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:AGO TITLEJ COMPANY „_.�......_.:
1212 Marsh Street; P.O. Box 810, San Luis Obispo, CA 93406
Phone: 805-543-2900 Fax: (805) 541-2549; or 543-2539
MS. LINDA ASPRION, FINANCE DEPARTMENT
CITY OF SAN LUIS OBISPO
990 PALM STREET
SAN LUIS OBISPO, CA 93401
DATE June 24, 1996
REGARDING: PRADO ROAD
ORDER NO. 234174 - NH
In accordance with instructions in the above order number, we enclose herewith our Policy of
Title Insurance.
Any documents recorded in connection with this transaction will be forwarded to you direct
from the County Recorder's office.
Should you have any questions, please contact the undersigned.
It has been our pleasure to have handled this transaction for you. If, at any time in the future
we can assist you, we will be pleased to have you request CHICAGO TITLE COMPANY.
We appreciate your business.
Sincerely,
CHICAGO TITLE COMPANY
NANCY HOAGLAND
PSPOLENG07/93bk
CALIFORNIA LAND TITLE ASSOCIATION
STANDARD COVERAGE POLICY 1990
CHICAGO TITLE INSURANCE COMPANY
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE
CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, CHICAGO TITLE
INSURANCE COMPANY, a Missouri corporation, herein called the Company, insures, as of Date of Policy shown
in Schedule A, against loss or damage, not exceeding the Amount of Insurance stated in Schedule A, sustained or
incurred by the insured by reason of:
I
1. Title to the estate or interest described in Schedule A being vested other than as si ted therein;
2. Any defect in or lien or encumbrance on the title; -�
3. Unmarketability of the title; '
4. Lack of a right of access to and from the land; i l\
and in addition, as to an insured lender only:
5. The invalidity or unenforceability of the lien of the insured mortgage upon the title;
6. The priority of any lien or encumbrance over the lien of the insured mortgage, said mortgage being
shown in Schedule B in the order of its -priority;
7. The invalidity or unenforceability of any assignment of the insured mortgage, provided the assignment
is shown in Schedule B, or the failure of the assignment shown in Schedule B to vest title to the insured
mortgage in the named insured 'assignee freejand clear of all liens.
The Company will also pay the costs, attorneys' fees' arid expenses incurred in defense of the title or the lien of the
insured mortgage, as"insured, but only to ihe-extent provided in the Conditions and Stipulations.
In Witness Whereof, CHICAGO TITLE INSURANCE COMPANY has caused this policy to be signed and sealed as
of Date of Policy'shown in Schedule A, the policy to become valid when countersigned by an authorized signatory.
Issued by:
CHICAGO TITLE COMPANY
1212 Marsh Street
San Luis Obispo, CA 93401
(805) 543 -2900
CHICAGO TITLE INSURANCE COMPANY
By:
By:
President'
((// Secretary
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. O •
SCHEDULE A
Policy No: 234174 — NH
Premium: $5,396.00
Amount of Insurance: $7,100,000.00
Date of Policy: June 19, 1996 at 8: 00 AM
1. Name of Insured:
FIRST TRUST OF CALIFORNIA NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION, AS
TRUSTEE FOR THE BONDHOLDERS UNDER THE TRUST AGREEMENT REFERRED TO IN ITEM NO. 17 OF
SCHEDULE B, PART II; AND
CITY OF SAN LUIS OBISPO
2. The estate or interest in the land which is covered by this policy is:
SEE ATTACHED EXHIBIT — ESTATE OR INTEREST
3. Title to the estate or interest in the land is vested in:
CITY OF SAN LUIS OBISPO
4. The land referred to in this policy is situated in the State of California, County of San Luis Obispo
and is described as follows:
SEE ATTACHED DESCRIPTION
This Policy valid only if Schedule B is attached.
C •
EXHIBIT (ESTATE OR INTEREST)
Policy No. 2134174 NH
A LEASEHOLD ESTATE AS TO PARCEL 1 AND A SUBLEASE ESTATE AS TO PARCEL 2, AS CREATED BY
THAT CERTAIN LEASE AGREEMENT, DATED JUNE 1, 1996, EXECUTED BY THE CITY OF SAN LUIS
OBISPO CAPITAL IMPROVEMENT BOARD, AS LESSOR AND THE CITY OF SAN LUIS OBISPO, AS
LESSEE, FOR THE TERM AND SUBJECT TO THE TERMS, COVENANTS AND CONDITIONS CONTAINED
THEREIN, RECORDED JUNE 19, 1996 under Recorder's Series Number 1996-030242, SAID
LEASE BEING A SUBLEASE (AS TO PARCEL 2) UNDER CERTAIN SITE LEASE SET FORTH IN
PARAGRAPH NO. 16 OF SCHEDULE B, PART II HEREIN
E%HIBEST-8/ 13/91-Irc
• DESCRIPTION •
Policy No. 234174 NH
Page 1
Parcel 1:
Lots 1 to 16 inclusive in Block A of Maymont Addition, in the City of San Luis
Obispo, County of San Luis Obispo, State of California, as per map filed April
9, 1888 in Book B at page 91 of Maps, in the Office of the County Recorder of
said County.
EXCEPTING therefrom that portion of said land described in the deed to the State
of California, recorded May 4, 1974 in Book 1777 at page 571 of Official
Records.
Parcel 2:
A portion of Lots 6, 7, 8 and 19 of the Suburban Tract, in the City of San Luis
Obispo, County of San Luis Obispo, State of California, according to the map
filed for record in Book 1, Page 92 of Surveys, in the Office of the County
Recorder of said County, described as follows:
Beginning at Station 710 + 00 on the centerline of U. S. Highway #101, said
centerline bearing North 270 45' 40" East as shown on California Department of
Transportation Right -of -Way Plot, SLO 101 26.9, sheet 31 and 32: thence South 620
14' 20" East a distance of 100.00 feet to point on the Easterly right-of-way of
U. S. Highway #101, said point being the True Point of Beginning; thence North
320 20' 40" East, 450.39 feet along said right -or -way; thence on a curve to the
right having a radius of 750.00 feet, through an angle of 140 12' 57" for a
length of 186.08 feet along said right-of-way; thence North 460 34' 10" East
196.72 feet along said right-of-way; thence South 871 36' 50" East 10.60 feet
along said right-of-way; thence parallel with the old centerline of Prado Road
and distance therefrom 54.00 feet, South 621 55' 50" East, 425.23 feet; thence
along a curve, concave to the right having a radius of 20.00 feet through an
angle of 900 00' 00" for a length of 31.42 feet; thence South 270 04' 10" West,
399.38 feet; thence along a curve, concave to the right, having a radius of
50.00 feet through an angle of 940 45' 00", for a length of 82.68 feet; thence
North 580 10' 50" West, 54.09 feet; thence along a curve, concave to the left,
having a radius of 235.00 feet through an angle of 910 10' 00" for a length of
373.92 feet; thence South 300 39' 10" West, 135.93 feet; thence South 620 55' 35"
West, 231.23 feet to the True Point of Beginning.
Policy No. 234174 — NH
SCHEDULE B
EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses)
which arise by reason of:
PARTI
1. Taxes or assessments which are not shown as existing liens by the records of any taring authority that levies taxes or
assessments on real property or by the public records.
Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or
not shown by the records of such agency or by the public records.
2. Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an
inspection of the land or which may be asserted by persons in possession thereof.
3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey
would disclose, and which are not shown by the public records.
5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof;
(c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by
the public records.
PART II
A 1. Property taxes, including any assessments collected with taxes, to be
levied for the fiscal year 1996-97 which are a lien not yet payable.
B
Assessment No.: 003,753,002 at to Parcel 1; 053-051-045 as to Parcel
2
Affects: The herein described land and other land.
C 2. The lien of supplemental taxes, if any, assessed pursuant to the
provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and
Taxation Code of the State of California.
D 3. Any adverse claim based upon the assertion that:
A. Some portion of said land has been created by artificial means or has
accreted to such portion so created.
B. Some portion of said land has been brought within the boundaries
thereof by an avulsive movement of San Luis Obispo Creek or has been
formed by accretion to any such portion.
E 4. Such rights and easements for navigation and fishery which may exist over
that portion of said land lying beneath the waters of San Luis Obispo
Policy 'No: 234174 - NIC •
Page 2
SCHEDULE B
(continued)
Creek, affecting Parcel 2.
F S. The fact that the ownership of said land does not include any right of
ingress or egress to or from the highway contiguous thereto, said right
having been condemned by Final Decree of Condemnation, a certified copy
of which was
Recorded: April 20, 1948 in Book 475, Page 300 of Official
Records
Case No.: 16380, San Luis Obispo County Superior Court
Affects: Parcel 2
G 6. An easement for the purpose shown below and rights incidental thereto as
set forth in a document (No representation is made as to the present
ownership of said easement).
Granted to: County of San Luis Obispo
Recorded: August 15, 1956 in Book 858, Page 440 of Official
Records
Purpose: Public Highway
Affects: Portion of the Parcel 2 herein described and other
property
H 7. The relinquishment of any and all abutters rights of access to the
freeway adjoining said property as contained in the deed to the State of
California, and recorded June 3, 1963, in Book 1243, at Page 335, of
Official Records, affecting Parcel 2.
I 8. A waiver in favor of the State of California of any claims for damages to
said land by reason of the location, construction, landscaping, or
maintenance of a highway, freeway, contiguous thereto, as contained in
the deed
From: City of San Luis Obispo
Recorded: June 3, 1963 in Book 1243, Page 335 of Official
Records, affecting Parcel 2.
J 9. An easement for the purpose shown below and rights incidental thereto as
shown or as offered for dedication on the recorded map shown below.
Map of: Parcel Map SL -82-88
Recorded: October 26, 1984 in Book 35, Page 98 of Parcel Maps
Easement
Purpose: Road right-of-way
Affects: Portion of Parcel 2 adjacent to Northeasterly line
of said land as shown on Parcel Map
Policy'No: 234174 - NC
Page 3
SCHEDULE B
(continued)
0
P 10. An easement for the purpose shown below and rights incidental thereto as
set forth in a document (No representation is made as to the present
ownership of said easement).
Granted to: City of San Luis Obispo
Recorded: September 18, 1962 in Book 1202 at page 111 of
Official Records
Purpose: a public sidewalk easement
Affects: portion of Parcel 1
Q 11. A waiver in favor of the State of California of any claims for damages to
said land by reason of the location, construction, landscaping, or
maintenance of a highway, freeway, contiguous thereto, as contained in
the deed
From: Southern California Gas Company
Recorded: May 7, 1974 in Book 1777 at page 571 of Official
Records, affecting Parcel 1
R 12. A waiver in favor of the State of California of any claims for damages to
said land by reason of the location, construction, landscaping, or
maintenance of a highway, freeway, contiguous thereto, as contained in
the deed
From: Maino Construction Company Incorporated, a
corporation
Recorded: May 17, 1974 in Book 1779 at page 522 of Official
Records, affecting Parcel 1
5 13. An easement for the purpose shown below and rights incidental thereto as
reserved in a document
Purpose: ingress, egress and pipeline
Recorded: March 8, 1994 under Recorder'.s Series Number
1994-014495
Affects: Northwesterly and Southwesterly 10 feet of Parcel 1
7 14. Notice of Merger and Certificate of Subdivision Compliance recorded May
26, 1995 under Recorder's Series Number 1995-022244, affecting Parcel 1.
U Among other things, said document provides:
Policy 'No: 234174 - NFO
Page 4
U
SCHEDULE B
(continued)
that the real properties described have been merged together into one
parcel or unit of land, and that said real properties are not separate
properties for the purpose of subdivision or development.
V 15. The terms and conditions contained in that certain unrecorded Aquisition
Agreement dated June 1, 1996 by and between the City of San Luis Obispo,
and the City of San Luis Obispo Capital Improvement Board, as disclosed
by reference in Lease Agreement between said parties recorded June 19,
1996 under Recorder's Series Number 1996-030242.
W 16. The terms, covenants and conditions contained in that certain Site Lease
dated June 1, 1996 executed by City of San Luis Obispo, as lessor and
City of San Luis Obispo Capital Improvement Board, as lessee, recorded
June 19, 1996 under Recorder's Series Number 1996-030241, affecting
Parcel 2 herein described.
X 17. The terms and conditions of that certain Assignment Agreement dated June
1, 1996 wherein the City of San Luis Obispo Capital Improvement Board
assigned to First Trust of California, National Association, as trustee,
certain rights in the lease referred to in Schedule A herein, which said
Assignment was recorded June 19, 1996 under Recorder's Series Number
1996-030243.
Y 18. The terms, covenants and conditions contained in that certain unrecorded
Indenture of Trust dated June 1, 1996 executed by and between City of San
Luis Obispo Capital Improvement Board and First Trust of California,
National Association, as disclosed by reference in Assignment Agreement
recorded June 19, 1996 under Recorder's Series Number 1996-030243.
2 19. The effect of any failure to comply with the terms, covenants, conditions
and provisions of the leases referred to in Schedule A herein.
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THIS PLAT IS FOR YOUR AID IN LOCATM YOUR LAND WITH
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which might cause loss or damage for which thpany may be liable by
virtue of this policy' or (iiij if -title to the estate Cerest or the lien of the
insured mortgage, as insured, is rejected as unmarketable. If prompt notice
shall not be given to the Company, then as to that insured all liability of the
Company shall terminate with regard to the matter or matters for which prompt
notice is required; provided, however, that failure to notify the Company shall
in no case prejudice the rights of any insured under this policy unless the
Company shall be prejudiced by the failure and then only to the extent of the
prejudice.
4. DEFENSE AND PROSECUTION OF ACTIONS; DUTY OF INSURED
CLAIMANT TO COOPERATE
(a) Upon written request by an insured and subject to the options contained
in Section 6 of these Conditions and Stipulations, the Company, at its own
cost and without unreasonable delay, shall provide for the defense of such
insured in litigation in which any third party asserts a claim adverse to the title
or interest as insured, but only as to those stated causes of action alleging a
defect, lien or encumbrance or other matter insured against by this policy. The
Company shall have the right to select counsel of its choice (subject to the
right of such insured to object for reasonable cause) to represent the insured
as to those stated causes of action and shall not be liable for and will not pay
the fees of any other counsel. The Company will not pay any fees, costs or
expenses incurred by the insured in the defense of those causes of action
which allege matters not insured against by this policy.
(b) The Company shall have the right, at its own cost, to institute and
prosecute any action or proceeding or to do any other act which in its opinion
may be necessary or desirable to establish the title to the estate or interest or
the lien of the insured mortgage, as insured, or to prevent or reduce loss or
damage to the insured. The Company may take any appropriate action under
the terms of this policy, whether or not it shall be liable hereunder, and shall not
thereby concede liability or waive any provision of this policy. If the Company
shall exercise its rights under this paragraph, it shall do so diligently.
(c) Whenever the Company shall have brought an action or interposed a
defense as required or permitted by the provisions of this policy, the Company
may pursue any litigation to final determination by a court of competent juris-
diction and expressly reserves the right, in its sole discretion, to appeal from
any adverse judgment or order.
(d) In all cases where this policy permits or requires the Company to prose-
cute or provide for the defense of any action or proceeding, an insured shall
secure to the Company the right to so prosecute or provide defense in the
action or proceeding, and all appeals therein, and permit the Company to use,
at its option, the name of such insured for this purpose. Whenever requested
by the Company, an insured, at the Company's expense, shall give the Com-
pany all reasonable aid (i) in any action or proceeding, securing evidence,
obtaining witnesses, prosecuting or defending the action or proceeding, or
effecting settlement, and (ii) in any other lawful act which in the opinion of the
Company may be necessary or desirable to establish the title to the estate or
interest or the lien of the insured mortgage, as insured. If the Company is
prejudiced by the failure of an insured to furnish the required cooperation, the
Company's obligations to the insured under the policy shall terminate, includ-
ing any liability or obligation to defend, prosecute, or continue any litigation,
with regard to the matter or matters requiring such cooperation.
S. PROOF OF LOSS OR DAMAGE
In addition to and after the notices required under Section 3 of these Condi-
tions and Stipulations have been provided the Company, a proof of loss or
damage signed and sworn to by the insured claimant shall be furnished to the
Company within 90 days after the insured claimant shall ascertain the facts
giving rise to the loss or damage. The proof of loss or damage shall describe
the defect in, or lien or encumbrance on the title, or other matter insured
against by this policy which constitutes the basis of loss or damage and shall
state, to the extent possible, the basis of calculating the amount of the loss or
damage. If the Company is prejudiced by the failure of an insured claimant to
provide the required proof of loss or damage, the Company's obligations to
such insured under the policy shall terminate, including any liability or obliga-
tion to defend, prosecute, or continue any litigation, with regard to the matter
or matters requiring such proof of loss or damage.
In addition, an insured claimant may reasonably be required to submit to
examination under oath by any authorized representative of the Company
and shall produce for examination, inspection and copying, at such reason-
able times and places as may be designated by any authorized representative
of the Company, all records, books, ledgers, checks, correspondence and
memoranda, whether bearing a date before or after Date of Policy, which
reasonably pertain to the loss or damage. Further, if requested by any author-
ized representative of the Company, the insured claimant shall grant its per-
mission, in writing, for any authorized representative of the Companyto exam-
ine, inspect and copy all records, books, ledgers, checks, correspondence
and memoranda in the custody or control of a third party, which reasonably
pertain to the loss or damage. All information designated as confidential by an
insured claimant provided to the Company pursuant to this Section shall not
be disclosed to others unless, in the reasonable judgment of the Company, it
is necessary in the administration of the claim. Failure of an insured claimant
to submit for examination under oath, produce other reasonably requested
information or grant permission to secure reasonably necessary information
from third parties as reqin this paragraph, unless prohibited by law or
governmental regulation, II terminate any liability of the Company under
this policy as to that insured for that claim.
6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION
OF LIABILITY
In case of a claim under this policy, the Company shall have the following
additional options:
(a) To Pay or Tender Payment of the Amount of Insurance or to
Purchase the Indebtedness.
(i) to pay or tender payment of the amount of insurance under this policy
together with any costs, attorneys' fees and expenses incurred by the insured
claimant, which were authorized by the Company, up to the time of payment or
tender of payment and which the Company is obligated to pay; or
(ii) in case loss or damage is claimed under this policy by the owner of the
indebtedness secured by the insured mortgage, to purchase the indebted-
ness secured by the insured mortgage for the amount owing thereon together
with any costs, attorneys' fees and expenses incurred by the insured claimant
which were authorized by the Company up to the time of purchase and which
the Company is obligated to pay.
If the Company offers to purchase the indebtedness as herein provided, the
owner of the indebtedness shall transfer, assign, and convey the indebted-
ness and the insured mortgage, together with any collateral security, to the
Company upon payment therefor.
Upon the exercise by the Company of the option provided for in paragraph
a(i), all liability and obligations to the insured under this policy, other than to
make the payment required in that paragraph, shall terminate, including any
liability or obligation to defend, prosecute, or continue any litigation, and the
policy shall be surrendered to the Company for cancellation.
Upon the exercise by the Company of the option provided for in paragraph
a(ii) the Company's obligation to an insured lender under this policy for the
claimed loss or damage, other than the payment required to be made, shall'
terminate, including any liability or obligation to defend, prosecute or continue
any litigation.
(b) To Pay or Otherwise Settle With Parties Other than the Insured or
With the Insured Claimant.
(i) to pay or otherwise settle with other parties for or in the name of an
insured claimant any claim insured against under this policy, together with any
costs, attorneys' fees and expenses incurred by the insured claimant which
were authorized by the Company up to the time of payment and which the
Company is obligated to pay; or
(ii) to pay or otherwise settle with the insured claimant the loss or damage
provided for under this policy, together with any costs, attorneys' fees and
expenses incurred by the insured claimant which were authorized by the
Company up to the time of payment and which the Company is obligated to
pay.
Upon the exercise by the Company of either of the options provided for in
paragraphs (b)(i) or b(ii), the Company's obligations to the insured under this
policy for the claimed loss or damage, other than the payments required to be
made, shall terminate, including any liability or obligation to defend, prose-
cute or continue any litigation.
7. DETERMINATION AND EXTENT OF LIABILITY
This policy is a contract of indemnity against actual monetary loss or dam-
age sustained or incurred by the insured claimant who has suffered loss or
damage by reason of matters insured against by this policy and only to the
extent herein described.
(a) The liability of the Company under this policy to an insured lender shall
not exceed the least of:
(i) the Amount of Insurance stated in Schedule A, or, if applicable, the
amount of insurance as defined in Section 2 (c) of these Conditions and
Stipulations;
(ii) the amount of the unpaid principal indebtedness secured by the
insured mortgage as limited or provided under Section 8 of these Conditions
and Stipulations or as reduced under Section 9 of these Conditions and
Stipulations, at the time the loss or damage insured against by this policy
occurs, together with interest thereon; or
(iii) the difference between the value of the insured estate or interest as
insured and the value of the insured estate or interest subject to the defect,
lien or encumbrance insured against by this policy.
(b) In the event the insured lender has acquired the estate or interest in the
manner described in Section 2(a) of these Conditions and Stipulations or has
conveyed the title, then the liability of the Company shall continue as set forth
in Section 7(a) of these Conditions and Stipulations.
(c) The liability of the Company under this policy to an insured owner of the
estate or interest in the land described in Schedule A shall not exceed the
least of:
(i) the Amount of Insurance stated in Schedule A; or,
(ii) the difference between the value of the insured estate or interest as
insured and the value of the insured estate or interest subject to the defect,
lien or encumbrance insured against by this policy.
(d) The Company will pay only those costs, attorneys' fees and expenses
incurred in accordance with Section 4 of these Conditions and Stipulations.
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All118VI1 d0 N0I1V111AII1 '9
-02 O JHHW:CPAaIc • - 6/7/96
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall Hill & White 0PYof oTl Docu � nn Recorded
Four Embarcadero Center, 19th Floor
San Francisco, California 94111 ) 7/4
Attention: Charles F. Adams aS No.U3oLq/
Has not been compared with original
Julie L. Rodewald, County Clerk
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY
TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA
REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM
RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA
GOVERNMENT CODE.
SITE LEASE
Dated as of June 1, 1996
by and between the
CITY OF SAN LUIS OBISPO,
as lessor
and the
CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD,
as lessee
Relating to
$7,100,000
City of San Luis Obispo Capital Improvement Board
1996 Lease Revenue Bonds
SITE LEASE
This Site Lease (this "Site Lease"), dated for convenience as of June 1,
1996, is by and between the between the CITY OF SAN LUIS OBISPO, a charter
city and municipal corporation duly organized and existing under the
Constitution and laws of the State of California, as lessor (the "City"), and the
CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD, a public body
corporate and politic duly organized and existing under Ordinance No. 1059
(1986 Series) adopted by the City Council of the City of San Luis Obispo on
April 15, 1986, and under the Constitution and laws of the State of California,
as lessee (the `Board");
WITNESSETH:
WHEREAS, the City has determined to finance the acquisition and
construction of various properties and improvements to be used for the
municipal purposes of the City, including but not limited to facilities to be used
for fire headquarters and station purposes, land acquisition, seismic and other
improvements to the City Hall and the acquisition of street lighting facilities, and
for the purpose of providing a portion of the funds for such acquisition and
construction, the City proposes to lease to the Board pursuant to this Site Lease
the real property constituting the Corporation Yard Property of the City (the
"Corporation Yard Property.") for an up front rental payment which will be paid
to the City upon the execution and delivery hereof; and
WHEREAS, in order to raise the amount required to make such rental
payment hereunder, the Board has determined to issue its City of San Luis
Obispo Capital Improvement Board 1996 Lease Revenue Bonds in the aggregate
principal amount of $7,100,000 (the 'Bonds") under and pursuant to an
Indenture of Trust dated as of June 1, 1996 (the "Indenture"), by and between
the Board and First Trust of California, National Association as trustee (the
"Trustee"); and
WHEREAS, in order to provide a source of revenues to enable the Board
to pay the principal of and interest and premium (if any) on the Bonds when
due, the Board has agreed to lease the Corporation Yard Property and certain
other property back to the City pursuant to the Lease Agreement dated as of
June 1, 1996, which has been recorded concurrently herewith (the "Lease"); and
WHEREAS, the Board and the City wish to enter into this Site Lease to
provide the terns and conditions relating to the lease of the Corporation Yard
Property by the City to the Board;
NOW, THEREFORE, in consideration of the above premises and of the
mutual covenants hereinafter contained and for other good and valuable
consideration, the parties hereto agree as follows:
SECTION 1. Site Lease. The City hereby leases the Corporation Yard
Property to the Board and the Board hereby leases the Corporation Yard
Property from the City, on the terms and conditions hereinafter set forth.
SECTION 2. Term; Possession. The term of this Site Lease shall commence,
and the Board shall become entitled to possession of the Corporation Yard
Property hereunder, on the date hereof. This Site Lease shall end, and the right
of the Board hereunder to possession of the Corporation Yard Property shall
thereupon cease, on June 1, 2036, or such earlier date on which the Bonds shall
no longer be Outstanding under the Indenture.
SECTION 3. Rental. The Board shall pay to the City as and for rental of
the Corporation Yard Property hereunder, the sum of $3,367,547.84 which shall
become due and payable upon the execution and delivery hereof. The City
hereby agrees that the amount of such rental shall be deposited in a separate
fund to be held and maintained by the City, to be used for the purpose of (a)
reimbursing the City for certain capital expenditures previously paid by the City
in anticipation of the execution and delivery of the Bonds, and (b) paying the
costs of acquisition and construction of other property of capital improvements
which the City is authorized to undertake. The City shall make no use of such
proceeds which would cause the interest on the Bonds to be or to become
includable in gross income for federal income tax purposes.
The Board and the City hereby find and determine that the amount of
such rental does not exceed the fair market value of the leasehold interest in the
Corporation Yard Property which is conveyed hereunder by the City to the
Board. No other amounts of rental shall be due and payable by the Board for
the use and occupancy of the Corporation Yard Property under this Site Lease.
SECTION 4. Lease Back to City; Title. The Board shall lease the
Corporation Yard Property back to the City pursuant to the Lease. During the
term of this Site Lease, fee title to the Corporation Yard Property shall be held by
the City, subject to Permitted Encumbrances as such term is defined in the Lease.
Upon termination of the Lease for any reason whatsoever, fee title to the
Corporation Yard Property shall remain or become fully vested in the City.
SECTION 5. Modification of Description of Property Leased Hereunder.
Pursuant to Sections 3.3 and 3.4 of the Lease, the City has the right to substitute
properties for the Corporation Yard Property, and to remove property from the
description of the Corporation Yard Property, upon satisfaction of certain
conditions precedent as set forth more fully therein. Upon any such substitution
or modification, the Corporation Yard Property shall be deemed to be modified
hereunder to the same extent as they are modified under the Lease, and the City
and the Board shall execute and deliver, and cause to be recorded, all
documentation required to reflect such modification.
SECTION 6. Assignments and Subleases. The Board may assign its rights
under this Site Lease or sublet all or any portion of the Corporation Yard
Property, but only as provided in the Lease, and only with the prior written
consent of the City (provided that the prior written consent of the City shall not
be required during any period in which the City shall be in default under the
Lease).
SECTION 7. Right of Entry. The City reserves the right for any of its duly
authorized representatives to enter upon the Corporation Yard Property, or any
portion thereof, at any reasonable time to inspect the same or to make any
repairs, improvements or changes necessary for the preservation thereof. The
City hereby grants to the Board all easements, rights of access and other interests
-2-
in and to any properties of the City as may be required to effectuate any of the
transactions contemplated under this Site Lease.
SECTION 8. Termination. The Board agrees, upon the termination of this
Site Lease, to quit and surrender the Corporation Yard Property in the same
good order and condition as the Corporation Yard Property was in at the time of
commencement of the term hereof, reasonable wear and tear excepted, and
agrees that all buildings, improvements and structures then existing upon the
Corporation Yard Property shall remain thereon and title thereto shall vest
thereupon in the City for no additional consideration.
SECTION 9. Default. In the event the Board shall be in default in the
performance of any obligation on its part to be performed under the terms of this
Site Lease, which default continues for thirty (30) days following notice and
demand for correction thereof to the Board, the City may exercise any and all
remedies granted by law, except that no merger of this Site Lease and of the
Lease shall be deemed to occur as a result thereof; provided, however, that so long
as the Lease remains in effect, the lease payments payable by the City under the
Lease shall continue to be paid to the Trustee.
SECTION 10. Quiet Enjoyment. The Board at all times during the term of
this Site Lease shall peaceably and quietly have, hold and enjoy all of the
Corporation Yard Property, subject to the provisions of the Lease and subject
only to Permitted Encumbrances (as such term is defined in the Lease).
SECTION 11. Waiver of Personal Liability. All liabilities under this Site
Lease on the part of the Board are solely corporate liabilities of the Board, and
the City hereby releases each and every member and officer of the Board of and
from any personal or individual liability under this Site Lease. No member or
officer of the Board or its governing board shall at any time or under any
circumstances be individually or personally liable under this Site Lease for
anything done or omitted to be done by the Board hereunder.
SECTION 12. Taxes. The City covenants and agrees to pay any and all
assessments of any kind or character and also all taxes, including possessory
interest taxes, levied or assessed upon the Corporation Yard Property and any
improvements thereon.
SECTION 13. Eminent Domain. In the event the whole or any part of the
Corporation Yard Property or any improvements thereon shall be taken by
eminent domain proceedings, the interest of the Board shall be recognized and is
hereby determined to be the amount of the then unpaid principal components of
the Lease Payments payable under and as defined in the Lease and the balance
of the award, if any, shall be paid to the City.
SECTION 14. Partial Invalidity. If any one or more of the terms,
provisions, covenants or conditions of this Site Lease shall to any extent be
declared invalid, unenforceable, void or voidable for any reason whatsoever by a
court of competent jurisdiction, the finding or order or decree of which becomes
final, none of the remaining terms, provisions, covenants and conditions of this
Site Lease shall be affected thereby, and each provision of this Site Lease shall be
valid and enforceable to the fullest extent permitted by law.
-3-
0 9
SECTION 15. Notices. Any notice, request, complaint, demand or other
communication under this Site Lease shall be given by first class mail or personal
delivery to the party entitled thereto at its address set forth below, or by
telecopy, telex or other form of telecommunication, at its number set forth below.
Notice shall be effective either (a) upon transmission by telecopy, telex or other
form of telecommunication, (b) 48 hours after deposit in the United States mail,
postage prepaid, or (c) in the case of personal delivery to any person, upon
actual receipt. The City, the Board and the Trustee may, by written notice to the
other parties, from time to time modify the address or number to which
communications are to be given hereunder.
If to the City: Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
Fax: (805) 549-7109
If to the Board: Chief Financial Officer
City of San Luis Obispo Capital Improvement Board
990 Palm Street
San Luis Obispo, California 93401
Fax: (805) 549-7109
If to the Trustee: First Trust of California, National Association
550 South Hope Street, 5th Floor
Los Angeles, California 90071
Attention: Corporate Trust Department
Fax: (213) 553-8729
SECTION 16. Governing Law. This Site Lease shall be construed in
accordance with and governed by the Constitution and laws of the State of
California.
SECTION 17. Binding Effect. This Site Lease shall inure to the benefit of
and shall be binding upon the Board, the City and their respective successors
and assigns, subject, however, to the limitations contained herein.
SECTION 18. Severability of Invalid Provisions. If any one or more of the
provisions contained in this Site Lease shall for any reason be held to be invalid,
illegal or unenforceable in any respect, then such provision or provisions shall be
deemed severable from the remaining provisions contained in this Site Lease and
such invalidity, illegality or unenforceability shall not affect any other provision
of this Site Lease, and this Site Lease shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein. The Board
and the City each hereby declares that it would have entered into this Site Lease
and each and every other section, paragraph, sentence, clause or phrase hereof
irrespective of the fact that any one or more sections, paragraphs, sentences,
clauses or phrases of this Site Lease may be held illegal, invalid or unenforceable.
SECTION 20. Section Headings. All section headings contained herein are
for convenience of reference only and are not intended to define or limit the scope
of any provision of this Site Lease.
-4-
SECTION 21. Execution in Counterparts. This Site Lease may be executed
in any number of counterparts, each of which shall be deemed to be an original
but all together shall constitute but one and the same lease. it is also agreed that
separate counterparts of this Site Lease may be separately executed by the
Board and the City, all with the same force and effect as though the same
counterpart had been executed by both the Board and the City.
IN WITNESS WHEREOF, the City and the Board have caused this Site
Lease to be executed by their respective officers thereunto duly authorized, all as
of the day and year first above written.
(SEAL)
Attest:
sistant City Clerk
(S F.AT.I
I&I
CITY OF SAN LUIS OBISPO, as
Lessor
B —
City trative Officer
CITY OF SAN LUIS OBISPO
CAPITAL IMPROVEMENT
BOARD,.as Lessee
E utive Director
STATE OF CALIFORNIA )
ss
COUNTY
On Ste-•- -1-0: 1`''7--, before me, P+/e, Notary Public,
personally appeared S k-w� , personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that�Si7s�i,4 executed the same in is'4* authorized
capacity, and that by(syn)¢ signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
«,
41
�� `, •111
54.
WITNESS my hand and official seal.
STATE OF CALIFORNIA )
ss
COUNTY OF
On before me, Notary Public,
personally appeared personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that Tie s�executed the same in lis/Lhey'�uthorized
capacity, and that by JKs/signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
M
WITNESS my hand and official seal.
R
E
EXHIBIT A
DESCRIPTION OF THE CORPORATION YARD PROPERTY
The real property constituting the Corporation Yard Property consists of
that certain land located in the County of San Luis Obispo, State of California,
more fully described as follows:
A portion of Lots 6, 7, 6 and 19 of the Suburban Tract, in the City of San Luis
Obispo, County of San Luis Obispo, State of California, according to the map
filed for record in Book 1, Page 92 of Surveys, in the Office of the County
Recorder of said County, described as follows.:
Beginning at Station 710 + 00 on the centerline of U. S. Highway #101, said
centerline bearing North 27" 45' 40" East as shown on California Department of
Transportation Right -of -Way Plot, SLO 101 26.9, sheet 31 and 32: thence South 62"
14' 20" East a distance of 100.00 feet to point on the Easterly right-of-way of
U. S. Highway "101, said point being the True Point of Beginning; thence North
320 20' 40" East, 450.39 feet along said right -or -way; thence on a curve to the
right having a radius of 750.00 feet, through an angle of 140 12' 57" for a
length of 186.08 feet along said sight -of -way; thence North 460 34' 10" East
196.72 feet along said right-of-way; thence South 870 36' 50" East 10.60 feet
along said right-of-way; thence parallel with the old centerline of Prado Road
and distance therefrom 54.00 feet, South 620 55' 50" East, 425.23 feet; thence
along a curve, concave to the right having a radius of 20.00 feet through an
angle of 900 00' 00" for a length of 31.42 feet; thence South 270 04' 10" West,
399.38 feet; thence along a curve, concave to the right, having a radius of
50.00 feet through an angle of 940 45' 00", for a length of 82.68 feet; thence
North 580 10' 50" West, 54.09 feet; thence along a curve, concave to the left,
having a radius of 235.00 feet through an angle of 91" 10' 00" for a length of
373.92 feet; thence South 300 39' 10" West, 535.93 feet; thence South 620 55` 35"
West, 231.23 feet to the True Point of Beginning.
A-1
2.Y2ss-u2 �' JHHW:CFA:PCH • 6/10/96
re -1:3 114 1 MEMO
This is to certify that the interest in real property conveyed by the Site Lease, dated as
of June 1, 1996, by and between City of San Luis Obispo, as lessor, and the City of San Luis
Obispo Capital Improvement Board (the 'Board"), as lessee, is hereby accepted by the
undersigned officer on behalf of the Board pursuant to authority conferred by resolution of the
governing board of the Board, adopted on April 16, 1996, and the lessee consents to
recordation thereof by its duly authorized officer.
Dated: June 20, 1996 CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEMENT BOARD
John Dunn,
Executive Director
29213-o2 6
JHHW:CFA:dc 0
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall Hill & White,
A Professional Law Corporation
Four Embarcadero Center, 19th Floor
San Francisco, California 94111
Attention: Charles F. Adams, Esq.
6/7/96
kJ of Document Recorded
on N(o as �lolj j&LZZ
Has not been compared with original
fle L. Rodew aid, County Cierk Recorder
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER
TAX PURSUANT TO SECTION 11922 OF THE CALIFORNIA REVENUE AND
TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES
PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
LEASE AGREEMENT
Dated as of June 1, 1996
by and between the
CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD,
as lessor
and the
CITY OF SAN LUIS OBISPO,
as lessee
Relating to
$7,100,000
City of San Luis Obispo Capital Improvement Board
1996 Lease Revenue Bonds
TABLE OF CONTENTS
Definitions
SectionI.I. Definitions...........................................................................................................1
Section 1.2. Interpretation.......................................................................................................2
ARTICLE II
Covenants, Representations and Warranties
Section 2.1. Covenants, Representations and Warranties of the City ..........................................2
Section 2.2. Covenants, Representations and Warranties of the Board.......................................3
ARTICLE III
Deposit and Application of Funds; Substitution of
Property
Section 3.1. Deposit of Moneys................................................................................................5
Section 3.2. Acquisition of Properties.......................................................................................5
Section 3.3. Substitution of Property......................................................................:.................5
ARTICLE IV
Lease of Properties; Term of This Lease; Lease
Payments
Section4.1. Lease...................................................................................................................6
Section4.2. Term....................................................................................................................6
Section4.3. Lease Payments....................................................................................................7
Section 4.4. Additional Rental Payments...........:.....................................................................8
Section4.5. Quiet Enjoyment..................................................................................................9
Section4.6. Title.....................................................................................................................9
ARTICLE V
Maintenance; Taxes; Insurance; and Other Matters
Section 5.1. Maintenance, Utilities, Taxes and Assessments......................................................9
Section 5.2. Modification of Properties....................................................................................10
Section 5.3. Public Liability and Property Damage Insurance ................................................. l0
Section 5.4. Casualty Insurance............................................................................................... 11
Section 5.5. Rental Interruption Insurance..............................................................................11
Section 5.6. Recordation Hereof; Title Insurance..................................................................... 11
Section 5.7. Insurance Net Proceeds; Form of Policies............................................................. I I
Section 5.8. Installation of City's Personal Property .................................................................12
Section5.9. Liens..................................................................................................................12
Section5.10. Advances...........................................................................................................12
ARTICLE VI
Damage, Destruction and Eminent Domain; Use of
Net Proceeds
Section 6.1. Application of Net Proceeds................................................................................13
Section 6.2. Termination or Abatement Due to Eminent Domain............................................13
Section 6.3. Abatement Due to Damage or Destruction..........................................................13
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ARTICLE VII
Other Covenants of the City
Section 7.1. Disclaimer of Warranties.....................................................................................14
Section 7.2. Access to the Properties.......................................................................................14
Section 7.3. Release and Indemnification Covenants...............................................................14
Section 7.4. Assignment and Subleasing by the City ..............................................................14
Section 7.5. Amendment Hereof............................................................................................15
Section 7.6. Tax Covenants.......................................................:............................................16
Section 7.7. Continuing Disclosure........................................................................................17
ARTICLE VIII
Events of Default and Remedies
Section 8.1. Events of Default Defined...................................................................................17
Section 8.2. Remedies on Default..........................................................................................17
Section 8.3. No Remedy Exclusive........................................:................................................19
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses.................................................19
Section 8.5. No Additional Waiver Implied by One Waiver...................................................19
Section 8.6. Application of Proceeds.......................................................................................19
Section 8.7. Trustee and Bond Owners to Exercise Rights ....................................................... 20
ARTICLE IX
Prepayment of Lease Payments
Section9.1. Security Deposit...:.............................................................................................20
Section 9.2. Optional Prepayment.........................................................................................20
Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or
EminentDomain................................................................................................20
Section 9.4. Credit for Amounts on Deposit....::......................................................................21
ARTICLE X
Miscellaneous
Section10.1.
Notices...............................................................................................................21
Section 10.2.
Binding Effect
.....................................................................................................22
Section10.3.
Severability........................................................................................................22
Section 10.4.
Net -net -net Lease................................................................................................22
Section 10.5.
Further Assurances and Corrective Instruments...................................................22
Section 10.6.
Execution in Counterparts...................................................................................22
Section10.7.
Applicable Law
Section 10.8.
..................................................................................................22
Board and City Representatives..........................................................................22
Section10.9.
Captions.............................................................................................................22
EXHIBIT A - DESCRIPTION OF THE PROPERTIES
EXHIBIT B - SCHEDULE OF LEASE PAYMENTS
6
LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease"), dated as of June 1, 1996, is by
and between the CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD, a
public body corporate and politic duly organized and existing under Ordinance
No. 1059 (1986 Series) adopted by the City Council of the City of San Luis
Obispo on April 15, 1986, and under the Constitution and laws of the State of
California, as lessor (the "Board' ), and the CITY OF SAN LUIS OBISPO, a charter
city and municipal corporation duly organized and existing under the
Constitution and laws of the State of California, as lessee (the "City");
WITNESSETH:
WHEREAS, the City has determined to finance the acquisition and
construction of various properties and improvements to be used for the
municipal purposes of the City, including but not limited to facilities to be used
for fire headquarters and station purposes, land acquisition, seismic and other
improvements to the City Hall and the acquisition of street lighting facilities; and
WHEREAS, in order to provide funds for such purpose, the City has
agreed to sell to the Board certain existing properties owned by the City
pursuant to an Acquisition Agreement dated as of June 1, 1996 (the "Acquisition
Agreement'), by and between the City as seller and the Board as purchaser, and
to lease other existing properties owned by the City pursuant to a Site Lease
dated as of June 1, 1996 (the "Site Lease") by and between the City as lessor
and the Board as lessee, and the Board has agreed to lease such properties back
to the City pursuant to this Lease; and
WHEREAS, lease payments made by the City hereunder have been
assigned by the Board to First Trust of California, National Association, as
trustee (the "Trustee") for the security of the $7,100,000 aggregate principal
amount of 1996 Lease Revenue Bonds to be issued by the Authority under an
Indenture of Trust dated as of June 1, 1996 (the "Indenture"), by and between
the Authority and the Trustee, the proceeds of which will be used by the
Authority to acquire such properties from the City under the Acquisition
Agreement and under the Site Lease;
NOW, THEREFORE, for and in consideration of the premises and the
material covenants hereinafter contained, the parties hereto hereby formally
covenant, agree and bind themselves as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or
unless otherwise defined herein, the capitalized terms in this Lease shall have the
respective meanings specified in Section 1.01 of the Indenture.
i SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the
singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents
hereof are solely for convenience of reference, do not constitute a part hereof and
shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other subdivisions
are to the corresponding Articles, Sections or subdivisions of this Lease; the
words "herein," "hereof;' "hereby," "hereunder" and other words of similar
import refer to this Lease as a whole and not to any particular Article, Section or
subdivision hereof.
ARTICLE II
COVENANTS, REPRESENTATIONS AND
WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The
City makes the following covenants, representations and warranties to the Board
as of the date of the execution and delivery of this Lease.:
(a) Due Organization and Existence. The City is a charter
city and municipal corporation duly organized and validly
existing under the Constitution and laws of the State of
California, has full legal right; power and authority under the laws
of the State of California to enter into this Lease, the Site Lease
and the Acquisition Agreement and to carry out and consummate
all transactions contemplated hereby and thereby, and by proper
action the City has duly authorized the execution and delivery of
this Lease, the Site Lease and the Acquisition Agreement.
(b) Due .Execution. The representatives of the City
executing this Lease, the Site Lease and the Acquisition Agreement
have been fully authorized to execute the same pursuant to a
resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. This
Lease, the Site Lease and the Acquisition Agreement have been
duly authorized, executed and delivered by the City and
constitute the legal, valid and binding agreements of the City
enforceable against the City in accordance with their respective
terms.
(d) No Conflicts. The execution and delivery of this
Lease, the Site Lease and the Acquisition Agreement, the
consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms
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and conditions hereof and thereof, do not and will not conflict
with or constitute a violation or breach of or default (with due
notice or the passage of time or both) under any applicable law or
administrative rule or regulation, or any applicable court or
administrative decree or order, or any indenture, mortgage, deed
of trust, lease, contract or other agreement or instrument to which
the City is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever
upon any of the property or assets of the City, which conflict,
violation, breach, default, lien, charge or encumbrance would have
consequences that would materially and adversely affect the
consummation of the transactions contemplated by this Lease, the
Site Lease and the Acquisition Agreement or the financial
condition, assets, properties or operations of the City.
(e) Consents and Approvals. No consent or approval of
any trustee or holder of any indebtedness of the City or of the
voters of the City, and no consent, permission, authorization,
order or license of, or filing or registration with, any governmental
authority is necessary in connection with the execution and
delivery of this Lease, the Site Lease or the Acquisition Agreement
, or the consummation of any transaction herein or therein
contemplated, except as have been obtained or made and as are
in full force and effect.
(f) No Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court or federal, state,
municipal or other governmental authority pending or, to the
knowledge of the City after reasonable investigation, threatened
against or affecting the City or the assets, properties or operations
of the City which, if determined adversely to the City or its
interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity
of this Lease, the Site Lease or the Acquisition Agreement , or
upon the financial condition, assets, properties or operations of
the City, and the City is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or other governmental authority, which
default might have consequences that would materially and
adversely affect the consummation of the transactions
contemplated by this Lease, the Site Lease or the Acquisition
Agreement or the financial conditions, assets, properties or
operations of the City.
SECTION 2.2. Covenants, Representations and Warranties of the Board. The
Board makes the following covenants, representations and warranties as the
basis for its undertakings herein contained:
(a) Due Organization and . Existence. The Board is a
public body corporate and politic duly organized and existing
under and by virtue of the laws of the State; has power to enter
into this Lease, the Site Lease, the Acquisition Agreement, the
Assignment Agreement and the Indenture; is possessed of full
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power to own and hold, improve and equip real and personal
property, and to lease and lease back the same; and has duly
authorized the execution and delivery of each of the aforesaid
agreements and such agreements constitute the legal, valid and
binding agreements of the Board, enforceable against the Board in
accordance with their respective terms.
(b) Due Execution. The representatives of the Board
executing this Lease, the Site Lease, the Acquisition Agreement,
the Assignment Agreement and the Indenture are fully authorized
to execute the same pursuant to official action taken by the
governing body of the Board.
(c) Valid. Binding and Enforceable. Obligations. This
Lease, the Site Lease, the Acquisition Agreement, the Assignment
Agreement and the Indenture have been duly authorized,
executed and delivered by the Board and constitute the legal,
valid and binding agreements of the Board, enforceable against the
Board in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this
Lease, the Site Lease, the Acquisition Agreement, the Assignment
Agreement and the Indenture, the consummation of the
transactions herein and therein contemplated and the fulfillment
of or compliance with the terms and conditions hereof, do not and
will not conflict with or constitute a violation or breach of or
default (with due notice or the passage of time or both) under any
applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any
indenture, mortgage, deed of trust, lease, contract or other
agreement or instrument to which the Board is a party or by which
it or its properties are otherwise subject or bound, or result in the
creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property
or assets of the Board, which conflict, violation, breach, default,
lien, charge or encumbrance would have consequences that would
materially and adversely affect the consummation of the
transactions contemplated by this Lease, the Site Lease, the
Acquisition Agreement, the Assignment Agreement and the
Indenture or the financial condition, assets, properties or
operations of the Board.
(e) Consents and Approvals. No consent or approval of
any trustee or holder of any indebtedness of the Board, and no
consent, permission, authorization, order or license of, or filing or
registration with, any governmental authority is necessary in
connection with the execution and delivery of this Lease, the Site
Lease, the Acquisition Agreement, the Assignment Agreement or
the Indenture, or the consummation of any transaction herein or
therein contemplated, except as have been obtained or made and
as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court or federal, state,
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municipal or other governmental authority pending or, to the
knowledge of the. Board after reasonable investigation, threatened
against or affecting the Board or the assets, properties or
operations of the Board which, if determined adversely to the
Board or its interests, would have a material and adverse effect
upon the consummation of the transactions contemplated by or
the validity of this Lease, the Site Lease, the Acquisition
Agreement, the Assignment Agreement or the Indenture, or upon
the financial condition, assets, properties or operations of the
Board, and the Board is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or other governmental authority, which
default might have consequences that would materially and
adversely affect the consummation of the transactions
contemplated by this Lease, the Site Lease, the Acquisition
Agreement, the Assignment Agreement or the Indenture or the
financial conditions, assets, properties or operations of the Board.
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS;
SUBSTITUTION OF PROPERTY
SECTION 3.1. Deposit of Moneys. On the Closing Date, the Board shall
cause the proceeds of sale of the Bonds to be deposited with the Trustee.
Pursuant to Section 3.01 of the Indenture, from the proceeds of sale of the Bonds
the amount of accrued interest received on the sale of the Bonds shall be
deposited in the Interest Account, the estimated amount of the Costs of Issuance
shall be deposited in the Costs of Issuance Fund, the amount of the Reserve
Requirement shall be deposited in the Reserve Fund, and the remainder_ of such
proceeds shall be deposited in the Acquisition Fund.
SECTION 3.2. Acquisition of Properties The Board hereby agrees to acquire
the Properties on the Closing Date in accordance with the Acquisition Agreement
and the Site Lease. Direct payment of the Acquisition Costs shall be made from
amounts on deposit in the Acquisition Fund, pursuant to Section 3.03 of the
Indenture.
SECTION 3.3. Substitution of Property. The City shall have, and is hereby
granted, the option at any time and from time to time, to substitute other real
property (the "Substitute Property") for any Property or portion thereof (the
"Former Property"), provided that the City shall satisfy all of the following
requirements which are hereby declared to be conditions precedent to such
substitution:
(a) No Event of Default shall have occurred and be
continuing;
(b) The City shall obtain a CLTA policy of title insurance
insuring the City's leasehold estate hereunder in the Substitute
lea
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Property, subject only to Permitted Encumbrances, in an amount
at least equal to the estimated fair market value thereof;
(c) The City shall certify in writing to the Board and the
Trustee that the Substitute Property serves the municipal
purposes of the City and constitutes property which the City is
permitted to lease under the laws of the State of California, and
has been determined to be essential to the proper, efficient and
economic operation of the City and to serve an essential
governmental function of the City;
(d) The Substitute Property shall not cause the City to
violate any of its covenants, representations and warranties made
herein;
(e) _ The City shall file with the Board and the Trustee an
appraisal of an M.A.I. appraiser which establishes that the
appraised value of the Substitute Property is at least equal to the
value of the Former Property, and that the useful life of the
Substitute Property at least extends to June 1, 2026; and
(f) The City shall have mailed written notice of such
substitution to each rating agency which then maintains a rating
on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this
Lease shall thereupon end as to the Former Property and shall thereupon
commence as to the Substitute Property, and all references to the Former
Property shall apply with full force and effect to the Substitute Property. The
City shall not be entitled to any reduction, diminution, extension or other
modification of the Lease Payments whatsoever as a result of such substitution.
The Board and the City shall execute, deliver and cause to be recorded all
documents required to discharge this Lease and the Assignment Agreement (and,
if applicable, the Site Lease) of record against the Former Property and to cause
the Substitute Property to become subject to all of the terms and conditions of
this Lease and the Assignment Agreement.
ARTICLE IV
LEASE OF PROPERTIES; TERM OF THIS LEASE;
LEASE PAYMENTS
SECTION 4.1. Lease. The Board hereby leases the Properties to the City
and the City hereby leases the Properties from the Board, upon the terms and
conditions set forth in this Lease. The City shall be entitled to take possession of
each Property upon the Closing Date.
SECTION 4.2. Term. The Term of this Lease shall commence on the date
hereof and shall end on the earliest of the date on which the Indenture shall be
discharged pursuant to and in accordance with Section 13.01 thereof, but under
any circumstances not later than June 1, 2036. The provisions of this Section 4.2
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are subject to the provisions of Section 6.2 relating to the taking in eminent
domain of the Properties in whole or in part.
SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3
and the provisions of Article IX, the City agrees to pay to the Board, its
successors and assigns, the Lease Payments (denominated into components of
principal and interest) in the respective amounts specified in Exhibit B attached
hereto and by this reference incorporated herein, to be due and payable in
immediately available funds on the Interest Payment Dates immediately
following each of the respective Lease Payment Dates specified in Exhibit B, and
to be deposited by the City with the Trustee on each of the Lease Payment Dates
specified in such Exhibit B. Any amount held in the Bond Fund, the Interest
Account, the Principal Account and the Sinking Account on any Lease Payment
Date (other than amounts resulting from the prepayment of the Lease Payments
in part but not in whole pursuant to Article IX and other than amounts required
for payment of past due principal or interest on any Bonds not presented for
payment) shall be credited towards the Lease Payment then required to be paid
hereunder; and no Lease Payment need be deposited with the Trustee on any
Lease Payment Date if the amounts then held in the Bond Fund, the Interest
Account, the Principal Account and the Sinking Account are at least equal to the
Lease Payment then required to be deposited with the Trustee. The Lease
Payments payable in any Rental Period with respect to any Property shall be for
the use of such Property during such Rental Period.
(b) Effect of Prepayment. In the event that the City prepays all Lease
Payments in full pursuant to Sections 9.2 or 9.3, the City's obligations under this
Section shall thereupon cease and terminate. In the event that the City prepays
the Lease Payments in part but not in whole pursuant to Sections 9.2 or 9.3, the
principal components of the remaining Lease Payments shall be reduced in
integral multiples of $5,000 among Lease Payment Dates on a basis which
corresponds to the principal maturities of the Bonds which are prepaid thereby;
and the interest component of each remaining Lease Payment shall be reduced by
the aggregate corresponding amount of interest which would otherwise be
payable with respect to the Bonds thereby redeemed pursuant to Sections
4.01(a) or (b) of the Indenture, as the case may be.
(c) Rate on Overdue Payments. In the event the City should fail to make
any of the payments required in this Section 4.3, the payment in default shall
continue as an obligation of the City until the amount in default shall have been
fully paid, and the City agrees to pay the same with interest thereon, from the
date of default to the date of payment at the highest rate of interest on any
Outstanding Bond.
(d) Fair Rental Value. The aggregate amount of the Lease Payments and
Additional Rental Payments coming due and payable during each Rental Period
shall constitute the total rental for the Properties for such Rental Period, and
shall be paid by the City in each Rental Period for and in consideration of the
right of the use and occupancy of; and the continued quiet use and enjoyment of
the Properties during each Rental Period. The parties hereto have agreed and
determined that the total Lease Payments represent the fair rental value of the
Properties. In making such determination, consideration has been given to the
appraised value of the Properties, the costs of financing the acquisition of the
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Properties, other obligations of the City and the Board under this Lease, the uses
and purposes which may be served by the Properties and the benefits therefrom
which will accrue to the City and the general public.
(e) Source of Payments;- Budget and Appropriation. The Lease
Payments and Additional Rental Payments shall be payable from any source of
available funds of the City, subject to the provisions of Sections 6.2, 6.3 and 9.1.
The City covenants to take such action as may be necessary to include all Lease
Payments in each of its budgets during the Term of this Lease and to make the
necessary appropriations for all such Lease Payments and Additional Rental
Payments. The covenants on the part of the City herein contained shall be
deemed to be and shall be construed to be duties imposed by law and it shall be
the duty of each and every public official of the City to take such action and do
such things as are required by law in the performance of the official duty of such
officials to enable the City to carry out and perform the covenants and
agreements in this Lease agreed to be carried out and performed by the City.
(f) Assignment. The City understands and agrees that all Lease
Payments have been assigned by the Board to the Trustee in trust, pursuant to
the Assignment Agreement, for the benefit of the Owners of the Bonds, and the
City hereby assents to such assignment. The Board hereby directs the City, and
the City hereby agrees to pay to the Trustee at its Office, all payments payable
by the City pursuant to this Section 4.3 and all amounts payable by the City
pursuant to Article IX.
SECTION 4.4. Additional Rental Payments. In addition to the Lease
Payments, the City shall pay when due the following amounts which shall
constitute payments of additional rent in consideration of the lease of the
Properties by the City from the Board hereunder:
(a) All fees and expenses incurred by the Board in
connection with or by reason of its leasehold estate in the
Properties as and when the same become due and payable;
(b) All reasonable compensation to the Trustee pursuant
to the Indenture for all services rendered under the Indenture and
for all reasonable expenses, charges, costs, liabilities, legal fees
and other disbursements incurred in and about the performance of
its powers and duties under the Indenture;
(c) The reasonable fees and expenses of such
accountants, consultants, attorneys and other experts as may be
engaged by the Board or the Trustee to prepare audits, financial
statements, reports, opinions or provide such other services
required under this Lease or the Indenture;
(d) Amounts coming due and payable as Excess
Investment Earnings in accordance with Section 7.6(e); and
(e) The reasonable out-of-pocket expenses of the Board in
connection with the execution and delivery of this Lease or the
Indenture, or in connection with the issuance of the Bonds,
including but not limited to any and all expenses incurred in
connection with the authorization, sale and delivery of the Bonds,
ME
or incurred by the Board in connection with any litigation which
may at any time be instituted involving this Lease, the Bonds, the
Indenture or any of the other documents contemplated hereby or
thereby, or otherwise incurred in connection with the
administration of this Lease.
SECTION 4.5. Quiet Enjoyment. Throughout the Term of this Lease, the
Board shall provide the City with quiet use and enjoyment of the Properties and
the City shall peaceably and quietly have and hold and enjoy the Properties,
without suit, trouble or hindrance from the Board, except as expressly set forth
in this Lease. The Board will, at the request of the City and at the City's cost,
join in any legal action in which the. City asserts its right to such possession. and
enjoyment to the extent the Board may lawfully do so. Notwithstanding the
foregoing, the Board shall have the right to inspect the Properties as provided in
Section 7.2.
SECTION 4.6. Title. Upon the termination of this Lease (other than
pursuant to Section 8.2(b) hereof), all right, title and interest of the Board in and
to the Properties shall be transferred to and vested in the City. Upon the
payment in full of all Lease Payments allocable to any Property, or upon the
deposit by the City of security for such Lease Payments as provided in Section
9.1, all right, title and interest of the Board in and to such Property shall be
transferred to and vested in the City. The Board agrees to take any and all steps
and execute and record any and all documents reasonably required by the City
to consummate any such transfer of title.
ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND
OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout
the Term of this Lease, as part of the consideration for the rental of the
Properties, all improvement, repair and maintenance of the Properties shall be
the responsibility of the City, and the City shall pay for or otherwise arrange for
the payment of all utility services supplied to the Properties, which may include,
without limitation, janitor service, security, power, gas, telephone, light, heating,
water and all other utility services, and shall pay for or otherwise arrange for the
payment of the cost of the repair and replacement of the Properties resulting
from ordinary wear and tear or want of care on the part of the City or any
assignee or sublessee thereof. In exchange for the Lease Payments herein
provided, the Board agrees to provide only the Properties, as hereinbefore more
specifically set forth. The City waives the benefits of subsections 1 and 2 of
Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil
Code, but such waiver shall not limit any of the rights of the City under the terms
of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of
any type or nature, if any, charged to the Board or the City affecting the
Properties or the respective interests or estates therein; provided that with
respect to special assessments or other governmental charges that may lawfully
be paid in installments over a period of years, the City shall be obligated to pay
only such installments asarerequired to be paid during the Term of this Lease as
and when the same become due.
The City may, at the City's expense and in its name, in good faith contest
any such taxes, assessments, utility and other charges and, in the event of any
such contest, may permit the taxes, assessments or other charges so contested to
remain unpaid during the period of such contest and any appeal therefrom
unless the Board shall notify the City that, in its reasonable opinion, by
nonpayment of any such items the interest of the Board in the Properties will be
materially endangered or the Properties or any part thereof will be subject to loss
or forfeiture, in which event the City shall promptly pay such taxes, assessments
or charges or provide the Board with full security against any loss which may
result from nonpayment, in form satisfactory to the Board and the Trustee..
SECTION 5.2. Modification of Properties. The City shall, at its own
expense, have the right to make additions, modifications and improvements to
the Properties or any portion thereof. All additions, modifications and
improvements to the Properties shall thereafter comprise part of the Properties
and become subject to the provisions of this Lease. Such additions,
modifications and improvements shall not in any way damage the Properties, or
cause the Properties to be used for purposes other than those authorized under
the provisions of state and federal law; and the Properties, upon completion of
any additions, modifications and improvements made thereto pursuant to this
Section, shall be of a value which is not substantially less than the value thereof
immediately prior to the making of such additions, modifications and
improvements. The City will not permit any mechanic's or other lien to be
established or remain against the Properties for labor or materials furnished in
connection with any remodeling, additions, modifications, improvements,
repairs, renewals or replacements made by the City pursuant to this Section;
provided that if any such lien is established and the City shall first notify or
cause to be notified the Board of the City's intention to do so, the City may in
good faith contest any lien filed or established against the Properties, and in such
event may permit the items so contested to remain undischarged and unsatisfied
during the period of such contest and any appeal therefrom and shall provide
the Board with full security against any loss or forfeiture which might arise from
the nonpayment of any such item, in form satisfactory to the Board. The Board
will cooperate fully in any such contest, upon the request and at the expense of
the City.
SECTION 5.3. Public Liability and Property Damage Insurance. The City
shall maintain or cause to be maintained throughout the Term of this Lease, but
only if and to the extent available from reputable insurers at reasonable cost in
the reasonable opinion of the City, a standard comprehensive general insurance
policy or policies in protection of the Board, City, and their respective members,
officers, agents, employees and assigns. Said policy or policies shall provide for
indemnification of said parties against direct or contingent loss or liability for
damages for bodily and personal injury, death or property damage occasioned
by reason of the operation of the Properties. Such policy or policies shall
provide coverage in such liability limits and be subject to such deductibles as the
City shall deem adequate and prudent. Such insurance may be maintained as
part of or in conjunction with any other insurance coverage carried by the City,
and may be maintained in whole or in part in the form of self-insurance by the
City, subject to the provisions of Section 5.7, or in the form of the participation
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by the City in a joint powers agency or other program providing pooled
insurance. The proceeds of such liability insurance shall be applied by the City
toward extinguishment or satisfaction of the liability with respect to which paid.
SECTION 5.4. Casualty Insurance. The City shall procure and maintain, or
cause to be procured and maintained, throughout the Term of this Lease,
casualty insurance against loss or damage to all buildings situated on the
Properties, in an amount at least equal to the lesser of (a) one hundred percent
(100%) of the replacement value of the insured buildings, or (b) one hundred
percent (100%) of the aggregate principal amount of the Outstanding Bonds.
Such insurance shall, as nearly as practicable, cover loss or damage by explosion,
windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are
normally covered by such insurance, and shall include earthquake insurance if
available at reasonable cost from reputable insurers in the judgment of the City.
Such insurance shall be subject to such deductibles as the City shall deem
adequate and prudent. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be
maintained in whole or in part in the form of the participation by the City in a
joint powers agency or other program providing pooled insurance; provided that
such insurance may not be maintained by the City in the form of self-insurance.
The Net Proceeds of such insurance shall be applied as provided in Section 6.1.
SECTION 5.5. Rental Interruption Insurance. The City shall procure and
maintain, or cause to be procured and maintained, throughout the Term of this
Lease, rental interruption or use and occupancy insurance to cover loss, total or
partial, of the use of the Properties and the improvements situated thereon as a
result of any of the hazards covered in the insurance required by Section 5.4, in
an amount at least equal to the maximum Lease Payments coming due and
payable during any eighteen (18) month period. Such insurance may be
maintained as part of or in conjunction with any other insurance coverage carried
by the City, and may be maintained in whole or in part in the form of the
participation by the City 'in a joint powers agency or other program providing
pooled insurance; provided that such insurance may not be maintained by the
City in the form of self-insurance. The Net Proceeds of such insurance, if any,
shall be paid to the Trustee and deposited in the Bond Fund, and shall be
applied as a credit towards the payment of the Lease Payments allocable to the
insured improvements as the same become due and payable.
SECTION 5.6. Recordation Hereof; Title Insurance. On or before the Closing
Date the City shall, at its expense, (a) cause the Assignment Agreement and this
Lease, or a memorandum hereof or thereof in form and substance approved by
Bond Counsel, to be recorded in the office of the San Luis Obispo County
Recorder, and (b) obtain a CLTA title insurance policy insuring the City's
leasehold estate hereunder in the Properties, subject only to Permitted
Encumbrances, in an amount at least equal to the aggregate principal amount of
the Bonds. All Net Proceeds received under any such title insurance policy shall
be deposited with the Trustee in the Bond Fund and shall be credited towards
the prepayment of the remaining Lease Payments pursuant to Section 9.3.
SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of
insurance maintained pursuant to Sections 5.4, 5.5 and 5.6 shall name the
Trustee as loss payee so as to provide that all proceeds thereunder shall be
payable to the Trustee. The City shall pay or cause to be paid when due the
premiums for all insurance policies required by this Lease. All such policies shall
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provide that the Trustee shall be given thirty (30) days' notice of each expiration;
any intended cancellation thereof or reduction of the coverage provided thereby.
The City shall file with the Trustee annually, within ninety (90) days following
the close of each Fiscal Year, a certificate of the City stating that all policies of
insurance required hereunder are then in full force and effect. The Trustee shall
not be responsible for the sufficiency, adequacy or amount of any insurance or
self-insurance herein required and shall be fully protected in accepting payment
on account of such insurance or any adjustment, compromise or settlement of
any loss.
In the event that any insurance maintained pursuant to Section 5.3 shall
be provided in the form of self-insurance, the City shall file with the Trustee
annually, within ninety (90) days following the close of each Fiscal Year, a
statement of the risk manager of the City or an independent insurance adviser
engaged by the City identifying the extent of such self-insurance and stating the
determination that the City maintains sufficient reserves with respect thereto. In
the event that any such insurance shall be provided in the form of self-insurance
by the City, the City shall not be obligated to make any payment with respect to
any insured event except from such reserves.
SECTION 5.8. Installation of City's Personal Property. The City may at any
time and from time to time, in its sole discretion and at its own expense, install
or permit to be installed other items of equipment or other personal property in
or upon the Properties. All such items shall remain the sole property of the City,
in which neither the Board nor the Trustee shall have any interest, and may be
modified or removed by the City at any time, provided that the City shall repair
and restore any and all damage to the Properties resulting from the installation,
modification or removal of any such items. Nothing in this Lease shall prevent
the City from purchasing or leasing items to be installed pursuant to this Section
under a lease or conditional sale agreement, or subject to a vendor's lien or
security agreement, as security for the unpaid portion of the purchase price
thereof, provided that no such lien or security interest shall attach to any part of
the Properties.
SECTION 5.9. Liens. The City shall not, directly or indirectly, create,
incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance
or claim on or with respect to the Properties, other than as herein contemplated
and except for such encumbrances as the City shall certify in writing to the
Trustee do not materially and adversely affect the leasehold estate in the
Properties hereunder. Except as expressly provided in this Article, the City shall
promptly, at its own expense, take such action as may be necessary to duly
discharge or remove any such mortgage, pledge, lien, charge, encumbrance or
claim, for which it is responsible, if the same shall arise at any time. The City
shall reimburse the Board.for any expense incurred by it in order to discharge or
remove any such mortgage, pledge, lien, charge, encumbrance or claim. ,
SECTION 5.10. Advances. If the City shall fail to perform any of its
obligations under this Article V, the Board shall take such action as may be
necessary to cure such failure, including the advancement of money, and the City
shall be obligated to repay all such advances as Additional Rental Payments
hereunder, with interest at the rate set forth in Section 4.3(c).
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ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT
DOMAIN; USE OF NET PROCEEDS
SECTION 6.1. Application of Net Proceeds. The Net Proceeds of any
insurance award resulting from any damage to or destruction of the Properties by
fire or other casualty shall be paid to the Trustee, as assignee of the Board under
the Assignment Agreement, and deposited in the Insurance and Condemnation
Fund to be applied as set forth in Section 5.08(0 of the Indenture. The Net
Proceeds of any eminent domain award with respect to the Properties resulting
from any event described in Section 6.2 shall be paid by the City to the Trustee
and deposited in the Insurance and Condemnation Fund to be applied as set
forth in Section 5.08(c) of the Indenture.
SECTION 6.2. Termination or Abatement Due to Eminent Domain. If the
Properties shall be taken permanently under the power of eminent domain or
sold to a government threatening to exercise the power of eminent domain, the
Term of this Lease shall cease with respect thereto as of the day possession shall
be so taken. If less than all of the Properties shall be taken permanently, or if the
Properties shall be taken temporarily, under the power of eminent domain, (a)
this Lease shall continue in full force and effect with respect thereto and shall not
be terminated by virtue of such taking and the parties waive the benefit of any
law to the contrary, and (b) there shall be a partial abatement of Lease Payments
allocated thereto, in an amount to be determined by the City such that the
resulting Lease Payments represent fair consideration for the use and occupancy
of the remaining usable portions of the Properties. Notwithstanding the
foregoing, there shall be no abatement of Lease Payments under this Section 6.2
to the extent that amounts in the Reserve Fund are available to pay Lease
Payments which would otherwise be abated under this Section 6.2, it being
hereby declared that such proceeds and amounts constitute a special fund for
the payment of the Lease Payments.
SECTION 6.3. Abatement Due to Damage or Destruction. The amount of
Lease Payments shall be abated during any period in which by reason of damage
or destruction (other than by eminent domain which is.hereinbefore provided for)
there is substantial interference with the use and occupancy by the City of the
Properties or any portion thereof. The amount of such abatement shall be
determined by the City such that the resulting Lease Payments represent fair
consideration for the use and occupancy of the portions of the Properties not
damaged or destroyed. Such abatement shall continue for the period
commencing with such damage or destruction and ending with the substantial
completion of the work of repair or reconstruction. In the event of any such
damage or destruction, this Lease shall continue. in full force and effect and the
City waives any right to terminate this Lease by virtue of any such damage and
destruction. Notwithstanding the foregoing, there shall be no abatement of Lease
Payments under this Section 6.3 to the extent that the proceeds of casualty
insurance, rental interruption insurance or amounts in the Reserve Fund are
available to pay Lease Payments which would otherwise be abated under this
Section 6.3, it being hereby declared that such proceeds and amounts constitute a
special fund for the payment of the Lease Payments.
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ARTICLE VII
OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE BOARD MAKES NO
AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE PROPERTIES OR ANY PORTION
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH
RESPECT TO THE PROPERTIES OR ANY PORTION THEREOF. THE CITY
ACKNOWLEDGES THAT THE BOARD IS NOT A MANUFACTURER OF
ANY PORTION OF THE PROPERTIES OR A DEALER THEREIN, THAT THE
CITY LEASES THE PROPERTIES AS -IS, IT BEING AGREED THAT ALL OF
THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no
event shall the Board be liable for incidental, indirect, special or consequential
damages, in connection with or arising out of this Lease for the existence,
furnishing, functioning or use of the Properties by the City.
SECTION 7.2. Access to the Properties. The City agrees that the Board and
any Board Representative, and the Board's successors or assigns, shall have the
right at all reasonable times to enter upon and to examine and inspect the
Properties or any part. thereof. The City further agrees that the Board, any Board
Representative and the Board's successors or assigns shall have such rights of
access to the Properties or any component thereof as may be reasonably
necessary to cause the proper maintenance of the Properties in the event of
failure by the City to perform its obligations hereunder; provided, however, that
neither the Board nor any of its assigns shall have any obligation to cause such
proper maintenance.
SECTION 7.3. Release and Indemnification Covenants. The City shall and
hereby agrees to indemnify and save the Board, the Trustee and their respective
officers, agents, successors and assigns, harmless from and against all claims,
losses and damages, including legal fees and expenses, arising out of (a) the use,
maintenance, condition or management of, or from any work or thing done on the
Properties by the City, (b) any breach or default on the part of the City in the
performance of any of its obligations under this Lease, (c) any negligence or
willful misconduct of the City or of any of its agents, contractors, servants,
employees or licensees with respect to the Properties, (d) any intentional
misconduct or negligence of any sublessee of the City with respect to the
Properties, or (e) the acquisition, construction, improvement and equipping of the
Properties, or the authorization of payment of the costs thereof. No
indemnification is made under this Section or elsewhere in this Lease for willful
misconduct or negligence under this Lease by the Board, the Trustee or their
respective officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment and Subleasing by the City. This Lease may not
be assigned by the City. The City may sublease the Properties, or any portion
thereof, subject to all of the following conditions:.
(a) This Lease and the obligation of the City to make
Lease Payments hereunder shall remain obligations of the City.
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(b) The City shall, within thirty (30) days after the
delivery thereof, furnish or cause to be furnished to the Board and
the Trustee a true and complete copy of such sublease.
(c) No such sublease by the City shall cause the
Properties to be used for a purpose other than as may be
authorized under the provisions of the laws of the State of
California.
(d) The City shall furnish the Board and the Trustee with
a written opinion of Bond Counsel stating that such sublease does
not cause the interest components of the Lease Payments to
become included in gross income for purposes of federal income
taxation or to become subject to personal income taxation by the
State of California.
SECTION 7.5. Amendment Hereof. The Board and the City may at any
time amend or modify any of the provisions of this Lease, but only: (a) with the
prior written consents of the Owners of a majority in aggregate principal amount
of the Outstanding Bonds; or (b) without the consent of the Trustee or any of the
Bond Owners, but only if such amendment or modification is for any one or more
of the following purposes -
(i) to add to the covenants and agreements of the City
contained in this Lease, other covenants and agreements thereafter
to be observed, or to limit or surrender any rights or power herein
reserved to or conferred upon the City;
(ii) to make such provisions for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective
provision contained herein, to conform to the original intention of
the City and the Board;
(iii) to modify, amend or supplement this Lease in such
manner as to assure that the interest on the Bonds remains
excluded from gross income under the Tax Code;
(iv) to amend the description of the Properties to reflect
accurately the property originally intended to be included therein;
(v) to obligate the City to pay additional amounts of
rental for the use and occupancy of the Projects, but only if (A)
such additional amounts of rental are pledged or assigned for the
payment of any bonds, notes, leases or other obligations the
proceeds of which are applied to finance or refinance the
acquisition or construction of any real or personal property for
which the City is authorized to expend funds subject to its
control, (B) the City has obtained and filed with the Trustee and
with Moody's an M.A.I. appraisal showing that the appraised
value of the Projects is at least equal to the aggregate principal
amount of the Outstanding Bonds and all such other bonds, notes,
leases or other obligations, and (C) the City has filed with the
Trustee written evidence that the amendments made pursuant to
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this clause (v) will not of themselves cause a reduction or
withdrawal of any rating then assigned to the Bonds; or
(vi) in any other respect whatsoever as the Board and the
City may deem necessary or desirable, provided that, in the
opinion of Bond Counsel, such modifications or amendments do
not materially adversely affect the interests of the Owners of the
Bonds.
No such modification or amendment shall (a) extend or have the effect of
extending any Lease Payment Date or reducing any Lease Payment or any
premium payable upon the prepayment thereof, without the express consent of
the Owners of the affected Bonds, or (b) modify any of the rights or obligations
of the Trustee without its written assent thereto.
SECTION 7.6. Tax Covenants.
(a) Private Business Use Limitation. The City shall assure that the
proceeds of the Bonds are not used in a manner which would cause the Bonds to
satisfy the private business tests of Section 141(b) of the Tax Code or the private
loan financing test of Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The City shall not take any action or
permit or suffer any action to be taken if the result of the same would be to cause
the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of
the Tax Code.
(c) No Arbitrage. The City shall not take, or permit or suffer to be taken
by the Trustee or otherwise, any action with respect to the proceeds of the Bonds
or of any other obligations which, if such action had been reasonably expected to
have been taken, or had been deliberately and intentionally taken, on the Closing
Date, would have caused the Bonds to be "arbitrage bonds" within the meaning
of Section 148(a) of the Tax Code.
(d) Maintenance of Tax -Exemption. The City shall take all actions
necessary to assure the exclusion of interest on the Bonds from the gross income
of the Owners of the Bonds to the same extent as such interest is permitted to be
excluded from gross income under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The City
shall calculate or cause to be calculated the Excess Investment Earnings in all
respects at the times and in the manner required pursuant to the Tax Code. The
City shall pay the full amount of Excess Investment Earnings to the United
States of America in such amounts, at such times and in such manner as may be
required pursuant to the Tax Code. Such payments shall be made by the City
from any source of legally available funds of the City, and shall constitute
Additional Rental Payments hereunder.
The City shall keep or cause to be kept, and retain or cause to be retained
for a period of six (6) years following the retirement of the Bonds, records of the
determinations made pursuant to this subsection (e). In order to provide for the
administration of this subsection (e), the City may provide for the employment
of independent attorneys, accountants and consultants compensated on such
reasonable basis as the City may deem appropriate. The Trustee shall have no
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duty or obligation to monitor or enforce compliance by the City of any of the
requirements herein.
SECTION 7.7. Continuing Disclosure. The City hereby covenants and
agrees that it will comply with and carry out all of the provisions of that certain
Continuing Disclosure Certificate executed by the City as of the Closing Date, as
originally executed and as it may be amended from time to time in accordance
with its terms. Notwithstanding any other provision of this Lease, failure of the
City to comply with such Continuing Disclosure Certificate shall not constitute
an Event of Default; provided, however, that any Participating Underwriter (as
such term is defined in such Continuing Disclosure Certificate) or any Owner or
beneficial owner of the Bonds may take such actions as may be necessary and
appropriate to compel performance by the City of its obligations under this
Section, including seeking mandate or specific performance by court order.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following
events shall constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other
payment required to be paid hereunder at the time specified
herein.
(b) Failure by the City to observe and perform any
covenant, condition or agreement on its part to be observed or
performed, other than as referred to in the preceding subsection
(a), for a period of thirty (30) days after written notice specifying
such failure and requesting that it be remedied has been given to
the City by the Board or the Trustee; provided, however, that if in
the reasonable opinion of the City the failure stated in the notice
can be corrected, but not within such thirty (30) day period, such
failure shall not constitute an Event of Default if the City shall
commence to cure such failure within such thirty (30) day period
and thereafter diligently and in good faith cure such failure in a
reasonable period of time.
(c) The filing by the City of a voluntary petition in
bankruptcy, or failure by the City promptly to lift any execution,
garnishment or attachment, or adjudication of the City as a
bankrupt, or assignment by the City for the benefit of creditors, or
the entry by the City into an agreement of composition with
creditors, or the approval by a court of competent jurisdiction of a
petition applicable to the City in any proceedings instituted under
the provisions of the Federal Bankruptcy Code, as amended, or
under any similar acts which may hereafter be enacted.
SECTION 8.2. Remedies on Default. Whenever any Event of Default shall
have happened and be continuing, it shall be lawful for the Board to exercise any
and all remedies available pursuant to law or granted pursuant to this Lease;
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provided, however, that notwithstanding anything herein or in the Indenture to the
contrary, there shall be no right under any circumstances to accelerate the Lease
Payments or otherwise declare any Lease Payments not then in default to be
immediately due and payable. Each and every covenant hereof to be kept and
performed by the City is expressly made a condition and upon the breach thereof
the Board may exercise any and all rights granted hereunder, provided, that no
termination of this Lease shall be effected either by operation of law or acts of
the parties hereto, except only in the manner herein expressly provided. Upon
the occurrence and during the continuance of any Event of Default, the Board
shall have and is granted each and every one of the following remedies, subject in
all respects to the limitations set forth in Section 8.3.
(a) Enforcement of Payments Without Termination. In the event the
Board does not elect to terminate this Lease in the manner hereinafter provided
for in subparagraph (b) hereof, the City agrees to and shall remain liable for the
payment of all Lease Payments and the performance of all conditions herein
contained and shall reimburse the Board for any deficiency arising out of the re-
leasing of the Properties, or, in the event the Board is unable to re -lease the
Properties, then for the full amount of all Lease Payments to the end of the Term
of this Lease, but said Lease Payments and/or deficiency shall be payable only
at the same time and in the same manner as hereinabove provided for the
payment of Lease Payments hereunder, notwithstanding such entry or re-entry
by the Board or any suit in unlawful detainer, or otherwise, brought by the Board
for the purpose of effecting such re-entry or obtaining possession of the
Properties or the exercise of any other remedy by the Board. The City hereby
irrevocably appoints the Board as the agent and attorney-in-fact of the City to
enter upon and re -lease the Properties upon the occurrence and continuation of
an Event of Default and to remove all personal property whatsoever situated
upon the Properties, to place such property in storage or other suitable place in
the County of San Luis Obispo for the account of and at the expense of the City,
and the City hereby exempts and agrees to save harmless the Board from any
costs, loss or damage whatsoever arising or occasioned by any such entry upon
and re-leasing of the Properties and the removal and storage of such property by
the Board or its duly authorized agents in accordance with the provisions herein
contained. The City agrees that the terms of this Lease constitute full and
sufficient notice of the right of the Board to re -lease the Properties in the event of
such re-entry without effecting a surrender of this Lease, and further agrees that
no acts of the Board in effecting such re-leasing shall constitute a surrender or
termination of this Lease irrespective of the term for which such re-leasing is
made or the terms and conditions of such re-leasing, or otherwise, but that, on
the contrary, in the event of such default by the City the right to terminate this
Lease shall vest in the Board to be effected in the sole and exclusive manner
hereinafter provided for in subparagraph (b) hereof. The City agrees to surrender
and quit possession of the Properties upon demand of the Board for the purpose
of enabling the Properties to be re -let under this paragraph, and the City further
waives the right to any rental obtained by the Board in excess of the Lease
Payments and hereby conveys and releases such excess to the Board as
compensation to the Board for its services in re-leasing the Properties.
(b) Termination of Lease. If an Event of Default occurs and is continuing
hereunder, the Board at its option may terminate this Lease and re -lease all or
any portion of the Properties. In the event of the termination of this Lease by the
Board at its option and in the manner hereinafter provided on account of default
by the City (and notwithstanding any re-entry upon the Properties by the Board
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in any manner whatsoever or the re-leasing of the Properties), the City
nevertheless agrees to pay to the Board all costs, loss or damages howsoever
arising or occurring payable at the same time and in the same manner as is herein
provided in the case of payment of Lease Payments and Additional Rental
Payments. Any surplus received by the Board from such re-leasing shall be
deposited in the Bond Fund. Neither notice to pay rent or to deliver up
possession of the premises given pursuant to law nor any proceeding in unlawful
detainer taken by the Board shall of itself operate to terminate this Lease, and no
termination of this Lease on account of default by the City shall be or become
effective by operation of law, or otherwise, unless and until the Board shall have
given written notice to the City of the election on the part of the Board to
terminate this Lease. The City covenants and agrees that no surrender of the
Properties, or of the remainder of the Term hereof or any termination of this
Lease shall be valid in any manner or for any purpose whatsoever unless stated
or accepted by the Board by such written notice.
(c) Proceedings at Law or In Equity. If an Event of Default occurs and
continues hereunder, the Board may take whatever action at law or in equity may
appear necessary or desirable to collect the amounts then due and thereafter to
become due hereunder or to enforce any other of its rights hereunder.
SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Board is intended to be exclusive and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Lease
or now or hereafter existing at law or in equity. No delay or omission to exercise
any right or power accruing upon the occurrence of any Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Board to exercise any remedy
reserved to it in this Article VIII it shall not be necessary to give any notice, other
than such notice as may be required in this Article VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses. In the event
either party to this Lease should default under any of the provisions hereof and
the nondefaulting party should employ attorneys or incur other expenses for the
collection of moneys or the enforcement or performance or observance of any
obligation or agreement on the part of the defaulting party herein contained, the
defaulting party agrees that it will on demand therefor pay to the nondefaulting
party the reasonable fees of such attorneys and such other expenses so incurred
by the nondefaulting party.
SECTION 8.5. No Additional Waiver Implied by One Waiver. In the event
any agreement contained in this Lease should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the
re -lease of the Properties under this Article VIII, and all other amounts derived
by the Board or the Trustee as a result of the occurrence of an Event of Default,
shall be paid to and applied by the Trustee in accordance with Section 7.03 of
the Indenture.
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SECTION 8.7. Trustee and Bond Owners to Exercise Rights. Such rights and
remedies as are given to the Board under this Article VIII have been assigned by
the Board to the Trustee under the Assignment Agreement for the benefit of the
Bond Owners, to which assignment the City hereby consents. Such rights and
remedies shall be exercised by the Trustee and the Bond Owners as provided in
the Indenture.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of
this Lease, the City may on any date secure the payment of the Lease Payments
allocable to any Property in whole or in part by depositing with the Trustee an
amount of cash which, together with other available amounts on deposit in the
funds and accounts established under the Indenture, is either (a) sufficient to pay
such Lease Payments; including the principal and interest components thereof, in
accordance with the Lease Payment schedule set forth in Exhibit B, or (b)
invested in whole or in part in non -callable Federal Securities in such amount as
will, in the opinion of an independent certified public accountant, together with
interest to accrue thereon and together with any cash which is so deposited, be
fully sufficient to pay such Lease Payments when due pursuant to Section 4.3(a)
or when due on any optional prepayment date pursuant to Section 9.2, as the
City shall instruct at the time of said deposit. In the event of a security deposit
pursuant to this Section with respect to all unpaid Lease Payments for a
particular Property, and notwithstanding the provisions of Section 4.2, (a) the
Term of this Lease shall continue, (b) all obligations of the City under this Lease,
and all security provided by this Lease for said Lease Payments, shall thereupon
cease and terminate, excepting only the obligation of the City to make, or cause
to be made all of said Lease Payments from such security deposit, and (c)
pursuant to Section 4.6, title to such Property shall vest in the City on the date of
said deposit automatically and without further action by the City or the Board.
Said security deposit shall be deemed to be and shall constitute a special fund
for the payment of Lease Payments in accordance with the provisions. of this
Lease.
SECTION 9.2. Optional Prepayment. The City may exercise its option to
prepay the principal components of the Lease Payments in whole, or in part in
any integral multiple of $5,000, on any Interest Payment Date on or after June 1,
2006 by paying a prepayment price equal to the aggregate principal components
of the Lease Payments to be prepaid, together with the interest component of the
Lease Payment required to be paid on such date, and together with a
prepayment premium equal to the premium (if any) required to be paid on the
resulting redemption of Bonds under the Indenture. Such prepayment price shall
be deposited by the Trustee in the Redemption Fund to be applied to the
redemption of Bonds pursuant to Section 4.01(a) of the Indenture. The City shall
give the Trustee written notice of its intention to exercise its option not less than
sixty (60) days in advance of the date of exercise.
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or
Eminent Domain. The City shall be obligated to prepay the principal components
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of the Lease Payments allocable to any Property in whole or in part on any date,
from and to the extent of any Net Proceeds of insurance award or eminent
domain award with respect to such Property theretofore deposited in the
Redemption Fund for such purpose pursuant to Article VI hereof and Section
5.08 of the Indenture. The City and the Board hereby agree that such Net
Proceeds, to the extent .remaining after payment of any delinquent Lease
Payments, shall be credited towards the City's obligations under this Section 9.3
and shall be applied to the corresponding redemption of Bonds pursuant to
Section 4.01(b) of the Indenture.
SECTION 9.4. Credit for Amounts on Deposit. In the event of prepayment
of the principal components of the Lease Payments in full under this Article IX,
such that the Indenture shall be discharged by its terms as a result of such
prepayment, at the written election of the City filed with the Trustee any or all
amounts then on deposit in the Bond Fund (and the accounts therein) shall be
credited towards the amounts then required to be so prepaid.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other
communication under this Lease shall be given by first class mail or personal
delivery to the party entitled thereto at its address set forth below, or by
facsimile transmission or other form of telecommunication, at its number set forth
below. Notice shall be effective either (a) upon transmission by facsimile
transmission or other form of telecommunication, (b) 48 hours after deposit in
the United States of America first class mail, postage prepaid, or (c) in the case
of personal delivery to any person, upon actual receipt. The Board, the City or
the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
If to the City: Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
Fax: (805) 549-7109
If to the Board: Chief Financial Officer
City of San Luis Obispo Capital Improvement Board
990 Palm Street
San Luis Obispo, California 93401
Fax: (805) 549-7109
If to the Trustee: First Trust of California, National Association
550 South Hope Street, 5th Floor
Los Angeles, California 90071
Attention: Corporate Trust Department
Fax: (213) 553-8729
-21-
SECTION 10.2. Binding Effect. This Lease shall inure to the benefit of and
shall be binding upon the Board, the City and their respective successors and
assigns.
SECTION 10.3. Severability. In the event any provision of this Lease shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
SECTION 10.4. Net -net -net Lease. This Lease shall be deemed and
construed to be a "net -net -net lease" and the City hereby agrees that the Lease
Payments shall be an absolute net return to the Board, free and clear of any
expenses, charges or set -offs whatsoever.
SECTION 10.5. Further Assurances and Corrective Instruments. The Board
and the City agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as may reasonably be required for correcting
any inadequate or incorrect description of the Properties hereby leased or
intended so to be or for carrying out the expressed intention of this Lease.
SECTION 10.6. Execution in Counterparts. This Lease may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 10.7. Applicable Law. This Lease shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 10.8. Board and City Representatives. Whenever under the
provisions of this Lease the approval of the Board or the City is required, or the
Board or the City is required to take some action at the request of the other, such
approval or such request shall be given for the Board by a Board Representative
and for the City by a City Representative, and any party hereto shall be
authorized to rely upon any such approval or request.
SECTION 10.9. Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or Section of this Lease.
-22-
• 0
IN WITNESS WHEREOF, the Board and the City have caused this Lease
to be executed in their respective names by their duly authorized officers, all as
of the date first above written.
(SEAL)
(S F A 1.)
-23-
CITY OF SAN LUIS OBISPO
CAPITAL IMPROVEMENT
BOARD, as Lessor
CITY OF SAN LUIS OBISPO, as
Lessee
City dministrative Officer
STATE OF CALIFORNIA )
ss
COUNTY
Onbefore me, G-:��,YP. /� Notary Public,
personally appeared personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that(FoYs,* executed the same in Iii s" h)4 authorized
capacity, and that b)t 'J- signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
CINDY PILG
Commission i 1091390
NotoryPublic — Ca➢hxrMa
Sort Lir% Obispo County
Qt Y CC: R::T :X:)'!es Am 17, 2MD
M
o 0
STATE OF CALIFORNIA )
ss
COUNTY OF
On before me, Notary Public,
personally appeared personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that l6/:ffWexecuted the same in %stoNuthorized
capacity, and that by l)(s er ignature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
C
EXHIBIT A
DESCRIPTION OF THE PROPERTIES
•
The Properties consist of that certain real property situated in the City of
San Luis Obispo, County of San Luis Obispo, which is more particularly
described as follows:
I. Fire Station Property
Lots 1 to 16 inclusive in Block A of Maymont Addition, in the City of San
Luis Obispo, County of San Luis Obispo, State of California, as per map filed
April 9,1888 in Book B at page 91 of Maps, in the Office of the County Recorder
of said County.
EXCEPTING therefrom that portion of said land described in the deed to
the State of California, recorded May 4, 1974 in Book 1777 at page 571 of
Official Records.
II. Corporation Yard Property
A portion of Lots 6, 7, 6 and 19 of the Suburban Tract, in the City of San Luis
Obispo, Count%- of San Luis Obispo, State of California, according to the map
filed for record in Book 1, Page 92 of Surveys, in the Office of the County
Recorder of said County, described as follows:
Beginning at Station 710 4 oo on the centerline of U. S. highway #101, said
centerline bearing North 27' 45' 40"East as shown on California Department of
Transpertatic.n night -of -Way Plot, SLO 101 26.9, sheet 31 and 32: thence South 620
14' 20" East a distance of 100.00 feet to point on the Easterly right-of-way of
U. S. Highway -101, said point being the True Point of Beginning; thence North
320 20' 40" East, 450.39 feet along said right -or -way; thence on a curve to the
right having a radius of 750.00 feet, through an angle of 140 12' 57" for a
length of 186.08 feet along said right-of-way; thence North 46° 34' 10" East
196.72 feet along said right-of-way; thence South 870 36' 50" East 10.60 feet
along said right-of-way; thence parallel withtheold centerline of Prado Road
and distance therefrom 54.00 feet, South 620 55' So" East, 425.23 feet; thence
along a curve, concave to the right having a radius of 20.00 feet through an
angle of 900 00' 00" for a length of 31.42 feet; thence South 270 04' 10" West,
399.36 feet; thence along a curve, concave to the right, having a radius of
50.00 feet through an angle of 940 45' 000, for a length of 82.68 feet; thence
North 560 10' 50" west, 54.09 feet; thence along a curve, concave to the left,
having a radius of 235.00 feet through an angle of 910 10' 00" for a length of
373.92 feet; thence South 300 39' 10" West, 135.93 feet; thence South 620 55' 35"
West, 231.23 feet to the True Point of Beginning.
A-1
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
Schedule of Aggregate Lease Payments
Lease
Principal
Interest
Aggregate
Payment Date
Component
Component
Lease Payment
November 15, 1996
$219,688.75
$219,688.75
May 15, 1997
$85,000
219,688.75
304,688.75
November 15, 1997
216,607.50
216,607.50
May 15, 1998
90,000
216,607.50
306,607.50
November 15, 1998
213,345.00
213,345.00
May 15, 1999
95,000
213,345.00
308,345.00
November 15, 1999
209,901.25
209,901.25
May 15, 2000
105,000
209,901.25
314,901.25
November 15, 2000
206,095.00
206,095.00
May 15, 2001
110,000
206,095.00
316,095.00
November 15, 2001
202,107.50
202,107.50
May 15, 2002
120,000
202,107.50
322,107.50
November 15, 2002
197,757.50
197,757.50
May 15, 2003
125,000
197,757.50
322,757.50
November 15, 2003
193,226.25
193,226.25
May 15, 2004
135,000
193,226.25
328,226.25
November 15, 2004
188,332.50
188,332.50
Mav 15, 2005
145,000
188,332.50
333,332.50
November 15, 2005
183,620.00
183,620.00
May 15, 2006
155,000
183,620.00
338,620.00
November 15, 2006
179,512.50
179,512.50
May 15, 2007
165,000
179,512.50
344,512.50
November 15, 2007
175,057.50
175,057.50
May 15, 2008
175,000
175,057.50
350,057.50
November 15, 2008
170,245.00
170,245.00
May 15, 2009
180,000
170,245.00
350,245.00
November 15, 2009
165,205.00
165,205.00
May 15, 2010
190,000
165,205.00
355,205.00
November 15, 2010
159,790.00
159,790.00
May 15, 2011
205,000
159,790.00
364,790.00
November 15, 2011
153,845.00
153,845.00
May 15, 2012
215,000
153,845.00
368,845.00
November 15, 2012
147,502.50
147,502.50
. May 15, 2013
230,000
147,502.50
377,502.50
November 15, 2013
140,602.50
140,602.50
May 15, 2014
240,000
140,602.50
380,602.50
November 15, 2014
133,402.50
133,402.50
May 15, 2015
255,000
133,402.50
388,402.50
November 15, 2015
125,752.50
125,752.50
B-1
C 0
Lease
Principal
Interest
Aggregate
Payment Date
Component
Component
Lease Payment
May 15, 2016
$270,000
$125,752.50
$395,752.50
November 15, 2016
117,652.50
117,652.50
May 15, 2017
285,000
117,652.50
402,652.50
November 15, 2017
108,960.00
108,960.00
May 15, 2018
305,000
108,960.00
413,960.00
November 15, 2018
99,657.50
99,657.50
May 15, 2019
325,000
99,657.50
424,657.50
November 15, 2019
89,745.00
89,745.00
May 15, 2020
345,000
89,745.00
434,745.00
November 15, 2020
79,050.00
79,050.00
May 15, 2021
365,000
79,050.00
444,050.00
November 15, 2021
67,735.00
67,735.00
May 15, 2022
385,000
67,735.00
452,735.00
November 15, 2022
55,800.00
55,800.00
May 15, 2023
410,000
55,800.00
465,800.00
November 15, 2023
43,090.00
43,090.00
May 15, 2024
435,000
43,090.00
478,090.00
November 15, 2024
29,605.00
29,605.00
May 15, 2025
465,000
29,605.00
494,605.00
November 15, 2025
15,190.00
15,190.00
May 15, 2026
490,000
15,190.00
505,190.00
B-2
N
Schedule of Lease Payments for
Corporation Yard Property
•
Lease
Principal
Interest
Aggregate
Payment Date.
Component
Component
Lease Payment
November 15, 1996
$114,490.00
$114,490.00
May 15, 1997
$45,000
114,490.00
159,490.00
November 15, 1997
112,858.75
112,858.75
May 15, 1998
45,000
112,858.75
157,858.75
November 15, 1998
111,227.50
111,227.50
May 15, 1999
50,000
111,227.50.
161,227.50
November 15,1999
109,415.00
109,415.00
May 15, 2000
55,000
109,415.00
164,415.00
November 15, 2000
107,421.25
107;421.25
May 15, 2001
55,000
107,421.25
162,421.25
November 15, 2001
105,427.50
105,427.50
May 15, 2002
65,000
105,427.50
170,427.50
November 15, 2002
103,071.25
103,071.25
May 15, 2003
65,000
103,071.25
168,071.25
November 15, 2003
100,715.00
100,715.00
. May 15, 2004
70,000
100,715.00
170,715.00
November 15, 2004
98,177.50
98,177.50
May 15, 2005
75,000
98,177.50
173,177.50
November 15, 2005
95,740.00
95,740.00
May 15, 2006
80,000
95,740.00.
175,740.00
November 15, 2006
93,620.00
93,620.00
May 15, 2007
85,000
93,620.00
178,620.00
November 15, 2007
91,325.00
91,325.00
May 15, 2008
90,000
91,325.00
181,325.00
November 15, 2008
88,850.00
88,850.00
May 15, 2009
95,000
88,850.00
183,850.00
November 15, 2009
86,190.00
86,190.00
May 15, 2010
100,000
86,190.00
186,190.00
November 15, 2010
83,340.00
83,340.00
May 15, 2011
105,000
83,340.00
188,340.00
November 15, 2011
80,295.00
80,295.00
May 15, 2012
110,000
80,295.00
190,295.00
November 15, 2012
77,050.00
77,050.00
May 15, 2013
120,000
77,050.00
197,050.00
November 15, 2013
73,450.00
73,450.00
May 15, 2014.
125,000
73,450.00
198,450.00
November 15, 2014
69,700.00
69,700.00
May 15, 2015
135,000
69,700.00
204,700.00
November 15, 2015
65,650.00
65,650.00
May 15; 2016
140,000
65,650.00
205,650.00
November 15, 2016
61,450.00
61,450.00
May 15, 2017
150,000
61,450.00
211,450.00
November 15, 2017
56,875.00
56,875.00
May 15, 2018
160,000
56,875.00
216,875.00
B-3
Q 0
Lease
Principal
Interest
Aggregate
Payment Date
Component
Component
LeasePayment
November 15, 2018
$51,995.00
$51,995.00
May 15, 2019
$170,000
51,995.00
221,995.00
November 15, 2019
46,810.00
46,810.00
May 15, 2020
180,000
46,810.00
226,810.00
November 15, 2020
41,230.00
41,230.00
May 15, 2021
190,000
41,230.00
231,230.00
November 15, 2021
35,340.00
35,340.00
May 15, 2022
200,000
35,340.00
235,340.00
November 15, 2022
29,140.00
29,140.00
May 15, 2023
215,000
29,140.00
244,140.00
November 15, 2023
22,475.00
22,475.00
May 15, 2024
225,000
22,475.00
247,475.00
November 15, 2024
15,500.00
15,500.00
May 15, 2025
245,000
15,500.00
260,500.00
November 15, 2025
7,905.00
7,905.00
May 15, 2026
255,000
7,905.00
262,905.00
B-4
Q 0
Schedule of Lease Payments for
Fire Station Property
Lease
Principal
Interest
Aggregate
Payment Date
Component
Coml2onent
Lease Payment
November 15, 1996
$105,198.75
$105,198.75
May 15, 1997
$40,000
105,198.75
145,198.75
November 15, 1997
103,748.75
103,748.75
May 15, 1998
45,000
103,748.75
148,748.75
November 15, 1998
102,117.50
102,117.50
May 15, 1999
45,000
102,117.50
147,117.50
November 15, 1999
100,486.25
100,486.25
May 15, 2000
50,000
100,486.25
150,486.25
November 15, 2000
98,673.75
98,673.75
May 15, 2001
55,000
98,673.75
153,673.75
November 15, 2001
96,680.00
96,680.00
May 15, 2002
55,000
96,680.00
151,680.00
November 15, 2002
94,686.25
94,686.25
May 15, 2003
60,000
94,686.25
154,686.25
November 15, 2003
92,511.25
92,511.25
May 15, 2004
65,000
92,511.25
157,511.25
November 15, 2004
90,155.00
90,155.00
May 15, 2005
70,000
90,155.00
160,155.00
November 15, 2005
87,880.00
87,880.00
May 15, 2006
75,000
87,880.00
162,880.00
November 15, 2006
85,892.50
85,892.50
May 15, 2007
80,000
85,892.50
165,892.50
November 15, 2007
83,732.50
83,732.50
May 15, 2008
85,000
83,732.50
168,732.50
November 15, 2008
81,395.00
81,395.00
May 15, 2009
85,000
81,395.00
166,395.00
November 15, 2009
79,015.00
79,015.00
May 15, 2010
90,000
79,015.00
169,015.00
November 15, 2010
76,450.00
76,450.00
May 15, 2011
100,000
76,450.00
176,450.00
November 15, 2011
73,550.00
73,550.00
May 15, 2012
105,000
73,550.00
178,550.00
November 15, 2012
70,452.50
70,452.50
May 15, 2013
110,000
70,452.50
180,452.50
November 15, 2013
67,152.50
67,152.50
May 15, 2014
115,000
67,152.50
182,152.50
November 15, 2014
63,702.50
63,702.50
May 15, 2015
120,000
63,702.50
183,702.50
November 15, 2015
60,102.50
60,102.50
May 15, 2016
130,000
60,102.50
190,102.50
November 15, 2016
56,202.50
56,202.50
May 15, 2017.
135,000
56,202.50
191,202.50
November 15, 2017
52,085.00
52,085.00
May 15, 2018
145,000
52,085.00
197,085.00
Q � �
Lease
Principal
Interest
Aggregate
Payment Date
Component
Component
Lease Payment
November 15, 2018
$47,662.50
$47,662.50
May 15, 2019
$155,000
47,662.50
202,662.50
November 15, 2019
42,935.00
42,935.00
May 15, 2020
165,000
42,935.00
207,935.00
November 15, 2020
37,820.00
37,820.00
May 15, 2021
175,000
37,820.00
212,820.00
November 15, 2021
32,395.00
32,395.00
May 15, 2022
185,000
32,395.00
217,395.00
November 15, 2022
26,660.00
.26,660.00
May 15, 2023
195,000
26,660.00
221,660.00
November 15, 2023
20,615.00
20,615.00
May 15, 2024
210,000
20,615.00
230,615.00
November 15, 2024
14,105.00
14,105.00
May 15, 2025
220,000
14,105.00
234,105.00
November 15, 2025
7,285.00
7,285.00
May 15, 2026
235,000
7,285.00
242,285.00
ffm
GYL3-w O JHHW:CFA:PCH • 6/10/96
This is to certify that the interest in real property conveyed by the Lease Agreement,
dated as of June 1, 1996, from the City of San Luis Obispo Capital Improvement Board, as
lessor, to the City of San Luis Obispo (the "City"), as lessee, is hereby accepted by the
undersigned officer on behalf of the City, pursuant to authority conferred by ordinance of the
City Council of the City adopted on May 7,1996, and the lessee consents to recordation thereof
by its duly authorized officer.
Dated: June 20, 1996 CITY OF SAN LUIS OBISPO
(7:!! John Dunn,
jdministrative Officer
29233.02 O
JHHW:CFA:tIc • 6/7/96
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall FEB & White,
A Professional Law Corporation
Four Embarcadero Center,19th Floor
San Francisco, California 94111
Attention: Charles F. Adams, Esq.
CU i of Document Recorded
on (0/f as No. 'J'!"L Z` 3
Has not been compared with origin-':
Julie L. Rodewald, County Clerk RecoidiOr
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION
27383 OF THE CALIFORNIA GOVERNMENT CODE.
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Assignment Agreement"), made
and entered into as of June 1, 1996, is by and between the CITY OF SAN LUIS
OBISPO CAPITAL IMPROVEMENT BOARD, a public body corporate and politic
duly organized and existing under Ordinance No. 1059 (1986 Series) adopted by
the City Council of the City of San Luis Obispo on April 15,1986, and under the
Constitution and laws of the State of California (the 'Board"), and FIRST TRUST
OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, as
trustee (the `Trustee");
WITNESSETH:
WHEREAS, the City of San Luis Obispo (the "City") has determined to
finance the acquisition and construction of various properties and improvements
to be used for the municipal purposes of the City, including but not limited to
facilities to be used for fire headquarters and station purposes, land acquisition,
seismic and other improvements to the City Hall and the acquisition of street
lighting facilities; and
WHEREAS, in order to provide funds for such purpose, the City has
agreed to sell to the Board certain existing properties owned by the City
pursuant to an Acquisition Agreement dated as of June 1, 1996, by and between
the City as seller and the Board as purchaser, and to lease other existing
properties owned by the City pursuant to a. Site. Lease dated as of June 1, 1996
by and between the City as lessor and the Board as lessee, and the Board has
agreed to lease such properties back to the City pursuant to a Lease Agreement
dated as of June 1, 1996 (the "Lease"), by and between the Board as lessor and
the City as lessee; and
WHEREAS, the properties which are subject to the Lease are described
more particularly in Exhibit A attached hereto and by this reference incorporated
herein (the "Properties"); and
C •
WHEREAS, in order to raise the funds necessary to enable it to acquire
the Properties under the Acquisition Agreement, the Board has determined to
issue its $7,100,000 aggregate principal amount of 1996 Lease Revenue Bonds
(the 'Bonds") under an Indenture of Trust dated as of June 1, 1996, by and
between the Board and the Trustee (the "Indenture"); and
WHEREAS, in order to accomplish such financing transactions, the Board
has requested the Trustee to enter into this Assignment for the purpose of
assigning to the Trustee certain of the rights of the Board under the Lease;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Defined Terms. All capitalized terms not otherwise defined
herein shall have the respective meanings given such terms in Section 1.01 of the
Indenture.
SECTION 2. Assignment. The Board hereby transfers, assigns and sets
over to the Trustee, for the benefit of the Owners of all Bonds which are
executed, delivered and Outstanding under and pursuant to the Indenture, all of
the Board's rights under the Lease (excepting only the Board's rights under
Sections 4.5, 5.10, 7.3 and 8.4 of the Lease), including without limitation (a) the
right to receive and collect all of the Lease Payments from the City under the
Lease, (b) the right to receive and collect any proceeds of any insurance
maintained thereunder with respect to the Properties, or any eminent domain
award (or proceeds of sale under threat of eminent domain) paid with respect to
the Properties, and (c) the right to exercise such rights and remedies conferred on
the Board pursuant to the Lease as may be necessary or convenient (i) to enforce
payment of the Lease Payments and any amounts required to be deposited in the
Insurance and Condemnation Fund established under Section 5.08 of the
Indenture, or (ii) otherwise to protect the interests of the Owners in the event of a
default by the City under the Lease. All rights assigned by the Board shall be
administered by the Trustee in accordance with the provisions of the Indenture
and for the benefit of the Owners of Bonds. Such assignment shall be absolute
and irrevocable.
SECTION 3. Acceptance. The Trustee hereby accepts the assignments
made herein for the purpose of securing the payments due pursuant to the Lease
and Indenture to, and the rights under the Lease and Indenture of, the Owners of
the Bonds, all subject to the provisions of the Indenture. The recitals contained
herein are those of the Board and not of the Trustee, and the Trustee assumes no
responsibility for the correctness thereof.
SECTION 4. Conditions. This Assignment Agreement shall confer no rights
or impose no duties upon the Trustee beyond those expressly provided in the
Indenture.
SECTION 5. Execution in Counterparts. This Assignment Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original but all together shall constitute but one and the same agreement. It is
also agreed that separate counterparts of this Assignment Agreement may be
separately executed by the Trustee and the Board, both with the same force and
-2-
effect as though the same counterpart had been executed by the Trustee and the
Board.
SECTION 6. Binding Effect. This Assignment Agreement shall inure to the
benefit of and shall be binding upon the Board and the Trustee, and their
respective successors and assigns, subject, however, to the limitations contained
herein.
SECTION 7. Governing Law. This Assignment Agreement shall be
construed in accordance with and governed by the Constitution and laws of the
State of California.
IN WITNESS WHEREOF, the parties have executed this Assignment
Agreement by their officers thereunto duly authorized as of the day and year
first written above.
CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEAOENT BOARD
(S E A L)
Ex utive Director
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Trustee
By
Authorized Officer
-3-
STATE OF CALIFORNIA
ss
COUNTY
On before me, Notary Public,
personally appearedr-�^ personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me thatde'�de executed the same in4�0* authorized
capacity, and that by l�u'yh)k signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
CINDY PIIG
Commission # 1091990
-` - Notcry Pjblk — Ctn &r40
Son Lars Obispo County
My Comm. Expires Mor 17,2M0
1
STATE OF CALIFORNIA )
ss
COUNTY OF:scv�s� )
On before me, v'i /-:7 , Notary Public,
personally appeared personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that Are/djg)executed the same in %s he uthorized
capacity, and that by %s,��signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
010
WITNESS my hand and official seal.
4.1
•
E
effect as though the same counterpart had been executed by the Trustee and the
Board.
SECTION 6. Binding Effect. This Assignment Agreement shall inure to the
benefit of and shall be binding upon the Board and the Trustee, and their
respective successors and assigns, subject, however, to the limitations contained
herein.
SECTION 7. Governing Law. This Assignment Agreement shall be
construed in accordance with and governed by the Constitution and laws of the
State of California.
IN WITNESS WHEREOF, the parties have executed this Assignment
Agreement by their officers thereunto duly authorized as of the day and year
first written above.
(SEAQ
Attest:
By
Assistant Secretary
CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEAQENT BOARD
By
Executive Director
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
as Trustee
r
OEM-
-3-
C •
STATE OF CALIFORNIA )
) ss
COUNTY OF 10. 13VU -"3, )
On �lt. 2 12- 19 9 �� before me, ��b0w N1 E�fmdUY Notary Public,
personally appeared- I U 2LQ4LI IU\IkP,n, personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Alicia M. Estrada
L ; Comm. #1021151
NOTARY PUBLIC - CALIFORNI.
cu "r ti LOS ANGELES COUNTY
L •„ .�, Comm. Expires March 20. 1998
0
EXHIBIT A
DESCRIPTION OF THE PROPERTIES
The Properties consist of that certain real property situated in the City of
San Luis Obispo, County of San Luis Obispo, which is more particularly
described as follows:
L Fire Station Property
Lots 1 to 16 inclusive in Block A of Maymont Addition, in the City of San
Luis Obispo, County of San Luis Obispo, State of California, as per map Tiled
April 9, 1888 in Book B at page 91 of Maps, in the Office of the County Recorder
of said County.
EXCEPTING therefrom that portion of said land described in the deed to
the State of California, recorded May 4, 1974 in Book 1777 at page 571 of
Official Records.
II. Corporation Yard Property
A portion of Lots 6, 7, 6 and 19 of the Suburban Tract, in the City of San Luis
Obispo, County of San Luis Obispo, State of California, according to the map
filed for record in Book 1, Page 92 of Surveys, in the Office of the County
Recorder of said County, described as follows:
Beginning at Station 710 + 00 on the centerline of U. S. Highway !#101, said
centerline bearing North 270 45' 40" East as shown on California Department of
Transportation Right -of -Kay Plot, SIA 101 26.9, sheet 31 and 32: thence South 620
14' 20" East a distance of 100.00 feet to point on the Easterly right-of-way of
U. S. Highway 4101, said point being the True Point of Beginning; thence North
320 20' 40" East, 450.39 feet along said right -or -way; thence on a curve to the
right having a radius of 750.00 feet, through an angle of 14" 12' 57" for a
length of 186.06 feet along said right-of-way; thence North 460 34' 10" East
196.72 feet along said right-of-way; thence South 870 36' So" East 10.60 feet
along said right-of-way; thence parallel with the old centerline of Prado Road
and distance therefrom 54.00 feet, South 620 55' So" East, 425.23 feet; thence
along a curve, concave to the right having a radius of 20.00 feet through an
angle of 900 00' 00" for a length of 31.42 feet; thence South 270 04' 10" West,
399.38 feet; thence along a curve, concave to the right, having a radius of -
50.00 feet through an angle of 940 45' 00", for a length of 82.68 feet; thence
North 580 10' So" West, 54.09 feet; thence along a curve, concave to the left,
having a radius of 235.00 feet through an angle of 910 10' 00" for a length of
373.92 feet; thence South 300 39' 1o" West, 135.93 feet; thence South 620 55' 35"
West, 231.23 feet to the True Point of Beginning.
A-1
��� i ��illll nwuM�
city o c� San WI S OBISPO
Nii�P,I�IIII �
COUNCIL AGENDA REPORT
FROM: William C. Statler, Director of Finance W71 ---
SUBJECT: APPROVAL OF PROJECT FINANCING
CAO RECOMMENDATION
TUTAF
I N MBER:
Adopt resolutions of the City Council and the Board of Directors of the San Luis Obispo
Capital Improvement Board approving the sale of $4.5 million in Certificates of
Participation in order to finance the following projects:
■ Fire Station No. 1 Site Acquisition
■ General Fund Share of the Recreation Center Rehabilitation
■ Impending Open Space and Parkland Acquisitions
REPORT -IN -BRIEF
The proposed project financing is in conformance with the policies, objectives, and
projects outlined in the 1989-91 Financial Plan, and is recommended for implementation
at this time due to the following factors:
■ Enables these approved projects to proceed expeditiously in accordance with
approved financing plans.
■ Record keeping and investment earning advantages associated with completing a
small debt issuance (defined by the IRS as $5 million or less) prior to the close
of 1990.
■ Very favorable market conditions for an issuance of this type.
Attachment A provides an overview of the proposed financing including issue size,
anticipated net proceeds, project summary, maturity term, type of issue, projected interest
rate, net annual debt service, and tentative calendar. As noted in Attachment A, this
financing is to be achieved through the issuance of Certificates of Participation through
the San Luis Obispo Capital Improvement Board (Board), which was established on April
15, 1986 as a public financing authority for the express purpose of providing financing
for these types of improvements. The City Council serves as the Board of Directors for
this agency.
Under the proposed financing approach, which is very similar to that used for the 1986
Lease Revenue Bonds and 1988 Certificates of Participation, the City will make annual
lease payments to the Board equal to the debt service payments on the Certificates,
which will be issued through the Board. Due to the lease -purchase nature of the
financing between the Board and the City, adoption of resolutions approving the sale and
related documents is required by both agencies.
no
n
L-A
ki� city of San WIS OBISPO
HE% COUNCIL AGENDA REPORT
DISCUSSION
Summary of Pmiects
The purpose of the proposed financing is to implement funding for the following projects:
Fire Station No. 1 Site Acquisition
Council approved the purchase of this site from the school district on November 7,
1990 in the amount of $2,640,000. Debt financing of this project was approved by the
Council at that time.
General Fund Share of the Recreation Center Rehabilitation
Council approved general fund support for this project in the amount of $338,000 on
April 10, 1990. Out to bid at this time, the total cost of this project is $972,000, to
be funded as follows:
State Grant 296,000
Park In -Lieu Fees 338,000
General Fund Supported Debt Financing 338.000
TOTAL $972,000
Debt financing of the General Fund's share of this project was approved at that time.
Open Space and Parkland Acquisition
Funding is provided through this financing in the amount of $900,000 to implement
impending open space and parkland acquisitions currently under discussion.
Capital Financing and Debt Management Policy Links
The proposed financing is consistent with the City's adopted capital financing and debt
management policies as provided on pages B-7 and B-8 of the 1989-91 Financial Plan.
Most notably, the proposed financing meets the following key criteria outlined in this
policy:
■ The projects' useful lives exceed the term of the financing (20 years).
■ The proposed financing will support an investment grade rating and will be
conducted on a competitive basis.
■ Current market conditions present favorable interest rates and demand for
municipal financings.
Proposed Financing Structure
Under the proposed financing structure, the debt service payments on the Certificates will
be funded through lease payments from the City to the Board. As security for the lease
payments, the City will transfer its ownership of the Fire Station site and the Recreation
Center to the Board (which is governed by the City Council), which will in turn lease
the facilities back to the City. At the end of the term of the financing (20 years),
M
0
i11N�iNIIU�IIIIIIIII�����n�IIIIIUIII city of San WIS OBISPO
NMI' COUNCIL AGENDA REPORT
ownership will revert back to the City. The lease -purchase nature of the proposed issue
is almost identical to the approach used in structuring the 1986 Lease Revenue Bonds
which were used to finance street and parking structure improvements as well as the
1988 Certificates of Participation which were used to finance water system improvements.
Description of Financing Documents
The attached resolutions approve a variety of financing documents which are required
in order to proceed with the project financing. Prepared by the City's Bond Counsel
(Jones Hall Hill & White) and Financial Advisor (Evensen Dodge), the following is a
brief description of these documents which are on file in the City Clerk's office:
Lease Agreement
This document serves as the basic security for the financing. Under the Lease
Agreement, the Board leases the Recreation Center and the Fire Station site back to
the City for a term equal to the term of the Certificates. The City agrees to make
annual lease payments to the Board (which will be equal to the debt service on the
Certificates of Participation issued by the Board), and at the end of the financing
term (20 years), title will revert to the City.
Acquisition Agreement
This is the agreement under which the Board acquires the Recreation Center from
the City. The purchase will take place at the Certificate closing in December, and
the full purchase price will be paid from the Certificate proceeds at that time.
Assignment Agreement
Because the Certificates are payable from the Lease Payments, it is necessary for the
Lease Payments (and various other rights of the Board under the Lease Agreement)
to be assigned to the Trustee; and this is the sole purpose of the Assignment
Agreement.
Trust Agreement
This document contains all of the terms and provisions relating to the Certificates,
including prepayment provisions, maturity schedules, rights, and remedies of the
Certificate owners and the Trustee in the event of a default under the Lease
Agreement.
Official Notice of Sale
The Official Notice of Sale provides all of the terms upon which the City will receive
bids from potential investors for the purchase of the Certificates.
Official Statement
Prepared by the Financial Advisor, the Official Statement (OS) describes the financing
for prospective purchasers of the Certificates, and constitutes the primary marketing
document for the financing.
As reflected in the attached resolutions of the Board and City approving these financing
documents, the City Administrative Officer (who also serves as the Executive Director
for the Board) is authorized to make minor amendments to these documents as
C
0
��►�►il�lllll�l�i�►►����U city of San tins OBISPO
Mi COUNCIL AGENDA REPORT
recommended by Bond Counsel and the Financial Advisor, and to execute the final
documents.
Professional Assistance
In accordance with service agreements previously executed with these firms, Bond
Counsel services will be provided by the law firm of Jones Hall Hill & White and
Financial Advisor services will be provided by Evensen Dodge. Additionally, Trustee
Services are anticipated to be provided by Security Pacific Bank based on their
experience in serving as the City's trustee for the 1986 Lease Revenue Bonds and 1988
Certificates of Participation. However, to ensure competitiveness, proposals will be
solicited from other firms providing this service.
CONCURRENCES
The Fire Chien Recreation Director, and Community Development Director concur with
the proposed financing which will enable them to implement key priority projects
affecting their departments.
FISCAL IMPACT
The net lease payments (debt service) to be made by the City will be approximately
$375,000 annually and will be paid from the General Fund beginning in Fiscal Year
1991-92. This represents approximately 1.5% of current General Fund expenditures.
Accommodating this increase in next year's budget in order to fund key high_priority
project s is within the City's current financial capability.
The following detail schedules regarding the financial terms of the Certificate issuance
are provided in Attachment B:
s Source and Use of Funds (Attachment B-1)
■ Debt Service Schedule (Attachment B-2)
■ Interest Rate Summary (Attachment B-3)
■ Net Debt Service Requirements (Attachment B-4)
ALTERNATIVES
The recommended financing is in accordance with adopted Council financial management
policies, objectives, and projects. Accordingly, there are no viable alternatives to the
proposed financing which will achieve project objectives in a timely manner that is
consistent with the sound and prudent financial management policies currently in effect.
Failure to adopt the attached resolutions implementing the proposed financing will:
■ Delay or prevent implementation of approved high-priority projects, which are
dependent upon the proceeds from the financing for funding as identified in the
1989-91 Financial Plan, Facilities Master Plan, and recent Council actions.
city of San WI S OBISPO
MIsMs COUNCIL AGENDA REPORT
■ Result in a lost opportunity to conduct a small issue (less than $5,000,000)
financing during 1990, which provides significant record keeping and interest
earning advantages to the City.
■ Result in a potential lost opportunity to benefit from current market conditions
which are especially favorable at this time for an issuance of this type.
SUMMARY
In order to provide the funding required to implement three high-priority projects, it is
recommended that the Council and the Board adopt the proposed resolutions which
authorize the issuance of $4.5 million in Certificates of Participation for this purpose.
ATTACHMENTS:
Resolutions of the City Council and Board of Directors of the San Luis Obispo Capital
Improvement Board (two separate documents)
k Summary of the Proposed Project Financing
B. Detail Financial Schedules
1. Source and Use of Funds
2. Debt Service Schedule
3. Interest Rate Summary
4. Net Debt Service Requirements
PF/9000PS.YPF
W
O
zvozel l MW-akin
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO APPROVING THE SALE OF MUNICIPAL LAND AND
IMPROVEMENTS TO THE CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEMENT BOARD AND THE LEASE OF SUCH LAND
IMPROVEMENTS BACK FROM SUCH BOARD, APPROVING RELATED
AGREEMENTS, OFFICIAL STATEMENT AND COMPETITIVE SALE OF NOT
TO EXCEED $4,500,000 CERTIFICATES OF PARTICIPATION
i vaam
I vmroo
WHEREAS, the City of San Luis Obispo (the "City") is currently proceeding to finance
the costs of various municipal improvements, consisting of the acquisition of land for open space
purposes, the acquisition of land to be used as the site of a fire station, and the renovation and
rehabilitation of the recreation center of the City (the "Project"); and
WHEREAS, the City of San Luis Obispo Capital Improvement Board (the "Board") has
been formed for the purpose of assisting the City in financing the acquisition, construction and
improvement of property which is of benefit to the City; and
WHEREAS, to accomplish such financing of the Project, the City has proposed to sell
such recreation center facilities (the "Facilities") to the Board pursuant to the Acquisition
Agreement dated as of December 1, 1990, (the "Acquisition Agreement") and to lease the Facilities
and such fire station site from the Board pursuant to the Lease Agreement dated as of December 1,
1990 (the "Lease Agreement"); and
WHEREAS, for the purpose of obtaining the moneys required to finance the acquisition
of the Facilities under the Acquisition Agreement, the Board proposes to assign and transfer certain
of its rights under the Lease Agreement to a trustee bank (the 'Trustee") pursuant to that certain
Assignment Agreement dated as of December 1, 1990, by and between the Board and the Trustee;
and
WHEREAS, in consideration of such assignment and the execution of that certain Trust
Agreement dated as of December 1, 1990, (the 'Trust Agreement") by and among the Board, the
City and the Trustee, the Trustee will execute and deliver Certificates of Participation in the
principal amount of not to exceed $4,500,000 (the "Certificates of Participation'), each evidencing
an undivided fractional interest in the Lease Payments made by the City under the Lease
Agreement; and
WHEREAS, the City and the Board have determined to sell the Certificates of
Participation at competitive sale, and the firm of Evensen Dodge, Inc. (the "Financial Adviser") is
assisting the City and the Board in such sale of the Certificates of Participation and has caused to
be prepared an Official Statement describing the Certificates of Participation, to be used in
connection with such sale; and
WHEREAS, the City Council approves of said transactions as being in the public
interests of the City;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San
Luis Obispo as follows:
SECTION 1. Sale of Facilities; Approval of Acquisition Agreement. The City
Council hereby approves the sale of the Facilities by the City to the Board pursuant to, and subject
to the terms and conditions of, the Acquisition Agreement in substantially the form on file with the
City Clerk, together with any changes therein or additions thereto deemed advisable by the City
Administrative Officer, whose execution thereof shall be conclusive evidence of his approval of
such changes and additions. The Board hereby authorizes and directs the City Administrative
Officer to execute, and the City Clerk to attest and affix the seal of the City to, said form of the
Acquisition Agreement for and in the name of the City.
SECTION 2. Lease of Facilities and Fire Station Site; Approval of Lease
Agreement. The City Council hereby approves the lease of the Facilities and fire station site by
the City from the Board pursuant to, and subject to the terms and conditions of, the Lease
Agreement in substantially the form on file with the City Clerk, together with any changes therein
or additions thereto deemed advisable by the City Administrative Officer, whose execution thereof
shall be conclusive evidence of his approval of such changes and additions. The City Council
hereby authorizes and directs the City Administrative Officer to execute, and the City Clerk to attest
and affix the seal of the City to, said form of the Lease Agreement for and in the name of the City.
The schedule of lease payments set forth in the Lease Agreement shall conform to the schedule of
principal and interest payments represented by the Certificates of Participation as determined
pursuant to Section 4 hereof.
SECTION 3. Approval of Trust Agreement. The City Council hereby approves the
Trust Agreement in substantially the form on file with the City Clerk together with any changes
therein or additions thereto deemed advisable by the City Administrative Officer, whose execution
thereof shall be conclusive evidence of his approval of such changes and additions. The City
Council hereby authorizes and directs the City Administrative Officer to execute, and the City Clerk
to attest and affix the seal of the City to, said form of the Trust Agreement for and in the name of
the City.
SECTION 4. Sale of Certificates of Participation. The City Council hereby
approves the competitive sale of the Certificates of Participation, and hereby calls for the receipt of
bids on the Certificates of Participation on Thursday, December 13, 1990, at the hour of 10:00
a.m. in the office of Jones Hall Hill & White at Four Embarcadero Center, Suite 1950, San
Francisco, California The Director of Finance is hereby authorized and directed for and in the
name and on behalf of the City to accept the bid of the best responsible bidder, provided that the
purchase price to be paid for the Certificates of Participation shall be at least ninety-eight percent
(98%) of the par value thereof, and the weighted average rate of interest represented by the
Certificates of Participation shall not exceed eight and three-quarters percent (8-3/4%) per annum.
The Certificates of Participation shall be sold pursuant to and in accordance with the provisions of
the Official Notice of Sale in substantially the form on file with the City Clerk, which is hereby
approved as the official notice of sale of the Certificates of Participation.
SECTION 5. Publication of Notice of Intention. In accordance with the
requirements of Section 53692 of the California Government Code, the Director of Finance is
hereby authorized and directed to execute, and. Jones Hall Hill & White, A Professional Law
Corporation, as bond counsel to the City, is hereby authorized and directed to cause to be
published, the Notice of Intention to Sell Certificates of Participation in substantially the form on
file with the City Clerk. Such publication shall be made once no later than November 28, 1990, in
a financial journal published in the State of California
SECTION 6. Official Statement. The City Council hereby approves, and hereby
deems nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the
preliminary Official Statement describing the Certificates in the form submitted by the Financial
Adviser and on file with the City Clerk, together with any changes therein or additions thereto
-2-
deemed advisable by the Director of Finance, whose execution thereof shall be conclusive evidence
of his approval of any such changes or additions. The City Council hereby approves and
authorizes the distribution by the Financial Adviser and by the purchaser of the Certificates of
Participation of said Official Statement to prospective purchasers of the Certificates of
Participation. The Director of Finance is hereby authorize to execute an appropriate certificate
stating the City Council's determination that the Preliminary Official Statement has been deemed
nearly final within the meaning of such Rule. The Director of Finance is further hereby authorized
and directed to approve any changes in or additions to the final form of such Official Statement as
the Director of Finance shall deem advisable, and to execute said final Official Statement for and in
the name and on behalf of the City.
SECTION 7. Official Actions. The City Administrative Officer, the Director of
Finance, the City Clerk, the City Attorney and all other officers and representatives of the City are
each authorized and directed in the name and on behalf of the City to make any and all
assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance,
warrants and other documents, which they or any of them might deem necessary or appropriate in
order to consummate any of the transactions contemplated by the documents approved pursuant to
this Resolution.
-3-
SECTION S. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
On motion of , seconded by
PASSED AND ADOPTED this 20th day of November, 1990, by the following vote:
AYES:
NOES:
ABSENT:
Mayor
ATTEST:
City Clerk
APPROVED:
r%,- Q�:�--
City Administrative Officer
Director of Finance
4
o •
29M6.11 nlxw:crA:d
RESOLUTION NO.
RESOLUTION OFTHE BOARD OF DIRECTORS OF THE CITY OF SAN LUIS
OBISPO CAPITAL IMPROVEMENT BOARD APPROVING THE PURCHASE
OF MUNICIPAL LAND AND IMPROVEMENTS FROM THE CITY OF SAN
LUIS OBISPO AND THE -LEASE OF SUCH IMPROVEMENTS BACK TO THE
CITY, APPROVING RELATED AGREEMENTS, OFFICIAL STATEMENT
AND COMPETITIVE SALE OF NOT TO EXCEED $4,500,000 CERTIFICATES
OF PARTICIPATION
11/0&190
11/07/90
WHEREAS, the City of San Luis Obispo (the "City") is currently proceeding to finance
the costs of various municipal improvements, consisting of the acquisition of land for open space
purposes, the acquisition of land to be used as the site of a fire station, and the renovation and
rehabilitation of the recreation center of the City (the "Project'); and
WHEREAS, the City of San Luis Obispo Capital Improvement Board (the "Board") has
been formed for the purpose of assisting the City in *financing the acquisition, construction and
improvement of property which is of benefit to the City; and 1.
WHEREAS, to accomplish such financing of the Project, the City has proposed to sell
such recreation center facilities (the "Facilities") to the Board pursuant to the Acquisition
Agreement dated as of December 1, 1990, (the "Acquisition Agreement") and to lease the Facilities
and such fine station site from the Board pursuant to the Lease Agreement dated as of December 1,
1990 (the "Lease Agreement'); and
WHEREAS, for the purpose of obtaining the moneys required to finance the acquisition
of the Facilities under the Acquisition Agreement, the Board proposes to assign and transfer certain
of its rights under the Lease Agreement to a trustee bank (the 'Trustee") pursuant to that certain
Assignment Agreement dated as of December 1, 1990, (the "Assignment Agreement") by and
between the Board and the Trustee; and
WHEREAS, in consideration of such assignment and the execution of that certain'Trust
Agreement dated as of December 1, 1990, (the 'Trust Agreement") by and among the Board, the
City and the Trustee, the Trustee will execute and deliver Certificates of Participation in the
principal amount of not to exceed $4,500,000 (the "Certificates of Participation"), each evidencing
an undivided fractional interest in the Lease Payments made by the City under the Lease
Agreement; and
WHEREAS, the City and the Board have determined to sell the Certificates of
Participation at competitive sale, and the firm of Evensen Dodge, Inc. (the "Financial Adviser") is
assisting the City and the Board in such sale of the Certificates of Participation and has caused to
be prepared an Official Statement describing the Certificates of Participation, to be used in
connection with such sale; and
WHEREAS, the Board of Directors approves of said transactions as being in the public
interests of the Board;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the City of
San Luis Obispo Capital Improvement Board as follows:
SECTION 1. Purchase of Facilities; Approval of Acquisition Agreement.
The Board of Directors hereby approves the purchase of the Facilities by the Board from the City
pursuant to, and subject to the terms and conditions of, the Acquisition Agreement in substantially
the form on file with the Secretary, together with any changes therein or additions thereto deemed
advisable by the Executive Director. The Board hereby authorizes and directs the President to
execute, and the Secretary to attest and affix the seal of the Board to, said form of the Acquisition
Agreement for and in the name of the Board.
SECTION 2. Lease of Facilities and Fire Station Site; Approval of Lease
Agreement. The Board of Directors hereby approves the lease of the Facilities and fire station
site by the Board to the City pursuant to, and subject to the terms and conditions of, the Lease
Agreement in substantially the form on file with the Secretary, together with any changes therein or
additions thereto deemed advisable by the Executive Director. The Board of Directors hereby
authorizes and directs the President to execute, and the Secretary to attest and affix the seal of the
Board to, said form of the Lease Agreement for and in the name of the Board. The schedule of
lease payments set forth in the Lease Agreement shall conform to the schedule of principal and
interest payments represented by the Certificates of Participation as determined pursuant to Section
5 hereof.
SECTION 3. Approval of Assignment Agreement. The Board of Directors hereby
approves the Assignment Agreement in substantially the form on file with the Secretary together
with any changes therein or additions thereto deemed advisable by the Executive Director. The
Board of Directors hereby authorizes and directs the President to execute, and the Secretary to
attest and affix the seal of the Board to, said form of the Assignment Agreement for and in the
name of the Board.
SECTION 4. Approval of Trust Agreement. The Board of Directors hereby
approves the Trust Agreement in substantially the form on file with the Secretary together with any
changes therein or additions thereto deemed advisable by the Executive Director. The Board of
Directors hereby authorizes and directs the President to execute, and the Secretary to attest and
affix the seal of the Board to, said form of the Trust Agreement for and in the name of the Board.
SECTION 5. Sale of Certificates of Participation. The Board of Directors hereby
approves the competitive sale of the Certificates of Participation, and hereby calls for the receipt of
bids on the Certificates of Participation on Thursday, December 13, 1990, at the hour of 10:00
a.m. in the office of Jones Hall Hill & White at Four Embarcadero Center, Suite 1950, San
Francisco, California. The Chief Financial Officer is hereby authorized and directed for and in the
name and on behalf of the Board to accept the bid of the best responsible bidder, provided that the
purchase price to be paid for the Certificates of Participation shall be at least ninety-eight percent
(98%) of the par value thereof, and the weighted average rate of interest represented by the
Certificates of Participation shall not exceed eight and three-quarters percent (8-3/4%) per annum.
The Certificates of Participation shall be sold pursuant to and in accordance with the provisions of
the Official Notice of Sale in substantially the form on file with the Secretary, which is hereby
approved as the official notice of sale of the Certificates of Participation.
SECTION 6. Official Statement. The Board hereby approves, and hereby deems
nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the
preliminary Official Statement describing the Certificates in the form submitted by the Financial
Adviser and on file with the Secretary, together with any changes therein or additions thereto
deemed advisable by the Chief Financial Officer, whose execution thereof shall be conclusive
evidence of his approval of any such changes or additions. The Board hereby approves and
authorizes the distribution by the Financial Adviser and by the purchaser of the Certificates of
Participation of said Official Statement to prospective purchasers of the Certificates of
Participation. The Chief Financial Officer is hereby authorized to execute an appropriate certificate
-2-
T O •
stating the Board's determination that the Preliminary Official Statement has been deemed nearly
final within the meaning of such Rule. The Chief Financial Officer is further hereby authorized
and directed to approve any changes in or additions to the final form of such Official Statement as
the Chief Financial Officer shall deem advisable, and to execute said final Official Statement for
and in the name and on behalf of the Board
SECTION 7. Official Actions. The Executive Director, the Chief Financial Officer,
the Secretary, the Board Attorney and all other officers and representatives of the Board are each
authorized and directed in the name and on behalf of the Board to make any and all assignments,
certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and
other documents, which they or any of them might deem necessary or appropriate in order to
consummate any of the transactions contemplated by the documents approved pursuant to this
Resolution.
SECTION 8. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
On motion of , seconded by ,
PASSED AND ADOPTED this 20th day of November, 1990, by the following vote:
AYES:
NOES:
ABSENT:
ATTEST:
APPROVED:
President
Secretary
Executive Director
-3-
o •
SUMMARY OF PROPOSED PROJECT FINANCING *Attachment.A.
■ Policy Links Implements Various Elements of -
1987 -89 Financial Plan
1989-91 Financial Plan
Council Work Program
Facilities Master Plan
Comprehensive Financial
Managment Plan: 1989-2000
Recent Council Actions:
Approval of Fire Station Site
Acquisition (11/7/90)
Approval of Recreation Center
Rehabilitation (4/10/90)
■ Issue Size $4,500,000
■ Anticipated Net Proceeds After Debt
Service Reserve Requirements and Issuance
Costs: $3,925,000
■ Project Cost Summary
Fire Station No. 1 Site Acquisition 2,640,000
Recreation Center Rehabilitation
(General Fund Share) 340,000
Open Space and Parkland Acquisition 900.000
Total Estimated Project Costs $3,880,000
a Type of Debt Instrument Certificates of Participation
■ Issued Through San Luis Obispo
Capital Improvement Board`
® Maturity Period 20 years
® Estimated Interest Rate 7.0% to 7.5%
■ Estimated Net Annual Debt Service $375,000
■ Source of Funding Annual appropriation from the
General Fund for lease payments
® Schedule of Key Events
Council Approval of the Financing November 20, 1990
Rating Agency Presentation December 3, 1990
Underwriter Bid Closing December 13, 1990
Receipt of Proceeds December 27, 1990
' Public facilities financing corporation established on April 15, 1986; the City
Council serves as its Board of Directors.
PF/ZPRPFINA.4PF
SM dy
tl-4U ; 14;04 ; tVtNbtN @uta OUZ 04V 'I IUaiii Z
CITY OF SAN LUIS OBISPO, CALIFORNIA
840480,000 CERTIFICATES OF PARTICIPATION /
PRELIMINARY ISSUE 8IiIN6 (11/8/90) Atmchment . .
SOURCES ANO USES OF FUNDI
.:.. DELIVERY DATES 12/ 1/90
Sources of Funds
e■e■■■a■■■v■■
Per Amount of Bonds ................... 86,480,000.00
afrsoiue /•Dfaeou+t................... 80.00
Sand Proceeds ........................................... 4,480,000.00
...................
56,480,000.00
Uses of Funds
�■as■a
Fire Station No.1 Site Acquisition ...................... 2,660,000.00
Underwriters Discount (% or S) .......... ( 2.000000%)... 59,600.00
Cost of Issuance ................. 100,000.00
Roc Center Rehabilitation (O.F. share) .................. 3400000.00
Open Spaeo and Parkland Acquisition ..................... 900,000.00
Debt Service Reserve .............. a..................... 406,371.30
tontintency............................................. 4,022.50
Prepared by Evensen Dodge. Inc.
RUNDATEI 11.08.1990 8 14111132 FILENAME.- sL0 KEY1 90
V
54,480,000.00
SENT BY: b—yU ; 14:07 cvtNacN 0uc" ouo 040 iiuo.8 a
CITY OF SAN LUIS 01190, CALIFORNIA
".680,000 CERTIFICATES OF PARTICIPATION
PRELININART ISSUE 8I2ING (11/8/901 j��chment� Z.
asaaassassossa®m
DEOT SERVICE SCHEDULE
DATE PRINCIPAL COUPON INTEREST
........ ..............
PERIOD TOTAL
FISCAL TOTAL
..............
6/ 1/91
255,000.00
......................................
5.930000
1490321.25
404,321.25
406,321.25
12/ 1/91
141,735.00
141,735.00
6/ 1/92
120,000.00
6.000000
141,733.00
261,735.00
403,470.00
12/ 1/92
138,135.00
138,135.00
6/ 1/93
130,000.00
6.050000
138,135.00
268,135.00
406,270.00
12/ 1/93
136.202.50
134,202.50
6/ 1/94
135,000.00
6.100000
134,202.50
2691202.50
403,405.00
12/ 1/94
130,085.00
130,085.00
6/ 1/95
145,000.00
6.150000
130,085.00
275,085.00
405,170.00
12/ 1/95
125,626.25
125,626.25
6/ 1/96
150,000.00
6.200000
12S.M.25
275,626.25
401.252.50
12/ 1/96
120,976.25
120,976.25
6/ 1/97
160,000.00
6.250000
120,976.23
280,976.25
401,952.50
12/ 1/97
115,976.25
115,976.25
6/ 1/98
170,000.00
6.350000
115,976.25
285,976.25
4010952.50
12/ 1/98
110,578.75
110,578.75
6/ 1/99
185,000.00
6.400000
110,578.75
295,578.75
406,157.50
12/ 1/99
104,638.75
104,638.75
6/ 1/ 0
195,000.00
6.500000
1041658.75
299,658.75
404,317.50
12/ 1/ 0
96,321.25
98,321.25
6/ 1/ 1
205,000.00
6.600000
98,321.25
303,321.25
401,662.50
12/ 1/ 1
91,SS6.25
91,556.25
6/ 1/ 2
220,000.00
6.700000
91,556.25
311,556.25
403.112.50
12/ 1/ 2
84,186.25
84,186.25
6/ 1/ 3
235,000.00
6.800000
86,186.25
319,186.25
403,372.50
12/ 1/ 3
76,196.25
76,196.25
6/ 1/ 4
250,000.00
6.900000
76,196.25
326,196.25
402,392.50
12/ 1/ 4
67,571.25
67,571.25
6/ 1/ 5
270,000.00
6.930000
67,571.25
337,571.25
405,142.50
12/ 1/ 5
58,188.75
58,188.75
6/ 1/ 6
290,000.00
7.000000•
58,188.75
348,188.75
406,377.50
12/ 1/ 6
48,038.75
68,038.73
6/ 1/ 7
310,000.00
7.000000
48,038.75
358,038.75
606,077.50
12/ 1/ 7
37,186.75
27,188.75
6/ 1/ 8
330,000.00
7.050000
37,188.75
367,188.75
404,377.50
12/ 1/ 8
25,556.25
25,556.25
6/ 1/ 9
350,000.00
7.050000
25,556.25
375,556.23
401,112.50
12/ 1/ 9
13,218.75
13,218.75
6/ 1/10
..............
375,000.00
7.050000
....
13,218.75
......................
388,218.75
6011437.50
80
4.6,000.00
3,593,313.75
8,073,313.75
ACCRUED
4,480,000.00
3,593,313.75
8,075,313.75
ssa-=ass■o
..mmmum
as v■agtssa m=
Prepared by Evanson Dodge, Ina.
RUNDATE: 11.08-1990 0 140102 FILENARE: SLO KEY: 90
SENT BY: C—VU ; 14;:D tvtl0tl)WuC" ou> >ya I I UU I* y
CITY OF BAN LUIS OBISPO, CALIFORNIA
33,480,000 CERTIFICATES OF PARTICIPATION
PRELIMINARY ISSUE SIZING (11/8/90)
eq"ep"t k 3.
DEBT SERVICE SCNEDIIIE Attachmen
■■a®mwaaww��oa
Dated 12/ 1/90 with Delivery of 12/ 1/90
Bond Years
52,305.000
Average Coupon
6.856815
Average Life
11.697545
N I C %
7.027791 X Ueiro 98.0000000
T I C X
7.094718 X ►rm Dated Date
Prepared by Evanson Dodge, Inc.
RUNDATE: 11-08.1990 B 14:11:14 FILENAME: SLO KIT: 90
401 bY;
D -0u v 14 -DO i tVCIVJCIV *Ut" QUO 040 riue.A 0
CITY OF BAN LUIS OBISPO, CALIFORNIA
54,480,000 CERTIFICATES OF PARTICIPATION
PRELIMINARY ISSUE BIIIYO (11/8/90)
qttechment
NET DEBT SERVICE REQUIREMENTS
�oo®o®■®■.m
DELIVERY DATE: 12/ 1/90
PERIOD
TOTAL CONSTR. FUND DEBT SVC. RES.
NET
SURPLUS FUNDS
ENDING
....
PRINCIPAL
COUPON
INTEREST
DEBT SERVICE EARNINGS +
CAP. INT.
DEBT SERVICE
REMAINING
.................
6/ 1/91
255,000.00
..........
S MOOOD
..........................................
1491321.25
..............
404x321.25
14,324.81
..............
389,996.44
..............
12/ 1/91
141,735.00
141,735.00
14,326.81
127,410.19
6/ 1/92
120,000.00
6.000000
141,735.00
261,735.00
14,324.81
247,410.19
12/ 1/92
138,135.00
138,135.00
14,324.81
123,810.19
6/ 1/93
130,000.00
6.050000
138,135.00
268,135.00
14,324.81
253,810.19
12/ 1/93
134,202.50
136,202.50
14,324.81
119,877.69
6/ 1/94
135,000.00
6.100000
134,202.50
269,202.50
14,324.81
254,877.69
12/ 1/94
130,085.00
130,085.00
14,326.81
115,760.19
6/ 1/95
145,000.00
6.150000
1301085.00
2750085.00
14,324.81
260,760.19
it/ 1/95
125,626.25
125,626.25
14,324.81
111,301.44
6/ 1/96
150,000.00
6.200000
125,626.5
2751626.25
14,324.81
261,301."
12/ 1/96
120,976.25
120,976.25
14,324.81
106,651."
6/ 1/97
160,000.00
6.250000
120,976.25
280,976.25
14,324.81
266,651.44
12/ 1/97
115,976.25
115,976.25
14,324.81
101,651.44
6/ 1/98
170,000.00
6.350000
115,976.25
285,976.25
14,324.81
271,651."
12/ 1/98
110,578.75
110,578.75
14,324.81
96,53.94
6/ 1/99
1851000.00
6.400000
110,578.75
2951578.75
14,326.81
281,253.94
12/ 1/99
104,658.75
104,658.75
14,324.81
90,333.94
6/ 1/ 0
195,000.00
6.500000
104,658.75
299,658.75
14,324.81
25,333.94
12/ 1/ 0
98,321.25
98,321.25
14,324.81
83,996.44
6/ 1/ 1
205,000.00
6.600000
98,321.5
303,321.25
14,324.81
288,996.66
12/ 1/ 1
91,556.25
91,556.25
14,324.81
77,231."
6/ 1/ 2
220,000.00
6.700000
91,556.5
311,556.25
14,324.81
297,231.44
12/ 1/ 2
84,186.25
84,186.25
14,324.81
69,861.44
6/ 1/ 3
235,000.00
6.800000
84,186.25
319,186.5
14,324.81
304,861.44
12/ 1/ 3
76,196.5
76,196.25
14,324.81
61,871."
6/ 1/ 4
250,000.00
6.900000
76,196.5
326,196.25
14,324.81
311,871.46
12/ 1/ 4
67,571.25
67,571.25
16,324.81
53,266.44
6/ 1/ 5
270,000.00
6. "ONO
67,571.5
337,571.25
14;324.81
323,246.44
12/ 1/ 5
58.188.75
58,188.75
14,324.81
43,863.94
6/ 1/6
290,000.00
7.000000
58,188.75
348,188.75
14,324.81
333,863.94
12/ 1/ 6
48,038.75
48,038.75
16526.81
33,713.94
6/ 1/ 7
310,000.00
7.000000
48.038.75
138,038.75
14,324.81
343,713.94
12/ 1/ 7
37,188.75
37,189.75
14,324.81
22,863.94
6/ 1/ B
330,000.00
7.060000
37.188.75
367,188.75
14,324.81
352,863.94
12/ 1/8
25,556.5
25,556.5
14,324.81
11,231.44
6/ 1/ 9
3500000.00
7.050000
5,556.25
375,556.25
14,324.81
361,231."
12/ 1/ 9
13,218.75
13,218.75
14,324.81
1,106.06
6/ 1/10
..............
375,000.00
7.OS000O
............................
13,218.75
388,218.73
420,702.31
33,589.62
4,480,000.00
3,593,313.75
.............. ............................
8,073,313.75
965,045.09
7,141,858.28
mmm* ee
�O�fttw��m u�o�uu�m uoue�Ww �uWus�uaa atmu��uas
Prepared by Evemen Dodge,
Inc.
RURDATEI
11-08.1990 8 14:11:23
FILENAME; BLO
KEY: 90
JoxES HALL HILL & WHITE,
A PROFESSIONAL LAW CORPORATION
ATTORNEYS AT LAW
CHARLES F. ADAMS
HAROLD W. BANK'
STEPHEN R. CASALEOOIO
BRUCE H. COLEMAN
THOMAS A. DOWNEY
ANDREW C. HALL JR.
KENNETH I. JONES
WILT T A M H. MADISON
DAVID J. OSTER
BRIAN D. QUINT
PAUL J. TBIMMIO
SHARON STANTON WHITE
• ADY3YSaD Y X8 "RK A
DI41'D OP ML� DADS OF Y
MEMORANDUM
To: Interested Parties
From: Chick Adams
Date: November 9, 1990
FOUR EMBARCADERO CENTER
NINETEENTH FLOOR
SAN FRANCISCO, CA 94111
(415) 391-5780
Re: City of San Luis Obispo - Certificate of Participation Financing
FACSIMILE
(415) 391-5784
(415) 391-5785
(415) 956-8308
ROBERT J. BILL (1998-1988)
Enclosed for your review are first drafts of the Lease Agreement, Trust Agreement,
Acquisition Agreement and Assignment Agreement for this financing. Brief descriptions of these
documents are as follows:
1. Acquisition Agreement. In order to provide collateral for the Lease
which is currently in existence, the City agrees under the Acquisition Agreement to
sell to the Board the current property which is used for the Recreation Center. Bill
Statler has told me that the value of the Recreation Center, including land and
existing improvements, is in the high $3 million range. It will be important to
refine the number as we get closer to the closing. Under the Acquisition
Agreement, the Board agrees to pay the full value of the Recreation Center to the
City as the purchase price, and the City agrees to use the purchase price to finance
(a) the rehabilitation costs of the Recreation Center, (b) the purchase of the Open
Space Property, and (c) any other capital improvements determined by the City. At
the closing, the City will deliver and record a grant deed to the Board for this
property..
2. Lease Agreement. Under the Lease Agreement, the Board agrees to
acquire the Recreation Center as described above, and to acquire the Fire Station
Property from the San Luis Coastal Unified School District (for this purpose, the
City assigns to the Board its rights under the existing agreement with the School
District). In turn, the Board agrees to lease the Recreation Center and the Fire
Station Property back to the City, and the City agrees to pay semiannual
installments of rent, which we call Lease Payments, in the amounts and at the times
necessary to pay semiannual installments of principal and interest with respect to the
cops.
•
Interested Parties
November 9, 1990
Page 2
The Lease is not modeled on the Lease Agreement which we used in 1988.
Because the 1988 financing was secured by the water enterprise of the City, it
proved not to be useful for this financing, which is payable from the City's general
fund. The Lease contains typical provisions applicable to general fund lease
financings, which we can cover at our meeting next Thursday. The important thing
to note is that the lease is a "financing lease" such that upon payment of the Lease
Payments in full, title to the Recreation Center and the Fire Station Property vests in
the City.
3. Assignment Agreement. In order to issue the COPs, it is necessary for
the Board to assign its rights under the Lease Agreement to the trustee, yet to be
selected. As a result of the assignment, the City will pay the Lease Payments
directly to the Trustee, and the Trustee will assume responsibility for enforcing the
City's obligations under the Lease Agreement.
4. Trust Agreement. This document provides all of the terms and
conditions applicable to the COPS, including provisions for payment and
prepayment to the Certificate Owners. The Trust Agreement creates various funds
to be held by the Trustee, including the Lease Payment Fund (into which Lease
Payments will be deposited and from which payments will be made to the
Certificate Owners), the Reserve Fund to be held as a reserve should Lease
Payments prove insufficient for any reason, and the Acquisition Fund (from which
the Board will requisition payment of the Acquisition Costs of the Recreation
Center and the Fire Station Property, as well as payment of all costs of issuance).
Section 10.05 of the Trust Agreement contains covenants under applicable federal
tax law relating to the $5 million "small issuer" exemption.
I am looking forward to our meeting next Thursday to review these documents. As I have
mentioned to Bill, the County of San Mateo in its wisdom has chosen to call me for jury duty this
month, and there is some chance that I may not be able to attend the meeting. Should this happen,
I will make arrangements for another attorney to attend from our office.
0
29026.11 MHW:CFAjaj
CITY OF SAN LUIS OBISPO
1990 Certificates of Participation
Distribution List
CITY
-William C. Statler, Director of
Finance
-Jeffrey G. Jorgensen, Esq.
City Attorney
CITY OF SAN LUIS OBISPO
990 Palm Street
San Luis Obispo, California 93401
(P.O. Box 8100, 93403-8100)
(805) 549-7130 (Statler)
(805) 549-7140 (Jorgensen)
(805) 549-7109 (FAX)
FINANCIAL ADVISOR
-Timothy J. Schaefer, Senior Vice
President
EVENSEN DODGE, INC.
650 Town Center Drive, Suite 430
Costa Mesa, California 92626
(714) 545-1290
(714) 557-9126 (FAX)
-Katherine C. Kardell, Assistant Vice
President
EVENSEN DODGE, INC.
222 South Ninth Street, Suite 3800
Minneapolis, Minnesota 55402
(800)328-8200
(612)338-3535
(612) 338-7264 (FAX)
TRUSTEE
(TO COME)
RATING AGENCY
-David Ambler
-Mark Campa
MOODY'S INVESTORS SERVICE, INC.
One Sansome Street, Suite 3110
San Francisco, California 94104
(415) 274-1700 (Ambler)
(415) 274-1704 (Campa)
•
BOND COUNSEL
-Charles F. Adams, Esq.
JONES HALL HILL & WHITE
Four Embarcadero Center, 19th Floor
San Francisco, California 94111
(415)391-5780
(415) 391-5784 (FAX)
11/09/90
xbostoi JH rw:cFn:oj FWAL
/�Ireem�t tt /f- I � �
TRUST AGREEMENT
Dated as of December 1, 1990
by and among
[NAME OF TRUSTEE],
as trustee
CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD
and the
CITY OF SAN LUIS OBISPO
Relating to
$4,500,000
Certificates of Participation
(1990 Public Facilities Financing)
_� �q, RV . cc-
X
TABLE OF CONTENTS
ARTICLE I
•
DEFINITIONS
Section1.01. Definitions..........................................................................................................2
Section1.02. Legal Authority...................................................................................................6
ARTICLE lI
THE CERTIFICATES OF PARTICIPATION
Section2.01.
Authorization......................................................................................................7
Section2.02.
Date...................................................................................................................7
Section 2.03.
Terms of Certificates.............................................................................................7
Section 2.04.
Fully Registered Form..........................................................................................
7
Section 2.05.
Form of Certificates...............................................................................................7
Section2.06.
Execution...........................................................................................................7
Section 2.07.
Transfer and Exchange...........................................................................................8
Section 2.08.
Certificates Mutilated, Lost, Destroyed or Stolen........................................................8
Section2.09.
Payment.............................................................................................................8
Section 2.10.
Execution of Documents and Proof of Ownership........................................................9
Section 2.11.
Temporary Certificates..........................................................................................9
Section 2.12.
Registration Books...............................................................................................10
ARTICLE III
PREPAYMENT OF CERTIFICATES
Section3.01. Prepayment........................................................................................................11
Section 3.02. Selection of Certificates for Prepayment...................................................................12
Section 3.03. Notice of Prepayment............................................................................................12
Section 3.04. Partial Prepayment of Certificates ............................................ e .............................12
Section 3.05. Effect of Notice of Prepayment...............................................................................12
Section 3.06. Purchase of Certificates.........................................................................................13
ARTICLE IV
DISPOSITION OF PROCEEDS;
ACQUISITION FUND AND RESERVE FUND
Section 4.01. Application of Proceeds.........................................................................................14
Section 4.02. Acquisition Fund..................................................................................................14
Section4.03. Reserve Fund.......................................................................................................14
0
ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease........:...............:......................................................16
Section 5.02. Establishment of Lease Payment Fund.....................................................................16
Section5.03. Deposits.............................................................................................................16
Section 5.04. Application of Moneys..........................................................................................16
Section5.05. Surplus..............................................................................................................16
ARTICLE VI
INSURANCE AND CONDEMNATION FUND
Section 6.01. Establishment of Insurance and Condemnation Fund; Application of Net
Proceeds of Insurance Award.................................................................................17
Section 6.02. Deposit and Application of Net Proceeds of Eminent Domain Award- ............................. 17
ARTICLE VII
MONEYS IN FUNDS; INVESTMENTS
Section7.01. Held in Trust.......................................................................................................19
Section 7.02. Investments Authorized.........................................................................................19
Section7.03. Accounting.........................................................................................................19
Section 7.04. Allocation of Eammgs..........................................................................................19
Section 7.05. Valuation and Disposition of Investments...........:....................................................19
ARTICLE VIII
THE TRUSTEE
Section 8.01. Appointment of Trustee.........................................................................................20
Section 8.02. Acceptance of Trusts.............................................................................................20
Section 8.03.
Fees. Charges and Expenses of Trustee.....................................................................23
Section 8.04.
Notice to Certificate Owners of Default....................................................................23
Section 8.05.
Removal of Trustee.. .................................... ; ........................... ..............................
23
Section 8.06.
Resignation by Trustee..........................................................................................23
Section 8.07.
Appointment of Successor Trustee...........................................................................23
Section 8.08.
Merger or Consolidation........................................................................................23
Section 8.09.
Concerning any Successor Trustee...........................................................................24
Section 8.10.
Non -Liability of Trustee.................................:...............................................:......24
Section 8.11.
Actions Through Agents........................................................................................24
Section 8.12.
Nature of Trust Engagement...................................................................................24
•
ARTICLE IX
MODIFICATION OR AMENDMENT
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Section 9.01. Amendments Permitted...................:....................:.................................................26
Section 9.02. Procedure for Amendment with Written Consent of Certificate Owners ...........................26
Section 9.03. Effect of Supplemental Agreement............................................::..............................27
Section 9.04. Endorsement or Replacement of Certificates Delivered After Amendments .......................27
Section 9.05. Amendatory Endorsement of Certificates...................................................................27
ARTICLE X
OTHER COVENANTS
Section 10.01.
Compliance With and Enforcement of Lease..............................................................28
Section 10.02.
Observance of Laws and Regulations.........................................................................28
Section 10.03.
Prosecution and Defense of Suits.............................................................................28
Section 10.04.
Recordation and Filing. ....:.:.:...........................................................................:....28
Section10.05.
Tax Covenants.....................................................................................................28
Section 10.06.
Further Assurances.................................................................................................29
ARTICLE XI
LIMITATION OF LIABILITY
Section 11.01.
Limited Liability of City................................:................:.....................................30
Section 11.02.
No Liability of the Board for Trustee Performance......................................................30
Section 11.03.
Indemnification of Trustee......................................................................................30
Section 11.04.
Opinion of Counsel..............................................................................................30
Section 11.05.
Limitation of Rights to Parties and Certificate Owners................................................30
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
OF CERTIFICATE OWNERS
Section 12.01.
.........:.........:..................
Assignment of Rights ........................................ .............31
Section12.02.
Remedies............................................................................................................31
Section 12.03.
Application of Funds.............................................................................................31
Section 12.04.
Institution of Legal Proceedings..............................................................................31
Section12.05.
Non-waiver.........................................................................................................32
Section 12.06.
Remedies Not Exclusive........................................................................................32
Section 12.07.
Power of Trustee to Control Proceedings..................................................................32
Section 12.08.
Limitation on Certificate Owners' Right to Sue..................:......................................32
Section 12.09.
Possession of Certificates by Trustee Not Required.....................................................32
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ARTICLE XIII
EXHIBIT A - FORM OF CERTIFICATE OF PARTICIPATION
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DISCHARGE; ADMINISTRATIVE PROVISIONS
Section 13.01.
Discharge Hereof..................................................................................................34
Section13.02.
Records........................................:.:.:.................................................................34
Section13.03.
Notices...............................................................................................................34
Section 13.04.
Disqualified Certificates.........................................................................................35
Section 13.05.
Payment of Certificates After Discharge of Trust Agreement.........................................35
Section13.06.
Governing Law....................................................................................................35
Section 13.07.
Binding Effect; Successors.....................................................................................35
Section 13.08.
Board and City Representatives...............................................................................35
Section 13.09.
Execution in Counterparts......................................................................................36
Section 13.10.
Delivery of Cancelled Certificates............................................................................36
Section13.11.
Headings.....................:.......................................................................................36
Section 13.12.
Waiver of Notice ..................................................................................................36
Section 13.13.
Separability of Invalid Provisions.................................................:..........................36
EXHIBIT A - FORM OF CERTIFICATE OF PARTICIPATION
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TRUST AGREEMENT
THIS AGREEMENT, dated as of December 1, 1990, is by and among [NAME OF
TRUSTEE], a organized and existing under the laws of
(the "Trustee"), the CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEMENT BOARD, a public body corporate and politic duly organized and existing under
Ordinance No. 1059 (1986 Series) adopted by the City Council. of the City of San Luis Obispo on
April 15, 1986, and under the Constitution and laws of the State of California (the "Board"), and
the CITY OF SAN LUIS OBISPO, a charter city and municipal corporation duly organized and
existing under the Constitution and laws of the State of California (the "City");
WITNESSETH:
WHEREAS, the City has determined to undertake the acquisition of land to be used as the
site of a fire station (the "Fire Station Property"), the acquisition of land to be used for open space
purposes (the "Open Space Property"), and the rehabilitation of an existing recreation center which
is currently owned by the City(the 'Recreation Center"); and
WHEREAS, the Board has been formed for purposes which include assisting the City in
financing the acquisition, construction and improvement of property which is used for the
municipal purpose of the City; and
WHEREAS, in order to provide funds to enable the City to finance the acquisition of the
Open Space Property and the rehabilitation of the Recreation Center, the City has agreed to sell to
the Board, and the Board has agreed to purchase from the City, the Recreation Center for an
amount not exceeding its current estimated value, pursuant to the Acquisition Agreement dated as
of December 1, 1990, by and between the City and the Board (the "Acquisition Agreement"); and
WHEREAS, the Board has agreed to purchase the Recreation Center from the City under
the Acquisition Agreement and to purchase the Fire Station Property from its current owner, and to
lease the Recreation Center and the Fire Station Property to the City under and pursuant to the
Lease Agreement dated as of December 1, 1990, by and between the Board as lessor and the City
as lessee (the "Lease"); and
WHEREAS, for such purposes the Board proposes to assign and transfer to the Trustee
certain of its rights under the Lease, and in consideration of such assignment and the execution of
this Trust Agreement, the Trustee has agreed to execute and deliver Certificates of Participation
(1990 Public Facilities Financing) in the aggregate principal amount of $4,500,000, each
evidencing a direct, undivided fractional interest in the Lease Payments to be made by the City
under the Lease:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined
in this Section shall, for all purposes of this Trust Agreement, have the meanings herein specified.
In addition, all terms defined in the Lease and not otherwise defined herein shall have the
respective meanings specified in the Lease.
"AAc uisition Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.02.
"Assignment Agreement" means the Assignment Agreement, dated as of December 1,
1990, by and between the Board as assignor and the Trustee as assignee, as originally executed or
as thereafter amended pursuant to any duly authorized and executed amendments thereto.
"Board" means the City of San Luis Obispo Capital Improvement Board, a public body
corporate and politic duly organized and existing under Ordinance No. 1059 (1986 Series) adopted
by the City Council of the City of San Luis Obispo on April 15, 1986, and under the Constitution
and laws of the State of California.
"Board Representative" means the President, Executive Director, Chief Financial Officer or
Secretary of the Board, or any other person authorized by resolution of the governing body of the
Board to act on behalf of the Board under or with respect to this Agreement.
"Bond Counsel" means (a) Jones Hall Hill & White, A Professional Law Board, and (b)
any other attorney or firm of attorneys of nationally recognized expertise with respect to legal
matters relating to obligations the interest on which is excludable from gross income pursuant to
Section 103 of the Tax Code.
"Business Day" means a day other than a Saturday, Sunday or legal holiday, on which
banking institutions in the State of California, or in any state in which the Office of the Trustee is
located, are not closed.
"Certificate Proceeds", when used with reference to the Certificates, means the face amount
of the Certificates, plus accrued interest and premium, if any, less original issue discount and less
the proceeds thereof deposited in the Reserve Fund.
"Certificates" means the $4,500,000 aggregate principal amount of Certificates of
Participation (1990 Public Facilities Financing), executed and delivered and at any time
Outstanding hereunder.
"City" means the City of San Luis Obispo, a charter city and municipal corporation duly
organized and existing under the Constitution and laws of the State of California.
"City Representative" means the Mayor, City Administrative Officer, Assistant City
Administrative Officer or the Director of Finance of the City or any other person authorized by
resolution of the City Council of the City to act on behalf of the City under or with respect to this
Agreement.
"Closing Date" means December _, 1990, being the day when the Certificates, duly
executed by the Trustee, are delivered to the Original Purchaser.
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"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the City or the Board relating to the execution and delivery of the Lease or the
execution, sale and delivery of the Certificates, including but not limited to filing and recording
costs, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of
the Trustee (which shall include legal fees and the first annual administration fee of the Trustee),
financing discounts, legal fees and charges, insurance fees and charges, financial and other
professional consultant fees, costs of rating agencies for credit ratings, fees for execution,
transportation and safekeeping of the Certificates and charges and fees in connection with the
foregoing.
:'Event of Default" means an event of default under the Lease, as defined in Section 8.1
thereof.
"Federal Securities" means any of the following which at the time of investment are legal
investments under the laws of the State of California for the funds proported to be invested therein:
(a) direct general obligations of the United States of America (including obligations issued or held
in book entry form on the books of the Department of the Treasury of the United States of
America); and (b) obligations of any agency, department or instrumentality of the United States of
America the timely payment of principal of and interest on which are fully guaranteed by the United
States of America.
"Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending
on June 30 of the next succeeding year, or any other twelve-month period by the City as its fiscal
year pursuant to written notice filed with the Trustee.
"Information Services" means Financial Information, Inc: s "Daily Called Bond Service",
30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny
Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York
10006; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor,
New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's Board
"Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in
accordance with then current guidelines of the Securities and Exchange Commission, such other
addresses and/or such other services providing information with respect to called bonds as the City
may designate in a written request delivered to the Trustee.
"Insurance and Condemnation Fund" means the fund by that name to be established and
held by the Trustee pursuant to Section 6.01.
"Interest Payment Date" means June 1, 1991, and the first day of each June and December
thereafter so long as any Certificates are Outstanding.
"Investment Property" means any security (as such term is defined in Section 165(g)(2)(A)
or (B) of the Tax Code), obligation, annuity or investment -type property, excluding, however,
obligations (other than specified private activity bonds as defined in Section 57(a)(5)(c) of the Tax
Code) the interest on which is excludable from gross income for federal income tax purposes under
Section 103 of the Tax Code.
"Lease" means the Lease Agreement dated as of December 1, 1990, by and between the
Board as lessor and the City as lessee, as originally executed or as thereafter amended pursuant to
any duly authorized and executed amendments thereto.
"Lease Payment. Fund" means the fund by that name established and held by the Trustee
pursuant to Section 5.02.
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"Lease Payments" means all payments required to be paid by the City pursuant to Section
4.4(a) of the Lease including any prepayment thereof pursuant to Article IX of the Lease.
"Moody's" means Moody's Investors Service, its successors and assigns.
"Net Proceeds" means an insurance proceeds or eminent domain award (including any
proceeds of sale to a governmental entity under threat of the exercise of eminent domain powers),
paid with respect to the Recreation Center or the Fire Station Property, to the extent remaining after
payment therefrom of all expenses incurred in the collection thereof.
"Office" means the corporate office of the Trustee at
or at such other address or addresses designated by the Trustee in written notice filed with the City,
the Board and the Owners.
"Original Purchaser" means, as original purchaser of the Certificates
at the public sale thereof.
"Outstanding", when used as of any particular time with respect to Certificates, means
(subject to the provisions of Section 13.04) all Certificates theretofore executed and delivered by
the Trustee hereunder except (a) Certificates theretofore cancelled by the Trustee or surrendered to
the Trustee for cancellation; (b) Certificates for the payment or prepayment of which funds or
Federal Securities in a sufficient amount shall have theretofore been deposited with the Trustee
(whether upon or prior to the maturity or prepayment date of such Certificates), provided that, if
such Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been
given as provided in Section 4.03 or provision satisfactory to the Trustee shall have been made for
the giving of such notice; and (c) Certificates in lieu of or in exchange for which other Certificates
shall have been executed and delivered by the Trustee pursuant to Section 2.09.
"Owner", when used with respect to a Certificate, means the person in whose name the
ownership of such Certificate shall be registered on the Registration Books.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State of California for the moneys proposed to be invested
therein:
(a) Federal Securities;
(b) any of the following direct or indirect obligations of the following
agencies of the United States of America: (i) direct obligations of the Export -Import
Bank; (ii) certificates of beneficial ownership issued by the Farmers Home
Administration; (iii) participation certificates issued by the General Services
Administration; (iv) mortgage-backed bonds or pass-through obligations issued and
guaranteed by the Government National Mortgage Association, the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Federal Housing Administration; (v) project notes issued by the United States
Department of Housing and Urban Development; and (vi) public housing notes and
bonds guaranteed by the United States of America;
(c) interest-bearing demand or time deposits (including certificates of
deposit) in federal or State chartered savings and loan associations or in federal or
State of California banks (including the Trustee), provided that: (i) the unsecured
obligations of such commercial bank or savings and loan association shall be rated
in one of the two highest rating categories by Moody's; or (ii) such demand or time
deposits shall be fully insured by the Federal Deposit Insurance Corporation;
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(d) commercial paper rated in one of the two highest short-term rating
categories by Moody's, issued by corporations which are organized and operating
within the United States of America, and which matures not more than 180 days
following the date of investment therein;
(e) bankers acceptances, consisting of bills of exchange or time drafts
drawn on and accepted by a commercial bank whose short-term obligations are
rated in one of the two highest short-term rating categories by Moody's or whose
long-term obligations are rated A or better by Moody's, which mature not more
than 270 days following the date of investment therein;
(f) obligations the interest on which is excludable from gross income
pursuant to Section 103 of the Tax Code and which are either (a) rated A or better
by Moody's, or (b) fully secured as to the payment of principal and interest by
Federal Securities;
(g) obligations issued by any corporation organized and operating within
the United States of America having assets in excess of $500,000,000, which
obligations are rated A or better by Moody's;
(h) money market funds which are rated in one of the two highest rating
categories by Moody's, or which invest in Federal Securities or in Permitted
Investments described in the preceding clause (b); and
(i) any investment agreement with, or guaranteed by, a financial institution
the long-term unsecured obligations of which are rated A or better by Moody's at
the time of such investment.
"Record Date" means the close of business on the fifteenth (15th) day of the month
preceding each Interest Payment Date; whether or not such fifteenth (15th) day is a Business Day.
'Registration Books" means the records maintained by the Trustee pursuant to Section 2.12
for registration of the ownership and transfer of ownership of the Certificates.
"Reserve Fund" means the fund by that name established and held by the Trustee pursuant
to Section 4.03.
'Reserve Requirement" means, as of the date of calculation thereof, an amount equal to the
lesser of (a) $[Insert amount equal to 10% of the face amount of the Certificates, less underwriter's
discount if over 2%, plus accrued interest], or (b) the maximum amount of Lease Payments
(excluding Lease Payments with respect to which the City shall have posted a security deposit
pursuant to Section 9.1 of the Lease) coming due in the current or any future Fiscal Year.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, New York 11530, Fax -(516) 227-4039 or 4190; Midwest Securities Trust
Company, Capital Structures -Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605,
Fax -(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900
Market Street, Philadelphia, Pennsylvania 19103, Attention.: Bond Department, Fax -(215) 496-
5058; and, in accordance with then current guidelines of the Securities and Exchange Commission,
such other addresses and/or such other securities depositories as the City may designate in a
written request of the City delivered to the Trustee.
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"Tax ode" means the Internal Revenue Code of 1986. Any reference herein to a
provision of the Tax Code shall include all applicable Tax Regulations promulgated with respect to
such provision.
Code.
'Tax Regulations" means temporary and permanent regulations promulgated under the Tax
'Term Certificates" means the Certificates maturing on December 1, 20_.
"Trust Agreement" means this Trust Agreement, as originally executed or as thereafter
amended pursuant to any amendments hereto permitted to be made hereunder.
'Trustee" means [Name of Trustee], or any successor thereto acting as Trustee pursuant to
this Trust Agreement.
Section 1.02. Legal Authority. Each of the parties hereby represents and warrants
that it has full legal authority and is duly empowered to enter into this Agreement, and has taken all
actions necessary to authorize the execution of this Agreement by the officers and persons signing
it.
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ARTICLE II
THE CERTIFICATES OF PARTICIPATION
Section 2.01. Authorization. The Trustee is hereby authorized and directed upon
written request from the Board to prepare, execute and deliver to the Original Purchaser,
Certificates in the aggregate principal amount of Four Million Five Hundred Thousand Dollars
($4,500,000). The Certificates shall evidence direct, undivided fractional ownership interests of
the Owners thereof in the Lease Payments.
Section 2.02. Date. Each Certificate shall be dated as of the date of its execution and
interest represented thereby shall be payable from the Interest Payment Date next preceding the date
of execution thereof, (a) unless it is executed following a Record Date and on or before the next
succeeding Interest Payment Date, in which event interest represented thereby shall be payable
from such Interest Payment Date, or (b) unless it is executed on or before the first Record Date, in
which event interest represented thereby shall be payable from December 1, 1990; provided,
however, that if, as of the date of any Certificate, interest represented by such Certificate is in
default, interest represented thereby shall be payable from the Interest Payment Date to which
interest has previously been paid or made available for payment with respect to such Certificate.
Section 2.03. Terms of Certificates. Principal represented by the Certificates shall
be payable on December 1 in each of the respective years and in the respective amounts, and
interest represented thereby shall be computed at the respective rates, as follows:
Maturity Date Principal Interest Maturity Date Principal Interest
(December 1) Amount Rate (December 1) Amount Rate
Section 2.04. Fully Registered Form; Interest. The Certificates shall be .
delivered in the form of fully registered Certificates without coupons in the authorized
denominations of $5,000 or any integral multiple thereof, except that no Certificate shall represent
principal payable in more than one year. The Certificates shall be assigned such alphabetical and
numerical designation as shall be deemed appropriate by the Trustee.
Interest represented by the Certificates shall be payable on each Interest Payment Date to
and including the date of maturity or prepayment, whichever is earlier, as provided in Section
2.09. Said interest shall represent the portion of Lease Payments designated as interest and coming
due on each of the respective Interest Payment Dates. The share of the portion of Lease Payments
designated as interest with respect to any Certificate shall be computed by multiplying the portion
of Lease Payments designated as principal represented by such Certificate by the rate of interest
represented by such Certificate (on the basis of a 360 -day year of twelve 30 -day months).
Section 2.05. Form of Certificates. The Certificates shall be substantially in the
form set forth in Exhibit A attached hereto and by this reference incorporated herein.
Section 2.06. Execution. The Certificates shall be executed by and in the name of the
Trustee by the manual signature of an authorized officer of the Trustee. If any person whose
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signature appears on any Certificate ceases to be an authorized officer before the date of delivery of
said Certificate, such signature shall nevertheless be as effective as if such person had remained an
authorized officer until such date.
Section 2.07. Transfer and Exchange.
(a) Transfer of Certificates. The registration of any Certificate may, in accordance with its
terms, be transferred upon the Registration Books by the person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such Certificate for cancellation at the
Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form
approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be
surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or
Certificates representing the same maturity, interest rate and aggregate principal amount, in any
authorized denominations.
(b) Exchange of Certificates. Certificates may be exchanged at the Office of the Trustee,
for a like aggregate principal amount of Certificates representing other authorized denominations of
the same interest rate and maturity. The City shall pay all costs of the Trustee incurred in
connection with any such exchange, except that the Trustee may require the payment by the
Certificate Owner requesting such exchange of any tax or other governmental charge required to be
paid with respect to such exchange.
(c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or exchange
either (i) any Certificate during the period established by the Trustee for the selection of Certificates
for prepayment, or (ii) the portion of any Certificate which the Trustee has selected for prepayment
pursuant to the provisions of Section 3.02.
Section 2.08. Certificates Mutilated, Lost, Destroyed or Stolen. If any
Certificate shall become mutilated, the Trustee, at the expense of the Owner of such Certificate,
shall execute and deliver a new Certificate of like principal amount, interest rate and maturity in
replacement for the Certificate so mutilated, but only upon surrender to. the Trustee of the
Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled
by it and destroyed by the Trustee, who shall thereupon deliver a certificate of destruction to the
City. If any Certificate shall be lost,. destroyed or stolen, evidence of such loss, destruction or
theft must be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and the
City and, if an indemnity satisfactory to the Trustee and the City shall be given, the Trustee, at the
expense of the Certificate Owner, shall execute and deliver a new Certificate of like principal
amount, interest rate and maturity and numbered as the Trustee shall determine in lieu of and in
replacement for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an
appropriate fee for each replacement Certificate delivered under this Section 2.08 and of the
expenses which may be incurred by the Trustee in carrying out the duties under this Section 2.08.
Any Certificate issued under the provisions of this Section 2.08 in lieu of any Certificate alleged to
be lost, destroyed or stolen shall be equally entitled to the benefits of this Agreement with all other
Certificates secured by this Agreement. The Trustee shall not be required to treat both the original
Certificate and any replacement Certificate as being Outstanding for the purpose of determining the
principal amount of Certificates which may be executed and delivered hereunder or for the purpose
of determining any percentage of Certificates Outstanding hereunder, but both the original and
replacement Certificate shall be treated as one and the same. Notwithstanding any other provision
of this Section 2.08, in lieu of delivering a replacement for a Certificate which has been mutilated,
lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to
such Certificate upon receipt of indemnity satisfactory to the Trustee and the City.
Section 2.09. Payment. Payment of interest represented by any Certificate on any
Interest Payment Date shall be made to the person appearing on the Registration Books as the
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Owner thereof as of the close of business on the Record Date immediately preceding such Interest
Payment Date, such interest to be paid by check or draft mailed to such Owner, by first class mail
postage prepaid, at his address as it appears on the Registration Books; provided, however, that at
the written request of the Owner of Certificates in an aggregate principal amount of at least
$1,000,000, which written request shall be on file with the Trustee as of the Record Date
preceding any Interest Payment Date, interest represented by such Certificates coming due and
payable on such Interest Payment Date shall be paid by wire transfer in immediately available funds
to such account in the United States as shall be specified in such written request. The principal and
prepayment price represented by any Certificate at maturity or upon prior prepayment shall be
payable in lawful money of the United States of America upon surrender of such Certificate at the
Office of the Trustee.
Section 2.10. Execution of Documents and Proof of Ownership. Any
request, direction, consent, revocation of consent, or other instrument in writing required or
permitted by this Agreement to be signed or executed by Certificate Owners may be in any number
of concurrent instruments of similar tenor, and may be signed or executed by such Owners in
person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by
any bank, trust company or other depository for such Certificates. Proof of the execution of any
such instrument, or of any instrument appointing any such attorney or agent, and of the ownership
of Certificates shall be sufficient for any purpose of this Agreement (except as otherwise herein
provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his attorney or agent of any such
instrument and of any instrument appointing any such attorney or agent, may be proved by a
certificate, which need not be acknowledged or verified, of an officer of any bank or trust company
located within the United States of America, or of any notary public, or other officer authorized to
take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such
instruments acknowledged before him the execution thereof. Where any such instrument is
executed by an officer of a corporation or association or a member of a partnership on behalf of
such corporation, association or partnership, such certificate shall also constitute sufficient proof of
his authority.
(b) The fact of the ownership of Certificates by any person and the amount, the maturity
and the numbers of such Certificates and the date of his holding the same shall be proved by the
Registration Books.
Nothing contained in this Section 2.10 shall be construed as limiting the'Trustee to such
proof, it being intended that the Trustee may accept any other evidence of the matters herein stated
which the Trustee may deem sufficient. Any request or consent of the Owner of any Certificate
shall bind every future Owner of the same Certificate in respect of anything done or suffered to be
done by the Trustee in pursuant of such request or consent.
Section 2.11. Temporary Certificates. The Certificates may be issued in temporary
form exchangeable for definitive Certificates when ready for delivery. Any temporary Certificates
may be printed, lithographed or typewritten, shall be of authorized denominations, shall be in fully
registered form without coupons and may contain such reference to any of the provisions of this
Trust Agreement as may be appropriate. Every temporary Certificate shall be executed by the
Trustee upon the same conditions and in substantially the same manner as the definitive
Certificates. If the Trustee delivers temporary Certificates it will execute and deliver definitive
Certificates as promptly thereafter as practicable, and thereupon the temporary Certificates shall be
surrendered, for cancellation, in exchange therefor at the Office of the Trustee who shall execute
and deliver in exchange for such temporary Certificates an equal aggregate principal amount of
definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates
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shall be entitled to the same benefits under this Trust Agreement as definitive Certificates executed
and delivered hereunder.
Section 2.12. Registration Books. The Trustee shall keep or cause to be kept
sufficient records for the registration and registration of transfer of the Certificates, which shall at
all reasonable times be open to inspection by the City and the Board during regular business hours;
and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it
may prescribe, register or transfer or cause to be registered or transferred, on the Registration
Books, Certificates as hereinbefore provided.
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ARTICLE III
PREPAYMENT OF CERTIFICATES
Section 3.01. Prepayment..
(a) Optional Prepayment. The Certificates maturing on or before December 1, , are
not subject to optional prepayment prior to the respective stated maturities. The Certificates
maturing on or after December 1, , are subject to optional prepayment in whole, or in part
among maturities on a pro rata basis and by lot within a maturity, on any date on or after December
1, , from prepayments of the Lease Payments made at the option of the City pursuant to
Section 9.2 of the Lease, at a prepayment price (expressed asa percentage of the principal amount
to be prepaid), together with accrued interest represented thereby to the date fixed for prepayment,
as follows:
Prepayment Period Prepayment
Dates Inclusive Price
(b) Prepayment From Net Proceeds of Insurance or Condemnation. The Certificates are
subject to mandatory prepayment on any date, in whole, or in part among maturities on a pro rata
basis and by lot within a maturity, from the Net Proceeds of insurance or eminent domain
proceedings credited towards the prepayment of the Lease Payments pursuant to Section 9.3 of the
Lease, at a prepayment price equal to 100% of the principal amount to be prepaid, together with
accrued interest represented thereby to the date fixed for prepayment, without premium.
(c) Sinking Fund Prelavment. The Term Certificates are also subject to mandatory
sinking fund prepayment by lot on December 1 in each year beginning December 1, 20_, from the
principal components of the Lease Payments required to be paid with respect to each of such dates,
at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued
interest represented thereby to the prepayment date, without premium, as follows:
Principal Amount of Principal Amount of
Prepayment Date Term Certificates Prepayment Date Term Certificates
(December 1) To Be Prepaid (December 1) To Be Prepaid
Notwithstanding the foregoing provisions of this subsection (c), in the event that some but
not all of the Term Certificates have been prepaid pursuant to any of the preceding provisions of
this Section 3.01, the aggregate principal amount of the Term Certificates to be prepaid in each year
thereafter pursuant to this subsection (c) shall be reduced by the aggregate principal amount of
Term Certificates so prepaid, to be allocated among sinking fund installments on a pro rata basis in
integral multiples of $5,000 such that the resulting amount of principal represented by the Term
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Certificates subject to prepayment on any date pursuant to this subsection (c) is equal to the
aggregate principal components of the Lease Payments coming due and payable on such date.
Section 3.02. Selection of Certificates for Prepayment. Whenever provision is
made in this Agreement for the prepayment of Certificates and less than all Outstanding Certificates
of any maturity are called for prepayment, the Trustee shall select Certificates of such maturity for
prepayment by lot. For the purposes of such selection, Certificates shall be deemed to be
composed of $5,000 portions, and any such portion may be separately prepaid. The Trustee shall
promptly notify the City and the Board in writing of the Certificates or portions thereof so selected
for prepayment.
Section 3.03. Notice of Prepayment. When prepayment is authorized or required
pursuant to Section 3.01, the Trustee shall give notice of the prepayment of the Certificates on
behalf and at the expense of the City. Such notice shall state the prepayment date and prepayment
price and, if less than all of the then Outstanding Certificates are to be called for prepayment, shall
designate the numbers of the Certificates to be prepaid by giving the individual number of each
Certificate or by stating that all Certificates between two stated numbers, both inclusive, have been
called for prepayment or by stating that all of the Certificates of one or more maturities have been
called for prepayment, and shall require that such Certificates be surrendered on the prepayment
date at the Office of the Trustee for prepayment at said prepayment price, giving notice also that
further interest represented by the Certificates will not accrue after the prepayment date. Such
notice shall further state that on the prepayment date there shall become due and payable, the
principal and premium, if any, represented by each Certificate together with accrued interest
represented thereby to said date, and that from and after such date interest represented thereby shall
cease to accrue and be payable.
Notice of such prepayment shall be mailed by first class mail with postage prepaid, to one
or more of the Information Services, and to the Owners of Certificates designated for prepayment
at their respective addresses appearing on the Registration Books, at least thirty (30) days but not
more than sixty (60) days prior to the prepayment date. In addition, notice of prepayment shall be
given by telecopy or certified, registered or overnight mail to each of the Securities Depositories at
least two (2) days prior to such mailing to the Certificate Owners. Such notice shall, in addition to
setting forth the above information, set forth, in the case of each Certificate called only in part, the
portion of the principal represented thereby which is to be prepaid; provided, however, that neither
failure to receive such notice so mailed nor any defect in any notice so mailed shall affect the
sufficiency of the proceedings for the prepayment of such. Certificates or the cessation of accrual of
interest represented thereby from and after the date fixed for prepayment.
Section 3.04. Partial Prepayment of Certificates. Upon surrender of any
Certificate prepaid in part only, the Trustee shall execute, authenticate and deliver to the Owner
thereof, at the expense of the City, a new Certificate or Certificates of authorized denominations
equal in aggregate principal amount to the unprepaid portion of the Certificate surrendered and of
the same interest rate and the same maturity.
Section 3.05. Effect of Notice of Prepayment. Moneys for the prepayment
(including the interest to the applicable date of prepayment) of Certificates having been set aside in
the Lease Payment Fund shall become due and payable on the date of such prepayment, and, upon
presentation and surrender thereof at the Office of the Trustee, said Certificates shall be paid at the
unpaid principal amount (or applicable portion thereof) represented thereby plus interest accrued
and unpaid to said date of prepayment.
If, on said date of prepayment, moneys for the prepayment of all the Certificates to be
prepaid, together with interest represented thereby to said date of prepayment, shall be held by the
Trustee so as to be available therefor on such date of prepayment, then, from and after said date of
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prepayment, interest represented by the Certificates shall cease to accrue and become payable. All
moneys held by the Trustee for the prepayment of Certificates shall be held in trust for the account
of the Owners of the Certificates so to be prepaid, and shall be held by the Trustee in cash
uninvested.
All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions of
this Article III shall be cancelled upon surrender thereof and delivered to the City pursuant to
Section 13.10.
Section 3.06. Purchase of Certificates. In lieu of prepayment of Certificates as
provided in this Article III, amounts held by the Trustee for such prepayment shall, at the written
request of the City Representative, be applied by the Trustee to the purchase of Certificates at
public or private sale as and when and at such prices. (including brokerage, accrued interest and
other charges) as the City may in its discretion direct, but not to exceed the prepayment price which
would be payable if such Certificates were prepaid. The aggregate principal amount of Certificates
of the same maturity purchased in lieu of prepayment pursuant to this Section 3.06 shall not exceed
the aggregate principal amount of Certificates of such maturity which would otherwise be subject
to such prepayment.
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F-
6,1
ARTICLE IV
DISPOSITION OF PROCEEDS;
ACQUISITION FUND AND RESERVE FUND
Section 4.01. Application of Proceeds. The proceeds received by the Trustee from
the sale of the Certificates on the Closing Date shall forthwith be set aside by the Trustee in the
following respective funds and in the following order of priority:
(a) The Trustee shall deposit the amount of $ in the Lease
Payment Fund, constituting accrued interest with respect to the Certificates.
(b) The Trustee shall deposit the amount of $ in the Reserve
Fund, constituting the initial amount of the Reserve Requirement.
(c) The Trustee shall deposit the amount of $ constituting the
remainder of such proceeds, in the Acquisition Fund.
Section 4.02. Acquisition Fund. The Trustee shall establish a special fund
designated as the "Acquisition Fund". The Trustee shall disburse moneys in the Acquisition Fund
upon receipt of a requisition signed by the Board Representative, for the purpose of paying or
reimbursing the payment of the Acquisition Costs and the Costs of Issuance. Each such
requisition shall: (a) identify the total amount of such costs to be paid pursuant to such requisition,
including all items of cost in such detail as may be available to the Board; (b) state with respect to
such disbursement (i) the requisition number, (ii) the amount to be disbursed for payment of such
costs, and (iii) that each item of cost identified therein has been properly incurred, and is a proper
charge against the Acquisition Fund and has not been the basis of any previous disbursement; and
(c) be accompanied by an invoice, if any. The Trustee may conclusively rely on requisitions
submitted in accordance with this Section 4.02 as complete authorization for the disbursements
made pursuant thereto.
On the earlier of (a) the final Completion Date, or (b) the third (3rd) anniversary of the
Closing Date or such later date as may be permitted in the written opinion of Bond Counsel filed
with the Trustee, the Trustee shall withdraw all remaining moneys in the Acquisition Fund and
deposit such moneys in the Lease Payment Fund.
Section 4.03. Reserve Fund. The Trustee shall establish a special fund designated as
the "Reserve Fund" to be held by the Trustee in trust for the benefit of the City and the Owners of
the Certificates, and applied solely as provided herein. Moneys in the Reserve Fund shall be held
in trust as a reserve for the payment when due of the Lease Payments on behalf of the City. All
amounts on deposit in the Reserve Fund at any time in excess of the Reserve Requirement, and all
amounts derived from the investment of amounts in the Reserve Fund which are not required to be
retained therein to maintain the Reserve Requirement, shall be transferred by the Trustee to the
Lease Payment Fund.
If on any Interest Payment Date the moneys available in the Lease Payment Fund do not
equal the amount of the Lease Payment then coming due and payable, the Trustee shall apply the
moneys available in the Reserve Fund to make such payments on behalf of the City by transferring
the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent
Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such
Lease Payment shall be deposited in the Reserve Fund to the extent of such advance.
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If on any Interest Payment Date the moneys on deposit in the Reserve Fund and the Lease
Payment Fund (excluding amounts required for payment of principal, interest and prepayment
premium, if any, represented by any Certificates theretofore having come due but not presented for
payment) are sufficient to pay or prepay all Outstanding Certificates, including all principal, interest
and prepayment premiums (if any) represented thereby, the Trustee shall, upon the written request
of the City, transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to
be applied for such purpose to the payment of the Lease Payments on behalf of the City. Any
amounts remaining in the Reserve Fund on the date of payment in full, or provision for such
payment as provided in Section 13.01, of all obligations represented by the Outstanding
Certificates and upon all amounts then due and owing to the Trustee, shall be withdrawn by the
Trustee and at the written request of the City applied towards such payment or paid to the City.
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ARTICLE V
LEASE PAYMENTS; LEASE PAYMENT FUND
Section 5.01. Assignment of Rights in Lease. Pursuant to the Assignment
Agreement, the Board has in the Assignment Agreement transferred, assigned and set over to the
Trustee certain of its rights under the Lease, including but not limited to all of the Board's rights to
receive and collect all of the Lease Payments and all other amounts required to be deposited in the
Lease Payment Fund. All Lease Payments and such other amounts to which the Board may at any
time be entitled shall be paid directly to the Trustee, and all of the Lease Payments collected or
received by the Board shall be deemed to be held and to have been collected or received by the
Board as the agent of the Trustee, and all such Lease Payments and such other amounts shall be
forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund, except as
provided in Section 4.03.
Section 5.02. Establishment of Lease Payment Fund. The Trustee shall
establish a special fund designated as the "Lease Payment Fund". All moneys at any time
deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the
benefit of the City and the Owners of the Certificates. So long as any Certificates are Outstanding,
neither the City nor the Board shall have any beneficial right or interest in the Lease Payment Fund
or the moneys deposited therein, except only as provided in this Agreement, and such moneys
shall be used and applied by the Trustee as hereinafter set forth.
Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all
Lease Payments received by the Trustee, including any moneys received by the Trustee for deposit
therein pursuant to Sections 4.01(a) or 5.01 or pursuant to Article VI hereof, or Article IX of the
Lease, and any other moneys required to be deposited therein pursuant to the Lease or pursuant to
this Agreement.
Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund
shall be used and withdrawn by the Trustee solely for the purpose of paying the principal, interest
and prepayment premiums (if any) represented by the Certificates as the same shall become due
and payable, in accordance with the provisions hereof.
Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund, after
prepayment and payment of all Certificates, including premiums and accrued interest (if any) and
payment of any applicable fees and expenses to the Trustee, or provision for such prepayment or
payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and
remitted to the City.
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ARTICLE VI
INSURANCE AND CONDEMNATION FUND
Section 6.01. Establishment of Insurance and Condemnation Fund;
Application of Net Proceeds of Insurance Award. Any Net Proceeds of insurance
collected by the City in the event of accident to or destruction of the Recreation Center or the Fire
Station Property collected by the City in the event of any such accident or destruction shall be paid
to the Trustee pursuant to Section 6.1 of the Lease and deposited by the Trustee promptly upon
receipt thereof in a special fund designated as the "Insurance and Condemnation Fund" which the
Trustee shall thereupon establish. If the City determines and notifies the Trustee in writing of its
determination, within ninety (90) days following the date of such deposit, that the replacement,
repair, restoration, modification or improvement of the Recreation Center or the Fire Station
Property is not economically feasible or in the best interests of the City, then such Net Proceeds
shall be promptly transferred by the Trustee to the Lease Payment Fund and applied to the
prepayment of Lease Payments pursuant to Section 9.3 of the Lease and the corresponding
prepayment of Certificates pursuant to Section 3.01(b). In the event of damage or destruction of
the Recreation Center or the Fire Station Property in full, such Net Proceeds may be transferred to
the Lease Payment Fund to be used to prepay Outstanding Certificates only if such Net Proceeds,
together with other available moneys, are sufficient to cause the corresponding prepayment of all
Lease Payments allocable to the Recreation Center or the Fire Station Property, as the case may be.
All Net Proceeds deposited in the Insurance and Condemnation Fund and not so transferred to the
Lease Payment Fund shall be applied to the prompt replacement, repair, restoration, modification
or improvement of the damaged or destroyed portions of the Recreation Center or the Fire Station
Property by the City, upon receipt of written requisitions of the City stating with respect to each
payment to be made (a) the name and address of the person, firm or corporation to whom payment
is due, (b) the amount to be paid and (c) that each obligation mentioned therein has been properly
incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis
of any previous withdrawal, and specifying in reasonable detail the nature of the obligation,
accompanied by a bill or a statement of account for such obligation. Any balance of the Net
Proceeds remaining after the City shall file a written certificate with the Trustee stating that such
work has been completed shall be paid to the City.
Section 6.02. Deposit and Application of Net Proceeds of Eminent Domain
Award. If all or any part of the Recreation Center or the Fire Station Property shall be taken by
eminent domain proceedings (or sold to a government threatening to exercise the power of eminent
domain) the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and
Condemnation Fund, pursuant to Section 6.1 of the Lease, and shall be applied and disbursed by
the Trustee as follows:
(a) If the City has given written notice to the Trustee of its determination
that (i) such eminent domain proceedings have not materially affected the interest of
the City in the the Recreation Center or the Fire Station Property, or the ability of
the City to meet any of its financial obligations under the Lease, and (ii) that such
proceeds are not needed for repair, replacement or rehabilitation of the Recreation
Center or the Fire Station Property, and the City has given written notice to the
Trustee of such determination, the Trustee shall transfer such proceeds to the Lease
Payment Fund to be credited towards the payment of the Lease Payments as the
same become due and payable.
(b) If the City has given written notice to the Trustee of its determination
that (i) such eminent domain proceedings have not materially affected the interest of
the City in the the Recreation Center or the Fire Station Property, or the ability of
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the City to meet any of its financial obligations under the Lease, and (ii) such
proceeds are needed for repair, replacement or rehabilitation of the the Recreation
Center or the Fire Station Property, the Trustee shall pay to the City, or to its order,
from said proceeds such amounts as the City may expend for such repair or
rehabilitation, upon the filing of requisitions of the City Representative meeting the
requirements of Section 6.01.
(c) If (i) less than all of the the Recreation Center or the Fire Station
Property, as the case may be, shall have been taken in such eminent domain
proceedings or sold to a government threatening the use of eminent domain powers,
and if the City has given written notice to the Trustee of its determination that such
eminent domain proceedings have materially affected the interest of the City in the
the Recreation Center or the Fire Station Property, as the case may be, or the ability
of the City to meet any of its financial obligations under the Lease, or (ii) all of the
the Recreation Center or the Fire Station Property shall have been taken in such
eminent domain proceedings, then the Trustee shall transfer such proceeds to the
Lease Payment Fund to be credited toward the prepayment of the Lease Payments
pursuant to Section 9.3 of the Lease and applied to the corresponding prepayment
of Certificates in the manner provided in Section 3.01(b).
In making any such determination whether to repair, replace or rehabilitate the Recreation
Center or the Fire Station Property under this Section 6.02, the City may obtain, but shall not be
required to obtain, at its expense, the report of an independent engineer or other independent
professional consultant, a copy of which shall be filed with the Trustee. Any such determination
by the City shall be final.
ARTICLE VII
MONEYS IN FUNDS; INVESTMENTS
Section 7.01. Held in Trust. The moneys and Permitted Investments held by the
Trustee under this Trust Agreement, other than moneys and Permitted Investments held in the
Rebate Account, are irrevocably held in trust for the benefit of the City and the Owners of the
Certificates solely for the purposes herein specified, and such moneys, and any income or interest
earned thereon, shall be expended only as provided in this Agreement, and shall not be subject to
levy or attachment or lien by or for the benefit of any creditor of the Board, the Trustee, the City or
the Owner of any Certificates.
Section 7.02. Investments Authorized. Upon the written request of the City filed
with the Trustee from time to time, moneys held by the Trustee in any fund or account hereunder
shall be invested and reinvested by the Trustee in Permitted Investments selected by the City and
specified in such written request of the City, which mature not later than the date such moneys are
required or estimated by the City to be required to be expended hereunder. In the absence of any
written request of the City directing the investment of uninvested moneys held by the Trustee
hereunder, the Trustee shall invest such moneys in Federal Securities or in Permitted Investments
described in clause (h) of the definition thereof, which mature not later than the date such moneys
are required or estimated by the Trustee to be required to be expended hereunder. Such
investments, if registrable, shall be registered in the name of the Trustee, as trustee or in the name
of its nominee, and shall be held by the Trustee. The Trustee may purchase or sell to itself or any
affiliate, as principal or agent, investments authorized by this Section 7.02. Such investments and
reinvestments shall be made giving full consideration to the time at which funds are required to be
available. The Trustee may act as purchaser or agent in the making or disposing of any
investment. Whenever in this Agreement any moneys are required to be transferred by the City to
the Trustee, such transfer may be accomplished by transferring a like amount of Permitted
Investments. For purposes of acquiring any investments hereunder, the Trustee may commingle
funds held by it hereunder upon the written request of the City. The Trustee shall not be
responsible or liable for any loss suffered in connection with any investment of funds made by it in
accordance with this Section 7.02.
Section 7.03. Accounting. The Trustee shall furnish to the City, not less than
monthly, an accounting (in the form customarily used by the Trustee) of all investments and other
transactions made by the Trustee pursuant to this Trust Agreement.
Section 7.04. Allocation of Earnings. Subject to the provisions of Section 4.03,
any income, profit or loss on such investments shall be deposited in or charged to the respective
funds from which such investments were made.
Section 7.05. Valuation and Disposition of .Investments. For the purpose of
determining the amount in any fund, the value of Permitted Investments credited to such fund shall
be calculated at the lesser of (a) the par amount thereof or (b) the cost thereof, excluding accrued
interest and brokerage commissions, if any; except that any Permitted Investments having a
maturity of more than five (5) years from the date of investment shall be valued at least annually at
the market value thereof.
The Trustee may sell at the best price reasonably obtainable, or present for prepayment, any
Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to
provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund
to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible
for any loss resulting from any such Permitted Investment.
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ARTICLE VIII
THE TRUSTEE
Section 8.01. Appointment of Trustee. [Name of Trustee] is hereby appointed
Trustee by the Board and the City for the purpose of receiving all moneys required to be deposited
with the Trustee hereunder and to allocate, use and apply the same as provided in this Agreement.
The Board and the City agree that any successor Trustee shall have a corporate office in California,
shall have a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and shall
be subject to supervision or examination by Federal or state authority, so long as any Certificates
are Outstanding. If such bank or trust company publishes a report of condition at least annually
pursuant to law or to the requirements of any supervising or examining authority above referred to
then for the purpose of this Section 8.01 the combined capital and surplus of such bank or trust
company shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
The Trustee is hereby authorized to pay or prepay the Certificates when duly presented for
payment at maturity, or on prepayment, or on purchase by the Trustee as directed by the City prior
to maturity in accordance with Section 3.06, and to cancel all Certificates upon payment thereof.
The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid
and discharged. The Trustee shall be compensated for its services rendered pursuant to the
provisions of this Agreement.
Section 8.02. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed
upon it by this Trust Agreement, and agrees to perform said trusts, but only upon and subject to
the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and after
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only'such duties as are specifically set forth in this Trust
Agreement. In case an Event of Default has occurred (which has not been cured or
waived) the Trustee may exercise such of the rights and powers vested in it by this
Trust Agreement, and shall use the same degree of care and skill in their exercise,
as a prudent and reasonable man would exercise or use under the circumstances in
the conduct of his own affairs.
(b) No provision in this Trust Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured
to it.
(c) The Trustee may execute any of the trusts or powers hereof and perform
the duties required of it hereunder by or through attorneys, agents, or receivers and
the Trustee shall not be responsible for any misconduct or negligence on the part of
any attorney, agent or receiver appointed with the same degree of care and skill as a
prudent and reasonable man would exercise or use under the circumstances in the
conduct of his own affairs. The Trustee shall be entitled to advice of counsel
concerning all matters of trust and its duty hereunder and shall be protected in any
action taken or suffered by it hereunder in reliance on such advice.
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(d) The Trustee shall not be responsible for any recital herein, or in the
Certificates, or for any of the supplements thereto or instruments of further
assurance, or for the sufficiency of the security for the Certificates issued hereunder
or intended to be secured hereby and the Trustee shall not be bound to ascertain or
inquire as to the observance or performance of any covenants, conditions or
agreements on the part of the Board or the City under the Lease. The Trustee shall
not be responsible or liable for any loss suffered in connection with any investment
of funds made by it in accordance with Article VII of this Trust Agreement.
(e) The Trustee shall not be accountable for the use of any Certificates
delivered hereunder. The Trustee may become the Owner of Certificates secured
hereby with the same rights which it would have if not the Trustee; may acquire and
dispose of other bonds or evidence of indebtedness of the City with the same rights
it would have if it were not the Trustee; and may act as a depository for and permit
any of its officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of Owners of Certificates,
whether or not such committee shall represent the Owners of the majority in
aggregate principal amount of the Certificates then Outstanding.
(f) In the absence of bad faith on its part, the Trustee shall be protected in
acting upon any notice, request, consent, certificate, order, affidavit, letter,
telegram or other paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons. Any action taken or
omitted to be taken by the Trustee in good faith pursuant to this Trust Agreement
upon the request or authority or consent of any person who at the time of making
such request or giving such authority or consent is the Owner of any Certificate,
shall be conclusive and binding upon all future Owners of the same Certificate and
upon Certificates issued in exchange therefor or in place thereof. The Trustee shall
not be bound to recognize any person as an Owner of any Certificate or to take any
action at his request unless such Certificate shall be deposited with the Trustee or
satisfactory evidence of the ownership of such Certificate shall be furnished to the
Trustee.
(g) As to the existence or non-existence of any fact or as to the sufficiency
or validity of any instrument, paper or proceeding, the Trustee shall be entitled to
rely upon a certificate signed by a Board Representative or a City Representative as
sufficient evidence of the facts therein contained and prior to the occurrence of an
Event of Default of which the Trustee has been given notice or is deemed to have
notice, as provided in Section 8.02(i) hereof, shall also be at liberty to accept a
similar certificate to the effect that any particular dealing, transaction or action is
necessary or expedient, but may at its discretion secure such further evidence
deemed by it to be necessary or advisable, but shall in no case be bound to secure
the same. The Trustee may accept a certificate of a Board Representative or a City
Representative to the effect that an authorization in the form therein set forth has
been adopted by the Board or the City, as the case may be, as conclusive evidence
that such authorization has been duly adopted, and is in full force and effect.
(h) The permissive right of the Trustee to do things enumerated in this
Trust Agreement shall not be construed as a duty and it shall not be answerable for
other than its negligence or willful misconduct. The immunities and exceptions
from liability of the Trustee shall extend to its officers, directors, employees and
agents.
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(i) The Trustee shall not be required to take notice or be deemed to have
notice of any Event of Default hereunder except failure by the City to make any of
the Lease Payments to the Trustee required to be made by the City pursuant to the
Lease or failure by the Board or the City to file with the Trustee any document
required by this Trust Agreement or the Lease to be so filed subsequent to the
delivery of the Certificates, unless the Trustee shall be specifically notified in
writing of such default by the Board, the City or the Owners of at least twenty-five
percent (25%) in aggregate principal amount of Certificates then Outstanding and all
notices or other instruments required by this Trust Agreement to be delivered to the
Trustee must, in order to be effective, be delivered at the Office of the Trustee, and
in the absence of such notice so delivered the Trustee may conclusively assume
there is no Event of Default except as aforesaid.
0) At any and all reasonable times the Trustee, and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives, shall have
the right fully to inspect the Recreation Center and the Fire Station Property,
including all books, papers and records of the Board or the City pertaining to the
Recreation Center, the Fire Station Property and the Certificates, and to take such
memoranda from and with regard thereto as may be desired.
(k) The Trustee shall not be required to give any bond or surety in respect
of the execution of the said trusts and powers or otherwise in respect of the
premises.
(1) Notwithstanding anything elsewhere in this Trust Agreement with
respect to the execution of any Certificates, the withdrawal of any cash, the release
of any property, or any action whatsoever within the purview of this Trust
Agreement, the Trustee shall have the right, but shall not be required, to demand
any showings, certificates, opinions, appraisals or other information, or corporate
action or evidence thereof, in addition to that by the terms hereof required as a
condition of such action, which may be deemed desirable by the Trustee for the
purpose of establishing the right of the Board or the City to the execution of any
Certificates, the withdrawal of any cash, or the taking of any other action by the
Trustee.
(m) Before taking any action referred to in Section 12.02, the Trustee may
require that a satisfactory indemnity bond be furnished by the Owners of the
Outstanding Certificates, or any of them, for the reimbursement of all expenses to
which it may be put and to protect it against all liability, except liability which is
adjudicated to have resulted from its negligence or wilful misconduct in connection
with any such action.
(n) All moneys received by the Trustee shall, until used or applied or
invested as herein provided, be held in trust for the purposes for which they were
received but need not be segregated from other funds except to the extent required
by law. The Trustee shall not be under any liability for interest on any moneys
received hereunder except such as may be agreed upon, other than interest derived
from investments made or required to be made pursuant to Section 7.02.
(o) The Trustee shall not be responsible for the sufficiency of the Lease, its
right to receive moneys pursuant to the Lease, or the value of or title to the
Recreation Center and the Fire Station Property.
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(p) The Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Owners of a majority in aggregate principal amount of the Outstanding Certificates
relating to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement.
Section 8.03. Fees, Charges and Expenses of Trustee. The Trustee shall be
entitled to payment and reimbursement by the City for reasonable fees for its services rendered
hereunder and all advances, counsel fees (including expenses) and other expenses reasonably and
necessarily made or incurred by the Trustee in connection with such services. Upon an Event of
Default, but only upon an Event of Default, the Trustee shall have a first lien with right of payment
prior to payment on account of principal of, premium, if any, and interest on any Certificate upon
the amounts held hereunder for the foregoing fees, charges and expenses incurred by it
respectively.
Section 8.04. Notice to Certificate Owners of Default. If an Event of Default
occurs of which the Trustee has been given or is deemed to have notice, as provided in Section
8.02(i), then the Trustee shall promptly give written notice thereof by first class mail, postage
prepaid, to the Owner of each Outstanding Certificate, unless such Event of Default shall have been
cured before the giving of such notice; provided, however that unless such Event of Default
consists of the failure by the City to make any Lease Payment when due, the Trustee may elect not
to give such notice to the Certificate Owners if and so long as the Trustee in good faith determines
that it is in the best interests of the Certificate Owners not to give such notice.
Section 8.05. Removal of Trustee. So long as no Event of Default (or any event
which, if not cured, with the passage of time would become an Event of Default) shall have
occurred and be continuing, the City may, upon at least thirty (30) days' prior written notice and
with the consent of the Board, remove the Trustee initially appointed, and any successor thereto,
by an instrument or concurrent instruments in writing delivered to the Trustee and the Board, and
may appoint a successor or successors thereto; provided that any such successor shall be a bank or
trust company meeting the requirements set forth in Section 8.01..
Section 8.06. Resignation by Trustee. The Trustee and any successor Trustee may
at any time resign by giving thirty (30) days' written notice by registered or certified mail to the
City and the Board. Upon receiving such notice of resignation, the City shall promptly appoint a
successor Trustee. Any resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon
such acceptance, the City shall mail notice thereof to the Certificate Owners at their respective
addresses set forth on the Registration Books.
Section 8.07. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 8.05 or 8.06, respectively, the City shall promptly
appoint a successor Trustee. In the event the City shall for any reason whatsoever fail to appoint a
successor Trustee within thirty (30) days following the delivery to the Trustee of the instrument
described in Section 8.05 or within thirty (30) days following the receipt of notice by the City
pursuant to Section 8.06, the Trustee may apply to a court of competent jurisdiction for the
appointment of a successor Trustee meeting the requirements of Section 8.01. Any such successor
Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any
action by the City purporting to appoint a successor Trustee following the expiration of such thirty -
day period.
Section 8.08. Merger or Consolidation. Any company or association into which
the Trustee may be merged or converted or with which it may be consolidated or any company
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resulting from any merger, conversion or consolidation to which it shall be a parry or any company
or association to which the Trustee may sell or transfer all or substantially all of its corporate trust
business, provided that such company or association shall be eligible under Section 8.01, shall be
the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts,
powers, discretions, immunities, privileges and all other matters as was its predecessor, without
the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
Section 8.09. Concerning any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor and also the Board
and the City an instrument in writing accepting such appointment hereunder and thereupon such
successor, without any further act, deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the written request of the Board, or of its successor, execute
and deliver an instrument transferring to such successor all the estates, properties, rights, powers
and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities
and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing
from the Board be required by any successor Trustee for more fully and certainly vesting in such
successor the estate, rights, powers and duties hereby vested or intended to be vested in the
predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged
and delivered by the Board. The resignation of any Trustee and the instrument or instruments
removing any Trustee and appointing a successor hereunder, together with all other instruments
provided for in this Article VIII, shall be filed or recorded by the successor Trustee in each
recording office where the Assignment Agreement shall have been filed or recorded.
Section 8.10. Non -Liability of Trustee. The recitals, statements and
representations by the City and the Board contained in this Trust Agreement or in the Certificates
shall be taken and construed as made by and on the part of the City and the Board, as the case may
be, and not by the Trustee, and the Trustee does not assume, and shall not have, any responsibility
or obligation for the correctness of any thereof.
The Trustee makes no representation or warranty, express or implied as to the title, value,
design, compliance with specifications or legal requirements, quality, durability, operation,
condition, merchantability or fitness for any particular purpose or fitness for the use contemplated
by the City or Board of the Recreation Center and the Fire Station Property. In no event shall the
Trustee be liable for special or consequential damages in connection with or arising from the Lease
for the existence, furnishing or use of the Recreation Center and the Fire Station Property.
The Trustee shall not be: (a) responsible for the sufficiency or enforceability of the Lease or
the assignment under the Assignment Agreement of its rights to receive Lease Payments; (b)
deemed to have knowledge of any Event of Default unless and until it shall have actual knowledge
thereof or except as provided in Section 8.02(i); or (c) accountable for the use or application by the
City or Board of any funds which the Trustee has released under this Trust Agreement.
Section 8.11. Actions Through Agents. The Trustee may execute any of the trusts
or powers hereof and perform the duties required of it hereunder by or through attorneys, agents,
or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty
hereunder, and the Trustee shall not be answerable for the default or misconduct of any such
attorney, agent, or receiver selected by it with reasonable care. The Trustee shall not be
answerable for the exercise of any discretion or power under this Trust Agreement or for anything
whatever in connection with the funds and accounts established hereunder, except only for its own
negligence or willful misconduct.
Section 8.12. Nature of Trust Engagement. The Trustee undertakes to perform
such duties and only such duties as are specifically set forth in the Trust Agreement and no implied
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covenants or obligations shall be read into the Trust Agreement against the Trustee. In accepting
the trusts hereby created, the Trustee acts solely as Trustee and not in its individual capacity. All
persons, including without limitation the Owners, the City and the Board having any claim against
the Trustee arising from the Trust Agreement shall look only to the funds and accounts hereunder
for payment except as otherwise provided herein; provided, however, that nothing in this sentence
is intended or shall be construed to apply to, or limit the source of payment of, claims against the
Trustee arising from the negligence or wilful misconduct of the Trustee. Under no circumstances
shall the Trustee be liable in its individual capacity for payment of the obligations represented by
the Certificates.
The permissive right of the Trustee to do things enumerated in this Trust Agreement shall
not be construed as a duty.
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ARTICLE IX
MODIFICATION OR AMENDMENT
Section 9.01. Amendments Permitted. This Agreement and the rights and
obligations of the Owners of the Certificates may be modified or amended at any time by a
supplemental agreement which shall become effective when the written consents of the Owners of
a majority in aggregate principal amount of the Certificates then Outstanding, exclusive of
Certificates disqualified as provided in Section 13.04, shall have been filed with the Trustee. No
such modification or amendment shall (a) extend or have the effect of extending the fixed maturity
of any Certificate or reducing the interest rate represented thereby or extending the time of payment
of interest, or reducing the amount of principal represented thereby or reducing any premium
payable upon the prepayment thereof, without the express consent of the Owner of such
Certificate, or (b) reduce or have the effect of reducing the percentage of Certificates required for
the affirmative vote or written consent to an amendment or modification hereof, or (c) modify any
of the rights or obligations of the Trustee without its written assent thereto. Any such
supplemental agreement shall become effective as provided in Section 9.02.
This Agreement and the rights and obligations of the Owners of the Certificates may be
modified or amended at any time by a supplemental agreement, without the consent of any such
Owners, but only to the extent permitted by law and only (a) to add to the covenants and
agreements of any party, other covenants to be observed, or to surrender any right or power herein
reserved to the Board or the City, (b) to cure, convect or supplement any ambiguous or defective
provision contained herein, (c) in regard to questions arising hereunder, as the parties hereto or
thereto may deem necessary or desirable and which shall not, in the opinion of Bond Counsel,
materially adversely affect the interests of the Owners of the Certificates, or (d) if and to the extent
permitted in the opinion of Bond Counsel filed with the Trustee, the City and the Board, to delete
or modify any of the provisions hereof or thereof relating to the exclusion from gross income of
interest represented by the Certificates for federal income tax purposes. Any such supplemental
agreement shall become effective upon execution and delivery by the parties hereto.
Section 9.02. Procedure for Amendment with Written Consent of
Certificate Owners. This Agreement may be amended by supplemental agreement as provided
in this Section 9.02 in the event the consent of the Owners of the Certificates is required pursuant
to Section 9.01. A copy of such supplemental agreement, together with a request to the Certificate
Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at
his address as set forth on the Registration Books, but failure to mail copies of such supplemental
agreement and request shall not affect the validity of the supplemental agreement when assented to
as in this Section provided.
Such supplemental agreement shall not become effective unless there shall be filed with the
Trustee the written consents of the Owners of a majority in aggregate principal amount of the
Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 13.04)
and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall
be effective only if accompanied by proof of ownership of the Certificates for which such consent
is given, which proof shall be such as is permitted by Section 2.10. Any such consent shall be
binding upon the Owner of the Certificate giving such consent and on any subsequent Owner
(whether or not such subsequent Owner has notice thereof) unless such consent is revoked in
writing by the Owner giving such consent or a subsequent Owner by filing such revocation with
the Trustee prior to the date when the notice hereinafter in this Section provided for has been
mailed.
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After the Owners of the required percentage of Certificates shall have filed their consents to
such supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the
manner hereinbefore provided in this Section for the mailing of such supplemental agreement of the
notice of adoption thereof, stating in substance that such supplemental agreement has been
consented to by the. Owners of the required percentage of Certificates and will be effective as
provided in this Section (but failure to mail copies of said notice shall not affect the validity of such
supplemental agreement or consents thereto). A record, consisting of the papers required by this
Section to be filed with the Trustee, shall be conclusive proof of the matters therein stated. Such
supplemental agreement shall become effective upon the mailing of such last-mentioned notice, and
such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the
Owners of all Certificates at the expiration of sixty (60) days after such filing, except in the event
of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or
equitable proceeding for such purpose commenced within such sixty (60) day period.
Section 9.03. Effect of Supplemental Agreement. From and after the time any
supplemental agreement becomes effective pursuant to this Article IX, this Agreement shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto and all Owners of Certificates Outstanding, as the case may be,
shall thereafter be determined, exercised and enforced hereunder subject in all respects to such
modification and amendment, and all the terms and conditions of any supplemental agreement shall
be deemed to be part of the terms and conditions of this Agreement for any and all purposes.
Section 9.04. Endorsement or Replacement of Certificates Delivered After
Amendments. The Trustee may determine that Certificates delivered after the effective date of
any action taken as provided in this Article IX shall bear a notation, by endorsement or otherwise,
in form approved by the Trustee, as to such action. In that case, upon demand on the Owner of
any Certificate Outstanding at such effective date and presentation of his Certificate for the purpose
at the Office of the Trustee, a suitable notation shall be made on such Certificate. The Trustee may
determine that the delivery of substitute Certificates, so modified as in the opinion of the Trustee is
necessary to conform to such Certificate Owners' action is necessary or desirable, which substitute
Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand on the
Owner of any Certificate then Outstanding, such substitute Certificate shall be exchanged at the
Office of the Trustee, without cost to such Owner, for a Certificate of the same character then
Outstanding, upon surrender of such Outstanding Certificate.
Section 9.05. Amendatory Endorsement of Certificates. The provisions of this
Article IX shall not prevent any Certificate Owner from accepting any amendment as to the
particular Certificates held by him, provided that proper notation thereof is made on such
Certificates.
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ARTICLE X
OTHER COVENANTS
Section 10.01. Compliance With and Enforcement of Lease. The City
covenants and agrees with the Owners of the Certificates to perform all obligations and duties
imposed on it under the Lease. The Board covenants and agrees with the Owners of the
Certificates to perform all obligations and duties imposed on it under the Lease.
The City will not do or permit anything to be done, or omit or refrain from doing anything,
in any case where any such act done or permitted to be done, or any such omission of or refraining
from action, would or might be a ground for cancellation or termination of the Lease by the Board
thereunder. The Board and the City, immediately upon receiving or giving any notice,
communication or other document in any way relating to or affecting their respective estates, or
either of them, in the Recreation Center and the Fire Station Property, which may or can in any
manner affect such estate of the City, will deliver the same, or a copy thereof, to the Trustee.
Section 10.02. Observance of Laws and Regulations. The City will well and
truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter
imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any
officer, board or commission having jurisdiction or control, as a condition of the continued
enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the
City, including its right to exist and carry on business as a public agency, to the end that such
rights, privileges and franchises shall be maintained and preserved, and shall not become
abandoned, forfeited or in any manner impaired.
Section 10.03. Prosecution and Defense of Suits. The City shall promptly,
upon request of the Trustee or any Certificate Owner, from time to time take such action as may be
necessary or proper to remedy or cure any defect in or cloud upon the title to the Recreation Center
or the Fire Station Property, whether now existing or hereafter developing and shall prosecute all
such suits, actions and other proceedings as may be appropriate for such purpose and shall
indemnify and save the Trustee and every Certificate Owner harmless from all loss, cost, damage
and expense, including attorneys' fees, which they or any of them may incur by reason of any
such defect, cloud, suit, action or proceeding.
Section 10.04. Recordation and Filing. The City shall record and file the Lease or
a memorandum thereof, the Assignment Agreement and all such documents as may be required by
law (and shall take all further actions which may be necessary or be reasonably required by the
Trustee), all in such manner, at such times and in such places as may be required by law in order
fully to preserve, protect and perfect the security of the Trustee and the Certificate Owners.
Section 10.05. Tax Covenants.
(a) Generally. The City shall not take any action or permit to be taken any action within its
control which would cause or which, with the passage of time if not cured would cause, interest
represented by the Certificates to become includable in gross income for federal income tax
purposes.
(b) Private Business Use Limitation. The City shall assure that no use is made of the
proceeds of the Certificates for any private business use which cause the obligations represented by
the Certificates to be "private activity bonds" within the meaning of Section 141(a) of the Tax
Code.
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(c) Private Loan Limitation. The City shall assure that no more than five percent (5%) of
the proceeds of the Certificates are used, directly or indirectly, to make or finance a loan to persons
other than state or local government units.
(d) Federal Guarantee. Prohibition. The City shall not take any action or permit or suffer
any action to be taken if the result of the same would be to cause the Certificates to be "federally
guaranteed" within the meaning of Section 149(b) of the Tax Code.
(d) Small Issuer Exemption from Bank Nondeductibility Restriction. The City hereby
designates the Lease for purposes of paragraph (3) of Section 265(b) of the Tax Code and hereby
covenants that (i) the Lease does not constitute private activity bonds as defined in Section 141 of
the Tax Code, and (ii) not more than $10,000,000 aggregate principal amount of obligations the
interest on which is excludable (under Section 103(a) of the Tax Code) from gross income for
federal income taxes (excluding, however, private activity bonds, as defined in Section 141 of the
Tax Code, other than qualified 501(c)(3) bonds as defined in Section 145 of the Tax Code),
including the Lease, have been or shall be issued by or on behalf of the City, including all
subordinate entities of the City, during the calendar year 1990.
(e) Small Issuer Exemption from Rebate Requirements. In accordance with Section
148(f)(4)(C) of the Tax Code, the City covenants that the Lease does not constitute private activity
bonds as defined in Section 141 of the Tax Code; that ninety-five percent (95%) or more of the
proceeds of the Certificates are to be used for local governmental activities of the City (or of a
governmental unit the jurisdiction of which is entirely within the jurisdiction of the City); and that
the aggregate face amount of all tax-exempt obligations issued by the City (including all
subordinate entities of the City and all entities which may issue obligations on behalf of the City)
during the calendar year 1990, will not exceed $5,000,000, excluding, however, private activity
bonds as defined in Section 141 of the Tax Code and current refunding obligations having a
principal amount not in excess of the refunded obligations.
Section 10.06. Further Assurances. The Board and the City will make, execute
and deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this Agreement and
the Lease, and for the better assuring and confirming unto the Owners of the Certificates the rights
and benefits provided herein.
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ARTICLE XI
LIMITATION OF LIABILITY
Section 11.01. Limited Liability of City. Except for the payment of Lease
Payments when due in accordance with the Lease and the performance of the other covenants and
agreements of the City contained in the Lease and this Trust Agreement, the City shall have no
pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates with
respect to this Agreement or the terms, execution, delivery or transfer of the Certificates, or the
distribution of Lease Payments to the Owners by the Trustee, except as expressly set forth herein.
Section 11.02. No Liability of the Board for Trustee Performance. Neither
the City nor the Board shall have any obligation or liability to any of the other parties or to the
Owners of the Certificates with respect to the performance by the Trustee of any duty imposed
upon it under this Agreement.
Section 11.03. Indemnification of Trustee. The Board and the City shall
indemnify and save the Trustee, its directors, officers, agents and employees harmless from and
against all claims, losses, costs, expenses, liability and damages, including legal fees and
expenses, arising out of (a) the use, maintenance, condition or management of, or from any work
or thing done on, the Recreation Center or the Fire Station Property by the Board or the City, (b)
any breach or default on the part of the Board or the City in the performance of any of their
respective obligations under this Trust Agreement and any other agreement made and entered into
for purposes of the Recreation Center or the Fire Station Property, (c) any act of negligence of the
Board or the City or of any of their respective agents, contractors, servants, employees, licensees
with respect to the Recreation Center or the Fire Station Property, (d) any act of negligence of any
assignee of, or purchaser from the Board or the City or of any of its or their respective agents,
contractors, servants, employees or licensees with respect to the Recreation Center or the Fire
Station Property, (e) the authorization of payments from the Acquisition Fund, (f) the actions of
any other party, including but not limited to the ownership, operation or use of the Recreation
Center or the Fire Station Property by the Board or the City, or (g) the Trustee's exercise and
performance of its powers and duties hereunder.- No indemnification will be made under this
Section 11.03 or elsewhere in this Trust Agreement for willful misconduct, negligence under this
Trust Agreement by the Trustee, its officers, agents, employees, successors or assigns. The
Board's and the City's obligations hereunder shall remain valid and binding notwithstanding
maturity and payment of the Certificates.
Section 11.04. Opinion of Counsel. Before being required to take any action, the
Trustee may, at the expense of the City, require an opinion of counsel acceptable to the Trustee, or
an opinion of Bond Counsel acceptable to the Trustee with respect to any federal tax matters, or a
verified certificate of any party hereto, or both, concerning the proposed action. If it does so in
good faith, Trustee shall be absolutely protected in relying on any such opinion or certificate
obtained by the Trustee.
Section 11.05. Limitation of Rights to Parties and Certificate Owners.
Nothing in this Agreement or in the Certificates expressed or implied is intended or shall be
construed to give any person other than the City, the Board, the Trustee and the Owners of the
Certificates, any legal or equitable right, remedy or claim under or in respect of this Agreement or
any covenant, condition or provision hereof, and all such covenants, conditions and provisions are
and shall be for the sole and exclusive benefit of the City, the Board, the Trustee and said Owners.
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ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
OF CERTIFICATE OWNERS
Section 12.01. Assignment of Rights. Pursuant to the Assignment Agreement the
Board has transferred, assigned and set over to the Trustee all of the Board's rights and duties in
and to the Lease (excepting only the Board's rights under Sections 4.7, 5.11, 7.3 and 8.4 thereof),
including without limitation all of the Board's rights to exercise such rights and remedies conferred
on the Board pursuant to the Lease as may be necessary or convenient (a) to enforce payment of
the Lease Payments and any other amounts required to be deposited in the Lease Payment Fund or
the Insurance and Condemnation Fund, and (b) otherwise to exercise the Board's rights and take
any action to protect the interests of the Trustee or the Certificate Owners in an Event of Default.
Section 12.02. Remedies. If an Event of Default shall happen, then and in each and
every such case during the continuance of such Event of Default, the Trustee may, and at the
written direction of the Owners of a majority in aggregate principal amount of the Certificates then
Outstanding shall, exercise any and all remedies available pursuant to law or granted pursuant to
the Lease; provided, however, that notwithstanding anything herein or in the Lease to the contrary,
there shall be no right under any circumstances to accelerate the maturities of the Certificates or
otherwise to declare any Lease Payment not then in default to be immediately due and payable.
Section 12.03. Application of Funds. All moneys received by the Trustee pursuant
to any right given or action taken under the provisions of this Article XII or Article VIII of the
Lease shall be applied by the Trustee in the order following upon presentation of the several
Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender
thereof if fully paid -
First, to the payment of the costs and expenses of the Trustee and of the
Certificate Owners in declaring such Event of Default and in taking any remedial
action with respect thereto, including reasonable compensation to its or their agents,
attorneys and counsel;
Seco , to the payment of the whole amount then owing and unpaid with
respect to the Certificates for principal and interest, with interest on the overdue
principal and installments of interest at the net effective rate per annum then
represented by the Outstanding Certificates (but such interest on overdue
installments of interest shall be paid only to the extent funds are available therefor
following payment of principal and interest and interest on overdue principal, as
aforesaid), and in case such moneys shall be insufficient to pay in full the whole
amount so owing and unpaid with respect to the Certificates, then to the payment of
such principal and interest without preference or priority of principal over interest,
or of interest over principal, or of any installment of interest over any other
installment of interest, ratably to the aggregate of such principal and interest.
Section 12.04. Institution of Legal Proceedings. If one or more Events of
Default shall happen and be continuing, the Trustee in its discretion may, and upon the written
request of the Owners of a majority in principal amount of the Certificates then Outstanding, and
upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or
the rights of the Owners of Certificates by a suit in equity or action at law, either for the specific
performance of any covenant or agreement contained herein, or in aid of the execution of any
power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any
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other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its
rights or duties hereunder.
Section 12.05. Non -waiver. Nothing in this Article XII or in any other provision of
this Agreement or in the Certificates, shall affect or impair the obligation of the City, which is
absolute and unconditional, to pay or prepay the Lease Payments as provided in the Lease. No
delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or
power arising upon the happening of any Event of Default shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and
every power and remedy given by this Article XII to the Trustee or to the Owners of Certificates
may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the
Certificate Owners.
Section 12.06. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any other
remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise.
Section 12.07. Power of Trustee to Control Proceedings. In the event that the
Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial
proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or
upon the request of the Owners of a majority in aggregate principal amount of the Certificates then
Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the
Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action; provided, however, that the Trustee shall
not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at
law or in equity, without the consent of a majority in aggregate principal amount of the Certificates
Outstanding.
Section 12.08. Limitation on Certificate Owners' Right to Sue. No Owner of
any Certificate issued hereunder shall have the right to institute any suit, action or proceeding at
law or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default hereunder,
(b) the Owners of a majority in aggregate principal amount of all the Certificates then Outstanding
shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to
institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the
Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request; and (d) the Trustee shall have refused or omitted to comply with
such request for a period of sixty (60) days after such written request shall have been received by,
and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Certificates of any
remedy hereunder; it being understood and intended that no one or more Owners of Certificates
shall have any right in any manner whatever by his or their action to enforce any right under this
Agreement, except in the manner herein provided, and that all proceedings at law or in equity with
respect to an Event of Default shall be instituted, had and maintained in the manner herein provided
and for the equal benefit of all Owners of the Outstanding Certificates.
Section 12.09. Possession of Certificates by Trustee Not Required. All
rights and remedies granted to or exercisable by the Trustee hereunder or under the Lease may be
exercised by the Trustee without possession of any of the Certificates or the production thereof at
the trial or other proceeding relative thereto, and any suit, action or proceeding instituted by the
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Trustee hereunder or under the Lease shall be brought in its name for the benefit of all of the
Owners of such Certificates, subject to the provisions of this Trust Agreement.
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ARTICLE XIII
DISCHARGE; ADMINISTRATIVE PROVISIONS
Section 13.01. Discharge Hereof. If and when the obligations represented by any
Outstanding Certificates shall be paid and discharged in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and
interest and prepayment premiums (if any) represented by such Certificates
Outstanding, as and when the same become due and payable; or
(b) by depositing with the Trustee or any other fiduciary, under an escrow
deposit and trust agreement, security for the payment of Lease Payments relating to
such Certificates as more particularly described in Section 9.1 of the Lease, said
security to be held by the Trustee on behalf of the City to be applied by the Trustee
or by such other fiduciary to pay or prepay such Lease Payments as the same
become due, pursuant to Section 9.1 of the Lease -
notwithstanding that such Certificates shall not have been surrendered for payment, all rights
hereunder of the Owners of such Certificates and all obligations of the Board, the Trustee and the
City with respect to such Certificates shall cease and terminate, except only the obligations of the
Trustee under Sections 2.07 and 2.08, and the obligation of the Trustee to pay or cause to be paid,
from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraph
(b) of this Section, to the Owners of such Certificates not so surrendered and paid all sums
represented thereby when due and in the event of deposits pursuant to paragraph (b), such
Certificates shall continue to represent direct, undivided fractional interests of the Owners thereof
in the Lease Payments.
Any funds held by the Trustee, at the time of discharge of the obligations represented by all
Outstanding Certificates as a result of one of the events described in paragraphs (a) or (b) of this
Section, which are not required for the payment to be made to Owners, shall, upon payment in full
of all fees and expenses of the Trustee (including attorneys' fees) then due, be paid over to the
City.
Section 13.02. Records. The Trustee shall keep complete and accurate records of all
moneys received and disbursed under this Agreement, which shall be available for inspection by
the City, the Board, and any Owner, or the agent of any of them, at any reasonable time during
regular business hours.
Section 13.03. Notices. Any notice, request, complaint, demand or other
communication under this Agreement shall be given by first class mail or personal delivery to the
party entitled thereto at its address set forth below, or by telecopier or other form of
telecommunication, at its number set forth below. Notice shall be effective either (a) upon
transmission by telecopier or other form of telecommunication, (b) 48 hours after deposit in the
United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to
any person, upon actual receipt. The Board, the City or the Trustee may, by written notice to the
other parties, from time to time modify the address or number to which communications are to be
given hereunder.
If to the City: Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
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If to the Board: Chief Financial Officer
City of San Luis Obispo Capital Improvement Board
990 Palm Street
San Luis Obispo, California 93401
If to the Trustee:
Section 13.04. Disqualified Certificates. In determining whether the Owners of
the requisite aggregate principal amount of Certificates have concurred in any demand, request,
direction, consent or waiver under this Agreement, Certificates which are owned or held by or for
the account of the City (but excluding Certificates held in any employees' retirement fund) shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination,
provided, however, that for the purpose of determining whether the Trustee shall be protected in
relying on any such demand, request, direction, consent or waiver, only Certificates which the
Trustee knows to be so owned or held shall be disregarded.
Section 13.05. Payment of Certificates After Discharge of Trust
Agreement. Notwithstanding any provisions of this Trust Agreement, but subject to any
applicable laws of the State of California relating to the escheat of funds or property, any moneys
held by the Trustee in trust for the payment of the principal or interest represented by any
Certificates and remaining unclaimed for two (2) years after the principal represented by all of the
Certificates has become due and payable (whether at maturity or upon call for prepayment or by
acceleration as provided in this Trust Agreement), if such moneys were so held at such date, or
four (4) years after the date of deposit of such moneys if deposited after said date when all of the
Certificates became due and payable, shall be repaid to the City free from the trusts created by this
Trust Agreement upon receipt of an indemnification agreement acceptable to the City and the
Trustee indemnifying the Trustee with respect to claims of Owners of Certificates which have not
yet been paid, and all liability of the Trustee with respect to such moneys shall thereupon cease;
provided, however, that before the repayment of such moneys to the City as aforesaid, the Trustee
may (at the cost of the City) first mail, by first class mail postage prepaid, to the Owners of
Certificates which have not yet been paid, at the respective addresses shown on the Registration
Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the
Certificates so payable and not presented and with respect to the provisions relating to the
repayment to the City of the moneys held for the payment thereof.
Section 13.06. Governing Law. This Agreement shall be construed and governed in
accordance with the laws of the State of California, without giving effect to principles of conflicts
of law of the State of California.
Section 13.07. Binding Effect; Successors. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and assigns. Whenever
in this Agreement either the Board, the City or the Trustee is named or referred to, such reference
shall be deemed to include the successors or assigns thereof, and all the covenants and agreements
in this Agreement contained by or on behalf of the Board, the City, the Trustee shall bind and inure
to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 13.08. Board and City Representatives. Whenever under the provisions
of this Agreement the Board or the City is required or permitted to take some action, including but
not limited to the giving of any approval or the execution of some request, direction or other
instrument, such action shall be made on behalf of the Board by a Board Representative and on
-35-
behalf of the City by a City Representative, and any party hereto shall be fully authorized to rely
upon any such action by a Board Representative or a City Representative.
Section 13.09. Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same agreement.
Section 13.10. Delivery of Cancelled Certificates. Whenever in this Agreement
provision is made for the surrender to or cancellation by -the Trustee of any Certificates, the Trustee
shall cancel and, unless directed in writing by the City Representative, destroy such Certificates
and shall deliver a certificate of destruction with respect thereto to the City.
Section 13.11. Headings. The headings or titles of the several Articles and Sections
hereof, and any table of contents appended to copies hereof, shall be solely for convenience of
reference and shall not affect the meaning, construction or effect of this Agreement. All references
herein to "Articles", "Sections", and other subdivisions are to the corresponding Articles, Sections
or subdivisions of this Agreement; and the words "herein", "hereof', "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular Article, Section or
subdivision hereof.
Section 13.12. Waiver of Notice. Whenever in this Agreement the giving of notice
by mail or otherwise is required, the giving of such notice may be waived in writing by the person
entitled to receive such notice and in any case the giving or receipt of such notice shall not be a
condition precedent to the validity of any action taken in reliance upon such waiver.
Section 13.13. Separability of Invalid Provisions. In case any one or more of
the provisions contained in this Agreement or in the Certificates shall for any reason be held to be
invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, and this Agreement shall be construed as if
such invalid or illegal or unenforceable provision had never been contained herein. The parties
hereto hereby declare that they would have entered into this Agreement and each and every other
section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates
pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences,
clauses or phrases of this Agreement may be held illegal, invalid or unenforceable.
-36-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
Attest:
0
Secretary
[(S E A L)
Attest:
By:
City Clerk
-37-
[NAME OF TRUSTEE], as Trustee
By:
Assistant Vice President
CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEMENT BOARD, as lessor
I:A
Executive Director
CITY OF SAN LUIS OBISPO, as lessee
By
City Administrative Officer
V
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EXHIBIT A
FORM OF CERTIFICATE OF PARTICIPATION
(To Be Provided After Sale of COPs)
A-1
;r
26052-01
6
JIUMCFA:juj
fJ-g y Q e �trn e�✓t,.4 4L �' -/ Sb _. I® - GC_
LEASE AGREEMENT
Dated as of December 1, 1990
by and between
CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD, as lessor
Im
CITY OF SAN LUIS OBISPO, as lessee
Relating to
$4,500,000
Certificates of Participation
(1990 Public Facilities Financing)
FINAL
t4 -150 - Wo C C-
( P- Legoo/16901)
11
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TABLE OF CONTENTS
ARTICLE I
DEFINMONS
SectionI.I. Definitions..........................................................................................................
Section1.2. Interpretation:.....................................................................................................
ARTICLE 11
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 2.1. Covenants, Representations and Warranties of the City................................................4
Section 2.2. Covenants, Representations and Warranties of the Board..............................................5
ARTICLE III
DEPOSIT OF MONEYS; ACQUISITION OF THE RECREATION CENTER
AND FIRE STATION PROPERTY
Section3.1. Deposit of Moneys.......................................................................:.......................7
Section 3.2. Acquisition of the Recreation Center and Fire.Station Property .....................................7
Section 3.3. Substitution of Property ........................................................................................7
ARTICLE IV
LEASE OF RECREATION CENTER AND FIRE STATION PROPERTY;
TERM OF THIS LEASE; LEASE PAYMENTS
Section4.1.
Lease.................................................................................................................9
Section4.2.
Term..................................................................................................................9
Section4.3.
Possession..........................................................................:...............................9
Section 4.4.
Lease Payments...................................................................................................9
Section4.5.
Quiet Enjoyment..................................................................................................10
Section4.6.
Title...................................................................,..........................:...................10
Section 4.7.
Additional Payments.............................................................................................1
l
ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATIERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments..........................................................12
Section 5.2. Modification of the Recreation Center and Fire Station Property....................................12
Section 5.3. Public Liability and Property Damage Insurance.........................................................13
Section 5.4. Fire and Extended Coverage Insurance........................................................................13
Section 5.5. Rental Interruption Insurance..................................................................................13
Section 5.6. Recordation Hereof; Title Insurance..........................................................................14
Section 5.7. Insurance Net Proceeds; Form of Policies..................................................................14
Section 5.8. Installation of City's Equipment..............................................................................14
Section5.9. Liens..............................................:..................................................................14
Section5.10. Advances............................................................................................................15
-i-
Section 6.1.
Section 6.2.
Section 6.3.
o 0
P
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
Application of Net Proceeds...................................................................................16
Termination or Abatement Due to Eminent Domain...................................................16
Abatement Due to Damage or Destruction...................:.............................................16
ARTICLE VII
OTHER COVENANTS OF TEE CITY
Section 7.1.
Disclaimer of Warranties........................................................................................17
Section 7.2.
Access to the Recreation Center and the Fire Station Property.......................................17
Section 7.3.
Release and Indemnification Covenants.....................................................................17
Section 7.4.
Assignment by the Board.......................................................................................17
Section 7.5.
Assignment and Subleasing by the City...................................................................17
Section 7.6.
Amendment of Lease Agreement...................:.........................................................18
ARTICLE VIII
:U20 •::� . t011 : vuyl 101
Section 8.1.
Events of Default Defined......................................................................................19
Section 8.2.
Remedies on Default.............................................................................................19
Section 8.3.
No Remedy Exclusive...........................................................................................20
Section 8.4.
Agreement to Pay Attomeys' Fees and Expenses........................................................21
Section 8.5.
No Additional Waiver Implied by One Waiver............................................................21
Section 8.6.
Application of Proceeds.........................................................................................21
Section 8.7.
Trustee and Certificate Owners to Exercise Rights......................................................21
ARTICLE IX
i�:aaiaub.
Section 9.1. Security Deposit................................................................:.................................22
Section 9.2. Optional Prepayment............................................................................................22
Section 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain ...................22
Section 9.4. Credit for Amounts on Deposit...............................................................................22
Section 10.1.
Section 10.2.
Section 10.3.
Section 10.4.
Section 10.5.
Section 10.6.
Section 10.7.
Section 10.8.
Section 10.9.
ARTICLE X
MISCELLANEOUS
Notices...............................................................................................................23
BindingEffect......................................................................................................23
Severability.........................................................................................................23
Net -net -net Lease..................................................................................................23
Further Assurances and Corrective Instruments...........................................................23
Execution in Counterparts......................................................................................23
ApplicableLaw....................................................................................................23
Board and City Representatives...............................................................................24
Captions.............................................................................................................24
EXHIBIT A - DESCRIPTION OF THE LEASED PROPERTIES
EXHIBIT B - SCHEDULE OF LEASE PAYMENTS
LEASE AGREEMENT
This Lease (this "Lease"), dated as of December 1, 1990, is by and between the CITY OF
SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD, a public body corporate and politic
duly organized and existing under Ordinance No. 1059 (1986 Series) adopted by the City Council
of the City of San Luis Obispo on April 15, 1986, and under the Constitution and laws of the State
of California (the "Board"), and the CITY OF SAN LUIS OBISPO, a charter city and municipal
corporation duly organized and existing under the Constitution and laws of the State of California
(the "City");
WITNESSETH:
WHEREAS, the City has determined to undertake the acquisition of land to be used as the
site of a fire station (the "Fire Station Property"), the acquisition of land to be used for open space
purposes (the "Open Space Property"), and the rehabilitation of an existing recreation center which
is currently owned by the City (the 'Recreation Center"); and
WHEREAS, the Board has been formed for purposes which include assisting the City in
financing the acquisition, construction and improvement of property which is used for the
municipal purpose of the City; and
WHEREAS, in order to provide funds to enable the City to finance the acquisition of the
Open Space Property and the rehabilitation of the Recreation Center, the City has agreed to sell to
the Board, and the Board has agreed to purchase from the City, the Recreation. Center for an
amount not exceeding its current estimated value, pursuant to the Acquisition Agreement dated as
of December 1, 1990, by and between the City and the Board (the "Acquisition Agreement"); and
WHEREAS, the Board has agreed to purchase the Recreation Center from the City under
the Acquisition Agreement and to purchase the Fire Station Property from its current owner, and to
lease the Recreation Center and the Fire Station Property to the City under this Lease; and
WHEREAS, in order to raise funds to finance such acquisition, the Board has agreed to
assign and transfer to the Trustee certain of its rights under this Lease, and in consideration of such
assignment and the execution of the Trust Agreement dated as of December 1, 1990, by and among
the City, the Board and [Name of Trustee], as trustee (the "Trustee"), the Trustee has agreed to
execute and deliver the $4,500,000 aggregate principal amount of Certificates of Participation
(1990 Public Facilities Financing), each evidencing a direct, undivided fractional interest in the
Lease Payments to be paid by the City under this Lease;
NOW, THEREFORE, for and in consideration of the premises and the material
,covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS
SECTION I.I. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Lease shall have the respective meanings
specified in Section 1.01 of the Trust Agreement. In addition, the following terms heretofore
defined in this Lease and the following terms defined in this Section 1.1 shall, for all purposes of
this Lease, have the respective meanings herein specified.
"Acquisition Agreement" means the Acquisition Agreement dated as of December 1, 1990,
by and between the City as seller and the Board as purchaser of the Recreation Center, as originally
executed or as thereafter amended pursuant to any duly authorized and executed amendments
thereto.
"Acquisition Costs" means all costs incurred by the Board or the City for the acquisition of
the Recreation Center or the Fire Station Property, including but not limited to: (a) the purchase
price required to be paid to the City under the Acquisition Agreement or to the San Luis Coastal
Unified School District as the purchase price of Fire Station Property, costs of title insurance,
commissions, escrow costs, recordation costs, title company fees and other other costs of closing
the acquisition of such Parcel; (b) interest represented by the Certificates accruing prior to the
respective Completion Dates; (c) Costs of Issuance and other financing costs incurred by the Board
or the City with respect to the Certificates; and. (d) amounts necessary to reimburse the Board or the
City for the payment of any of the foregoing.
"Completion Date" means: (a) with respect to Fire Station Property, the date on which the
Board shall file a certificate with the City and the Trustee stating that the acquisition thereof has
been completed in accordance with all requirements of the City; and (b) with respect to the
Recreation Center thereof, the Closing Date.
"Event of Default" means any of the events of default defined as such in Section 8.1.
"Fire Station Property" means the land described as such in Exhibit A attached hereto and
by this reference incorporated herein, including all buildings, facilities and other real property at
any time situated thereon.
"Lease Payment Date" means, with respect to any Interest Payment Date, the twenty-fifth
(25th) calendar day of the month immediately preceding such Interest Payment Date.
"Lease Payments" means the amounts payable by the City pursuant to Section 4.4(a),
including any prepayment thereof pursuant to Article IX.
"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem taxes
and assessments, if any, not then delinquent, or which the City may permit to remain unpaid
pursuant to Article V; (b) this Lease, the Assignment Agreement, and any other agreement or
document contemplated hereunder to be recorded against the Recreation Center or the Fire Station
Property; (c) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed
or perfected in the manner prescribed by law; and (d) easements, rights of way, mineral rights,
drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of
record and which the City certifies in writing will not materially impair the use of the Recreation
Center and the Fire Station Property for their intended purposes.
M
"Rental Period" means each period during the Term of this Lease commencing on and
including the day immediately following an Interest Payment Date and extending to and including
the next succeeding Interest Payment Date.
"Term of this Lease" means the time during which this Lease is in effect, as provided in
Section 4.2.
'Trust Agreement" means the Trust Agreement dated as of December 1, 1990, by and
among the Trustee, the Board and the City, together with any duly authorized and executed
amendments thereto.
'Trustee" means [Name of Trustee], or any successor thereto acting as Trustee pursuant to
this Trust Agreement.
SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include
the plural and vice versa and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for
convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Trust Agreement; the words "herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Lease as a whole
and not to any particular Article, Section or subdivision hereof.
-3-
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The City makes the
following covenants, representations and warranties to the Board as of the date of the execution
and delivery of this Lease:
(a) Due Organization .and Existence. The City is a charter city and municipal
corporation duly organized and validly existing under the Constitution and laws of the State
of California, has full legal right, power and authority under the laws of the State of
California to enter into this Lease, the Acquisition Agreement and the Trust Agreement and
to carry out and consummate all transactions contemplated hereby and thereby, and by
proper action the City has duly authorized the execution and delivery of this Lease, the
Acquisition Agreement and the Trust Agreement.
(b) Due Execution. The representatives of the City executing this Lease, the
Acquisition Agreement and the Trust Agreement have been fully authorized to execute the
same pursuant to a resolution duly adopted by the City Council of the City.
(c) Valid. Binding and Enforceable Obligations. This Lease, the Acquisition
Agreement and the Trust Agreement have been duly authorized, executed and delivered by
the City and constitute the legal, valid and binding agreements of the City enforceable
against the City in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Acquisition
Agreement, the Trust Agreement, the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms and conditions hereof, do
not and will not conflict with or constitute a. violation or breach of or default (with due
notice or the passage of time or both) under any applicable law or administrative rule or
regulation, or any applicable court or administrative decree or order, or any indenture,
mortgage, deed of trust, lease, contract or other agreement or instrument to which the City
is a party or by which it or its properties are otherwise subject or bound, or result in the
creation or imposition of any prohibited lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the City, which conflict, violation,
breach, default, lien, charge or encumbrance would have consequences that would
materially and adversely affect the consummation of the transactions contemplated by this
Lease, the Acquisition Agreement and the Trust Agreement or the financial condition,
assets, properties or operations of the City or its properties.
(e) Consents and Approvals. No consent or approval of any trustee or holder of
any indebtedness of the City or of the voters of the City, and no consent, permission,
authorization, order or license of, or filing or registration with, any governmental authority
is necessary in connection with the execution and delivery of this Lease, the Acquisition
Agreement or the Trust Agreement, or the consummation of any transaction herein or
therein contemplated, except as have been obtained or made and as are in full force and
effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation
before or by any court or federal, state, municipal or other governmental authority pending
or, to the knowledge of the City after reasonable investigation, threatened against or
affecting the City or the assets, properties or operations of the City which, if determined
adversely to the City or its interests, would have a material and adverse effect upon the
4-
consummation of the transactions contemplated by or the validity of this Lease, the
Acquisition Agreement or the Trust Agreement, or upon the financial condition, assets,
properties or operations of the City, and the City is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state, municipal
or other governmental authority, which default might have consequences that would
materially and adversely affect the consummation of the transactions contemplated by this
Lease, the Acquisition Agreement or the Trust Agreement or the financial conditions,
assets, properties or operations of the City or its properties.
SECTION 2.2. Covenants, Representations and Warranties of the Board. The Board
makes the following covenants, representations and warranties as the basis for its undertakings
herein contained:
(a) Due Organization and Existence. The Board is a public body corporate and
politic duly organized and existing under Ordinance No. 1059 (1986 Series) adopted by the
City Council of the City of San Luis Obispo on April 15, 1986, and under the Constitution
and laws of the State of California, has full legal right, power and authority to enter into
this Lease, the Acquisition Agreement, the Trust Agreement and the Assignment Agreement
and to carry out and consummate all transactions contemplated hereby and thereby, and by
proper action the Board has duly authorized the execution and delivery of this Lease, the
Acquisition Agreement, the Trust Agreement and the Assignment Agreement.
(b) Due Execution. The representatives of the Board executing this Lease, the
Acquisition Agreement, the Trust Agreement and the Assignment Agreement are fully
authorized to execute the same pursuant to official action taken by the governing body of
the Board.
(c) Valid. Binding and Enforceable Obligations. This Lease, the Acquisition
Agreement, the Trust Agreement and the Assignment Agreement have been duly
authorized, executed and delivered by the Board and constitute the legal, valid and binding
agreements of the Board, enforceable against the Board in accordance their respective
terms.
(d) No Conflicts. The execution and delivery of this Lease, the Acquisition
Agreement, the Trust Agreement and the Assignment Agreement, the consummation of the
transactions herein and therein contemplated and the fulfillment of or compliance with the
terms and conditions hereof, do not and will not conflict with or constitute a violation or
breach of or default (with due notice or the passage of time or both) under any applicable
law or administrative rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Board is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any prohibited lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the Board,
which conflict, violation, breach, default, lien, charge or encumbrance would have
consequences that would materially and adversely affect the consummation of the
transactions contemplated by this Lease, the Acquisition Agreement, the Trust Agreement
and the Assignment Agreement or the financial condition, assets, properties or operations
of the Board or its properties.
(e) Consents and Approvals. No consent or approval of any trustee or holder of
any indebtedness of the Board, and no consent, permission, authorization, order or license
of, or filing or registration with, any governmental authority is necessary in connection
with the execution and delivery of this Lease, the Acquisition Agreement, the Trust
Agreement or the Assignment Agreement, or the consummation of any transaction herein or
-5-
therein contemplated, except as have been obtained or made and as are in full force and
effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation
before or by any court or federal, state, municipal or other governmental authority pending
or, to the knowledge of the Board after reasonable investigation, threatened against or
affecting the Board or the assets, properties or operations of the Board which, if
determined adversely to the Board or its interests, would have a material and adverse effect
upon the consummation of the transactions contemplated by or the validity of this Lease,
the Acquisition Agreement, the Trust Agreement or the Assignment Agreement, or upon the
financial condition, assets, properties or operations of the Board, and the Board is not in
default with respect to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or other governmental authority, which default might have
consequences that would materially and adversely affect the consummation of the
transactions contemplated by this Lease, the Acquisition Agreement, the Trust Agreement
or the Assignment Agreement or the financial conditions, assets, properties or operations of
the Board or its properties.
E11
X
ARTICLE III
0
DEPOSIT OF MONEYS;ACQUISITION OF THE
RECREATION CENTER AND FIRE STATION PROPERTY
SECTION 3.1. Deposit of Moneys. On the Closing Date, the Board shall cause the
proceeds of sale of the Certificates to be deposited with the Trustee. Pursuant to Section 4.01 of
the Trust Agreement, from the proceeds of sale of the Certificates the amount of $
shall be deposited in the Reserve Fund, the interest components of the Lease Payments in the
amount of $ shall be deposited in the Lease Payment Fund and the amount of
$ shall be deposited in the Acquisition Fund. .
SECTION 3.2. Acquisition of the Recreation Center and Fire Station Property. The Board
hereby agrees with due diligence to supervise and provide for, or cause to be supervised and
provided for, the acquisition of the Recreation Center and Fire Station Property in accordance with
the requirements of the City. The City hereby assigns to the Board its right to purchase the Fire
Station Property under and pursuant to that certain Purchase and Sale Agreement relating thereto,
by and between the City and the San Luis Coastal Unified School District, and the Board hereby
agrees to complete the acquisition of the Fire Station Property pursuant to and in accordance with
such agreement. Direct payment of the Acquisition Costs shall be made from amounts on deposit
in the Acquisition Fund, pursuant to Section 4.02 of the Trust Agreement.
The acquisition of the Recreation Center shall be completed on the Closing Date, pursuant
to the Acquisition Agreement. Upon the completion of acquisition of the Fire Station Property
pursuant to the agreement described in the preceding paragraph, the Board shall execute and deliver
to the City and the Trustee a certificate of completion stating that such acquisition has been
completed and identifying the total Acquisition Costs thereof. The estimated Completion Date of
the Fire Station Property is , 1991. If the Board, for any reason whatsoever, cannot
deliver possession of the Fire Station Property to the City by the estimated Completion Date
thereof, this Lease shall not be void or voidable; but in that event the Lease Payments allocable
thereto shall, until the time when the Board delivers possession thereof to the City hereunder, be
payable solely from the sources identified in Section 4.4(e) and the City shall not be obligated to
pay such Lease Payments from any other source of funds or property of the City whatsoever.
SECTION 3.3. Substitution of Property. The City shall have, and is hereby granted; the
option at any time and from time to time during the Term of this Lease, to substitute other land,
facilities, improvements or other property (a "Substitute Property") far the Recreation Center or the
Fire Station Property or any portion thereof (a "Former Property"), provided that the City shall
satisfy all of the following requirements which are hereby declared to be conditions precedent to
such substitution:
(a) The City shall notify Moody's in writing of such substitution, which
notice shall contain the certification that all conditions set forth in this Section 3.3
are met with respect to such substitution;
(b) The City shall file with the Board and the Trustee an amended Exhibit
which adds thereto a description of such Substitute Property and deletes therefrom
the description of such Former Property;
(c) The City shall certify in writing to the Board and the Trustee that the
estimated fair market value and the estimated fair rental value of such Substitute
Property are at least equal to the estimated fair market value and the estimated fair
rental value, respectively, of such Former Property;
EVA
LI
(d) The City shall certify in writing to the Board and the Trustee that such
Substitute Property serves the public purposes of the City and constitutes property
which the City is permitted to lease under the laws of the State of California;
(e) The City shall certify in writing to the Board and the Trustee that the
estimated useful life of such Substitute Property at least extends to the date on
which the final Lease Payment becomes due and payable hereunder; and
(f) The Substitute Property shall not cause the City to violate any of its
covenants, representations and warranties made herein or in the Trust Agreement.
From and after the date on which all of the foregoing conditions precedent to such
substitution are satisfied, the Term of this Lease shall cease with respect to the Former Property
and shall be continued with respect to the Substitute Property, and all references herein to the
Former Property shall apply with full force and effect to the Substitute Property. The City shall
not be entitled to any reduction, diminution, extension or other modification of the Lease Payments
whatsoever as a result of such substitution.
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ARTICLE IV
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LEASE OF RECREATION CENTER AND FIRE STATION PROPERTY;
TERM OF THIS LEASE; LEASE PAYMENTS
SECTION 4.1. Lease. The Board hereby leases the Recreation Center and the Fire Station
Property to the City and the City hereby leases the Recreation Center and the Fire Station Property
from the Board, upon the terms and conditions set forth in this Lease.
SECTION 4.2. Term. The Term of this Lease shall commence on the date hereof and shall
end on the earliest of the date on which the Trust Agreement shall be discharged pursuant to and in
accordance with Section 13.01 thereof, but under any circumstances not later than December 1,
20_. The provisions of this Section 4.2 are subject to the provisions of Section 6.2 relating to the
taking in eminent domain of the Recreation Center or the Fire Station Property.
SECTION 4.3. Possession. The City hereby agrees to take possession hereunder of the
Recreation Center on the Closing Date. The City shall be entitled to take possession of the Fire
Station Property hereunder on the Completion Date thereof.
SECTION 4.4. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 3.2, 6.2 and 6.3 and the
provisions of Article IX hereof, the City agrees to pay to the Board, its successors and assigns, the
Lease Payments (denominated into components of principal and interest) in the respective amounts
specified in Exhibit B attached hereto and by this reference incorporated herein, to be due and
payable in immediately available funds on the Interest Payment Dates immediately following each
of the respective Lease Payment Dates specified in Exhibit B, and to be deposited by the City with
the Trustee on each of the Lease Payment Dates specified in such Exhibit. Any amount held in the
Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the
prepayment of the Lease Payments in part but not in whole pursuant to Article IX and other than
amounts required for payment of past due principal or interest represented by any Certificates not
presented for payment) shall be credited towards the Lease Payment then required to be paid
hereunder, and no Lease Payment need be deposited with the Trustee on any Lease Payment Date if
the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then
required to be deposited with the Trustee. The Lease Payments payable in any Rental Period shall
be for the use of the Recreation Center and Fire Station Property during such Rental Period.
(b) Effect of Prepayment. In the event that the City prepays all Lease Payments in full
pursuant to Sections 9.2 or 9.3, the City's obligations under this Lease shall thereupon cease and
terminate, including but not limited to the City's obligation to pay Lease Payments under this
Section 4.4. In the event that the City prepays the Lease Payments in part but not in whole
pursuant to Sections 9.2 or 9.3, the principal components of the remaining Lease Payments shall
be reduced on a pro rata basis in integral multiples of $5,000; and the interest component of each
remaining Lease Payment shall be reduced by the aggregate corresponding amount of interest
which would otherwise be payable with respect to the Certificates thereby prepaid pursuant to
Sections 3.01(a) or 3.01(b) of the Trust Agreement, as the case may be.
(c) Rate on Overdue Payments. In the event the City should fail to make any of the
payments required in this Section 4.4, the payment in default shall continue as an obligation of the
City until the amount in default shall have been fully paid, and the City agrees to pay the same with
interest thereon, from the date of default to the date of payment at the rate of ten percent (10%) per
annum.
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(d) Fair Rental Value. The Lease Payments during each Rental Period shall constitute the
total rental for the Recreation Center and Fire Station Property for such Rental Period, and shall be
paid by the City in each Rental Period for and in consideration of the right of the use and
occupancy of, and the continued quiet use and enjoyment of the Recreation Center and Fire Station
Property during each Rental Period. The parties hereto have agreed and determined that the total
Lease Payments represent the fair rental value of the Recreation Center and the Fire Station
Property. In making such determination, consideration has been given to the estimated fair market
value of the Recreation Center, the cost of acquisition of the Fire Station Property, other
obligations of the parties under this Lease, the uses and purposes which may be served by the
Recreation Center and Fire Station Property and the benefits therefrom which will accrue to the
City and the general public.
(e) Source of Payments: Budget and Appropriation. Prior to the Completion Date of the
Recreation Center or the Fire Station Property, the Lease Payments allocable thereto shall be
payable solely from amounts deposited in the Lease Payment Fund from the proceeds of the
Certificates, from amounts on deposit in the Reserve Fund, or from any earnings on the
investments of amounts held under the Trust Agreement. Following the Completion Date of the
Recreation Center or the Fire Station Property, the Lease Payments allocable thereto shall be
payable from any source of available funds of the City, subject to the provisions of Sections 6.2,
6.3 and 9.1. The City covenants to take such action as may be necessary to include all Lease
Payments allocable to the Recreation Center or the Fire Station Property coming due on or after the
respective Completion Dates thereof in each of its annual budgets during the Term of this Lease
and to make the necessary annual appropriations for all such Lease Payments. Annually, the City
will furnish to the Trustee a certificate of the City Representative stating that the Lease Payments
have been included in the final budget of the City for the current Fiscal Year, to the full extent
required hereunder, such certificate to be filed within thirty (30) days after the adoption of such
budget and in any event no later than September 1 in the calendar year in which the City adopts
such budget. The covenants on the part of the City herein contained shall be deemed to be and
shall be construed to be duties imposed by law and it shall be the duty of each and every public
official of the City to take such action and do such things as are required by law in the performance
of the official duty of such officials to enable the City to carry out and perform the covenants and
agreements in this Lease agreed to be carried out and performed by the City.
(f) Assignment. The City understands and agrees that all Lease Payments have been
assigned by the Board to the Trustee in trust, pursuant to the Assignment Agreement, for the
benefit of the Owners of the Certificates, and the City hereby assents to such assignment. The
Board hereby directs the City, and the City hereby agrees to pay to the Trustee at its Office, all
payments payable by the City pursuant to this Section 4.4 and all amounts payable by the City
pursuant to Article IX.
SECTION 4.5. Quiet Enjoyment. From and after the date on which the City becomes
entitled to take possession of the Recreation Center or the Fire Station Property pursuant to Section
4.3, and continuing throughout the Term of this Lease, the Board shall provide the City with quiet
use and enjoyment of the Recreation Center or the Fire Station Property, as the case may be, and
the City shall peaceably and quietly have and hold and enjoy the Recreation Center or the Fire
Station Property, without suit, trouble or hindrance from the Board, except as expressly set forth
in this Lease. The Board will, at the request of the City and at the City's cost, join in any legal
action in which the City asserts its right to such possession and enjoyment to the extent the Board
may lawfully do so. Notwithstanding the foregoing, the Board shall have the right to inspect the
Recreation Center and the Fire Station Property as provided in Section 7.2.
SECTION 4.6. Title. At all times during the Term of this Lease following the respective
Completion Dates of the Recreation Center or the Fire Station Property, the Board shall hold title
thereto, and any and all additions which comprise fixtures, repairs, replacements or modifications
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thereto, except for those fixtures, repairs, replacements or modifications which are added thereto
by the City at its own expense and which may be removed without damage and except for any
items added thereto by the City pursuant to Section 5.8.
Upon the termination of this Lease, all right, title and interest of the Board hereunder in and
to the Recreation Center and the Fire Station Property shall be transferred to and vested in the City.
Upon the payment in full of all Lease Payments allocable to the Recreation Center or the Fire
Station Property, or upon the deposit by the City of security for such Lease Payments as provided
in Section 9. 1, all right, title and interest of the Board hereunder in and to the Recreation Center or
the Fire Station Property, as the case may be, shall be transferred to and vested in the City. The
Board agrees to take any and all steps and execute and record any and all documents reasonably
required by the City to consummate any such transfer of title.
SECTION 4.7. Additional Payments. In addition to the Lease Payments, the City shall pay
when due all costs and expenses incurred by the Board to comply with the provisions of the Trust
Agreement, including without limitation all Costs of Issuance (to the extent not paid from amounts
on deposit in the Acquisition Fund), annual compensation due to the Trustee and all of its
reasonable costs payable as a result of the performance of and compliance with its duties under the
Trust Agreement, and all costs and expenses of attorneys, auditors, engineers and accountants.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of
this Lease, as part of the consideration for the rental of the Recreation Center and the Fire Station
Property, all improvement, repair and maintenance of the Recreation Center and the Fire Station
Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for
the payment of all utility services supplied to the Recreation Center and the Fire Station Property,
which may include, without limitation, janitor service, security, power, gas, telephone, light,
heating, water and all other utility services, and shall pay for or otherwise arrange for the payment
of the cost of the repair and replacement of the Recreation Center and the Fire Station Property
resulting from ordinary wear and tear or want of care on the part of the City or any assignee or
sublessee thereof. In exchange for the Lease Payments herein provided, the Board agrees to
provide only the Recreation Center and the Fire Station Property, as hereinbefore more specifically
set forth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4)
and Sections 1941 and 1942 of the California Civil Code, but such waiver shall not limit any of the
rights of the City under the terms of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of any type or nature,
if any, charged to the Board or the City affecting the Recreation Center and the Fire Station
Property or the respective interests or estates therein; provided that with respect to special
assessments or other governmental charges that may lawfully be paid in installments over a period
of years, the City shall be obligated to pay only such installments as are required to be paid during
the Term of this Lease as and when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit the taxes,
assessments or other charges so contested to remain unpaid during the period of such contest and
any appeal therefrom unless the Board shall notify the City that, in its reasonable opinion, by
nonpayment of any such items the interest of the Board in the Recreation Center and the Fire
Station Property will be materially endangered or the Recreation Center and the Fire Station
Property or any part thereof will be subject to loss or forfeiture, in which event the City shall
promptly pay such taxes, assessments or charges or provide the Board with full security against
any loss which may result from nonpayment, in form satisfactory to the Board and the Trustee.
SECTION 5.2. Modification of Recreation Center or Fire Station Property. The City shall,
at its own expense, have the right to remodel the Recreation Center or the Fire Station Property, or
to make additions, modifications and improvements thereto. All additions, modifications and
improvements to the Recreation Center or the Fire Station Property shall thereafter comprise part
thereof and be subject to the provisions of this Lease. Such additions, modifications and
improvements shall not in any way damage the Recreation Center or the Fire Station Property, or
cause either of such properties to be used for purposes other than those authorized under the
provisions of state and federal law; and the Recreation Center or the Fire Station Property, upon
completion of any additions, modifications and improvements made thereto pursuant to this
Section, shall be of a value which is not substantially less than the value thereof immediately prior
to the making of such additions, modifications and improvements. The City will not permit any
mechanic's or other lien to be established or remain against the Recreation Center or the Fire
Station Property for labor or materials furnished in connection with any remodeling, additions,
modifications, improvements, repairs, renewals or replacements made by the City pursuant to this
Section; provided that if any such lien is established and the City shall first notify or cause to be
notified the Board of the City's intention to do so, the City may in good faith contest any lien filed
or established against the Recreation Center or the Fire Station Property, and in such event may
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permit the items so contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom and shall provide the Board with full security against any loss or
forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the
Board. The Board will cooperate fully in any such contest, upon the request and at the expense of
the City.
SECTION 5.3. Public Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained throughout the Term of this Lease, but only if and to the extent available at
reasonable cost from reputable insurers at reasonable cost in the opinion of the City, a standard
comprehensive general insurance policy or policies in protection of the Board, City, and their
respective members, officers, agents, employees and assigns. Said policy or policies shall provide
for indemnification of said parties against direct or contingent loss or liability for damages for
bodily and personal injury, death or property damage occasioned by reason of the operation of the
Recreation Center or the Fire Station Property. Such policy or policies shall provide coverage in
the minimum liability limits of $1,000,000 for personal injury or death of each person and
$3,000,000 for personal injury or deaths of two or more persons in each accident or event (subject
to a deductible of not to exceed $250,000), and in a minimum amount of $150,000 (subject to a
deductible of not to exceed $50,000) for damage to property resulting from each accident or event.
Such insurance may, however, be in the form of a single limit policy in the amount of $3,000,000
covering all such risks, subject to a deductible of not to exceed $250,000. Such insurance may be
maintained as part of or in conjunction with any other insurance coverage carried by the City, and
may be maintained in whole or in pan in the form of self-insurance by the City, subject to the
provisions of Section 5.7, or in the form of the participation by the City in a joint powers agency
or other program providing pooled insurance. The Net Proceeds of such liability insurance shall
be applied by the City toward extinguishment or satisfaction of the liability with respect to which
paid.
SECTION 5.4. Fire and Extended Coverage Insurance. The City shall procure and
maintain, or cause to be procured and maintained, commencing on the Completion Date of the
Recreation Center or the Fire Station Property and continuing thereafter throughout the Term of
this Lease, insurance against loss or damage to any improvements situated thereon by fire and
lightning, with extended coverage and vandalism and malicious mischief insurance. Said extended
coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm,
riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such
insurance. Such insurance shall be in an aggregate amount at least equal to the lesser of (a) the
replacement cost of the improvements insured thereunder, or (b) the aggregate principal amount of
the Outstanding Certificates. All policies of such insurance may be subject to deductible clauses of
not to exceed $100,000 for any one loss. The Net Proceeds of such insurance shall be applied as
provided in Section 6.1. Such insurance may be maintained as pan of or in conjunction with any
other insurance coverage carried by the City, and may be maintained in whole or in pan in the form
of self-insurance by the City, subject to the provisions of Section 5.7, or in the form of the
participation by the City in a joint powers agency or other program providing pooled insurance.
SECTION 5.5. Rental Interruption Insurance. The City shall procure, and maintain or
cause to be maintained, commencing on the Completion Date of the Recreation Center or the Fire
Station Property and continuing thereafter throughout the Tetra of this Lease, rental interruption or
use and occupancy insurance to cover loss, total or partial, of the use of the related improvements
as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at
least equal to the maximum Lease Payments allocable to such improvements (if any) coming due
and payable during the current or any future Fiscal Year. Such insurance may be maintained as
pan of or in conjunction with any other insurance coverage carried by the City, and may be
maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of
Section 5.7, or in the form of the participation by the City in a joint powers agency or other
program providing pooled insurance. The Net Proceeds of such insurance shall be paid to the
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Trustee and deposited in the Lease Payment Fund, and shall be credited towards the payment of the
Lease Payments as the same become due and payable.
SECTION 5.6. Recordation Hereof, Title Insurance. On the Closing Date, the City shall, at
its expense, (a) cause this Lease or a memorandum thereof in form and substance approved by
Bond Counsel, to be recorded in the office of the San Luis Obispo County Recorder with respect
to the Recreation Center, and (b) obtain a CLTA title insurance policy insuring the City's leasehold
estate hereunder in the Recreation Center, subject only to Permitted Encumbrances, in an amount at
least equal to $ . On the date of acquisition of the Fire Station Property, the City
shall, at its expense, (a) cause this Lease or a memorandum thereof in form and substance
approved by Bond Counsel, to be recorded in the office of the San Luis Obispo County Recorder
with respect to the Fire Station Property, and (b) obtain a CLTA title insurance policy insuring the
City's leasehold estate hereunder in the Fire Station Property, subject only to Permitted
Encumbrances, in an amount at least equal to $ . All Net Proceeds received under any
such title insurance policy shall be deposited with the Trustee in the Lease Payment Fund and shall
be credited towards the prepayment of the remaining Lease Payments pursuant to Section 9.3.
SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance
required by Sections 5.4, 5.5 and 5.6 shall name the Trustee as loss payee so as to provide that all
proceeds thereunder shall be payable to the Trustee. The City shall pay or cause to be paid when
due the premiums for all insurance policies required by this Lease. All such policies shall provide
that the Trustee shall be given thirty (30) days' notice of each expiration, any intended cancellation
thereof or reduction of the coverage provided thereby. The Trustee shall not be responsible for the
sufficiency of any insurance herein required and shall be fully protected in accepting payment on
account of such insurance or any adjustment, compromise or settlement of any loss. The City shall
cause to be delivered to the Trustee annually, no later than September 1 in each year, a certificate
stating that all of the insurance policies required by this Lease are in full force and effect.
In the event that any insurance required pursuant to Sections 5.3, 5.4 or 5.5 shall be
provided in the form of self-insurance, the City shall file with the Trustee annually, within ninety
(90) days following the close of each Fiscal Year, a statement of the risk manager of the City or an
independent insurance adviser engaged by the City identifying the extent of such self-insurance and
stating the determination that the City maintains sufficient reserves with respect thereto. In the
event that any such insurance shall be provided in the form of self-insurance by the City, the City
shall not be obligated to make any payment with respect to any insured event except from such
reserves.
SECTION 5.8. Installation of City's Equipment. The City may at any time and from time to
time, in its sole discretion and at its own expense, install or permit to be installed other items of
equipment or other personal property in or upon the Recreation Center and the Fire Station
Property. All such items shall remain the sole property of the City, in which neither the Board nor
the Trustee shall have any interest, and may be modified or removed by the City at any time,
provided that the City shall repair and restore any and all damage to the Recreation Center and the
Fire Station Property resulting from the installation, modification or removal of any such items.
Nothing in this Lease shall prevent the City from purchasing or leasing items to be installed
pursuant to this Section under a lease or conditional sale agreement, or subject to a vendor's lien or
security agreement, as security for the unpaid portion of the purchase price thereof, provided that
no such lien or security interest shall attach to any part of the Recreation Center and the Fire Station
Property.
SECTION 5.9. Liens. The City shall not, directly or indirectly, create, incur, assume or
suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the
Recreation Center and the Fire Station Property, other than as herein contemplated and except for
such encumbrances as the City shall certify in writing to the Trustee do not adversely affect the
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leasehold estate in the Recreation Center and the Fire Station Property hereunder. Except as
expressly provided in this Article, the City shall promptly, at its own expense, take such action as
may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge,
encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City
shall reimburse the Board for any expense incurred by it in order to discharge or remove any such
mortgage, pledge, lien, charge, encumbrance or claim.
SECTION 5.10. Advances. If the City shall fail to perform any of its obligations under this
Article V, the Board shall take such action as may be necessary to cure such failure, including the
advancement of money, and the City shall be obligated to repay all such advances as additional
rental hereunder, with interest at the rate of ten percent (10%) per annum.
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ARTICLE VI
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DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
USE OF NET PROCEEDS
SECTION 6.1. Application of Net Proceeds. The Net Proceeds of any insurance award
resulting from any damage to or destruction of the Recreation Center or the Fire Station Property
by fire or other casualty shall be paid to the Trustee, as assignee of the Board under the
Assignment Agreement, and deposited in the Insurance and Condemnation Fund to be applied as
set forth in Section 6.01 of the Trust Agreement. The Net Proceeds of any eminent domain award
with respect to the Recreation Center or the Fire Station Property resulting from any event
described in Section 6.2 shall be paid by the City to the Trustee and deposited in the Insurance and
Condemnation Fund to be applied as set forth in Section 6.02 of the Trust Agreement.
SECTION 6.2. Termination or Abatement Due to Eminent Domain. If the Recreation
Center or the Fire Station Property shall be taken permanently under the power of eminent domain
or sold to a goverment threatening to exercise the power of eminent domain, the Term of this
Lease shall cease with respect thereto as of the day possession shall be so taken. If less than all of
the Recreation Center or the Fire Station Property shall be taken permanently, or if the Recreation
Center or the Fire Station Property shall be taken temporarily, under the power of eminent domain,
(a) this Lease shall continue in full force and effect with respect thereto and shall not be terminated
by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there
shall be a partial abatement of Lease Payments allocated thereto, in an amount to be agreed upon by
the City and the Board such that the resulting Lease Payments represent fair consideration for the
use and occupancy of the remaining usable portions of the Recreation Center and the Fire Station
Property. Notwithstanding the foregoing, there shall be no abatement of Lease Payments under
this Section 6.2 to the extent that amounts in the Reserve Fund are available to pay Lease Payments
which would otherwise be abated under this Section 6.2, it being hereby declared that such
proceeds and amounts constitute a special fund for the payment of the Lease Payments.
SECTION 6.3. Abatement Due to Damage or Destruction. The amount of Lease Payments
shall be abated during any period in which by reason of damage or destruction (other than by
eminent domain which is hereinbefore provided for) there is substantial interference with the use
and occupancy by the City of the Recreation Center or the Fire Station Property or any portion
thereof. The amount of such abatement shall be agreed upon by the City and the Board such that
the resulting Lease Payments represent fair consideration for the use and occupancy of the portions
of the Recreation Center and the Fire Station Property not damaged or destroyed. Such abatement
shall continue for the period commencing with such damage or destruction and ending with the
substantial completion of the work of repair or reconstruction. In the event of any such damage or
destruction, this Lease shall continue in full force and effect and the City waives any right to
terminate this Lease by virtue of any such damage and destruction. Notwithstanding the
foregoing, there shall be no abatement of Lease Payments under this Section 6.3 to the extent that
the proceeds of hazard insurance, rental interruption insurance or amounts in the Reserve Fund are
available to pay Lease Payments which would otherwise be abated under this Section 6.3, it being
hereby declared that such proceeds and amounts constitute a special fund for the payment of the
Lease Payments.
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ARTICLE VII
OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE BOARD MAKES NO AGREEMENT,
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF
THE RECREATION CENTER OR THE FIRE STATION PROPERTY OR ANY PORTION
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE RECREATION CENTER OR THE FIRE STATION PROPERTY OR ANY PORTION
THEREOF. THE CITY ACKNOWLEDGES THAT THE BOARD IS NOT A
MANUFACTURER OF ANY PORTION OF THE RECREATION CENTER OR THE FIRE
STATION PROPERTY OR A DEALER THEREIN, THAT THE CITY LEASES THE
RECREATION CENTER AND THE FIRE STATION PROPERTY AS -IS, IT BEING AGREED
THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. In no
event shall the Board be liable for incidental, indirect, special or consequential damages, in
connection with or arising out of this Lease or the Trust Agreement for the existence, furnishing,
functioning or City's use of the Recreation Center and the Fire Station Property.
SECTION 7.2. Access to the Recreation Center and the Fire Station Property. The City
agrees that the Board and any Board Representative, and the Board's successors or assigns, shall
have the right at all reasonable times to enter upon and to examine and inspect the Recreation
Center and the Fire Station Property or any portion thereof. The City further agrees that the Board,
any Board Representative and the Board's successors or assigns shall have such rights of access to
the Recreation Center and the Fire Station Property or any portion thereof as may be reasonably
necessary to cause the proper maintenance of the Recreation Center and the Fire Station Property in
the event of failure by the City to perform its obligations hereunder.
SECTION 7.3. Release and Indemnification Covenants. The City shall and hereby agrees
to indemnify and save the Board and the Trustee and their respective officers, agents, successors
and assigns harmless from and against all claims, losses and damages, including legal fees and
expenses, arising out of (a) the use, maintenance, condition or management of, or from any work
or thing done on the Recreation Center or the Fire Station Property by the City, (b) any breach or
default on the pan of the City in the performance of any of its obligations under this Lease, (c) any
negligence or willful misconduct of the City or of any of its agents, contractors, servants,
employees or licensees with respect to the Recreation Center and the Fire Station Property, (d) any
intentional misconduct or negligence of any sublessee of the City with respect to the Recreation
Center or the Fire Station Property, or (e) the acquisition, construction, improvement and
equipping of the Recreation Center or the Fire Station Property, or the authorization of payment of
the Acquisition Costs. No indemnification is made under this Section or elsewhere in this Lease
for willful misconduct, negligence, or breach of duty under this Lease by the Board or the Trustee,
or their respective officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment by the Board. The Board's rights under this Lease, including
the right to receive and enforce payment of the Lease Payments, have been assigned to the Trustee
pursuant to the Assignment Agreement, to which assignment the City hereby consents.
SECTION 7.5. Assignment and Subleasing by the City. This Lease may not be assigned
by the City. The City may sublease the Recreation Center or the Fire Station Property, or any
portion thereof, but only with the written consent of the Board (which consent shall not be
unreasonably withheld), and subject to all of the following conditions:
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(a) This Lease and the obligation of the City to make Lease Payments
hereunder shall remain obligations of the City.
(b) The City shall, within thirty (30) days after the delivery thereof, furnish
or cause to be furnished to the Board and the Trustee a true and complete copy of
such sublease.
(c) No such sublease by the City shall cause the Recreation Center or the
Fire Station Property to be used for a purpose other than as may be authorized
under the provisions of the laws of the State of California.
(d) The City shall furnish the Board and the Trustee with a written opinion
of Bond Counsel stating that such sublease does not cause the interest components
of the Lease Payments to become includable in gross income for purposes of
federal or State of California personal income taxation.
SECTION 7.6. Amendment of Lease Agreement. The Board and the City may at any time
amend or modify any of the provisions of this Lease, but only:
(a) with the prior written consent of the Trustee (which consent shall not be
unreasonably withheld) or with the prior written consent of the Owners of a
majority in aggregate principal amount of the Outstanding Certificates; or (b)
without the consent of the Trustee or any of the Certificate Owners, but only if such
amendment or modification is for any one or more of the following purposes -
(a) to add to the covenants and agreements of the City contained in this
Lease, other covenants and agreements thereafter to be observed, or to limit or
surrender any rights or power herein reserved to or conferred upon the City, or
(b) to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained herein, or in
any other respect whatsoever as the Board and the City may deem necessary or
desirable, provided that, in the opinion of Bond Counsel, such modifications or
amendments shall not materially adversely affect the interests of the Owners of the
Certificates;
(c) to amend any provision thereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not adversely affect
the exclusion from gross income of interest represented by any of the Certificates
under the Tax Code, in the opinion of Bond Counsel;
(d) to amend the description of the Recreation Center or the Fire Station
Property to reflect accurately the property originally intended to be included therein,
or in connection with any substitution pursuant to Section 3.3; or
(e) to obligate the City to pay additional amounts of rental hereunder for the
use and occupancy of the Recreation Center and the Fire Station Property, but only
if such additional amounts of rental shall be pledged or assigned for the payment of
any bonds, notes, leases or other obligations the proceeds of which shall be applied
to finance the completion of the Recreation Center and the Fire Station Property or
any portion thereof, or to finance the acquisition or construction of any additions to
or modifications of the Recreation Center and the Fire Station Property or any
portion thereof.
-18-
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following events shall
constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment required
to be paid hereunder at the time specified herein, and the continuation of such
failure for a period of three (3) days.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as referred to in the
preceding clause (a), for a period of sixty (60) days after written notice specifying
such failure and requesting that it be remedied has been given to the City by the
Board or the Trustee; provided, however, that if in the reasonable opinion of the
City the failure stated in the notice can be corrected, but not within such sixty (60)
day period, such failure shall not constitute an Event of Default if the City shall
commence to cure such failure within such sixty (60) day period and thereafter
diligently and in good faith cure such failure in a reasonable period of time.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure by
the City promptly to lift any execution, garnishment or attachment, or adjudication
of the City as a bankrupt, or assignment by the City for the benefit of creditors, or
the entry by the City into an agreement of composition with creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the City in
any proceedings instituted under the provisions of the Federal Bankruptcy Code, as
amended, or under any similar acts which may hereafter be enacted.
SECTION 8.2. Remedies on Default. Whenever any Event of Default shall have happened
and be continuing, it shall be lawful for the Board to exercise any and all remedies available
pursuant to law or granted pursuant to this Lease; provided, however, that notwithstanding
anything herein or in the Indenture to the contrary, there shall be no right under any circumstances
to accelerate the Lease Payments or otherwise declare any Lease Payments not then in default to be
immediately due and payable. Each and every covenant hereof to be kept and performed by the
City is expressly made a condition and upon the breach thereof the Board may exercise any and all
rights granted hereunder, provided, that no termination of this Lease shall be effected either by
operation of law or acts of the parties hereto, except only in the manner herein expressly provided.
Upon the occurrence and during the continuance of any Event of Default, the Board shall have and
is granted each and every one of the following remedies, subject in all respects to the limitations set
forth in Section 8.3.
(a) Enforcement of Payments Without Termination. In the event the Board
does not elect to terminate this Lease in the manner hereinafter provided for in
subparagraph (b) hereof, the City agrees to and shall remain liable for the payment
of all Lease Payments and Additional Payments and the performance of all
conditions herein contained and shall reimburse the Board for any deficiency arising
out of the re-leasing of the Recreation Center and the Fire Station Property, or, in
the event the Board is unable to re -lease the Recreation Center and the Fire Station
Property, then for the full amount of all Lease Payments and Additional Payments
to the end of the Term of this Lease, but said Lease Payments and Additional
Payments and/or deficiency shall be payable only at the same time and in the same
manner as hereinabove provided for the payment of Lease Payments and Additional
-19-
o +�
Payments hereunder, notwithstanding such entry or re-entry by the Board or any
suit in unlawful detainer, or otherwise, brought by the Board for the purpose of
effecting such re-entry or obtaining possession of the Recreation Center and the
Fire Station Property or the exercise of any other remedy by the Board. The City
hereby irrevocably appoints the Board as the agent and attorney-in-fact of the City
to enter upon and re -lease the Recreation Center and the Fire Station Property in the
event of default by the City in the performance of any covenants herein contained to
be performed by the City and to remove all personal property whatsoever situated
upon the Recreation Center or the Fire Station Property, to place such property in
storage or other suitable place in the County of San Luis Obispo for the account of
and at the expense of the City, and the City hereby exempts and agrees to save
harmless the Board from any costs, loss or damage whatsoever arising or
occasioned by any such entry upon and re-leasing of the Recreation Center and the
Fire Station Property and the removal and storage of such property by the Board or
its duly authorized agents in accordance with the provisions herein contained. The
City agrees that the terms of this Lease constitute full and sufficient notice of the
right of the Board to re -lease the Recreation Center and the Fire Station Property in
the event of such re-entry without effecting a surrender of this Lease, and further
agrees that no acts of the Board in effecting such re-leasing shall constitute a
surrender or termination of this Lease irrespective of the term for which .such re-
leasing is made or the terms and conditions of such re-leasing, or otherwise, but
that, on the contrary, in the event of such default by the City the right to terminate
this Lease shall vest in the Board to be effected in the sole and exclusive manner
hereinafter provided for in subparagraph (b) hereof. The City further waives the
right to any rental obtained by the Board in excess of the Lease Payments and
hereby conveys and releases such excess to the Board as compensation to the Board
for its services in re-leasing the Recreation Center and the Fire Station Property.
(b) Termination of Lease. If an Event of Default occurs and is continuing
hereunder, the Board at its option may terminate this Lease and re -lease all or any
portion of the Recreation Center and the Fire Station Property. In the event of the
termination of this Lease by the Board at its option and in the manner hereinafter
provided on account of default by the City (and notwithstanding any re-entry upon
the Recreation Center or the Fire Station Property by the Board in any manner
whatsoever or the re-leasing of the Recreation Center and the Fire Station
Property), the City nevertheless agrees to pay to the Board all costs, loss or
damages howsoever arising or occurring payable at the same time and in the same
manner as is herein provided in the case of payment of Lease Payments and
Additional Payments. Any surplus received by the Board from such re-leasing
shall be deposited in the Lease Payment Fund. Neither notice to pay rent or to
deliver up possession of the premises given pursuant to law nor any proceeding in
unlawful detainer taken by the Board shall of itself operate to terminate this Lease,
and no termination of this Lease on account of default by the City shall be or
become effective by operation of law, or otherwise, unless and until the Board shall
have given written notice to the City of the election on the part of the Board to
terminate this Lease. The City covenants and agrees that no surrender of the
Recreation Center or the Fire Station Property, or of the remainder of the Term
hereof or any termination of this Lease shall be valid in any manner or for any
purpose whatsoever unless stated or accepted by the Board by such written notice.
(c) Proceedings at Law or In Equity. If an event of default occurs and
continues hereunder, the Board may take whatever action at law or in equity may
appear necessary or desirable to collect the amounts then due and thereafter to
become due hereunder or to enforce any other of its rights hereunder.
-20-
4.
SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Board is intended to be exclusive and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Lease or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon the occurrence of any
Event of Default shall impair any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Board to exercise any remedy reserved to it in this Article VIII it
shall not be necessary to give any notice, other than such notice as may be required in this Article
VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses. In the event either party
to this Lease should default under any of the provisions hereof and the nondefaulting party should
employ attorneys or incur other expenses for the collection of moneys or the enforcement or
performance or observance of any obligation or agreement on the part of the defaulting party herein
contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting parry
the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting
party.
SECTION 8.5. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Lease should be breached by either parry and thereafter waived by the other party,
such waiver shall be limited to the particular breach so waived and shall not be deemed to waive
any other breach hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the re -lease of the
Recreation Center or the Fire Station Property under this Article VIII, and all other amounts
derived by the Board or the Trustee as a result of the occurrence of an Event of Default, shall be
transferred to the Trustee promptly upon receipt thereof and shall be deposited by the Trustee in the
Lease Payment Fund to be applied to the Lease Payments in order of Lease Payment Date.
SECTION 8.7. Trustee and Certificate Owners to Exercise Rights. Such rights and
remedies as are given to the Board under this Article VIII have been assigned by the Board to the
Trustee under the Assignment Agreement, to which assignment the City hereby consents. Such
rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as
provided in the Trust Agreement.
-21-
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease, the
City may on any date secure the payment of the Lease Payments in whole or in part by depositing
with the Trustee an amount of cash which, together with other available amounts on deposit in the
funds and accounts established under the Trust Agreement, is either (a) sufficient to pay such
Lease Payments, including the principal and interest components thereof, in accordance with the
Lease Payment schedule set forth in Exhibit B, or (b) invested in whole or in part in non -callable
Federal Securities in such amount as will, in the opinion of an independent certified public
accountant, together with interest to accrue thereon and together with any cash which is so
deposited, be fully sufficient to pay such Lease Payments when due pursuant to Section 4.4(a) or
when due on any optional prepayment date pursuant to Section 9.2, as the City shall instruct at the
time of said deposit. In the event of a security deposit pursuant to this Section with respect to all
unpaid Lease Payments, and notwithstanding the provisions of Section 4.2, (a) the Term of this
Lease shall continue, (b) all obligations of the City under this Lease, and all security provided by
this Lease for said obligations, shall thereupon cease and terminate, excepting only the obligation
of the City to make, or cause to be made all of the Lease Payments from such security deposit, and
(c) pursuant to Section 4.6 title to the Recreation Center and the Fire Station Property shall vest in
the City on the date of said deposit automatically and without further action by the City or the
Board. Said security deposit shall be deemed to be and shall constitute a special fund for the
payment of Lease Payments in accordance with the provisions of this Lease.
SECTION 9.2. Optional Prepayment. The City may exercise its option to prepay the
principal components of the Lease Payments in whole, or in part in any integral multiple of
$5,000, on any date on or after December 1, , by paying a prepayment price equal to the
aggregate principal components of the Lease Payments to be prepaid, together with the interest
component of the Lease Payment required to be paid on such date and together with a prepayment
premium equal to the aggregate premium required to be paid upon the corresponding prepayment
of the Certificates pursuant to Section 3.01(a) of the Trust Agreement. Such prepayment price
shall be deposited by the Trustee in the Lease Payment Fund to be applied to the prepayment of
Certificates pursuant to Section 3.01(a) of the Trust Agreement. The City shall give the Trustee
written notice of its intention to exercise its option not less than sixty (60) days in advance of the
date of exercise.
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall be obligated to prepay the principal components of the Lease Payments in
whole or in part on any date, from and to the extent of any Net Proceeds of insurance award or
eminent domain award with respect to the Recreation Center or the Fire Station Property
theretofore deposited in the Lease Payment Fund for such purpose pursuant to Article VI hereof
and Article VI of the Trust Agreement. The City and the Board hereby agree that such Net
Proceeds, to the extent remaining after payment of any delinquent Lease Payments, shall be
credited towards the City's obligations under this Section 9.3.
SECTION 9.4. Credit forAmounts on Deposit. In the event of prepayment of the principal
components of the Lease Payments in full under this Article IX, such that the Trust Agreement
shall be discharged by its terms as a result of such prepayment, at the written election of the City
filed with the Trustee any or all amounts then on deposit in the Lease Payment Fund, the
Acquisition Fund or the Reserve Fund shall be credited towards the amounts then required to be so
prepaid. .
-22-
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other communication
under this Lease shall be given by first class mail or personal delivery to the party entitled thereto at
its address set forth below, or by telecopier or other form of telecommunication, at its number set
forth below. Notice shall be effective either (a) upon transmission by telecopier or other form of
telecommunication, (b) 48 hours after deposit in the United States of America first class mail,
postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The
Board, the City or the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
If to the City: Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, California 93401
If to the Board: Chief Financial Officer
City of San Luis Obispo Capital Improvement Board
990 Palm Street
San Luis Obispo, California 93401
If to the Trustee:
SECTION 10.2. Binding Effect, This Lease shall inure to the benefit of and shall be
binding upon the Board and the City and their respective successors and assigns.
SECTION 10.3. Severability. In the event any provision of this Lease shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
SECrION.10.4. Net -net -net Lease. This Lease shall be deemed and construed to be a "net -
net -net lease" and the City hereby agrees that the Lease Payments shall be an absolute net return to
the Board, free and clear of any expenses, charges or set -offs whatsoever.
SECTION 10.5. Further Assurances and Corrective Instruments. The Board and the City
agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description of the Recreation
Center or the Fire Station Property hereby leased or intended so to be or for carrying out the
expressed intention of this Lease.
SECTION 10.6. Execution in Counterparts. This Lease may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 10.7. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State of California.
-23
SECTION 10.8. Board and City Representatives. Whenever under the provisions of this
Lease the approval of the Board or the City is required, or the Board or the City is required to take
some action at the request of the other, such approval or such request shall be given for the Board
by a Board Representative and for the City by a City Representative, and any party hereto shall be
authorized to rely upon any such approval or request.
SECriON 10.9. Captions. The captions or headings in this Lease are for convenience only
and in no way define, limit or describe the scope or intent of any provisions or Section of this
Lease.
-24-
IN WITNESS WHEREOF, the Board and the City have caused this Lease to be executed
in their respective names by their duly authorized officers, all as of the date first above written.
Attest:
Secretary
[(S E A L)
Attest:
By:
City Clerk
-25-
CITY OF SAN LUIS OBISPO CAPITAL
IIAPROVEMENT BOARD, as lessor
Executive Director
CITY OF SAN LUIS OBISPO, as lessee
By
City Administrative Officer
•
EXHIBIT A
Description of Leased Properties
I. Description of the Recreation Center
That certain land situated in the County of San Luis Obispo, State of California, described
as follows:
(TO COME)
11. Description of the Fire Station Property
That certain land situated in the County of San Luis Obispo, State of California, described
as follows:
(TO COME)
A-1
EXHIBIT B
SCHEDULE OF LEASE PAYMENTS
I. Lease Payments For Recreation Center
(TO COME)
Q. Lease Payments For Fire Station Property
(TO COME)
;) 26052-m
OMHW-CFA:)ai
WHEN RECORDED, RETURN TO:
43 y t e rrt e -7n 7
E
ASSIGNMENT AGREEMENT
Relating to
$4,500,000
Certificates of Participation
(1990 Public Facilities Financing)
HNAL
THIS ASSIGNMENT AGREEMENT, made and entered into as of December 1, 1990, is
by and between the CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD, a public
body corporate and politic duly organized and existing under Ordinance No. 1059 (1986 Series)
adopted by the City Council of the City of San Luis Obispo on April 15, 1986, and under the
Constitution and laws of the State of California (the "Board"), and [NAME OF TRUSTEE], a
organized and existing under the laws of
as trustee (the 'Trustee");
WITNESSETH:
In the joint and mutual exercise of their powers, in consideration of the mutual covenants
herein contained, and for other valuable consideration, the parties hereto recite and agree as
follows:
Section 1. Recitals.
(a) The Board and the City of San Luis Obispo (the "City") have entered into an agreement
entitled "Lease Agreement", dated as of December 1, 1990, (the "Lease") whereby the Board has
agreed to lease to the City, and the City has agreed to lease from the Board, the Recreation Center
and the Fire Station Property (as said terms are more particularly defined in the Lease) in the
manner and on the terms set forth in the Lease, which terms include, without limitation, the
obligation of the City to pay Lease Payments (as defined in the Lease) to the Board, in
consideration of the City's use and enjoyment of the Recreation Center and the Fire Station
Property under the Lease.
(b) Under the Lease, the Board is required to cause to be deposited with the Trustee,
certain sums of money to be credited, held and applied in accordance with the Lease and with a
Trust Agreement dated as of December 1, 1990, (the 'Trust Agreement") by and among the Board,
the City and the Trustee.
(c) Upon delivery of the Lease, the Board is required to deposit with the Trustee, in
addition to other moneys to be deposited with the Trustee, moneys for the acquisition, construction
and improvement of certain land, improvements and equipment as more fully described in the
Lease. For the purpose of obtaining such moneys, the Board is willing to convey to certain
/�- t5"1 -9°' `C�
C fZt�Qoo/�9oi�
persons (the "Owners") direct, undivided fractional interests in the Lease Payments, such interests
to be evidenced by the $4,500,000 aggregate principal amount of Certificates of Participation
therein (1990 Public Facilities Financing) (the "Certificates"). In order to make such interests
marketable on terms acceptable to the Board, the Board is willing to assign and transfer its rights
under the Lease to the Trustee for the benefit of the Owners of the Certificates. Concurrently with
the delivery of this Agreement, the Trustee is executing and delivering the Certificates to the
original purchasers thereof. The proceeds of sale of the Certificates are anticipated by the Board to
be sufficient to permit the Board to make the deposits required under the Lease and the Trust
Agreement and to permit the Board to pay therewith the Acquisition Costs as defined in the Lease.
(d) Each of the parties has authority to enter into this Assignment Agreement, and has
taken all actions necessary to authorize its officers to execute it.
Section 2. Assignment.
The Board hereby transfers, assigns and sets over to the Trustee, for the benefit of the
Owners of Certificates executed and delivered under the Trust Agreement, all of the Board's rights
under the Lease (excepting only the Board's rights under Sections 4.7, 5.10, 7.3 and 8.4 of the
Lease), including without limitation (a) the right to receive and collect all of the Lease Payments
from the City under the Lease, (b) the right to receive and collect any proceeds of any insurance
maintained thereunder, or any eminent domain award (or proceeds of sale under threat of eminent
domain) paid with respect to the Recreation Center and the Fire Station Property, and (c) the right
to exercise such rights and remedies conferred on the Board pursuant to the Lease as may be
necessary or convenient (i) to enforce payment of the Lease Payments and any other amounts
required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund
established under the Trust Agreement, or (ii) otherwise to protect the interests of the Owners in
the event of a default by the City under the Lease. All rights assigned by the Board shall be
administered by the Trustee in accordance with the provisions of the Trust Agreement and for the
benefit of the Owners of Certificates.
Section 3. Acceptance.
The Trustee hereby accepts the assignments made herein for the purpose.of securing the
payments due pursuant to the Lease and Trust Agreement to, and the rights under the Lease and
Trust Agreement of, the Owners of the Certificates delivered pursuant to the Trust Agreement, all
subject to the provisions of the Trust Agreement. The recitals contained herein are those of the
Board and not of the Trustee, and the Trustee assumes no responsibility for the correctness
thereof.
Section 4. Conditions.
This Assignment Agreement shall confer no rights or impose no duties upon the Trustee
beyond those expressly provided in the Lease and Trust Agreement.
-2-
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement by their
officers thereunto duly authorized as of the day and year first written above.
Attest
Secretary
-3-
CITY OF SAN LUIS OBISPO CAPITAL
IMPROVEMENT BOARD
By
Executive Director
[NAME OF TRUSTEE], as Trustee
By
Assistant Vice President
29026.11 O =W:CFAjnj • 11/09/90
A S � e Uen e..yn -�- )�-- 04 - 6 D — 9 Z) - (-C--
ACQUISITION
am
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement"), dated as of December 1, 1990,
is by and between the CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD, a
public body corporate and politic duly organized and existing under Ordinance No. 1059 (1986
Series) adopted by the City Council of the City of San Luis Obispo on April 15, 1986, and under
the Constitution and laws of the State of California (the "Board"), and the CITY OF SAN LUIS
OBISPO, a charter city and municipal corporation duly organized and existing under the
Constitution and laws of the State of California (the "City"),
WITNESSETH:
WHEREAS, the City has determined to undertake the acquisition of land to be used as the
site of a fire station (the "Fire Station Property"), the acquisition of land to be used for open space
purposes (the "Open Space Property"), and the rehabilitation of an existing recreation center which
is currently owned by the City (the "Recreation Center"); and
WHEREAS, the Board has been formed for purposes which include assisting the City in
financing the acquisition, construction and improvement of property which is used for the
municipal purpose of the City; and
WHEREAS, in order to provide funds to enable the City to finance the acquisition of the
Open Space Property and the rehabilitation of the Recreation Center, the City proposes to sell to the
Board, and the Board proposes to purchase from the City, the Recreation Center for an amount not
exceeding its current estimated value, all as provided in this Agreement; and
WHEREAS, to pay the costs acquiring the Recreation Center from the City pursuant
hereto, the Board proposes to lease the Recreation Center and the Fire Station Property back to the
City pursuant to that certain Lease Agreement dated as of December 1, 1990, by and between the
Board as lessor and the City as lessee (the "Lease"), and to assign its rights to receive lease
payments payable by the City thereunder to [Name of Trustee], as trustee (the 'Trustee"), and to
enter into that certain Trust Agreement dated as of December 1, 1990, by and among the Board, the
City and the Trustee (the 'Trust Agreement") under which the Trustee agrees to execute and deliver
Certificates of Participation in the aggregate principal amount of $4,500,000 (the "Certificates")
representing the direct, undivided fractional interests of the owners thereof in such lease payments;
and
WHEREAS, the City is authorized to enter into this Agreement pursuant to the municipal
affairs power of the City as a charter city, and the Board is authorized to enter into this Agreement
pursuant to the Ordinance pursuant to which the Board has been established; and
WHEREAS, the Board and the City wish to enter into this Agreement to provide the
terms and conditions relating to such acquisition of the Recreation Center by the Board from the
City;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants hereinafter contained, the parties hereto hereby agree as follows:
SECTION 1. Acquisition of Recreation Center. The City hereby grants, conveys and sells
to the Board all right, title and interest of the City in and to the Recreation Center and the Board
/:�- -/ Sa -c D -CLC --
C P" & 9Ooile qr 01)
hereby acquires all of the right, title and interest of the City in and to the Recreation Center. The
City hereby agrees to take any and all actions and to execute, deliver and record any and all deeds,
instruments of conveyance and other documents which the Board may reasonably request to
accomplish the sale of the Recreation Center to the Board pursuant hereto.
SECTION 2. Warranty of Title. The City hereby represents and warrants to the Board that
the City owns good and marketable fee title to the Recreation Center, subject only such
encumbrances as do not materially affect the operation of the Recreation Center for the purposes
served thereby.
SECTION 3. Acquisition Price. In consideration of the acquisition by the Board of the
City's right, title and interest in all of the Recreation Center pursuant to Section 1, the Board
hereby agrees to pay to the City the amount of Dollars ($ ). The
Board and the City hereby agree that such amount is not in excess of the fair market value of the
Recreation Center. The parties hereto agree that said purchase price constitute fair and adequate
consideration for the interests of the City in the Recreation Center. Said purchase price shall be
paid by the Board to the City on the date of delivery of the Certificates, and shall be paid from
amounts deposited with the Trustee for such purpose from the proceeds of sale of the Certificates.
SECTION 4. Use of Proceeds. The parties hereby agree that the acquisition by the Board
of the City's right, title and interest in the Recreation Center pursuant to Section 1 serves the public
purposes of the City by providing funds to enable the City to finance certain capital requirements of
the City relating to the Enterprise. The City hereby agrees that the proceeds of sale of the
Recreation Center shall be deposited in a separate fund to be held and maintained by the City, to be
used for the purpose of paying the costs of renovations to the Recreation Center and the costs of
acquiring the Open Space Property, or for other capital improvements which the City is authorized
to undertake, and that the City shall make no use of such proceeds which would cause the interest
represented by the Certificates to be or to become includable in gross income for federal income tax
purposes.
2
EN
0
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, all as of the date first above written.
Attest
Un
Secretary
[(S E A L)
Attest
By:
City Clerk
CITY OF SAN LUIS OBISPO CAPITAL
HAPROVEN ENT BOARD
IM
Executive Director
CITY OF SAN LUIS OBISPO
City Administrative Officer
N
EXHIBIT A
(TO COME)
9
` i
OAQ yremP-�'�- ;LL- 53ip-CC.
a
PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 28,1988
NEW ISSUE Rating: Requested from Moody's Investors Service, Inc.
(See "Rating" herein)
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Special Counsel, subject however to certain
qualifications described herein, under existing law, the portion of lease payments designated as and comprising interest and received by the owners
of the Certificates is excluded from gross income for federal income tax purposes, although it is included in adjusted net book income and current
earnings in computing the alternative minimum tax imposed on certain corporations and the Lease Agreement is a "qualified tax-exempt
obligation" within the meaning of Section 265 of the Internal Revenue Code of 1986. In the further opinion of Special Counsel, such interest is
exempt from California personal income taxes See "TAX EXEMPTION" herein.
OFFICIAL STATEMENT
CERTIFILAIES OF F=IPATION
Representing Direct, Undivided Fractional Interests of the Owners Thereof
In Lease Payments to be Made by the
CITY OF SAN LUIS OBISPO
Dated: December 1, 1990 Principal Due: June 1, 1991-2010
Interest represented by the Certificates is payable on June 1 and December 1 of each year commencing June 1, 1991. The
Certificates will be delivered as fully registered certificates without coupons, and, when delivered, will be registered in the name of
Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC). DTC will act as securities depository of
the Certificates. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 or integral multiples
thereof for each maturity. Purchasers will not receive certificates representing their interest in the Certificates purchased. Principal
and interest will be paid to DTC, which will in turn remit such principal and interest to its participants for subsequent dispersal to
the beneficial owners of the Certificates as described herein.
The Certificates will mature on June 1 in the years and amounts as set forth below.
Interest Interest
Year Amount Rete Yield Year Amount Rate Yield
1991 2001
1992 2002
1993 2003
1994 2004
1995 2005
1996 2006
1997 2007
1998 2008
1999 2009
2000 2010
The Certificates are subject to prepayment as described herein.
Bids must be for not less than S and accrued interest represented by the Certificates, and must be accompanied by a good
faith check in the amount of $ payable to the City of San Luis Obispo.
The Certificates are being delivered to finance the acquisition of certain facilities of the City, consisting of a recreation center facility
or the City's existing corporation yard or both (the "Facilities") pursuant to an Acquisition A reement dated as of December 1, 1990
by and between the City as seller and the City of San Luis Obispo Capital Improvement Board (the "Board") as purchaser. The
Facilities will be leased pursuant to a Lease Agreement (the "Lease Agreement ), dated December 1, 1990, by and between the City
of San Luis Obispo as lessee and the Board as lessor. See "The Facilities" herein.
The Certificates represent direct undivided fractional interests of the owners in lease payments to be made by the City under the
Lease Agreement (the "Lease Payments"} The Lease Payments are payable solely from amounts budgeted and appropriated by the
City from its general fund. Neither the Certificates nor the obligation of the City to make Lease Payments constitutes and
obligation of the City or Board for which the City is obligated to levy or pledge any form of taxation or for which the City has levied
or pledged any form of taxation. The Board has no taring power.. Neither the Certificates nor the obligation of the City to make
Lease Payments under the Lease Agreement constitute a debt of the City, the County of San Luis Obispo, the State of California or
any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.
The Certificates are offered, sub'ect to approval of validity and tax exemption, by Jones Hall Hill & White, A Professional Law
Corporation, San Francisco, Cafiornia, Special Counsel. Delivery of the Certificates in San Francisco, California is expected to be
on or about December 27,1990.
The Lease Agreement has been designated as a "Qualified Tax -Exempt Obligation" pursuant to Section 265(6)(3) of the Internal
Revenue Code of 1986.
BIDS RECEIVED: 10:00 am, Pacific Time, Thursday, December 13, 1990 at the offices of Jones Hall Hill & White, A
Professional Law Corporation, Four Embarcadero Center, Suite 1950, San Francisco, California
94111.
AWARD: Within 24 hours of receipt of bids by the City Director of Finance on behalf of the City and pursuant to
prior authorization from the City Council.
Pr-153-90-1-1-
CRl00joo/b900)
0
No dealer, broker, salesman or other person has been authorized by the City, the Financial Advisor or the
Underwriters to give any information or to make any representations other than those contained in this
Official Statement or the Final Official Statement and, if given or made, such information and representations
must not be relied upon as having been authorized by the City, the Financial Advisor or the Underwriters.
This Official Statement or the Final Official Statement does not constitute an offer to sell or solicitation of an
offer to buy, nor shall there by any sale of the Bonds by any person in any jurisdiction in which it is unlawful
for such person to make such offer, solicitation or sale. The information set forth herein has been obtained
from the City and other sources which are believed to be reliable, but it is not to be construed as a
representation by the Financial Advisor or Underwriters. The information and expressions of opinion herein
are subject to change without notice, and neither the delivery of this Official Statement or the Final Official
Statement nor any sale made thereafter shall, under any circumstances, create any implication that there has
been no change in the affairs of the City or in any other information contained herein, since the date hereof.
TABLE OF CONTENTS
Page
Roster of City and Board Officials .................... iii
Introduction................. _................................................................................................................................................
TheCertificates.............................................................................................................................................................
GeneralProvisions...............................:...........................................................................................................
PrepaymentFeatures..........................................................................................................................................
Securityfor the Certificates.........................................................................................................................................
Book -Entry Only System..............................................................................................................................................
Discontinuance of DTC Services and the Issuance
ofReplacement Certificates.............................................................................................................................
TheBoard ...................................................................................................................................................................
TheFacilities......................................................................................................................................................_.......
Summary of Principal Legal Documents...................................................................................................................
DefinedTerms....................................................................................................................................................
LeaseAgreement.................................................................................................................................................
TrustAgreement..................................................................................................................................................
Assignment Agreement
FinancialAdvisor........................................................................................................................................................
LegalMatters.................................................................................................................................................................
TaxExemption..............................................................................................................................................................
BankQualified Tax -Exempt Obligations..................................................................................................................
--
Miscellaneous....................................................................................................................................................
.........................................................................................
................................................... _......... .................
Authorization...................................................
_............................................................................................................
AppendixA -
General Information Concerning the City
Appendix B -
General Purpose Audited Annual Financial Statements
for the Fiscal Year Ended June 30,1989
Appendix C -
Form of Legal Opinion
AppendixD -
Official Notice of Sale
Worksheet
Bid Forms
Ron Dunin
Jerry Riess
Peg Pinard
Penny Rappa
Bill Roalman
N
0
CITY OF SAN LUIS OBISPO CAPITAL IMPROVEMENT BOARD
CITY OF SAN LUIS OBISPO, CALIFORNIA
John Dunn
Jeff Jorgensen
Pam Voges
Ken Hampian
William C. Statler
William Hetland
Ann McPike
James Gardiner
Michael Dolder
Arnold Jonas
Lawrence J. Stockton
David F. Romero
Wayne A. Peterson
Governing Body of the Board
and the City Council
Mayor and President
Vice -Mayor and Vice President
Member
Member
Member
City Officials
Expiration of Term
November, ) 4 71
November, —17 -mi
November, 1991
November, 1991 9 3
November, I 1� c? j
City Administrative Officer
City Attorney
City Clerk
Assistant City Administrative Officer
Director of Finance/City Treasurer
Director of Utilities
Director of Personnel
Police Chief
Fire Chief
Director of Community Development
Director of Recreation
Director of Public Works
City Engineer
Special Counsel
Jones Hall Hill & White, A Professional Law Corporation
San Francisco, California
Trustee
Financial Advisor
Evensen Dodge, Inc.
Costa Mesa, California
iii
OFFICIAL STATEMENT
CERTIFICATE F PARTICIPATION
Representing Direct, Undivided Fractional
Interests of the Owners Thereof in Lease
Payments to be. Made by the
CITY OF SAN LUIS OBISPO
The purpose of this Official Statement is to provide certain information concerning the S
Certificates of Participation (the "Certificates") representing the direct, individual fractional interests of the
owners thereof in lease payments to be made by the City of San Luis Obispo (the "City") pursuant to a Lease
Agreement dated as of December 1, 1990 (the "Lease Agreement") between the City as lessee and the City of
San Luis Obispo Capital Improvement Board (the "Board") as lessor.
The Board is a public body corporate and politic created by the City pursuant to its municipal affairs powers
as a charter city as exercised pursuant to Ordinance No. 1059 (1986 Series ) adopted by the City Council of
the City on April 15, 1986. The Certificates are being delivered pursuant to a Trust Agreement, dated
December 1, 1990 (the "Trust Agreement"), by the City, the Board and as
trustee (the "Trustee").
The proceeds of the Certificates will be used to finance the acquisition by the Board of certain existing City
facilities (the "Facilities") consisting of the recreation center or the existing City corporation yard or both,
pursuant to an Acquisition Agreement dated as of December 1, 1990, by and between the City, as seller, and
the Board, as purchaser (the "Acquisition Agreement"). Proceeds of the sale of the Facilities will be used to
finance the acquisition of land for open space purposed, the acquisition of land to be used as a site for a fire
station and the renovation and rehabilitation of the City's recreation center (the "Project").
Pursuant to an Assignment Agreement, dated as of December 1, 1990 (the "Assignment Agreement"), the
Board has assigned to the Trustee, for the benefit of the owners of the Certificates, certain rights of the Board
under the Lease Agreement including its right to (i) to receive and collect the Lease Payments, (u7 to receive
and collect proceeds of condemnation of, and insurance of the Facilities, and (iii) to enforce payment of
amounts due under the Lease Agreement upon default by the City.
The Certificates evidence a direct, undivided fractional interest in the Lease Payments. Payments are payable
solely from amounts budgeted and appropriated by the City from its general fund. The obligation of the City
to pay the Lease Payments is absolute and unconditional, and is not subject to abatement under any
circumstances relating to the damage, destruction or condemnation of the Facilities. See "Summary of Legal
Documents—Lease Agreement."
Neither the Certificates nor the obligation of the City to make Lease Payments constitute an obligation of the
City or the Board for which the City or the Board is obligated to levy or pledge any form of taxation or for
which the City or Board has levied or pledged any form of taxation. The Board has no taxing power. Neither
the Certificates nor the obligation of the City to make Lease Payments constitutes a debt of the City, County
of San Luis Obispo, the State of California, or any of its political subdivisions, and does not constitute an
indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.
General information regarding the City is presented in Appendix A. Also within Appendix A is a discussion
of certain provisions of the California Constitution and their impact on the City. See 'Limitation on Tax
Revenues and Tax Collection Procedures." Audited general purpose financial statements of the City for the
fiscal year ended June 30, 1989 are presented in Appendix B.
Brief descriptions of the Certificates, the Board, and the Facilities are included in this Official Statement,
together with summaries of the Acquisition Agreement, Assignment Agreement, Lease Agreement and Trust
Agreement. Such descriptions do not purport to be comprehensive or definitive. All references herein are
qualified in their entirety by reference to the actual documents.
C
General Provisions
THE CERTIFICATES
0
The Certificates will be delivered in the aggregate principal amount of $ . and will be originally
dated December 1, 1990. Interest on the Certificates will be payable on June 1, 1991, and semiannually
thereafter on December 1 and June 1 of each year. The Certificates will mature June 1 in the years and
amounts as set for the below.
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Amount
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Amount
The Certificates will be executed and delivered in fully registered form without coupons and, when originally
delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New
York, New York ("DTC'). DTC will act as securities depository of the Certificates. Individual purchase may
be made in book -entry form only, in the principal amount of $5,000 or integral multiples thereof for each
maturity. Purchasers will not receive certificates representing their interest in the Certificates purchased.
Principal and interest represented by the Certificates will be paid to DTC, which will in turn remit such
principal and interest to its participants for subsequent dispersal to the beneficial owners of the Certificates as
described herein.
Prepayment Features
Optional Prepayment of Certificates. The Board may elect on June 1, 1999 and on any date thereafter, to
prepay Certificates due on or after June 1, 2000. Prepayment may bear in whole or in art of the Certificates
subject to prepayment. If only part of the Certificates are called for prepayment, the specific Certificates to be
prepaid will be selected by the City from among any or all of the remaining maturities in such respective
principal amounts as the Ciry may elect in its sole discretion. All prepayments shall be at a price of par and
accrued interest without premium.
SECURITY FOR THE CERTIFICATES
The Certificates represent direct, undivided fractional interests in the Lease Payments. The Lease Payments
are payable from and are secured solely by amounts budgeted and appropriated by the City from its general
fund. During the term of the Lease Agreement, the City has covenanted to
Pursuant to the Trust Agreement, there is to be on deposit in the Reserve Fund an amount equal to the
maximum annual debt service requirement on the Certificates. Such money is to be held in trust as a reserve
for the payment when due of principal and interest represented by the Certificates in the event amounts in the
Certificate Fund are insufficient therefor.
BOOK -ENTRY ONLY SYSTEM
The Depository Trust Company ("DTC'), New York, New York, will act as securities depository for the
Certificates. The Certificates will be issued as one fully registered Certificate for each maturity as set forth on
the cover page hereof, each in the aggregate principal amount of such maturity, in the name of Cede & Co., as
nominee and registered owner for DTC. DTC is a limited -purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning
of the New York Uniform Commercial Code, and a 'clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its
participants (the "Participants' and to facilitate the clearance and settlement of securities transactions among
Participants in such securities through electronic book -entry changes in accounts of the Participants, thereby
eliminating the need of physical movement of securities certificates. Participants include securities brokers
and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom
(and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.
Ownership interest in the Certificates may be purchased by or through Participants. Such Participants and the
persons for whom they acquire interest in the Certificates as nominees will not receive certificated
Certificates, but each such Participant will receive a credit balance in the records of DTC in the amount of
such Participant's interest in the Certificates, which will be confirmed in accordance with DTC's standard
procedures. When reference is made herein to any consent from or direction by the Certificate holders or
Beneficial Owners, such reference shall only relate to those permitted to act (by statute, regulation or
otherwise) on behalf of Beneficial Owners for such purposes. For the purposes of this Official Statement, the
term "Beneficial Owner" shall hereinafter be defined to include the person for which the Participant acquires
an interest in the Certificates.
The Board, as long as a book -entry -only method is used for the Certificates, will send any notice of
redemption or other bondholder notices only to DTC. Each such person for which a Participant has an
interest in the Certificates, as nominee, may desire to make arrangements with such Participant to have all
notices of redemption for other communications of the Board to DTC, which may affect such persons, to be
forwarded in writing by such Participant and to have notification made of all interest payments. Any failure of
DTC to advise any Participant, or of any Participant to notify the Beneficial Owner, of any such notice and its
content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the
Certificates called for redemption or of any other action premised on such notice. NEITHER THE CITY
NOR THE BOARD WILL HAVE A RESPONSIBILITY OR OBLIGATION TO SUCH PARTICIPANTS
OR THE PERSONS FOR WHICH THEY ACT AS NOMINEES WITH RESPECT TO PROVIDING
NOTICE TO SUCH PARTICIPANTS OR THE PERSONS FOR WHICH THEY ACT AS NOMINEES.
DTC will receive payments from the Trustee, to be remitted by DTC to the Participants for subsequent
disbursement to the Beneficial Owners. The ownership interest of each Beneficial Owner in the Certificates
will be recorded on the records of the Participants whose ownership interests will be recorded on a
computerized book -entry system operated by DTC.
Transfer or crediting of the applicable principal, interest or redemption premium payments to Participants is
the responsibility of DTC, and to Beneficial Owners on their nominees the responsibility of the Participants.
THE CITY AND THE BOARD CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, DTC
PARTICIPANTS OR OTHERS WILL DISTRIBUTE TO BENEFICIAL OWNERS PAYMENTS
REPRESENTED BY THE CERTIFICATES PAID TO DTC OR ITS NOMINEE AS THE REGISTERED
OWNER OF THE CERTIFICATES, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT
DTC WILL SERVICE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.
Beneficial Owners will receive written confirmations of their purchases detailing the terms of the Certificates
acquired. Transfers of ownership interests in the Certificates will be accomplished by book entries made by
DTC and the Participants who act on behalf of the Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interest in the Certificates, except as specifically provided in the
Ordinance. Interest and Principal will be paid by the Trustee to DTC, then paid by DTC to the Participants
and thereafter paid by the Participants to the Beneficial Owners when due.
DISCONTINUANCE OF DTC SERVICES AND
THE ISSUANCE OF REPLACEMENT CERTIFICATES
DTC may determine to discontinue providing its services with respect to the Certificates at any item by giving
notice to the City and discharging its responsibilities with respect thereto under applicable law. Under such
circumstances, certificates ("Replacement Certificates") are required to be delivered as described in the Trust
Agreement unless a successor securities depository is selected. The Beneficial Owner, upon registration of
certifications held in the Beneficial Owner's name, will become the registered owner of the Replacement
Certificates. Interest represented by the Replacement Certificates, when due and payable, will be paid by
check or draft mailed by the Trustee to the registered owners as they appear on the books of the Registrar on
the close of business on the Record Date (as hereinafter defined).
The City may determine that continuation of the system of book -entry transfers through DTC (or a successor
securities depository) is not in the best interest of the Beneficial Owners. In such event, Replacement
Certificates will be delivered.
No transfer or exchange of any Replacement Certificate shall be required to be made (i) after the Record
Date with respect to any interest payment due on the next succeeding interest payment date, or (iii) after the
Record Date with respect to any redemption of such Replacement Certificates. "Record Date" means the
15th day of the month next preceding such interest payment date or the 15th day next preceding a date of
mailing notice of redemption, whether or not regular business day of the Bond Registrar. The City shall not
be required to register the transfer of or exchange any Replacement Certificate selected for redemption in
whole or in part, except the unprepaid portion of the Replacement Certificate being prepaid in part For
every transfer and exchange of the Replacement Certificates, the Trustee may charge the Beneficial Owner a
sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto.
THE BOARD
The City of San Luis Obispo Capital Improvement Board was formed pursuant to Ordinance No. 1059 (1986
Series) adopted by the City Council of the City of San Luis Obispo on April 15, 1986 (the "Ordinance"), for
the purpose of implementing the construction, acquisition, maintenance and improvement of public facilities
and improvements within the City and the performance of all undertakings incidental or advantageous
thereto. Among the powers expressly granted to the Board is the power to borrow money to provide funds for
the construction, acquisition, maintenance or improvement of public facilities authorized by the Ordinance
and to issue in its name revenue bonds to evidence the indebtedness created by such borrowing. The
Ordinance further provides that the bonds of each issue of the Board shall constitute special obligations, and
evidence a special indebtedness of the Board, which shall be a charge upon and payable, both as to principal
and interest and as to any premiums payable upon the redemption of bonds, solely from such revenues and
funds as are specified therein and in the proceedings for their issuance and shall not constitute obligations nor
evidence any indebtedness of the City. The Certificates are the third financing by the Board. The members of
the City Council of the City also sit as the board of directors of the Board.
THE FACILITIES
(Description of Facilities to come.)
THE PROJECT
Proceeds of the sale of the Facilities will be used to finance the acquisition of land for open space purposes,
the acquisition of land to be used as the site of a fire station, and the renovation and rehabilitation of the
City's recreation center, all as described below.
0
Open Space Acquisition
(Description to Come)
•
Fire Station Site Acquisition The City's Facilities Master Plan identified the replacement of Fire Station No.
1, based on condition and space, as the highest priority among all City facilities. After evaluating the casts of
rehabilitating the existing facility versus rebuilding, it was concluded that a new facility would be most cost-
effective. Several sites were examined, and the preferred site was the Emerson School site owned by the San
Luis Coastal Unified School District. The City entered into negotiations with the District and on August 17,
1990, the District agreed to sell the site to the City at its appraised value of $2,640,000.
Recreation Center Rehabilitation: The City will complete a comprehensive rehabilitation of the Santa Rosa
Street Recreation Center. This project includes:; asbestos abatement; re -roofing; replacement/ repair of all
exterior materials; replacement of doors and windows; partial reorganization of interior spaces; replacement
of electrical, lighting and mechanical systems; structural stabilization; and landscaping and parking
reorganization. Total cost of the improvements is approximately $973,900. Funding will be provided from a
State of California grant ($296,000); park -in -lieu fees ($337,400); and long-term financing ($340,000).
ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the Certificates (net of accrued interest) are expected to be
applied as follows:
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
The following are brief summaries of the provisions of the principal legal documents. These summaries are
not intended to be definitive. Reference is made to the actual documents (copies of which are available from
the City) for the complete terms thereof.
DEFINED TERMS
The following terms shall have the following meanings, notwithstanding that any such terms may be elsewhere
defined in this Official Statement. Any terms not expressly defined in this Summary but previously defined in
this Official Statement shall have the respective meanings previously given.
LEASE AGREEMENT
TRUST AGREEMENT
ACQUISITION AGREEMENT
ASSIGNMENT AGREEMENT
FINANCIAL ADVISOR
Evensen Dodge, Inc., Costa Mesa, California, has acted as Financial Advisor to the Board and the City in
connection with the issuance of the Certificates. Requests for information concerning the Board and the City
should be addressed to Evensen Dodge, Inc., 650 Town Center Drive, Suite 430, Costa Mesa, California
92626; (714) 545 -1292 -
LEGAL MATTERS
Legal matters incident to the authorization and issuance of the Certificates are subject to the opinion of Jones
Hall Hill & White, A Professional Law Corporation, San Francisco, California, Special Counsel, as to validity
and tax exemption. The opinion will be substantially in the form set forth in Appendix C attached hereto.
Special Counsel has not been requested to, and has not undertaken to, verify the accuracy of the information
contained in this Official Statement and expresses no opinion with respect thereto.
TAX -EXEMPTION
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Special
Counsel, subject, however, to the qualifications set forth below, under existing law, the portion of the Lease
Payments designated as and comprising interest and received by the owners of the Certificates is excluded
from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes
of the federal alternative mum tax imposed on individuals and corporations, provided, however, that, for
the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal
income tax purposes), such interest is taken into account in determining adjusted net book income (adjusted
current earnings for taxable years beginning after December 31, 1989) and the Lease Agreement is a
"qualified tax-exempt obligation" within the meaning of Section 265 of the Internal Revenue Code of 1986
(the "Code") such that, in the case of a financial Institution, a deduction for federal income tax purposes is
allowed for 80 percent of that portion of such financial institutions' interest expense allocable to interest
payable with respect to the Certificates.
The opinions set forth in the preceding sentences are subject to the condition that the City comply with all
requirements of the Code that must be satisfied subsequent to the delivery of the Lease Agreement in order
that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The
City has covenanted to comply with each such requirement Failure to comply with certain of such
requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be
retroactive to the date of delivery of the Lease Agreement Special Counsel expresses no opinion regarding
other federal tax consequences arising with respect to the Lease Agreement and the Certificates.
Prospective purchasers of the Certificates should be aware that (i) with respect to insurance companies
subject to the tax imposed by Section 831 of the Code, for taxable years beginning after December 31, 1986,
Section 832(b)(5)(B)(1) reduces the deduction for loss reserves by 15 percent of the sum of certain items,
including interest payable with respect to the Certificates, (ii) for taxable years beginning after December 31,
1986 and before January 1, 1992, interest payable with respect to the Certificates earned by some corporations
could be subject to the environmental tax imposed by Section 59A of the Code, (iii) for taxable years
beginning after December 31, 1986, interest payable with respect to the Certificates earned by certain foreign
corporations doing business in the United States could be subject to a branch profits tax imposed by Section
884 of the Code, (iv) passive investment income, including interest payable with respect to the Certificates,
may be subject to federal income taxation under Section 1375 of the Code for subchapter S corporations that
have subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross
receipts of such subchapter S corporation is passive investment income and (v) Section 86 of the Code
requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in
determining gross income, receipts or accruals of interest payable with respect to the Certificates.
In the further opinion of Special Counsel, such interest is exempt from California personal income taxes.
BANK QUALIFIED TAR -EXEMPT OBLIGATIONS
The Lease Agreement has been designated as a "bank -qualified tax-exempt obligation" pursuant to Section
265(b)(3) of the Internal Revenue Code of 1986.
RATING
A rating review has been requested for the Certificates from Moody's Investors Service, Inc This rating will
reflect only the view of the rating agency, and does not constitute a recommendation to buy, sell or hold
securities. Explanations of the significance of the rating may be obtained from the rating agency. The rating is
subject to revision or withdrawal at any time by the rating agency, and there is no assurance that the rating will
continue for any period of time or that it will be revised or withdrawn. Any revision or withdrawal of the
rating could have an adverse effect on the market price of the Certificates..
LITIGATION
There is no litigation now pending or, to the knowledge of City or Board officials, threatened which questions
the validity of the Certificates or of any proceedings of the City or Board taken with respect to the delivery or
sale thereof:
0 0
CERTIFICATION
On the date of delivery of the Certificates, the Board President will furnish a written certification to the effect
that this Official Statement, to the best of his knowledge and belief as of the date of sale and the date of
delivery, is true and correct in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements made herein, in light of the
circumstances under which they were made, not misleading.
MISCELLANEOUS
Any statements made in this Official Statement involving matters of opinion or of estimated, whether or not so
expressly stated, are set forth as such and not as representations of fact, and no representation is made that
any of the estimated will be realized.
AUTHORIZATION
The execution and delivery of this Official Statement by its Chief Financial Officer have been duly authorized
by the Board.
BY /s/ William C. Statler
Chief Financial Officer
APPENDIX A
General Information Concerning the
City of San Luis Obispo
o .•
GENERAL INFORMATION CONCERNING THE CITY
Although the Certificates do not constitute a general obligation debt of the City, the following is presented for
informational purposes.
The City of San Luis Obispo is a Charter City, incorporated February 19, 1856 and chartered May 1, 1876 under the
laws of the State of California. Located on the central coast of California approximately 175 miles northwest of Los
Angeles, the City is the county seat of San Luis Obispo County. With a January 1, 1990 estimated population of
42,136, the City is the largest city in the county.
The City is governed under a "Council -Mayor -Administrative Officer" form of municipal government. The elected
officers of the City are the Mayor and four Council members. Each elected officer shares equal voting power. The
Mayor serves a two-year term. Council members serve four-year staggered terms. The City Administrative Officer,
City Attorney, City Clerk, City Treasurer and all advisory boards, committees and commissions are appointed by the
City Council. The City Administrative Officer is responsible for the day -today operations of the City staff,
implementing the policies of the City Council.
San Luis Obispo is a full-service city. Services provided include: public safety (police and fire); public utilities (water,
wastewater, ,
)• transportation (street maintenance, parking, flood control, municipal
transit); leisure, cultural and social services (parks, recreation, golf course, library, community promotion, human
relations); and community development (pulowl—prevements, planning and zoning, business promotion).
.
a J
(1) For comparison purposes, gross assessed valuations include homeowner's and other exemptions. Although
these exemptions reduce property tax collections, the revenue loss is reimbursed by the State of California.
As such, gross assessed valuation is the revenue base used in establishing property tax -related revenues.
(2) The decrease in the value of utility taxable property effective FY 1988-89 is due to the passage of AB454
which changed the way the State Board of Equalization allocated the values on the utility roll with respect to
the different tax rate areas.
Source: San Luis Obispo County Auditor -Controller
A-1
CITY PROPERTY VALUES, TAX RATES AND PROPERTY TAX COLLECTIONS
TABLE A-1
City of San Luis Obispo _
Trend of Assessed and Estimated Actual Value
of Taxable Property
Gross Assessed Valuation (1)
Year Ended
Secured
Unsecured
Estimated
une30
Total Valuation
Total Valuation Utility(2)
Total
Actual Value
1990
$
$ $
$
$
1989
1,542,776,441
107,876,695 7,819,573
1,658,472,679
1,658,472,679
1988
1987
1,355,182,574
94,891,297 65,930,350
1,516,004,221
1,516,004,221
1,202,072,027
81,766,693 66,459,690
1,350,298,410
1,350,298,410
1986
1,004,275,125
64,811,299 64,146,830
1,133,233,254
1,133,233,254
1985
933,064,061
69,050,162 53,753,180
1,055,867,403
1,055,867,403
1984
857,236,452
57,158,947 49,961,260
964,356,659
964,356,659
(1) For comparison purposes, gross assessed valuations include homeowner's and other exemptions. Although
these exemptions reduce property tax collections, the revenue loss is reimbursed by the State of California.
As such, gross assessed valuation is the revenue base used in establishing property tax -related revenues.
(2) The decrease in the value of utility taxable property effective FY 1988-89 is due to the passage of AB454
which changed the way the State Board of Equalization allocated the values on the utility roll with respect to
the different tax rate areas.
Source: San Luis Obispo County Auditor -Controller
A-1
0
9
Note: The secured property tax roll is composed of ad valorem taxes as well as special assessments, and is calculated
by the San Luis Obispo County Auditor -Controller. The San Luis Obispo County Tax Collector is responsible
for all property tax roll collections within the City of San Luis Obispo.
Source: San Luis Obispo County Auditor -Controller.
TABLE A-3
City of San Luis Obispo
Prooertv Tax Rates
TABLE A-2
Year Ended Tune 30
1986
City of San Luis Obispo
1988 1989 1990
Proposition 13
Secured Prooerty Tax Levies and Collections
$1.000
$1.000 $1.000 $1.000
Voter Approved Indebtedness:
Current Collections
Year Ended
State Water Project
.007
une 30
Total
Amount
Percent
1990
$
$
%
1989
3,246,315
3,027,826
93.3%
1988
2,826,498
2,723,234
96.3%
1987
2,541,905
2,439,169
96.0%
1986
2,138,689
2,069,902
96.8%
1985
1,962,421
1,886,049
96.1%
Note: The secured property tax roll is composed of ad valorem taxes as well as special assessments, and is calculated
by the San Luis Obispo County Auditor -Controller. The San Luis Obispo County Tax Collector is responsible
for all property tax roll collections within the City of San Luis Obispo.
Source: San Luis Obispo County Auditor -Controller.
TABLE A-3
City of San Luis Obispo
Prooertv Tax Rates
San Luis Coastal Unified School District
San Luis Obispo County -General Fund
City of San Luis Obispo
San Luis Obispo Community College District
County School Services
County Library
Port San Luis Harbor
Other Agencies
Total
Source: San Luis Obispo County Auditor -Controller.
A-2
Year Ended Tune 30
1986
1987
1988 1989 1990
Proposition 13
$1.000
$1.000
$1.000 $1.000 $1.000
Voter Approved Indebtedness:
State Water Project
.007
006
006 006
Community College Bonds
.014
.009
.Dog .005
Total
IL021
1.015
1.014 1.011 (2)
(1) Property tax rates are levied per $100 of assessed valuation.
The tax rate information provided is for Tax
Rate Area 003.000, which is
the largest tax rate area in
the City.
(2) Below is a summary of derived property tax allocations
within Tax Rate Area 003-000 for Fiscal Year 1989 -90 -
San Luis Coastal Unified School District
San Luis Obispo County -General Fund
City of San Luis Obispo
San Luis Obispo Community College District
County School Services
County Library
Port San Luis Harbor
Other Agencies
Total
Source: San Luis Obispo County Auditor -Controller.
A-2
TABLE A-4
(1) Total 1989 assessed value of the County is $12,732,877,000.
Source: San Luis Obispo County Auditor -Controller.
LIMITATIONS ON TAX REVENUES AND TAX COLLECTION PROCEDURES
Properly Tax Rate Limitations- Artk* XIIIA
In 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis -Gann
Initiative) to the California Constitution which imposes certain limitations on taxes that may be levied against real
property. This amendment, which adds Article )IIIA to the California Constitution, among other things, defines full
cash value to mean "the county assessor's valuation of real property as shown on the fiscal year 1975/76 tax bill under
'full cash value' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment period." This full cash value may be increased at a rate not to
exceed 2% per year to account for inflation. The amendment further limits the amount of any ad valorem tax on real
property to 1% of the full cash value, except that additional taxes may be levied to pay debt service on indebtedness
approved by the voters prior to July 1, 1978, and on any bonded indebtedness for the acquisition or improvement of
real property which is approved after July 1, 1978, by two-thirds of the voters voting on such indebtedness.
Property Tax Collection Procedures
In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured
classification includes property on which any property tax levied by a county becomes a lien on that property. A ax
levied on unsecured property does not become a hen against the taxes unsecured property, but may become a lien on
certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over
all other liens, arising pursuant to State law, on the secured property, regardless of the time of the creation of other
lines. The valuation of property is determined as of March 1 each year, and installments of taxes levied upon secured
property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due
March 1 and become delinquent August 31.
A-3
County of San Luis Obispo
Principal Property Taxpayers
(Fiscal Year Ended June 30,199(110
Type
Assessed
Taxpayer
of Business
Value
Percent(l)
Pacific Gas and Electric
Utility
$3,917,595,000
30.77%
Pacific Bell
Utility
177,014,640
139%
Union Oil Company of Californias
Oil Production
154,319,669
1.21%
Southern California Gas
Utility
38,278,450
030%
AT&T Communications
Utility
27,630,590
0.22%
French Hospital Medical Center
Health Care
27,082,885
0.21%
All American Pipeline Co.
Pipeline Transport
24,670,560
0.19%
Sonic Cable Television
Utility
22,743,048
0.18%
Shell Beach Hotel Corporation
Lodging/Developer
20,774,895
0.16%
American Medical International
Health Care
20.442.976
0.16%
Total
$4.43
34.79%
(1) Total 1989 assessed value of the County is $12,732,877,000.
Source: San Luis Obispo County Auditor -Controller.
LIMITATIONS ON TAX REVENUES AND TAX COLLECTION PROCEDURES
Properly Tax Rate Limitations- Artk* XIIIA
In 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis -Gann
Initiative) to the California Constitution which imposes certain limitations on taxes that may be levied against real
property. This amendment, which adds Article )IIIA to the California Constitution, among other things, defines full
cash value to mean "the county assessor's valuation of real property as shown on the fiscal year 1975/76 tax bill under
'full cash value' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment period." This full cash value may be increased at a rate not to
exceed 2% per year to account for inflation. The amendment further limits the amount of any ad valorem tax on real
property to 1% of the full cash value, except that additional taxes may be levied to pay debt service on indebtedness
approved by the voters prior to July 1, 1978, and on any bonded indebtedness for the acquisition or improvement of
real property which is approved after July 1, 1978, by two-thirds of the voters voting on such indebtedness.
Property Tax Collection Procedures
In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured
classification includes property on which any property tax levied by a county becomes a lien on that property. A ax
levied on unsecured property does not become a hen against the taxes unsecured property, but may become a lien on
certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over
all other liens, arising pursuant to State law, on the secured property, regardless of the time of the creation of other
lines. The valuation of property is determined as of March 1 each year, and installments of taxes levied upon secured
property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due
March 1 and become delinquent August 31.
A-3
Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor.
The method of collecting delinquent taxes is substantially different for the two classifications of property. The
exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of
the property securing the taxes to the State for the amount of taxes that is delinquent The taxing authority has three
ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer, (2) filing a certificate in
the office of the county clerk specifying certain facts in order to obtain a judgement lien on certain property of the
taxpayer, and (3) seizure and sale of personal property, improvements or possessory interests belonging or taxable to
the assessee.
Commencing in 1982, a 10% penalty is added to delinquent taxes which have been levied with respect to property on
the secured roll. In addition, property on the secured roll on which taxes are delinquent is sold to the State on or
about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a
delinquency penalty, plus a redemption penalty of 11/2% per month to the time of redemption. If taxes are unpaid for
a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax
collector. A 10% penalty also applies to delinquent taxes on property on the unsecured roll, and further, an additional
penalty of 1112% per month accrues with respect to such taxes beginning on the varying dates related to the tax billing
date.
Supplemental Assessments
Legislation enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), provides for the supplemental assignment and
taxation of property as of the occurrence of a change of ownership or completion of new construction. Previously,
statutes enabled the assessment of such changes only as of the next March 1 tax lien date following the change and
thus delayed the realization of increased property taxes from the new assessments for up to 14 months. As enacted,
Chapter 498 provides increased revenue to redevelopment agencies to the extent that supplemental assessments of
new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the
March 1 lien date.
Collection of taxes based on supplemental assessments occurs throughout the year. Taxes due are prorated according
to the amount of time remaining in the tax year, with the exception of tax bills dated March 1 through May 31, which
are calculated on the basis of the remainder of the current fiscal year and the full 12 months of the next fiscal year.
Business Inventory Exemption
Pursuant to legislation adopted in 1979 (Statutes of 1979, Chapter 1150), business inventories were exempted from
taxation in fiscal year 1980-81 and each fiscal year thereafter. Under Chapter 1150, the State paid, as a subvention to
certain local agencies, an amount equal to 100% of taxes that would otherwise be due (excluding taxes to pay for voter -
approved indebtedness) on business inventories. This law further provided a formula for reimbursement by the State
to cities, counties, special districts and school districts for the amount of tax revenues lost be reason of such exemption,
as adjusted for percentage changes in the population and the cost of living.
Supplemental Revenues/Special Subventions
Legislation adopted in 1984 (Senate Bill 794 and Assembly Bill 1849) has replaced business inventory subventions with
a financing plan for local governments. In Section 1 of Senate Bill 794 (Section 16110, et seq. of the California
Government Code, which became operative along with counterpart legislation, Assembly Bill 1949, on July 1, 1984),
the purpose and intent of the legislation was stated as follows:
The Legislature finds and declares that some local agencies lack sufficient revenues to meet their
obligations to the landowners and residents they serve. It is the intent of the Legislature in enacting
this act to provide local agencies with reliable, stable, and very predictable revenues to finance these
obligations.
A-4
•
Appropriation Limitation Article XIII B
On November 6, 1979, California voters approved Proposition 4, known as the Gann Initiative, which added Article
XIII B to the California Constitution. The principal effect of Article XIII B is to limit the annual appropriations of the
State and its political subdivisions to the level of appropriations for the prior fiscal year, as adjusted for changes in the
cost of living, population and services rendered by the government entity.
Proposition 62
On November 4,1986, an initiative statute (known as Proposition 62) was approved by the voters of the State which (i)
requires that any tax for general government purposes imposed on 1=1 governmental entities such as the City be
approved by resolution or ordinance adopted by a two-thirds vote of the governmental entity's legislative body and by
a majority vote of the electorate of the governmental entity, (ii) requires that any special tax (defined as taxes levied
for other than general government purposes) imposed by a local governmental entity approved by a two-thirds vote of
the voters within that jurisdiction, (iii) restricts the use of revenues from a special tax to the purposes or for the service
for which the special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on real property by local
government entities except as permitted by Article XIII A, (v) prohibits the imposition of transaction taxes and sales
taxes on the sale of real property by local government entities, and (vi) requires that any tax imposed by a local
governmental entity on or after August 1, 1985, be ratified by a majority vote of the electorate within two years of the
adoption of the initiative or be terminated by November 15, 1988. "A recent decision of a State Court of Appeals Q
of Westminster v. County of Ora)
has declared Proposition 62 unconstitutional in its entirety. No assurance can be
given that such decision will not be has
to the State Supreme Court or, if appealed, that such decision will be
upheld."
Computation of Legal Debt Margin (As of June 30, 1990)
Gross Assessed Valuation
Legal Debt Limit -3.75% of Gross Assessed Valuation
General Obligation Debt
Other Long -Term Debt:
Revenue Bonds Secured by Capital Leases
Certificates of Participation
Subtotal
Less: Deductions Allowed by Law
Revenue Bonds Secured by Capital Leases
Certificates of Participation
Total Debt Applicable to Computed Limit
Legal Debt Margin
A-5
0
DIrect and Overlapaine Bonded Debt
40
TABLE AS
City of San Luis Obispo
Statement of Direct and Overlapping Debt
San Luis Obispo County Certificates of Participation
Cuesta Community College District
San Luis Obispo Coastal Unified School District
Certificates of Participation
City of San Luis Obispo
City of San Luis Obispo Lease Revenue Bonds and
Certificates of Participation
City of San Luis Obispo 1915 Act Bonds
Total Gross Direct and Overlapping Bonded Debt
Less: Self -Supporting Issues:
General Obligation (water)
Lease Revenue (parking)
1915 Act
Total Net Direct and Overlapping Bonded Debt
Source: California Municipal Statistics, Inc.
AREA ECONOMY
Debt Outstanding as
% Applicable of November 1. 1990
The economic base of the City consist principally of governmental services higher education, the tourist industry and
public utilities. Government and public utilities are the largest employers in the City and county.
Year
TABLE A-6
City of San Luis Obispo
Population Growth
Population
Percentage Change
1981
34,509
0.9%
1982
35,545
3.0%
1983
35,740
0.2%
1984
36,420
2.0%
1985
37,151
2.0%
1986
38,205
2.8%
1987
38,307
0.0%
1988
39,850
4.0%
1989
41,000
2.9%
1990
42,136
2.8%
Source: California Department of Finance and U.S. Census.
Afi
TABLE A-7
City or San Luis Obispo
Building Permit Data
NON -MANUFACTURING:
County of San Luis Obispo'
Residential
2,400
Commercial/Industrial
University
Total
Men's Colony
Year Ended
1'700
($000)
Power Plant
($000)
San Luis Coastal Unified School District
($000)
June 30 No. of Permits Valuation
No. of Permits
Valuation
No. of Permits
Valuation
1990
City of San Luis Obispo
San Luis Obispo General Hospital
City Government
Hospital
360
American Eagle Airlines*
Airline
1989
359
42,683
33
9,224
910
66,369
1988
206
21,066
23
10,354
657
41,768
1987
323
30,243
31
14,620
833
54,014
1986
259
31,658
49
26,205
741
65,383
1985
241
19,546
32
6,135
694
30,916
1984
225
29,131
36
10,905
597
44,857
1983
114
8,782
15
3,427
418
18,115
1982
52
3,211
7
1,499
330
7,172
1981
126
6,449
7
3,224
424
12,954
Source: Department of Community
Development. City of San Luis
Obispo.
TABLE A-8
Major Emplovers
Estimated Number
Principal Product/Serviceof
Employees
MANUFACTURING:
TRW
Electronics Assembly
270
Wells & Company
Activewear
220
Cryolab
Cryogenic Values, Piping Systems
100
Zastech Corporation
Electronics
65
NON -MANUFACTURING:
County of San Luis Obispo'
County Government
2,400
Cal Poly State University
University
2,000
California
Men's Colony
State Prison
1'700
Pacific Gas & Electric (Diablo Canyon)'
Power Plant
1,144
San Luis Coastal Unified School District
School District
Siena Vista Regional Medical Center
Hos pitalp
French Hospital
Hos
Hospital
City of San Luis Obispo
San Luis Obispo General Hospital
City Government
Hospital
360
American Eagle Airlines*
Airline
300
298
Pacific Gas & Electric (General
Construction)
Utilities Construction
250
Pacific Gas & Electric (Transmission
and Distribution)
Utilities
240
Cuesta Community College'
Community College
234
Madonna Inn
Lodging
Mervyn's
Pacific Bell
D234
epartment Store
221
Telegram -Tribune
Telephone Company
Newspaper
200
Blake Graphic Center
Printig Typesetting
117755
Although outside of the City limits, these companies or agencies are relocated immediately adjacent to the
City's boundaries, and are major sources of employment for the San Luis Obispo community. In the case of
the County of San Luis Obispo, which is seated in the City, the total above represents County -wide
employment, of which 1,800 are estimated to work in the City.
Source: San Luis Obispo Chamber of Commerce.
A-7
0
Source: State of California Employment Development Department.
TABLE A-10
County of San Luis Obispo
Estimated Number of Wage and Salary
Workers by Industry -Annual Averages
(Amounts in Thousands)
1985 1986 1987
Agricultural
2.0
TABLE A-9
1.8
Mining
County of San Luis Obispo
.3
Average Annual Labor Force, Employment,
Construction
Unemolovment
and Unemployment Rate
5.0
1986
1987 1988
Employed
81,300
85,800 88,200
Unemployed
4,400
3.950 3.900
Labor Force
85,700
89,750 92,100
Unemployment Rate
5.1%
4.4% 4.2%
(1) As of 11990.
1.5
Retail Trade
Source: State of California Employment Development Department.
TABLE A-10
County of San Luis Obispo
Estimated Number of Wage and Salary
Workers by Industry -Annual Averages
(Amounts in Thousands)
1985 1986 1987
Agricultural
2.0
1.7
1.8
Mining
3
.3
.2
Construction
5.0
4.7
5.0
Manufacturing
4.7
4.8
4.9
Transportation, Utilities
and Communications
33
3.5
3.8
Wholesale Trade
1.5
1.5
1.5
Retail Trade
16.5
17.5
18.6
Finance, Insurance and
Real Estate
2.9
3.2
3.2
Services
12.9
13.5
14.7
Government
.13.1
13.8
14.3
Total All Industries
62.2
64.5
68.0
Source: State of California Employment Development Department
A-8
1989 1990(1)
1988 1989
2.2
.3
4.4
5.4
4.1
1.5
18.7
3.5
14.8
15.2
70.1
Retail Sales and Effective Buying Income
Sales and Marketing Managements annual "Survey of Buying Power" reported retail sales results and effective buying
income ("EBI') within the County of San Luis Obispo as follows:
Source: California State Board of Equalization.
A-9
TABLE A-11
County of San Luis Obispo
EBI and Retail Sales Data
Total EBI
Medan Household
Total Retail
Retail Sales
($000)
EBI
Sales ($000)
Per Household
1989 $2,724,441
$23,949(1)
$1,536,000
$19,057(2)
1988 2,605,104 (3)
23,553(3)
1,165,148
14,862
1987 2,607,691
24,217
1,125,149
14,863
1986 2,360,440
22,996
1,064,423
14,682
1985 2,212,179
22,362
1,005,084
14,277
(1) State median household EBI
in 1989, $30,713.
(2) State retail sales per household in 1989: $19,935.
(3) Sales and Marketing Management changed its methods of calculating effective buying income in 1988. This
adjustment resulted in a reduction of total income at the national level of approximately 11%.
The median age of residents in San Luis Obispo County was estimated to be
33.0 years in 1989. Table A-12 presents
the County's 1989 EBI by percentage
of households in EBI groups in comparison with the State.
TABLE A-12
County of San Luis Obispo
1989 EBI Income Groups
$10,000- $20,000-
$35,000-
$50,000
$1919" 34 "
$49,999
and Over
San Luis Obispo County
24.5% 25.6%
16.4%
163%
California
18.7% 23.5%
17.4%
26.5%
TABLE A-13
City of San Luis Obispo
Taxable Sales 1986-1989 ($000)
1986 1987
1988
1989
Apparel Stores
$21,800 $22,639
$24,873
$27,517
General Merchandise Stores
54,902 65,140
63,865
67,369
Drug Stores
10,372 10,620
11,385
10,606
Food Stores
20,771 22,300
22,995
26,562
Package Liquor Stores
4,503 4,252
4,101
3,905
Eating/Drinking Places
46,354 50,803
54,413
57,665
Home Furnishings/Appliances
14,866 17,419
19,890
21,771
Building Materials/Farm Implements
23,133 26,552
28,853
33,637
Auto Dealers/Auto Supplies
110,837 107,987
109,035
118,990
Service Stations
28,078 27,883
33,154
31,306
Other Retail Stores
38,394 47.649
59.787
68.011
Total Retail Outlets
$374,010 $403,244
$432,351
$467,339
All Other Outlets
66.128 78.735
78.910
66.215
Total All Outlets
440138 481979
511 261
533 554
Source: California State Board of Equalization.
A-9
FINANCIAL OPERATIONS OF THE CITY
The City uses the modified accrual basis of accounting for its governmental, expendable trust and agency funds
whereby revenues are recorded when available and measurable, and expenditures are recorded when services or
goods are received. The proprietary fund types utilize the accrual basis of accounting. The City has received the
Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association
of the United States and Canada for the fiscal year ended June 30, 1989, as well as for the six previous fiscal years.
Table A-14 summarizes the statements of revenues, expenditures and changes in fund balance for the City's general
fund for the past three fiscal years. Preliminary unaudited operating results for the fiscal year ended June 30, 1990 are
also presented. The financial information presented for fiscal years ended June 30, 1987-89 was extracted from the
audited annual financial statements of the City. The City's general purpose audited annual financial statement for the
fiscal year ended June 30, 1989 is included as Appendix B of this Official Statement The reader should be aware that
the complete financial statements may contain additional data relating to the information presented here which may
interpret, explain or modify it
A-10
TABLE A-14
City of San Luis Obispo
Statement of Revenues, Expenditures and
Changes in Fund Balance --General Fund
Fiscal Year Ended .Tune 30
1988 1989
Source: City of San Luis Obispo Comprehensive Annual Financial Statements.
A-11
$12,002,258
369,808
464,004
767,596
1,699,520
386,226
41.534
$15,730,946
$3,417,557
7,112,048
1,188,183
686,890
2,005,983
(814,600)
28,516
5.850
$13,630,427
2100 519
$ 233,951
(1,802,783)
-0-
$(1.568.832)
$ 531,687
4,473,351
66.183
5 071221
1990
(Unaudited)
1987
Revenues:
Taxes
$9,739,287
Licenses and Permits
316,302
Fines and Forfeitures
457,360
Use of Money and Property
605,243
Subventions and Grants
1,459,765
Charges for Services
417,179
Other
19,591
Total Revenues
$13,014,727
Expenditures:
Current:
General Government
$
Public Safety
Transportation
Leisure, Cultural, Social Services
Community Development
Cost Reimbursement
Debt Service:
Principal
23,651
Interest
10.715
Total Expenditures
$11,973,159
Excess of Revenues Over
(Under) Expenditures
$1,041,568
Other Financing Sources (Uses):
Operating Transfers In
$1,385,458
Operation Transfers Out
(1,655,540)
Proceeds of Capital Lease Financing
-0-
Total Other Financing Sources (Use)
S(270,082)
Excess of Revenues and Other
Financing Sources Over (Under)
Expenditures and Other Financing
Uses
$771,486
Fund Balance at Beginning of Year
$2,985,760
Residual Equity Transfer
-0-
Fund Balance at End of Year
$3,757,246
1988 1989
Source: City of San Luis Obispo Comprehensive Annual Financial Statements.
A-11
$12,002,258
369,808
464,004
767,596
1,699,520
386,226
41.534
$15,730,946
$3,417,557
7,112,048
1,188,183
686,890
2,005,983
(814,600)
28,516
5.850
$13,630,427
2100 519
$ 233,951
(1,802,783)
-0-
$(1.568.832)
$ 531,687
4,473,351
66.183
5 071221
1990
(Unaudited)
N
The Budgetary Process
In January, 1983, the City Council approved the use of a
purpose of the two-year plans to emphasize long-range `p.�
program budgets based on significant and measurable o96(
The City's two-year planning documents have
management techniques from the GovernmeF
'
1985-1987 Financial Plan received unanimou
such awards out of 200 documents reviewed.
ear financial planning and budgeting process. The
and effective fiscal management The plan presents
d national recognition as outstanding and innovative
Mcers Association of the United States and Canada. The
as an especially notable policy document—one of only two
Basic tenets of the budgetary policy of the City, briefly stated, include: maintenance of basic services at current levels
with adequate funding, maintenance of reserves at levels which will protect the City from future uncertainties;
estimation of revenues at realistic levels; arrangement of program costs to reflect the true picture of the cost of
operations; and compliance of the recommended budget with the provisions of the State Constitution, City Charter,
municipal code and should fiscal policy.
Table A-15 sets forth comparative revenue detail by source and comparative expenditure detail program of actual,
estimated, budgeted and projected budgets for fiscal years 1989-90 and 1990-91.
A-12
0 0
TABLE A-15
City of San Luis Obispo
Summary of Revenues, Expenditures, and
Changes in Fund Balance—All Funds Combined
Revenues:
Tae Revenues
Licenses and Permits
Fines and Forfeitures
Investment and Property Revenues
Subventions and Grants
Service Charges
Trust and Agency Revenues
Other Revenues
Total Revenues
Operating Programs:
Public Safety
Public Utilities
Transportation
Leisure, Cultural, and Social Services
Community Development
General Government
Total Operating Programs
Capital Proiects:
1989-91 Financial Plan Projects
Carry -Over and Supplemental Projects
Total Capital Projects
Total Expenditures
OTHER FINANCING SOURCES (USES)
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR:-
Designated
EARDesignated
Undesignated
TOTAL FUND BALANCE
1989-90 1990-91
Estimated Budget
A-13
• 0
Retirement Plans for City Employees
The City participants in the State of California Public Employees' Retirement System (PERS) which covers
substantially all of the City's employees. Two valuations have been established for the City; one for all safety
employees and a separate program for all other qualifying employees. PERS is considered a contributory plan
deriving funds from employee contributions as well as former employer contributions and earnings from investments.
It is the City's policy to fund current retirement costs as accrued. The total pension expense for the fiscal year ended
June 30, 1989 was $ , which includes amortization of past service cost to the year 2000. The
accumulated plan benefits and plan net assets for the City's PERS is presented below as of the most recent valuation
date, June 30,19_.
Actuarial present value of
accumulated plan benefits
Net assets available for benefits
Unfunded liability:
Employees
Employers
Total Actuarial Assets
Safety All Others
A-14
APPENDIX B
General Purpose Audited Annual
Financial Statements for the
Fiscal Year Ended June 30, 1989
APPENDIX C
Form of Legal Opinion
APPENDIX D
Official Notice of Sale
0
Members of the Board of
City of San Luis Obispo
Capital Improvement Board
San Luis Obispo, California
Members of the Board:
OFFICIAL BID FORM
Sale Date: December 13,1990
For all or none of the principal amount of $ Certificates of Participation, Series 1990, legally
issued and as described in the Notice of Sale, we will pay the City $ (not less than
$ ) plus accrued interest on the total principal of $ to date of delivery, provided the
Certificates bear the following interest rates:
Year Amount
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Rate .Yield
Complete the following if appropriate:
Year Amount
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Rate Yield
Certificates maturing in the years _ through to be accumulated into a Term Certificate maturing
June 1,
Certificates maturing in the years _ through to be accumulated into a Term Certificate maturing
June 1,
The Certificates mature on June 1 in each of the years as indicated above, and interest is payable June 1, 1991, and
semiannually thereafter on December 1 and June 1 of each year.
This bid is made for prompt acceptance and subject to the conditions of the Official Notice of Sale. We enclose,
herewith, our good faith check in the amount of $
NOT PART OF THIS BID:
Explanatory Note: According to our computation,
this bid involves the following.
Net Interest Cost
Net Interest Rate
Respectfully submitted,
Syndicate Manager
By
(A list of the firms associated with us in this bid is on
the reverse side of this proposal.)
* * * * * * * * * * * * * * * * * * * * t * * * * * * * * * * * * * * * * * * i * ■ * * * * * * * * * * * * * * *
The foregoing offer is hereby accepted by and on behalf of the City of San Luis Obispo, California, this 13th
day of December, 1990.
(Title)
(Title)
I hereby acknowledge receipt of the above-described good faith check.