasonable fee for each new Bond issued under this Section 2.8 and of the expenses which may be incurred by the City and the City Treasurer. Any Bond issued under the provisions of this Section 2.8 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 not the Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Resolution with all other Bonds secured by this Resolution.
Section 2.9. Registration Books. The City Treasurer will keep or cause to be kept, at the office of the City, sufficient books for the registration and transfer of the Bonds, and, upon presentation for such purpose, the City Treasurer shall, under such reasonable regulations as he or she may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books, Bonds as herein provided.
The City may treat the Owner of any Bond whose name appears on the Registration Books as the absolute Owner of such Bond for any and all purposes, and the City shall not be affected by any notice to the contrary. The City may rely on the address of the Owner as it appears in the Registration Books for any and all purposes. It shall be the duty of each Owner to give written notice to the City of any change in such Owner's address so that the Registration Books may be revised accordingly.
Section 2.10. Validity of the Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the Project or upon the performance by any person of his obligation with respect to the Project.
Section 2.11. Refunding of Bonds. The Bonds may be refunded by the City pursuant to Division 11.5 of the California Streets and Highways Code upon the conditions as set forth in appropriate proceedings therefor.
SECTION 3. REDEMPTION OF BONDS.
Section 3.1. Mandatory Redemption. The Bonds shall be redeemed prior to maturity, in whole or in part on any Interest Payment Date by lot within a maturity from surplus monies on deposit and available for such purpose in the Redemption Fund from the sources, to the extent of and in the manner set forth in the fourth paragraph of Section 4.4 hereof, at a redemption price, expressed as a percentage of the principal amount of the Bonds to be redeemed, of three percent (3%) together with accrued interest to the date of redemption:
Section 3.2. Optional Redemption3.2. Optional Redemption.2. Optional Redemption.2. Optional Redemption
. The Bonds may be redeemed prior to maturity, in whole or in part on any Interest Payment Date by lot within a maturity from surplus monies on deposit and available for such purpose in the Redemption Fund from sources other than those referred to in Section 3.1, at the option of the City, at a redemption price, expressed as a percentage of the principal amount of the Bonds to be redeemed, of three percent (3%) together with accrued interest to the date of redemption.
Section 3.3. Selection of Bonds for Redemption Section 3.3. Selection of Bonds for Redemption Section 3.3. Selection of Bonds for Redemption Section 3.3. Selection of Bonds for Redemption
. If less than all of the Outstanding Bonds are to be redeemed pursuant to Section 3.1 or Section 3.2, the City Treasurer shall select the Bonds to be redeemed in such a way that the ratio of Outstanding Bonds to issued Bonds shall be approximately the same within each maturity insofar as possible. Within each maturity, the Bonds shall be selected for redemption by lot in any manner that the City Treasurer deems fair; provided, however, that the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof, and that, in selecting portions of such Bonds for redemption, the City Treasurer shall treat each such Bond as representing that number of Bonds of a $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000.
Section 3.4. Notice of Redemption3.4. Notice of Redemption.4. Notice of Redemption.4. Notice of Redemption
. In the event that Bonds are to be redeemed as provided in this Section 3, at least 30 days but not more than 60 days prior to any Redemption Date, a notice of redemption (the "Redemption Notice") shall be sent by personal service, or registered or certified mail by the City Treasurer to the Owners of any Bonds designated for redemption and such securities depositories and securities information services as shall be designated by the City Treasurer. Such Redemption Notice shall specify: (i) the Bonds or designated portions thereof which are to be redeemed, (ii) the date of redemption, (iii) the redemption price, (iv) the CUSIP numbers (if any) assigned to the Bonds to be redeemed, and (v) if less than all Bonds are to be redeemed, the Bond numbers of the Bonds to be redeemed, and shall require that such Bonds be surrendered at the office of the City Treasurer for redemption at the redemption price. Such Redemption Notice shall further state that on the specified date there shall become due and payable upon each Bond or portion thereof being redeemed the redemption price, together with interest accrued to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue and be payable.
Neither failure to receive any Redemption Notice nor any defect in such Redemption Notice so given shall affect the sufficiency of the proceedings for the redemption of such Bonds. Each check or other transfer of funds issued by the City Treasurer for the purpose of redeeming Bonds shall bear to the extent specified the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
Section 3.5. Partial Redemption of Bonds3.5. Partial Redemption of Bonds.5. Partial Redemption of Bonds.5. Partial Redemption of Bonds
. Upon surrender of any Bond to be redeemed in part only, the City Treasurer shall authenticate and deliver to the Owner a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered, with the same interest rate and the same maturity. Such partial redemption shall be valid upon payment of the amount required to be paid to such Owner, and the City shall be released and discharged thereupon from all liability to the extent of such payment.
Section 3.6. Effect of Notice and Availability of Redemption Price3.6. Effect of Notice and Availability of Redemption Price.6. Effect of Notice and Availability of Redemption Price.6. Effect of Notice and Availability of Redemption Price
. Notice of redemption having been duly given, as provided in this Section 3, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption:
(a) Lower Pier Avenue Assessment District, Limited Obligation Improvement Bonds, Series 1997, Improvement Fund (the "Improvement Fund");
(b) Lower Pier Avenue Assessment District, Limited Obligation Improvement Bonds, Series 1997, Redemption Fund (the "Redemption Fund"), within which there shall be the:
Section 4.3. The Improvement Fund. All moneys in the Improvement Fund shall be withdrawn and applied exclusively for the purpose for which the Bonds were authorized to be issued. Prior to any such disbursement, the City Manager or his designee shall review all requests for payment and invoices with respect to the Project and shall inspect all completed work. If the work has been satisfactorily completed, the City Manager or his designee shall prepare a receiving report, in the general form and content attached hereto as Exhibit C, requesting payment by the City from the Improvement Fund. The City Treasurer shall make the requested payment upon receipt of a requisition therefor, in the general form and content attached hereto as Exhibit C.
Upon the filing with the City Treasurer of a certificate by the City Manager or his designee stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, the City Treasurer shall transfer the amount, if any, remaining in the Improvement Fund as directed by the City Council of the City, which directions shall be pursuant to the Resolution of Intention and to the applicable provisions of the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code, and the Improvement Fund shall be closed.
Section 4.4. Redemption Fund. The City hereby agrees to establish and maintain the Redemption Fund until all payments of principal of and premium (if any) and interest on the Bonds have been made and all of the Bonds have been paid or redeemed. The City Treasurer shall establish and maintain within the Redemption Fund an Assessment Installment Account and an Assessment Prepayment Account.
All sums received by the City from the collection of Assessment Installments, including any interest and penalties thereon and the proceeds of the exercise of any of the remedies for delinquent payments available hereunder or under the Bond Act shall be deposited and held in the Assessment Installment Account of the Redemption Fund except for prepayment of the Assessments herein. On each Interest Payment Date and each Principal Payment Date, the City Treasurer shall make payments of interest and principal, respectively, due and payable with respect to the Bonds from monies in the Assessment Installment Account.
On each September 2, all monies in the Assessment Installment Account in excess of the amount necessary to make the payments of principal of and interest on the Bonds then due or overdue and payable on such date (assuming all Owners entitled to payment on or before such date take or have taken any and all actions necessary on their part to receive amounts due them) shall, to the extent permitted by law, be applied as follows:
(a) The moneys shall be retained in the Assessment Installment Account of the Redemption Fund as a credit upon the Assessment; or
(b) The moneys shall be transferred to the Assessment Prepayment Account of the Redemption Fund for application to the advance maturity and redemption of Bonds pursuant to Section 3.
Amounts received from property owners in the Assessment District as prepayments of the Assessment pursuant to Section 4.5 shall be deposited in the Assessment Prepayment Account for application pursuant to Section 4.6. Amounts in the Assessment Prepayment Account shall be used to pay the principal of and redemption premium on Bonds the maturities of which shall have been advanced pursuant to Parts 11 and 11.1 of the Bond Act. The City Treasurer shall advance the maturity of and call Bonds for redemption pursuant to this Resolution and the Bond Act whenever and to the extent surplus monies are on deposit in the Assessment Prepayment Account sufficient to pay the principal of Bonds in integral $5000 amounts plus the redemption premium thereon. On or after each Redemption Date, or prior thereto, upon presentation and surrender thereof, the City Treasurer shall pay the principal of and redemption premium on each Bond the maturity of which has been so advanced from monies in the Assessment Prepayment Account. Interest accrued on each such Bond to the earlier of the Principal Payment Date or Redemption Date shall be paid from monies in the Assessment Installment Account.
Any amounts remaining in the Redemption Fund or the accounts thereof after payment of all of the Bonds and the interest thereon shall be applied in accordance with Section 4.8.
Section 4.5. Prepayment of Assessment. The owner of assessed land, except land which has been ordered to judicial foreclosure, may prepay the Assessment and remove the lien of the Assessment by paying to the City Treasurer the sum of the following amounts:
(a) The amount of any delinquent installments of principal and interest, together with penalties accrued to the date of prepayment.
(b) The unpaid, nondelinquent principal of the Assessment, including principal posted to the tax roll for the current Fiscal Year but not yet paid.
(c) An allowance for the applicable redemption premium. Unmatured principal excludes principal due during the Fiscal Year of prepayment.
(d) A reasonable fee, fixed by the City Treasurer, for the cost of administering the prepayment and the advance redemption of Bonds.
(e) Interest accrued to the next call date of the Bonds. The next call date shall be the next Interest Payment Date which is not less than 90 days after the date of prepayment. Credit shall be given, or refund provided, for installments of interest posted to the current tax roll and actually paid.
(f) Where the owner's land has been ordered to judicial foreclosure, the owner must pay additional amounts in accordance with Part 14 of the Bond Act, provided that attorneys' fees and costs of suit and post judgment interest are not required to be paid into the Redemption Fund. Section 4.6. Application of Prepaid Assessments4.6. Application of Prepaid Assessments.6. Application of Prepaid Assessments.6. Application of Prepaid Assessments
Upon receiving a prepayment of an assessment, the City Treasurer shall deposit it in the Assessment Prepayment Account of the Redemption Fund. All prepayments may be commingled in a single account. From the account the City Treasurer shall make disbursements in the following priority as follows:
(a) The administrative fee shall be deposited in the general fund of the City.
(b) Delinquent principal, interest, and penalties shall be transferred to the Redemption Fund.
(c) The installment of principal due in the Fiscal Year of prepayment shall be transferred to the Redemption Fund.
(d) Interest accrued to the next call date shall be transferred to the Redemption Fund.
(e) The balance in the Assessment Prepayment Account shall be used to advance the maturity of Bonds to the next call date as provided in Part 11 and Part 11.1 of the Bond Act. The amount of Bonds to be retired shall be the maximum for which principal and redemption premium may be paid in full from the Assessment Prepayment Account. Accrued interest on Bonds to be retired shall be paid from the Redemption Fund.
Section 4.7. Certain Procedures Upon Redemption4.7. Certain Procedures Upon Redemption.7. Certain Procedures Upon Redemption.7. Certain Procedures Upon Redemption
If notice of redemption is given, the Bonds so advanced shall mature and become payable on the date fixed for redemption in the notice. The Owner of any such Bond may, prior to the date of redemption, with the consent of the City Treasurer, surrender it and receive the principal and interest thereon to the date of payment together with the redemption premium provided for the Bond. If the Bond has not been sooner surrendered on the date fixed for redemption, the City Treasurer shall set aside to the credit of the Owner of the Bond the amount of principal and accrued interest then due on the Bond together with the redemption premium and the Bond shall then be deemed to have matured and interest shall cease to accrue on the Bond. The amount so set aside shall upon demand and upon the surrender and cancellation of the Bond be paid to the Owner of the Bond. Section 4.8. Redemption Fund Surplus If there is a surplus remaining in the Redemption Fund after payment of all Bonds and the interest thereon, that surplus shall be repaid in accordance with the provisions of Section 8783 of the Bond Act to persons paying supplemental assessments, if any, and the balance may be proportionately credited upon the final installments due upon the Assessments securing the Bonds and repaid to those persons whose Assessments have been previously paid or may be transferred to the general fund of the City.
Section 4.9. Investments.
(a) All moneys in any of the funds or accounts established pursuant to this Resolution shall be invested by the City Treasurer solely in Authorized Investments. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or accounts shall be deposited in the fund or account from which such investment was made. The City Treasurer shall incur no liability for losses arising from any investments made pursuant to this Section.
(b) For the purpose of determining the amount in any fund or account established hereunder, the value of investments credited to such fund or account shall be calculated at the cost thereof, excluding accrued interest and brokerage commissions, if any.
(c) Moneys in the Redemption Fund shall be invested only in obligations which will by their terms mature on such dates as to ensure the timely payment of principal and interest on the Bonds as the same become due.
Subject to the restrictions set forth in Section 5.3, the City Treasurer shall sell at the best price obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer for such funds and accounts or from such funds and accounts. For the purpose of determining at any given time the balance in any fund or account, any such investments constituting a part of such fund and account shall be valued at their amortized cost.
SECTION 5. COVENANTS.
So long as any of the Bonds issued hereunder are outstanding, the City makes the following covenants with the Owners under the provisions of the Bond Act (to be performed by the City or its proper officers, agents or employees) which covenants are necessary, convenient and desirable to secure the Bonds and tend to make them more marketable; provided, however, that said covenants do not require the City to expend any funds other than the Assessment Installments.
Section 5.1. Punctual Payment .
The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Resolution and any Supplemental Resolution, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all Supplemental Resolutions and of the Bonds.
Section 5.2. Limited Obligation; No Required Advances From Available Surplus The Bonds are limited obligation improvement bonds under Section 8769 of the Bond Act and are payable solely from and secured solely by the Assessments and the amounts in the Redemption Fund created hereunder. Notwithstanding any other provision of this Resolution, the City is not obligated to, but may in its sole and absolute discretion, advance available surplus funds from the City treasury to cure any deficiency in the Redemption Fund.
Section 5.3. Tax CovenantsSection . (a) The City Council covenants that, in order to maintain the exclusion from gross income for Federal income tax purposes of the interest on the Bonds, and for no other purpose, it will satisfy, or take such actions as may be necessary to cause to be satisfied, each provision of the Code necessary to maintain such exclusion. In furtherance of this covenant, the Board covenants to comply with such written instructions as may be provided by Bond Counsel.
(b) The City Council covenants that no part of the proceeds of the Bonds shall be used, directly or indirectly, to acquire any "investment property," as defined in Section 148 of the Code, and it shall not take or permit to be taken any other action or actions, which would cause any of the Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code, as in effect from time to time, or under applicable Treasury regulations promulgated thereunder.
(c) The City Council covenants that it will not take any action or omit to take any action, which action or omission, if reasonably expected on the date of initial execution and delivery of the Bonds, would result in a loss of exclusion from gross income for purposes of Federal income taxation, under Section 103 of the Code, of interest on the Bonds.
(d) The City Council covenants that it will not use or permit the use of the proceeds of the Bonds by any person (other than the City or other state or local governmental unit) in such manner or to such extent as would result in a loss of exclusion of the interest on the Bonds from gross income for Federal income tax purposes under Section 103 of the Code.
(e) Notwithstanding any provision of this Resolution, and except as provided below, the City Council covenants that none of the moneys contained in any of the funds created pursuant to this Resolution shall be (i) used in making loans guaranteed by the United States (or any agency or instrumentality thereof), (ii) invested directly or indirectly in a deposit or account insured by the Federal Deposit Insurance Corporation, National Credit Union Administration or any other similar Federally chartered corporation, or (iii) otherwise invested directly or indirectly in obligations guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof); provided, however, that the above restrictions do not apply to: (i) the investment of moneys held in the Assessment Installment Account "bona fide debt service fund," as defined for purposes of Section 148 of the Code, (ii) investments in direct obligations of the United States Treasury, (iii) investments in obligations guaranteed by the Federal National Mortgage Association, Government National Mortgage Association or the Federal Home Loan Mortgage Corporation, (iv) investments in obligations issued pursuant to Section 21B(d)(3) of the Federal Loan Bank Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, (v) investments permitted under regulations issued pursuant to Section 149(b)(3)(B) of the Code, or (vi) such other investments as, in the opinion of Bond Counsel, are investments permitted under the Resolution that do not jeopardize the exclusion from gross income for Federal income tax purposes of the interest on the Bonds.
Section 5.4. General Section 5
The City shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the City under the provisions of this Resolution. The City warrants that upon the date of execution and delivery of the Bonds, the conditions, acts and things required by law and this Resolution to exist, to have happened and to have been performed precedent to and in the execution and delivery of such Bonds do exist, have happened and have been performed and the execution and delivery of the Bonds shall comply in all respects with the applicable laws of the State.
Section 5.5. Protection of Security and Rights of Owners5.5. Protection of Security and Rights of Owners.5. Protection of Security and Rights of Owners.5.
The City will preserve and protect the security of the Bonds and the rights of the Owners thereto, and will warrant and defend their rights to such security against all claims and demands of all persons. From and after the delivery of the Bonds by the City, the Bonds shall be incontestable by the City.
Section 5.6. Compliance with the Law, Completion of Project.
The City will comply with all applicable provisions of the law in completing the construction of the Project; provided that the City shall have no obligation to advance any funds to complete the Project in excess of the amounts available therefor in the Improvement Fund.
Section 5.7. Against Encumbrances.
The City will not encumber, pledge or place any charge or lien upon any of the unpaid Assessments or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Resolution or the Bond Act.
Section 5.8. Collection of Assessments
The City shall comply with all requirements of the Bond Act so as to assure the timely collection of the unpaid Assessments.
Section 5.9. Accounting Records and Statements
The City will keep or cause to be kept proper accounting records in which complete and correct entries shall be made of all transactions relating to the receipt, deposit and disbursement of the Assessment Installments, and such accounting records shall be available for inspection upon five business days' written notice by any Owner or such Owner's agent duly authorized in writing at reasonable hours and under reasonable conditions.
SECTION 6. DEFEASANCE.
Section 6.1. Defeasance.
If all Outstanding Bonds shall be paid and discharged in any one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest with respect to all Bonds Outstanding, as and when the same become due and payable;
(b) by depositing with the City Treasurer, at or before maturity, an amount which, together with the amounts then on deposit in the Redemption Fund, is fully sufficient to pay the principal of and premium (if any) and interest on all Bonds Outstanding as and when the same shall become due and payable or, in the event of redemption thereof, before their respective maturity dates; or
(c) by depositing with the City Treasurer Federal Securities in such amount as the City shall determine, as verified by a nationally recognized Independent Public Accountant, will, together with the interest to accrue thereon and moneys then on deposit in the Redemption Fund together with the interest to accrue thereon, be fully sufficient to pay and discharge the principal of, and premium (if any) and interest on all Bonds Outstanding as and when the same shall become due and payable; then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, all obligations of the City under this Resolution with respect to all Outstanding Bonds shall cease and terminate, except for (i) the obligation of the City Treasurer to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid, all sums due thereon, and (ii) the City's obligations under Sections 5.3 and 5.5. Any funds held by the City Treasurer, at the time of receipt of such notice from the City, which are not required for the purpose above mentioned, shall be applied in accordance with Section 8784 of the Act.
SECTION 7. SUPPLEMENTAL RESOLUTIONS.
Section 7.1. Supplemental Resolutions Without Owner Consent
The City, may from time to time, and at any time, without notice to or consent of any of the Owners, adopt resolutions supplemental hereto as shall not be inconsistent with the terms and provisions hereof for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Resolution or in any supplemental resolution, provided that such action shall not adversely affect the interests of the Owners;
(b) to add to the covenants and agreements of and the limitations and the restrictions upon the City contained in this Resolution other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with this Resolution as theretofore in effect; and
(c) to modify, alter, amend or supplement this Resolution in any other respect which is not materially adverse to the interests of the Owners.
Section 7.2. Supplemental Resolutions with Owner Consent
Except as provided in Section 7.2, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right to consent to and approve the execution of such supplemental resolutions as shall be deemed necessary or desirable for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Resolution or in any supplemental resolution or agreement; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal of, or the payment date of interest on, any Bond, (b) a reduction in the principal amount of, or redemption price of, any Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the percentage of Bonds the Owners of which are required to consent to such supplemental resolution, without the consent of the Owners of all Bonds then Outstanding. In no event, however, may a modification or amendment provide for the issuance of additional bonds, notes or other evidences of indebtedness payable out of the Assessment Installments.
Section 7.3. Notice of Supplemental Resolution to Owners
If at any time the parties hereto shall desire to enter into a resolution supplemental hereto, which pursuant to the terms of Section 7.2 shall require the consent of the Owners, the City shall cause notice of the proposed resolution to be mailed, postage prepaid, to all Owners at their addresses as they appear in the Registration Books. Such notice shall briefly set forth the nature of the proposed resolution and shall state that a copy thereof is on file at the office of the City for inspection by all Owners. The failure of any Owner to receive such notice shall not affect the validity of such resolution when consented to and approved as in Section 7.2 provided. Whenever at any time within one year after the date of the first mailing of such notice, the City shall receive an instrument or instruments purporting to be executed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed resolution described in such notice, and shall specifically consent to and approve it substantially in the form of the copy thereof referred to in such notice as on file with the City, such proposed resolution, when duly adopted by the City, shall thereafter become a part of the proceedings for the issuance of the Bonds. In determining whether the Owners of the requisite aggregate principal amount of the Bonds have consented to the adoption of any supplemental resolution, Bonds which are owned by the City or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the City, shall be disregarded and shall be treated as though they were not Outstanding for the purpose of any such determination.
Upon the adoption of any resolution supplemental hereto and the receipt of consent to any such resolution from the Owners of the appropriate aggregate principal amount of Bonds in instances where such consent is required, this Resolution shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the City and all Owners of Bonds then Outstanding shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. SECTION 8. DEFAULT. Section 8.1. Events of Default
If any of the following events occur, it is hereby declared to constitute an "Event of Default":
(a) Default in the due and punctual payment of interest on any Bond, whether at the stated Interest Payment Date thereof, or upon proceedings for redemption thereof;
(b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated Principal Payment Date thereof, or upon proceedings for redemption thereof; or (c) Failure by the city to observe and perform any material covenant, condition or agreement required by this Resolution to be performed by it (other than a default described in clause (a) or (b) above) for a period of 60 days following written notice to the City from any Owner of such failure; provided, however, if the City is in good faith attempting to remedy said failure and is unable to do so within the 60 day time period, an additional 60 days shall be allowed.
Section 8.2. Remedies Not Exclusive; Non-waiver
No remedy conferred hereby upon any Owner is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by the Bond Act or any other law of the State. No waiver of any default or breach of duty or contract by any Owner shall affect any subsequent default or breach of duty or contract or shall impair any rights or remedies on said subsequent default or breach. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Owners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and the Owner shall prevail, said Owner shall be entitled to receive reimbursement for reasonable costs, expenses, outlays and attorney's fees and should said suit, action or proceeding be abandoned, or be determined adversely to the Owners then, and in every such case, the City and the 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 8.3. Limited Liability of the City to the Owners
Except for the collection of the Assessment Installments and the observance and performance of the other conditions, covenants and terms contained herein or in the Bond Act required to be observed or performed by it, the City shall not have any obligation or liability to the Owners with respect to this Resolution or the preparation, authentication, delivery, transfer, exchange or cancellation of the Bonds. Pursuant to the Resolution of Intention relating to these proceedings, the City has determined that no funds of the City will be available to pay principal of, premium, if any, or interest on the Bonds. In such Resolution of Intention the City has determined that pursuant to Section 8769 of the Bond Act, the City will not obligate itself to advance available funds from the District's treasury to cure any deficiency which may occur in the Redemption Fund.
Section 8.4. Action by Owners Upon Default.
In the event the City fails to take any action to eliminate an Event of Default under Section 8.1 hereof, the Owners of a majority in aggregate principal amount of Outstanding Bonds may institute any suit, action, mandamus or other proceeding in equity or at law for the protection or enforcement of any right under this Resolution, but only if such Owners have first made written request of the City, after the right to exercise such powers or right of action shall have occurred, and shall have afforded the City a reasonable opportunity either to proceed to exercise the powers granted herein or granted under law or to institute such action, suit or proceeding in its name and unless also, the City shall have been offered reasonable security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby, and the City shall have refused or neglected to comply with such request within a reasonable time. Any moneys recovered in such suit, action, mandamus or other proceedings shall be applied first to the payment of the reasonable costs and expenses of the Owners in bringing such suit, action, mandamus or other proceeding, including reasonable compensation to their agents and attorney.
SECTION 9. MISCELLANEOUS.
Section 9.1. Partial Invalidity.
If any section, paragraph, subdivision, sentence, clause or phrase of this Resolution shall for any reason be adjudged by any court of competent jurisdiction to be unconstitutional, unenforceable or invalid, such judgment shall not affect the validity of the remaining portions of this Resolution. The City Council hereby declares that it would have adopted this Resolution and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized 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 Resolution or the application thereof to any person or circumstance, may be held to be unconditional, unenforceable or invalid. Section 9.2. General Authorization.
The officers of the City are hereby authorized and directed, jointly and severally, to do all acts and things which may be required of them by this Resolution, or which may be necessary or desirable in carrying out the issuance of the Bonds as provided by this Resolution and all matters incidental thereto, including, without limitation, to execute such agreements, certificates, receipts, opinions and other documents, and to deliver at the closing and delivery of the Bonds any and all of the foregoing as may be appropriate in the circumstances. All such acts and things heretofore done are hereby approved, ratified and confirmed.
Section 9.3. Personal Liability.
The City or any officer, agent or employee thereof, shall not be individually or personally liable for the payment of the principal of or interest on the Bonds; but nothing herein contained shall relieve any such entity, officer, agent or employee from the performance of any official duty provided by law.
Section 9.4. Payment of Business Day.
In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Resolution is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period after such date.
Section 9.5. Employment of Agents by the City.
In order to perform its duties and obligations hereunder, the City may employ such persons or entities as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
Section 9.6. Qualified Tax-Exempt Obligations.
The total aggregate principal amount of Bonds to be issued pursuant to this Resolution is the total amount of all "tax-exempt bonds" and all "qualified tax-exempt obligations" (within the meaning of such terms under Sections 148(f)(4)(D) and 265(b)(3), respectively, of the Code) which have been or which are reasonably expected to be issued by the City during this calendar year. No Bond is a "private activity bond" within the meaning of that term under Section 141 of the Code. Ninety-five percent or more of the net proceeds of the Bonds are to be used for local governmental activities of the City. Neither the City nor any other subordinate entities of the City have issued any such qualified tax-exempt obligations during this calendar year and it is reasonably expected that none will be issued, other than the Bonds. Thus, the total aggregate principal amount of tax-exempt bonds and qualified tax-exempt obligations issued or reasonably expected to be issued during this calendar year by the City and any subordinate entities of the City does not exceed either $5,000,000 or $10,000,000. The Bonds are hereby designated as "qualified tax-exempt obligations."
Section 9.7. Disqualified Bonds.
In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Resolution, Bonds which are owned or held by or for the account of the City 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 City Treasurer shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the City Treasurer knows to be so owned or held shall be disregarded.
Section 9.8. Sale of Bonds to Purchaser; Purchase Contract.
The Bonds shall be sold to the Purchaser. As presented to this meeting and on file with the City Clerk of the City, the form of Purchase Contract is hereby approved and the Mayor is hereby authorized and directed, for and in the name and on behalf of the City, to execute the Purchase Contract and to deliver it to the Purchaser in substantially the form hereby approved, with such changes therein as the Mayor may approve, such approval to be conclusively evidenced by the Mayor's execution and delivery thereof.
Exhibit A
LIST OF UNPAID ASSESSMENTS LOWER PIER AVENUE ASSESSMENT DISTRICT LIMITED OBLIGATION IMPROVEMENT BONDS SERIES 1997
WHEREAS, an assessment and diagram were recorded in the offices of the City of Hermosa Beach, California (the "City") on October 23, 1997 for the installation and construction of the improvements described in the proceedings taken pursuant to Resolution No. 96-5811, as amended, of the City Council of the City;
WHEREAS, notice of recordation of the assessment and of the place where and the time within which the individual assessments could be paid, in whole or in part, has been duly given in the time and form provided by law, and the time so provided for such payments has expired;
NOW, THEREFORE, the undersigned City Treasurer of the City, being the person designated to receive payments of assessments, does hereby certify that Exhibit 1, attached hereto, and by this reference made a part hereof, is a true, correct and complete list of all assessments remaining unpaid upon such assessment and that this List of Unpaid Assessments is on file in the office of the City Clerk. The total amount of unpaid assessments is $400,000.
Dated:___________________
___________________ City Treasurer Exhibit 1
Assessor's Parcel No. Assessment
4183-002-001 -- $38,055.82 4183-002-017 -- $42,812.80 4183-002-009 -- $15,555.31 4183-002-020 -- $14,270.93 4183-002-021 -- $14,270.93 4183-002-012 -- $14,033.08 4183-002-013 -- $14,746.63 4183-002-014 -- $14,033.08 4183-002-015 -- $26,781.78 4183-005-011 -- $14,270.93 4187-005-012 -- $14,270.93 4187-005-013 -- $26,496.36 4187-005-024 -- $50,504.83 4187-005-005 -- $14,270.93 4187-005-006 -- $14,270.93 4187-005-026 -- $42,812.80 4187-005-009 -- $14,270.93 4187-005-010 -- $14,270.93
Exhibit B
[FORM OF BOND]
United States of America State of California County of Los Angeles
REGISTERED NUMBER 1 $400,000 LOWER PIER AVENUE ASSESSMENT DISTRICT LIMITED OBLIGATION IMPROVEMENT BOND SERIES 1997
REGISTERED OWNER: ABN-AMRO
Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the California Streets and Highways Code (the "Act"), the City of Hermosa Beach (the "City"), County of Los Angeles, State of California, will, out of the Redemption Fund for the payment of the Bonds issued upon the unpaid assessments made for the work and improvements more fully described in proceedings taken pursuant to Resolution of Intention No. 96-5811, adopted by the City Council of the City on June 11, 1996, as amended, pay to the registered owner hereof, or registered assigns, the principal sum of $400,000 in the amounts and on the dates as follows:
Maturity Date Principal (September 2) Amount
in lawful money of the United States of America and in like manner will pay interest on the unpaid balance hereof at the rate of 6½ percent per annum, payable semiannually on March 2 and September 2 (each an "Interest Payment Date") in each year commencing on March 2, 1999. This Bond bears interest from the Interest Payment Date next preceding its date of authentication and registration, unless this Bond is authenticated and registered (i) on an Interest Payment Date, in which event interest shall be payable from such date of authentication and registration, (ii) prior to an Interest Payment Date and after the close of business on the fifteenth day of the month immediately preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) prior to the close of business on February 15, 1998, in which event it shall bear interest from the Bond Date stated above, until payment of such principal sum shall have been discharged; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment. Principal of and interest on the Bond shall be paid by check of the City mailed by the City Treasurer on or before the Interest Payment Date by first class mail, postage prepaid, to the person whose name appears in the Registrations Books as the Owner of such Bond as of the fifteenth day of the calendar month immediately preceding each Interest Payment Date, to the address of that person on the Registration Books, provided that the payment of principal of the Bond on the final maturity date and the payment of the principal of the Bond and any premium due upon the redemption thereof shall be payable upon presentation and surrender thereof at maturity or earlier redemption at the office of the City Treasurer in Hermosa Beach, California.
This Bond will continue to bear interest after maturity at the rate above stated, provided that it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in the Redemption Fund with which to pay same. If it is not presented at maturity interest hereon will run only until maturity.
This Bond is issued by the City of Hermosa Beach under the Act and Resolution No. __________ of the City Council of the City (the "Resolution of Issuance") in the aggregate principal amount of $400,000 for the purpose of providing means for paying for the improvements described in the proceedings, and is secured by the moneys in the Redemption Fund and by the unpaid assessments made for the payment of those improvements, and, including principal and interest, is payable exclusively out of the Redemption Fund and certain other funds and accounts as provided in the Resolution. The City will not obligate itself to advance available funds from the City treasury to cure any deficiency which may occur in the Redemption Fund.
This Bond is transferable by the registered owner hereof, in person or by the owner's attorney duly authorized in writing, at the office of the City Treasurer, subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon transfer, a new registered Bond or Bonds, of any authorized denomination or denominations, of the same maturity, and for the same aggregate principal amount, will be issued to the transferee in exchange therefor.
Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership or a trust.
The City shall not be required to exchange or to register the transfer of Bonds during the fifteen days immediately preceding any interest payment date or of any Bonds selected for redemption in advance of maturity.
The City may treat the owner hereof as the absolute owner for all purposes, and the City shall not be affected by any notice to the contrary.
This Bond or any portion of it in the amount of five thousand dollars ($5,000), or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second day of March or September in any year by giving at least 30 days' notice by registered or certified mail, postage prepaid, or by personal service to the registered owner hereof at the registered owner's address as it appears on the registration books of the City and by paying principal and accrued interest together with a premium equal to three percent of the principal. Interest shall cease to accrue from and after the date of redemption.
This Bond is subject to refunding pursuant to the procedure of Division 11 (commencing with Section 9000) or Division 11.5 (commencing with Section 9500) of the Streets and Highways Code of the State of California prior to maturity.
This Bond shall not be entitled to any benefit under the Act or the Resolution of Issuance, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Finance Director of the City.
IN WITNESS WHEREOF, the City of Hermosa Beach, California has caused this Bond to be signed by the City Treasurer and by the City Clerk, and has caused its corporate seal to be impressed hereon all as of _________, 1997.
CITY OF HERMOSA BEACH, CALIFORNIA
City Clerk City Treasurer
CERTIFICATE OF AUTHENTICATION AND REGISTRATION
This is one of the Bonds described in the within mentioned Resolution which has been authenticated and registered on .
_____________________ Finance Director
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books kept for registration hereof with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as it appears upon the within Bond in every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT C
[FORM OF REQUISITION]
REQUISITION NO. _______ with reference to
$400,000 Lower Pier Avenue Assessment District Limited Obligation Improvement Bonds Series 1997
1. The City of Hermosa Beach (the "City") hereby requests the City Treasurer to pay from the moneys in the Improvement Fund established pursuant to Section 4.1 of the Resolution, the amounts shown on Schedule I attached hereto to the parties indicated in Schedule I.
2. The payees, the purposes for which the costs have been incurred, and the amount of the disbursements requested are itemized on Schedule I hereto.
3. Each obligation mentioned in Schedule I hereto has been properly incurred and is a proper charge against the Improvement Fund. None of the items for which payment is requested has been reimbursed previously from the Improvement Fund.
Dated:
By: Schedule I
$400,000 Lower Pier Avenue Assessment District Limited Obligation Improvement Bonds Series 1997
Purchase Contract
________________, 1997 1315 Valley Drive Hermosa Beach, California 90254-3685
Ladies and Gentlemen:
The undersigned (the "Purchaser") hereby offers to enter into the following agreement with the City of Hermosa Beach (the "City"). Upon the acceptance hereof by you, this offer will be binding upon the City and the Purchaser. This offer is made subject to (i) the written acceptance hereof by you and (ii) withdrawal by the Purchaser upon written notice (by telegraph or otherwise) delivered to you at any time prior to the acceptance hereof by you.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Purchaser hereby agrees to purchase from the City at the Closing Time on the Closing Date (both as defined herein), and the City hereby agrees to sell and deliver to the Purchaser, $400,000 aggregate principal amount of its City of Hermosa Beach, Lower Pier Avenue Assessment District, Limited Obligation Improvement Bonds, Series 1997 (the "Bonds"). The Bonds shall be dated the Closing Date (as hereafter defined) and shall mature on the dates and bear interest at the rates shown on Exhibit A hereto. Interest on the Bonds shall be payable each March 2 and September 2 to maturity or earlier redemption of the Bonds, beginning March 2, 1999. The purchase price for the Bonds shall be $400,000. (The date of such payment and delivery is referred to herein as the "Closing Date," the hour and date of such delivery and payment is referred to herein as the "Closing Time," and the other actions contemplated hereby to take place at the time of such payment and delivery being herein sometimes called the "Closing").
2. The Bonds. The Bonds shall be described in, and shall be issued and secured pursuant to, the provisions of the Constitution and the laws of the State of California including the provisions of the Improvement Bond Act of 1915, being Division 10 of the California Streets and Highways Code, commencing with Section 8500 (the "Bond Act"), and Resolution No. _________, adopted by the City Council on __________, 1997 (the "Resolution"). The Bonds are being issued for the purpose of financing the Project. The Bonds are secured by the Assessment Installments.
The Bonds shall be payable and shall be subject to redemption as provided in the Resolution.
Capitalized terms used herein and not otherwise defined shall, unless the context requires otherwise, be as defined in the Resolution.
3. Representations, Warranties and Agreements of the City. The City represents, warrants and agrees as follows:
(a) The City is a general law city organized and validly existing under the laws of the State of California.
(b) The City has full legal right, power and authority (i) to adopt the Resolution, to enter into this Purchase Contract, and to sell, issue and deliver the Bonds to the Purchaser as provided herein; and (ii) to carry out and consummate the transactions on its part contemplated by the Resolution and this Purchase Contract.
(c) By all necessary official action, the City has duly adopted the Resolution and authorized and approved the Purchase Contract and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations in connection with the issuance of the Bonds on its part contained in the Resolution, Bonds and the Purchase Contract, and the consummation by it of all other transactions contemplated by the Resolution and the Purchase Contract in connection with the issuance of the Bonds.
(d) To the best of its knowledge, the City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of any state or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Resolution) or other instrument to which the City is a party which breach or default has or may have an adverse effect on the ability of the City to perform its obligations under the Resolution, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the Purchase Contract, and compliance with the provisions on the City's part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Resolution.
(e) To the best of its knowledge, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations in connection with the issuance of the Bonds under the Purchase Contract and the Resolution have been duly obtained.
(f) The Bonds, when issued, authenticated and delivered in accordance with the Resolution, and sold to the Purchaser as provided herein, will be validly issued and outstanding special obligations of the City payable solely from and secured solely by the Assessments and the amounts in the Redemption Fund, entitled to the benefits of the Resolution, and upon such issuance and delivery, the Resolution will provide, for the benefit of the owners from time to time of the Bonds, the legally valid and binding pledge of and lien and security interest it purports to create.
(g) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, notice of which has been served on the City, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the City executing this Purchase Contract, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the pledge and lien of the Assessment Installments pursuant to the Resolution, or contesting or affecting as to the City the validity or enforceability of the Bond Act, the Bonds or the Resolution or Purchase Contract, or contesting the tax-exempt status of interest on the Bonds, or contesting the powers of the City for the issuance of the Bonds, or the execution and delivery or adoption by the City of the Resolution or Purchase Contract, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the City, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bond Act, as to the City, or the authorization, execution, delivery or performance by the City of the Bonds or the Resolution or Purchase Contract.
(h) The City will furnish such information, execute such instruments and take such other action in cooperation with the Purchaser as the Purchaser may reasonably request in order assure or maintain the tax-exempt status of the interest on the Bonds.
(i) The City will refrain from taking any action, or permitting any action to be taken, with regard to which the City may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds.
(j) Any certificate signed by any officer of the City and delivered to the Purchaser pursuant to the Resolution, this Purchase Contract or any document contemplated thereby shall be deemed a representation and warranty by the City to the Purchaser as to the statements made therein.
(k) So long as any of the Bonds are outstanding and except as may be authorized by the Resolution, the City will not issue or sell any bonds or other obligations, other than the Bonds sold thereby, the interest on and premium, if any, or principal of which will be payable from the payments to be made under the Resolution.
(l) The City shall honor all other covenants on its part contained in the Resolution which are incorporated herein and made a part of this Purchase Contract.
4. Closing. At ______, Los Angeles time, on ___________, 1997, or on such earlier date or as soon thereafter as practicable, as may be mutually agreed upon by the City and the Purchaser, the City will, subject to the terms and conditions hereof, cause the City Treasurer to deliver to the Purchaser the Bonds, in definitive form duly executed by the City Treasurer, together with the other documents hereinafter mentioned; and the Purchaser will accept such delivery and will pay the purchase price of the Bonds at the offices of Richards, Watson & Gershon, Los Angeles, California as set forth in Paragraph 1(a) hereof by delivering federal or other immediately available funds in the amount of such purchase price to the City Treasurer. The Bonds shall be prepared in fully registered form without coupons in authorized denominations and registered in the name of the Purchaser.
5. Closing Conditions. The Purchaser has entered into this Purchase Contract in reliance upon the representations and warranties of the City contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Purchaser's obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the City of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions:
(a) The representations and warranties of the City contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing;
(b) At the time of the Closing, the Resolution shall be in full force and effect in accordance with its terms and shall not have been amended, modified or supplemented;
(c) At the time of the Closing, all necessary official action of the City relating to the Resolution and the Purchase Contract shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect;
(d) At or prior to the Closing, the Purchaser shall have received copies of each of the following documents:
(1) A copy of the Resolution;
(2) Certificates of the City with respect to the matters described in Section 3 and in paragraphs a, b and c of this Section 5;
(3) An opinion, dated the date of the Closing and addressed to the City, of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel for the City, substantially in the form attached hereto as Exhibit B;
(4) An opinion, dated the date of the Closing and addressed to the Purchaser, of the City Attorney, in substantially the form attached hereto as Exhibit C; and (5) Transcripts of all proceedings relating to the authorization and issuance of the Bonds certified by the City Clerk;
All the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel and the Purchaser. The opinions and other documents presented as exhibits to this Purchase Contract shall be deemed satisfactory provided they are substantially in the forms attached as exhibits to this Purchase Contract.
If the City shall be unable to satisfy the conditions to the obligations of the Purchaser to purchase, to accept delivery of and to pay for the Bonds contained in this Purchase Contract, or if the obligations of the Purchaser to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Purchaser or the City shall be under any further obligation hereunder.
6. Termination. The Purchaser shall have the right to terminate the Purchaser's obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds by notifying the City in writing or by telegram, of its election to do so, if, after the execution hereof and prior to the Closing: (a) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency; (b) there shall have occurred the declaration of a general banking moratorium by any authority of the United States or the States of New York or California; (c) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency in the State of California, or a decision by any court of competent jurisdiction within the State of California shall be rendered which, in the Purchaser's reasonable opinion, materially adversely affects the market price of the Bonds; (e) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of obligations of the general character of the Bonds or the Bonds, as contemplated hereby.
If this Purchase Contract shall be terminated pursuant to Section 5 or this Section 6, or if the purchase provided for herein is not consummated because any condition to the Purchaser's obligation hereunder is not satisfied or because of any refusal, inability or failure on the part of the City to comply with any of the terms or to fulfill any of the conditions of this Purchase Contract, or if for any reason the City shall be unable to perform all of its respective obligations under this Purchase Contract, the City shall not be liable to the Purchaser for damages on account of loss of anticipated profits arising out of the transactions covered by this Purchase Contract.
7. Representations, Warranties and Agreements to Survive Delivery. The representations, warranties, indemnities, agreements and other statements of the City or it officers set forth in, or made pursuant to, this Purchase Contract will remain operative and in full force and effect regardless of any investigation made by or on behalf of the Purchaser and will survive delivery of and payment for the Bonds.
8. Notices. Any notice or other communication to be given under this Purchase Contract may be given by delivering the same in writing:
To the City: City of Hermosa Beach 1315 Valley Drive Hermosa Beach, California 90254-3685 Attention: City Manager
To the Purchaser: ABN-AMRO _____________________ ______________________ Attention: ___________________ 9. Parties in Interest . This Purchase Contract is made solely for the benefit of the City and the Purchaser (including the successors or assigns of the Purchaser) and no other person shall acquire or have any right hereunder or by virtue hereof. All of the City's representations, warranties and agreements contained in this Purchase Contract shall remain operative and in full force and effect, regardless of: (i) any investigations made by or on behalf of the Purchaser; (ii) delivery of and payment for the Bonds pursuant to this Purchase Contract; and (iii) any termination of this Purchase Contract.
10. Effectiveness . This Purchase Contract shall become effective upon the execution of the acceptance by the designee of the City and shall be valid and enforceable at the time of such acceptance.
11. Headings. The headings of the sections of this Purchase Contract are inserted for convenience only and shall not be deemed to be a part hereof.
12. Governing Law. This Purchase Contract shall be construed in accordance with the laws of the State of California. 13. Counterparts. This Purchase Contract may be executed in counterparts.
If the foregoing is in accordance with your understanding of the Purchase Contract please sign and return to us the enclosed duplicate copies hereof, whereupon it will become a binding agreement by and between the City and the Purchaser in accordance with its terms.
Very truly yours,
By: _____________________ Title_________________________
Accepted:
This ___ day of ___________, 1997
By:___________________________ Its:__________________________
Exhibit A
$400,000 Lower Pier Avenue Assessment District Limited Obligation Improvement Bonds Series 1997
Exhibit B City Council of the City of Hermosa Beach 1315 Valley Drive Hermosa Beach, California 90254-3685
Re: Opinion of Bond Counsel
with respect to $400,000 Lower Pier Avenue Assessment District Limited Obligation Improvement Bonds Series 1997
Ladies and Gentlemen:
We have examined the law and original documents or copies certified or otherwise identified to our satisfaction of proceedings taken in connection with the issuance of the above-referenced bonds (the "Bonds") of the City of Hermosa Beach (the "City"). We have also examined supplemental documents furnished to us and have obtained such certificates and documents from public officials and others as we have deemed necessary for the purpose of this opinion.
As to questions of fact material to our opinion we have relied upon such certificates and documents without undertaking to verify the same by independent investigation. The Bonds are issued under and pursuant to the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code, and the Improvement Bond Act of 1915, Division 10 of the California Streets and Highways Code, and a Resolution of Issuance, adopted by the City Council of the City on ______________, 1997 (the "Resolution").
From such examination, we are of the opinion that under existing law:
1. The Bonds are valid and binding special obligations of the City, payable solely from Assessments (as defined in the Resolution) and certain other funds and accounts as provided in the Resolution.
2. Interest on the Bonds is exempt from State of California personal income taxes.
3. Assuming compliance with the covenants described below, interest on the Bonds is excluded from gross income for Federal income tax purposes. The Bonds are not "specified private activity bonds" within the meaning of Section 57(a)(5) of the Internal Revenue Code of 1986, as amended (the "Code") and, therefore, the interest on the Bonds will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. However, we note a portion of the interest on Bonds owned by corporations may be subject to the Federal alternative minimum tax, which is based in part on adjusted current earnings.
The Code sets forth certain requirements which must be met subsequent to the issuance of the Bonds for interest thereon to be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issue of the Bonds. The City has covenanted in the Resolution to satisfy, or take such actions as may be necessary to cause to be satisfied, each provision of the Code necessary to maintain the exclusion of the interest on the Bonds from gross income for Federal income tax purposes pursuant to Section 103(a) of the Code.
Certain requirements and procedures contained or referred to in the Resolution may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth therein, upon the advice or with the approving opinion of nationally recognized bond counsel, and no opinion is expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of any counsel other than ourselves.
Except as stated in the foregoing paragraphs numbered 2 and 3 and the paragraph immediately following paragraph 3, we express no opinion as to any Federal or state tax consequences of the ownership or disposition of the Bonds.
The opinions expressed herein are based on an analysis of existing law and cover certain matters not directly addressed thereby. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof, and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in such documents. Furthermore, we have assumed compliance with all agreements and covenants contained in the Resolution, including (without limitation) agreements and covenants compliance with which is necessary to assure that interest on the Bonds will not be included in gross income for Federal income tax purposes.
In addition, we call attention to the fact that the rights of the registered owners of the Bonds and the enforceability of such rights may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and enforcement may also be subject to the exercise of judicial discretion in appropriate cases.
Exhibit C
Opinion of City Attorney Addressed to the Purchaser
$400,000 Lower Pier Avenue Assessment District Limited Obligation Improvement Bonds Series 1997
_______________________________ _______________________________ _______________________________
Ladies and Gentlemen:
I serve as City Attorney to the City of Hermosa Beach (the "City") and in such capacity, I have examined the original, certified copies, or copies otherwise identified to my satisfaction as being true copies of such resolutions, documents, certificates, and records as I have deemed relevant and necessary (except as I have specifically limited the scope of my investigation herein) as the basis for the opinions set forth herein relying on such examination and pertinent law and subject to the limitations and qualifications hereinafter set forth, I am of the opinion that:
1. The City is a general law city organized and validly existing under the laws of the State of California with full legal right, power and authority to perform all of its obligations under the Purchase Contract dated as of ______________, 1997 (the "Purchase Contract") by and between the City and ABN-AMRO (the "Purchaser"). The City has duly authorized, executed and delivered the Purchase Contract and it constitutes the legal, valid and binding agreement of the City enforceable against the City in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, moratorium, insolvency, equitable remedies and other laws affecting creditors' rights or remedies.
2. To the best of my knowledge, there is no action, suit or proceeding before or by any court, public board or body pending or threatened wherein an unfavorable decision, ruling or finding would (a) affect the creation, organization, existence or powers of the City or the titles of its officers to their respective offices, (b) in any way question or affect the validity or enforceability of the Purchase Contract, or (c) find illegal, invalid or unenforceable the Purchase Contract or the transactions contemplated thereby, or any other agreement or instrument related to the issuance of the Bonds to which the City is a party.
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