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HomeMy WebLinkAbout87-188 - Resolutions RESOLUTION NO. 87-188 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, SAN BERNARDINO, CALIFORNIA, DETERMINING UNPAID ASSESSMENTS; DESIGNATING PAYING AGENT, AUTHENTICATING AGENT, TRANSFER AGENT AND REGISTRAR; AND PROVIDING FOR ISSUANCE OF BONDS UNDER THE IMPROVEMENT BOND ACT OF 1915 WHEREAS, the City Council of the City of Rancho Cucamonga has heretofore commenced assessment proceedings pursuant to the Resolution of Intention, under the Municipal Improvement Act of 1913, and has confirmed assessments on parcels within the boundaries of a special assessment district designated ASSESSMENT DISTRICT NO. 86-2 WHEREAS, notice of the recordation of the assessment and of the time within which assessments may be paid in cash has been published and mailed in the manner provided by law, the time provided for receiving payment of assessments in cash has expired, and a list of all assessments which now remain unpaid has been filed with the Treasurer; WHEREAS, the assessment proceedings provide for the issuance of Bonds, in an aggregate amount not to exceed the total amount of the unpaid assessments, under the Improvement Bond Act of 1915, and it is necessary to establish the terms for the issuance of the Bonds; WHEREAS, it is necessary that the City authorize the sale of Bonds representing unpaid assessments; and WHEREAS, Stone & Youngberg has offered to purchase the Bonds pursuant to a Purchase Contract presented to the City and the City wishes to approve the sale of the Bonds to Stone & Youngberg, pursuant to the Purchase Contract: NOW, THEREFORE, the City Council of the City of Rancho Cucamonga does hereby RESOLVE, DECLARE AND ORDER as follows: ARTICLE I DEFINITIONS~ RULES OF CONSTRUCTION SECTION 1.01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise: "1913 Act" means the Municipal Improvement Act of 1913, being Division 12 of the Streets and Highways Code. Resolution No. 87-188 Page 2 '1915 Act" means the Municipal Improvement Act of 1915, being Division 10 of the Streets and Highways Code. "Assessment District' means Assessment District No. 86-2 of the City. 'Bond Counsel" means counsel whose opinion is acceptable by underwriters in the marketing of tax-exempt obligations of public entities and political subdivisions. 'Bondowner' or "Owner' means the person in whose name any Bond is registered upon the Bond Register maintained by the Paying Agent. "Bond Register' means the books for registration to be maintained by the Paying Agent, pursuant to Section 4.01 hereof. 'Bonds' means improvement bonds representing unpaid assessments issued under the 1915 Act. 'Bond Year' means the twelve month period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Certificate Year shall begin on the Closing Date. 'Cash Payment Account' means the account within the Improvement Fund designated by the name of the Bonds established under Section 7.02 and held by the Treasurer. "City" means the City of Rancho Cucamonga, San Bernardino County, California. "City Clerk" means the City Clerk of the City. 'City Council' means the governing body of the City. 'Closing Date' means the date upon which there is an exchange of the Bonds for the proceeds representing the purchase of the Bonds by the Underwriter. "Code" means the Internal Revenue Code of 1986, as amended. 'Debt Service' means the scheduled payment of principal and interest on the Bonds. "Excess Income' means the amount by which all income earned from the investment of Invested Funds in Non-Purpose Investments exceeds the amount which would have been earned if the Invested Funds had been invested at the Yield plus any income attributable to such excess. Resolution No. 87-188 Page 3 'Excess Investment Earnings' means an amount equal to the sum of: (a) The excess of {i) The aggregate amount earned from the Closing Date on all Non-purpose Obligations in which Gross Proceeds of the Bonds are invested (other than amounts attributable to an excess described in this clause (a}}, over (ii) The amount that would have been earned if the Yield on such Non-purpose Obligations (other than amounts attributable to an excess described in this clause (a)) had been equal to the Yield of the Bonds, plus (b) Any income attributable to the excess described in clause {a) above. 'Excess Investment Earnings Fund' means the fund designated by the name of the Bonds established under Section 8.02 and held by the Treasurer. 'Fiscal Year' means July 1 of each year through the next succeeding June 30. "Gross Proceeds' means the sum of the following amounts: (a) Original Proceeds, namely, net amounts received by or for the City as a result of the sale of the Bonds; (b) Investment proceeds, namely, amounts received at any time by or for the City, such as interest and dividends, resulting from the investment of any Original Proceeds (as referenced in clause (a) above) or investment proceeds (as referenced in this clause (b)) in Non-purpose Obligations, increased by any profits and decreased (if necessary, below zero) by any losses on such investments; (c) Amounts in the Reserve Fund and in any other fund established as a reasonably required reserve or replacement fund; (d) Investment Property pledged as security to make principal or interest payments on the Bonds; (e) Amounts, other than as specified in this definition, used to make principal or interest payments on the Bonds; and (f) Amounts received as a result of investing amounts described in this definition. "Improvement Fund' means the fund designated by the name of the Bonds established under Section 7.01 and held by the Treasurer. Resolution No. 87-188 Page 4 "Improvements' mean the improvements constructed and/or acquired for or on behalf of the Assessment District together with appurtenances and appurtenant work, acquisition and incidental expenses in connection therewith. 'Interest Payment Date' means March 2 and September 2 of each year commencing March 2, 1988. 'Invested Funds' means that portion of the Original Proceeds invested in Non-Purpose Investments. 'Investment Earnings Fund' means the fund designated by the name of the Bonds established under Section 8.01 and held by the Treasurer. 'Investment Property' means any security (as defined in section 165(g){2}(A) or (B} of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations the interest on which is excluded from gross income, under section 103 of the Code, for federal income tax purposes. "Net Proceeds' when used with reference to the Bonds, means the face amount of the Bonds, plus accrued interest and premium, if any, less original issue discount and less proceeds deposited in the Reserve Fund. 'Non-Purpose Investments" means any Investment Property which: (a) Is acquired with the Gross Proceeds of the issue; and (b) Ls not acquired in order to carry out the governmental purpose of the issue. "Non-Purpose Obligation' means any Investment Property which is acquired with the Gross Proceeds of the Bonds and is not acquired in order to carry out the governmental purpose of the issue. 'Original Proceeds" means the proceeds from the sale of the Bonds. 'Original Purchaser' means the first purchaser of the Bonds upon their delivery by the City. "Outstanding' when used with reference to the Bonds and as of any particular date means all Bonds theretofore delivered except: (a) Any Bond cancelled by the Treasurer on or before said date; and (b} Any Bond in lieu of or in substitution for which another Bond shall have been delivered pursuant to the Section 3.12 hereof. 'Paying Agent' means the Treasurer of the City who shall act as paying agent, authenticating agent, transfer agent and registrar with respect to the Bonds. Resolution No. 87-188 Page 5 'Permitted Investments' mean any investments authorized pursuant to Article 1, Chapter 4, Part 1, Division 2 of Title 5 of the Government Code of the State of California, as amended from time to time. 'Private Business Use' means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a governmental unit and use as a member of the general public. "Purchase Agreement' or 'Purchase Contract' means the agreement by and between the Original Purchaser and City for the purchase of the Bonds. 'Purchase Price' for the purpose of computation of the Yield of the Bonds, has the same meaning as the term "issue price" in sections 1273(b) and 1274 of the Code, and, in general, means the initial offering price of the Bonds to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term "Purchase Price", for the purpose of computation of the Yield of Non-Purpose Obligations, means the fair market value of the Non-Purpose Obligations on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date that Investment Property constituting a Non-Purpose Obligation becomes a Non-Purpose Obligation of the Bonds. 'Redemption Fund' means the fund designated by the name of the Bonds established under Section 6.01 and held by the Treasurer. 'Record Date' means the close of business on the fifteenth (15th) day of the month preceding each Interest Payment Date whether such fifteenth (15th) day is a Business Day. 'Regulations' means temporary or permanent regulations promulgated under the Code. 'Reserve Fund' means the fund designate Bonds established under Section 5.01 and held by the Treasurer. 'Reserve Requirement' means an amount equal to ten per (10%) of the par value of the Bonds. 'Resolution of Intention' means Resolution No. 86-93 as amended adopted by the City Council. ' ' 'Superintendent of Streets' means the Superintendent of Streets of the City. 'Treasurer' means the Treasurer of the City. Resolution No. 87-188 Page 6 'Unpaid List' means the list of assessments on file with the Treasurer remaining unpaid thirty (30) days after recordation of the assessment in the office of the Superintendent of Streets. 'Yield' means that yield which, when used in computing the present worth of all payments of principal and interest (or o payments in the case of Non-Purpose Obligations which require payments in a form not characterized as principal and interest on a Non-Purpose Obligation or of the Bonds produces an amount equal to the Purchase Price of such Non-Purpose Obligation or the Bonds, all computed as prescribed in applicable Regulations. ARTICLE II UNPAID ASSESSMENTS Section 2.01. ~npaid Assessments. The assessments now remaining unpaid in the aggregate amount of $2,059,351.81 are shown on the Unpaid List on file in the office of the Treasurer and by reference made a part hereof. Section 2.02. Parcel Descriptions. For a description of the lots or parcels of land bearing the respective assessment numbers set forth on the Unpaid List and upon which assessment remain unpaid, reference is hereby made to the assessment and diagram recorded in the Office of the Superintendent of Streets. ARTICLE III BONDS Section 3.01. Issuance of Bonds. Bonds shall be issued in the aggregate principal amount of $2,059,351.81 representing assessments remaining unpaid as shown on the Unpaid List, upon the security of the unpaid assessments, pursuant to the 1915 Act, Resolution of Intention and assessments proceedings duly had and taken, for the purpose of paying for the costs of the Improvements for the Assessment District. Section 3.02. Re~istration~ Denomination. The Bonds shall be issuable only as fully registered Bonds in the denomination of $5,000, or any integral multiple thereof; except that, if the amount by which the total issue exceeds the maximum integral multiple of $5,000, then one Bond in such amount shall be issued to mature in the first year of maturity. Resolution No. 87-188 Page 7 Section 3.03. Date. The Bonds shall be dated April 6, 1987 and interest shall accrue thereon from such date, unless otherwise provided by the Purchase Contract. Section 3.04. Maturity. The Bonds shall be issued in serial form with annual maturities on September 2nd of each year-succeeding the first twelve (12) months after their date, until the whole is: paid. The last installment of Bonds shall mature on September 2, 2007 The amount maturing each year shall be such as to result in approximately equal annual debt service during the term of the issue, as provided by the Purchase Contract. Section 3.07. Interest. Each Bond shall be of a single maturity and shall bear interest at the rate to be determined on the sale thereof on March 2 or September 2 commencing March 2, 1988 next preceding the date on which it is authenticated and registered, unless: (a) The Bond is authenticated and registered as of an Interest Payment Date, in which case it shall bear interest from such Interest Payment Date; or (b) The Bond is authenticated and registered prior to the first Interest Payment Date, in which case it shall bear interest from its date; until payment of its principal sum has been discharged. Section 3.06. Form of Bonds. The Bonds shall be substantially in the form set forth on Exhibit A. Section 3.07. Medium of Payment. The Bonds shall be payable in lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Section 3.08. Payment of Principal and Interest. The principal on the Bonds shall be payable in lawful money of the United States of America at the Principal Office of the Paying Agent. Interest on the Bonds shall be paid by the Paying Agent by check mailed on the Interest Payment Date to the regis- tered Owner of each Bond as his name and address appear on the Bond Register kept by the Paying Agent at the close of business on the Record Date. Resolution No. 87-188 Page 8 Section 3.09. Failure to PaS Interest. Each Bond shall continue to bear interest after maturity at the rate stated thereon, provided it is presented at maturity and payment thereof is refused on the sole ground that there is not sufficient money in the Redemption Fund with which to pay same. If a Bond is not presented at maturity, interest thereon shall run only until maturity. Section 3.10. Execution. The Bonds shall be executed in facsimile by the Treasurer and City Clerk. The seal of the City shall be imprinted in facsimile on the Bonds. The Bonds shall then be delivered to the Paying Agent for authentication and registration. In case an officer who shall have signed or attested to any of the Bonds by facsimile or otherwise shall cease to be such officer before the authentication, delivery and issuance of the Bonds, the Bonds nevertheless may be authenticated, delivered and issued, and thereupon shall be as binding as though those who signed and attested the same had remained in office. Section 3.11. Authentication. Only those Bonds which bear a certificate of authentication substantially in the form set forth on Exhibit A manually executed by the Paying Agent shall be valid or obligatory for any purpose or entitled to the benefits of this Resolution. The certificate of the Paying Agent shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder, and are entitled to the benefits of this Resolution. Section 3.12. Bonds Mutilated~ Destro~ed~ Stolen or Lost. In case any Bond shall become mutilated or be destroyed, stolen or lost, the City shall execute and the Paying Agent shall authenticate and deliver a new bond of like maturity and principal amount as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such a mutilated Bond, upon surrender and cancellation of the mutilated Bond or in lieu of and in substitution for a destroyed, stolen or lost Bond, upon filing with the City and the Paying Agent evidence satisfactory to the City and the Paying Agent that the bond has been destroyed, stolen or lost and proof of ownership thereof, and upon furnishing the City and the Paying Agent with indemnity satisfactory to each, complying with such other reasonable regulations as the City and the Paying Agent may incur. All mutilated Bonds so surrendered shall be cancelled by the Paying Agent. Section 3.13. Temporary Bonds. Until the definitive Bonds are prepared, the City may execute and the Paying Agent may authenticate and deliver, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds, except as to exchangeability for Bonds, one or more temporary Bonds (which shall be registered as to principal and interest), substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued and with such omissions or insertions of and variations from the terms and conditions thereof as may be appropriate to temporary Bonds. The City at its expense shall prepare and execute and the Paying Agent ~pon the surrender of such temporary Bonds for exchange and the cancellation of such surrendered temporary Bonds, without charge to the Owner thereof, shall authenticate and deliver in exchange Resolution No. 87-188 Page 9 therefor, at the Principal Office of the Paying Agent, definitive Bonds of the same aggregate principal amount and maturity. The temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this Resolution. All temporary Bonds surrendered in exchange for a definitive Bond or Bonds shall be forthwith cancelled by the Paying Agent. Section 3.14. Order to Print and Authenticate Bonds. The Treasurer is hereby instructed to cause the Bonds, in such form as shall be approved by the City and its Bond Counsel, to be printed, and to proceed to cause the Bonds to be authenticated and delivered to an authorized representative of the Underwriter, upon payment of the purchase price as set forth in the accepted Purchase Agreement for the sale of Bonds. ARTICLE IV REGISTRATION; TRANSFER; EXCHANGE; CANCELLATION Section 4.01. Bond Register. All of the Bonds issued under this Resolution shall be subject to the provisions for registration and transfer contained in this Resolution and in the Bonds. So long as any of the Bonds shall remain outstanding, the Paying Agent shall maintain and keep, at its principal Office, the Bond Register, and, upon presentation of a Bond for registration or transfer at the Principal Office, the Paying Agent shall register or cause to be registered therein, and permit to be transferred thereon, under such reasonable regulations as the City or the Paying Agent may prescribe, any Bond entitled to registration or transfer. So long as any of the Bonds remain outstanding, the City shall make all necessary provisions to permit the exchange of Bonds at the Principal Office of the Paying Agent. Section 4.02. Transfer Bonds. Each Bond shall be transferable only upon the Bond Register by the Owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof, together with a written instrument of transfer satisfactory to the Paying Agent duly executed by the Owner or his duly authorized attorney. Upon the transfer of any Bond, the Paying Agent shall issue in the name of the transferee a new Bond or Bonds of a like aggregate principal amount of the same series, interest rate and maturity as the surrendered Bond or Bonds. Section 4.03. Exchange of Bonds. Any Bond or Bonds may be exchanged at the Principal Office of the Paying Agent, upon surrender thereof, by the Owner in person or by his attorney duly authorized in writing. Upon exchange of such Bond or Bonds, the Paying Agent shall issue in the name of the Owner thereof a new Bond or Bonds for a like aggregate principal amount of the same series, interest rate and maturity as the surrendered Bond or Bonds. Section 4.04. Regulations with Respect to Exchanges and Transfers. In all cases in which the privilege of exchanging or transferring Bonds is exercised, the City shall execute and the Paying Agent shall authenticate and deliver Bonds in accordance with the provisions of this Resolution. All Resolution No. 87-188 Page 10 Bonds surrendered in any such exchanges or transfers shall forthwith be cancelled by the Paying Agent and delivered to the City. For every such exchange or transfer of Bonds, whether temporary or definitive, the City or the Paying Agent may impose a charge sufficient to reimburse them for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer (other than such as may have been imposed by the City), which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. Section 4.05. No Exchanqe or Transfer. No exchange or transfer of Bonds shall be made during the period from any Record Date to the next succeeding Interest Payment Date. Section 4.06. Cancellation. All Bonds paid or redeemed, either at or before maturity, shall be cancelled upon payment or redemption of such Bonds, and upon delivery of such Bonds to the Paying Agent when such payment or redemption is made. All Bonds cancelled under any of the provisions of this Resolution shall be sent by certified or registered mail to the City which shall retain such Bonds for the statutory period of one year, after which such Bonds may be destroyed upon execution of a certificate describing the Bonds so destroyed. The City shall retain the executed certificate in its permanent files for the issue. ARTICLE V RESERVE FUND Section 5.01. Reserve Fund. A fund is hereby created and designated Reserve Fund Assessment District No. 86-2 to be held and administered by the Treasurer. Section 5.02. Disposition of Proceeds. Bond proceeds in an amount equal to the Reserve Requirement of $205,934.41 shall be transferred to the Reserve Fund. Section 5.03. Application. The monies in the Reserve Fund shall be applied as follows: (a) Except as provided in Section 5.06, monies in the Reserve Fund shall be transferred to the Redemption Fund for the Bonds if, as a result of delinquencies in the payment of assessments, there are insufficient monies in the Redemption Fund to pay principal of and interest on the Bonds. Amounts Resolution No. 87-188 Page 11 so transferred shall be repaid to the Reserve Fund from proceeds from the redemption or foreclosure of property with respect to which such transfer was required and from payments of the delinquent assessments; and (b) Whenever monies in the Reserve Fund are sufficient to retire all of the Bonds outstanding, plus accrued interest thereon, such money shall be transferred to the Redemption Fund and collection of the remaining unpaid assessments shall cease. Section 5.04. Investment. The monies in the Reserve Fund may be invested and reinvested in Permitted Investments. Section 5.06. Transfer of Investment Earnings. All interest earnings and profits on amounts in the Reserve Fund shall be transferred to the Investment Earnings Fund upon receipt thereof. ARTICLE VI REDEMPTION FUND Section 6.01. Redemption Fund. A fund is hereby created and designated Redemption Fund Assessment District No. 86-2 to be held and administered by the Treasurer. Section 6.02. Disposition of Proceeds. Bond proceeds in the amount of $146,213.98 representing not to exceed one year's interest on the Bonds shall be deposit- ed in the Redemption Fund upon sale and delivery of the Bonds. Section 6.03. Accrued Interest. Accrued interest paid by the Original Purchaser, if any, shall be deposited in the Redemption fund upon sale and delivery of the Bonds and used for payment of interest due on the first Interest Payment Dates. Section 6.04. Application. Except as provided in Section 6.06, monies in the Redemption Fund shall be used exclusively for the payment of principal of and interest on the Bonds when due. Section 6.05. Investment. The monies in the Redemption Fund may be invested and reinvested in Permitted Investments. Section 6.06. Transfer of Investment Earnings. All interest earnings and profits on amounts in the Redemption Fund shall be retained in the Redemption Fund if such earnings and profits in any Bond Year are less than Resolution No. 87-188 Page 12 $100,000. If the aggregate earnings and profits equal or exceed $100,000 in any Bond Year, then all such earnings and profits shall be forthwith transferred to the Investment Earnings Fund. ARTICLE VII IMPROVEMENT FUND Section 7.01. Improvement Fund. A fund is hereby created and designated Improvement Fund Assessment District No. 86-2 to be held and administered by the Treasurer. Section 7.02. Cash Pasment Account. Within the Improvement Fund, an account is hereby created and designated Cash Payment Account Improvement Fund Assessment District No. 86-2 to be held and administered by the Treasurer. Section 7.03. Disposition of Cash Payments. All payments made by the owners of property within the Assessment District, pursuant to Section 10603 of the Streets and Highways Code, shall be deposited in the Cash Payment Account. Section 7.04. Investment of Cash Pasments. The monies in the Cash Payment Account may be invested and reinvested in Permitted Investments, without regard to yield limitations or rebate requirements under the Code, and shall be retained in the Cash Payment Account for the purpose specified in Section 7.08. Section 7.05. Disposition of Bond Proceeds. After deposit of the required amounts in the Reserve Fund and Redemption Fund, the remaining proceeds from the sale of the Bonds shall be deposited in the Improvement Fund. Section 7.06. Investment of Bond Proceeds. The monies in the Improve- ment Fund, exclusive of the monies in the Cash Payment Account, may be invested and reinvested in Permitted Investments. Section 7.07. Transfer of Investment Earnings on Bond Proceeds. All interest earnings and profits on amounts in the Improvement Fund, exclusive of the amounts in the Cash Payment Account, shall be transferred to the Investment Earnings Fund upon receipt thereof. Resolution No. 87-188 Page 13 Section 7.08. Application. The monies in the Improvement Fund and Account therein shall be used exclusively for the payment of the costs of the Improvements described in the Resolution of Intention, as now or hereafter amended by appropriate change and modification proceedings. Section 7.09. Surplus Funds. Any surplus in the Improvement Fund after completion of the Improvements shall remain in the Improvement Fund for a period not less than two (2) years from the date of receipt of Bond proceeds and thereafter shall be utilized or distributed pursuant to Section 10427.1 of the Streets and Highways Code. ARTICLE VIII REBATE Section 8.01. Investment Earnin§s Fund. A fund is hereby created and designated Investment Earnings Fund Assessment District No. 86-2 to be held and administered by the Treasurer. Section 8.02. Excess Investment Earnings Fund. A fund is hereby created and designated Excess Investment Earnings Fund Assessment District No. 86-2 to be held and administered by the Treasurer. Section 8.03. Transfers to Investment Earnings Funds. All interest earnings and profits on amounts in all funds and accounts established hereunder, other than: (a) Interest earnings and profits on the Redemption Fund and any other funds referenced in this Section if such earnings in any Bond Year are less than $100,000; (b) Interest earnings and profits on amounts in funds and accounts which do not constitute Gross Proceeds; and (c) Interest earnings and profits on the Excess Investment Earnings Fund; shall, upon receipt by the Treasurer, be deposited in the Investment Earnings Fund. In addition, all interest earnings and profits on Gross Proceeds in funds held by the City shall, upon receipt, be deposited by the Treasurer in the Investment Earnings Fund. Resolution No. 87-188 Page 14 Section 8.04. Transfers to Excess Investment Earnings Fund. Annually, on the last day of each Bond Year or on the preceding business day in the event that such last day is not a business day, the Treasurer shall transfer from the Investment Earnings Fund to the Excess Investment Earnings Fund for purposes of ultimate rebate to the United States an amount equal to Excess Investment Earnings. Section 8.05. Transfers to Redemption Fund. After the transfer, pursuant to Section 8.04, the Treasurer shall transfer all amounts remaining in the Investment Earnings Fund to the Redemption Fund to be used for Debt Service on the next Payment Date. Section 8.06. Duties of Treasurer in General. The Treasurer shall calculate Excess Investment Earnings in accordance with Section 8.07 and shall assure payment of an amount equal to Excess Investment Earnings to the United States in accordance with Sections 8.08 and 8.09. Section 8.07. Calculation of Excess Investment Earnings. Prior to the last day of the first Bond Year, the Treasurer shall calculate the Excess Investment Earnings referenced in clause (a)(i) of the definition of Excess Investment Earnings. Thereafter, fifteen (15) days prior to the last day of each Bond Year and on the date of the payment of the Bonds in full, the Treasurer shall calculate the amount of Excess Investment Earnings. The calculations shall be made or caused to be made by the Treasurer as follows: (a) Except as provided in (b), in determining the amount described in clause (a)(i) of the definition of Excess Investment Earnings, the aggregate amount earned on Non-purpose Obligations shall include; (i) All income realized under federal income tax accounting principles (whether or not the person earning such income is subject to federal income tax) with respect to such Non-purpose Obligations and with respect to the reinvestment of investment receipts from such Non-purpose Obligations (without regard to the transaction costs incurred in acquiring, carrying, selling or redeeming such Non-purpose Obligations), including, but not limited to, gain or loss realized on, the disposition of such Non-purpose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to taxable year of inclusion of gross income), and income under section 1273 of the Code (relating to original issue discount); and (ii) Any unrealized gain or loss as of the date of payment of the Bonds in full in the event that any Non-Purpose Obligation is retained after such date. Resolution No. 87-188 Page 15 (b) In determining the amount described in clause (a)(i) of the defini- tion of Excess Investment Earnings, Investment Property shall be treated as acquired for its fair market value at the time it becomes a Non-purpose Obligation, so that gain or loss on the disposition of such Investment Property shall be computed with reference to such fair market value as its adjusted basis. (c) In determining the amount described in clause (a)(ii) of the definition of Excess Investment Earnings, the Yield of the Bonds shall be determined based on the actual Yield of the Bond during the period between the Closing Date and the date the computation is made (with adjustments for original issue discount or premium). (d) In determining the amount described in clause (b) of the definition of Excess Investment Earnings, all income attributable to the excess described in clause (a) of this definition must be taken into account, whether or not that income exceeds the Yield of the Bonds, and no amount may be treated as "negative arbitrage". (e) In determining the amount of Excess Investment Earnings, there shall be excluded any amount earned on any fund or account which is used primarily to achieve a proper matching of revenues and Debt Service within each Bond Year and which is depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on such fund or account or one-twelfth of annual Debt Service as well as amount earned on such earnings if the gross earnings on such fund or account for the Bond Year is less than $100,000. Section 8.08. Payment to the United States. The Treasurer shall pay from the Excess Investment Earnings Fund an amount equal to Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth (5th) Bond Year and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The Treasurer shall assure that each such installment is in an amount equal to at least ninety percent (90%) of the Excess Investment Earnings with respect to the Gross Proceeds as of the close of the computation period. Not later than sixty (60) days after the payment of the Bonds in full, the Treasurer shall pay from the Excess Invest Earnings Fund to the United States one hundred percent (100%) of the theretofore unpaid Excess Investment Earnings. In the ev that there are any amounts remaining in the Excess Investment Earnings Fund following the payment required by the preceding sentence, the Treasurer shall pay such amounts to the City to be used for any lawful purpose of the City. The Treasurer shall remit payments to the United States at the address prescribed by the Regulations as the same may be from time to time in effect, with such reports and statements as may be prescribed by such Regulations. In the event that, for any reason, amounts in the Excess Investment Earnings Fund are insufficient to make the payments to the United States which are required by this Section, the Treasurer shall assure that such payments are made to the United States, on a timely basis, from any funds lawfully available therefor. Resolution No. 87-188 Page 16 Section 8.09. Further Obligation of Treasurer. The Treasurer shall assure that Excess Investment Earnings are not paid or disbursed except as required in this Article. To that end, the Treasurer shall assure that investment transactions are on an arm's length basis and that Non-purpose Obligations are acquired at their fair market value. In the event that Non-purpose Obligations consist of certificates of deposit or investment contracts, investment in such Non-purpose Obligations shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. Section 8.10. Maintenance of Records. The Treasurer shall keep, and retain for a period of six (6) years following the payment of the Bonds in full, records of the determinations made pursuant to this Article. Section 8.11. Independent Consultants. In order to provide for the administration of this Article, the Treasurer may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Treasurer may deem appropriate. ARTICLE IX DEFICIENCIES IN REDEMPTION FUND Section 9.01. No Obliqation to Advance Funds. The City shall not be obligated to advance any lawfully available funds to cure any deficiency which may occur in the Redemption Fund; provided that this determination shall not prevent the City, in its sole discretion, from so advancing such funds. Section 9.02. Title of Bonds. The determination not to advance law- fully available funds to cure deficiencies in the Redemption Fund shall be clearly stated in the title of any Bonds issued representing unpaid assess- ments, pursuant to Section 8769 of the Streets and Highways Code. ARTICLE X REDEMPTION SECTION 10.01. Redemption. The outstanding Bonds may be redeemed and paid in advance of maturity upon the 2nd of March or 2nd of September in any year by giving the notice provided by law and by paying principal and accrued interest together with a premium equal to Three percent (3%) of the principal thereof. Resolution No. 87-188 Page 17 Section 10.02. Notice of Redemption. The notice shall specify the maturities of the Bonds to be redeemed, the redemption date ~nd the place or places where amounts due upon such redemption will be payable and, if less than all of the bonds of any like maturity are to be redeemed, the letter and numbers or other distinguishing marks of such Bonds to be redeemed, and, in the case of a Bond to be redeemed in part only, such notice shall also specify the portion of the principal amount thereof to be redeemed. Section 10.03. Redemption of Less than Entire~Bond. If there shall be called for redemption less than all of a Bond, the-City shall execute and the Paying Agent shall authenticate and deliver, upon the surrender of such Bond to the Paying Agent, without charge to the owner thereof, for the unredeemed balance of the principal amount of the Bond surrendered, a bond or bonds of the same maturity and of any authorized denomination. ARTICLE XI PAYING AGENT Section 11.01. Appointment. The City Council hereby appoints Treasurer of the City of Rancho Cucamonga as paying agent, authenticating agent, transfer agent and registrar for the Bonds. Section 11.02. Approval of Administrative Charges. The City Council hereby authorizes and directs the Paying Agent to collect administrative charges to defray expenses incurred in performing the services specified herein as may be authorized by law. ARTICLE XII TAX COVENANTS Section 12.01. Intention of Covenants. It is the intention of the City that the interest paid on the Bonds be exempt from federal income taxation to the extent permitted under the Code and from personal income taxation imposed by the State of California and therefore the City agrees to the covenants contained in this Article. Section 12.02. Compliance with Code and Requlations. The City represents and covenants, for the benefit of the Bond Owners, that until the last Bond has been paid or defeased, the City will comply with all require- ments of the Code and all applicable Regulations. Section 12.03. General. The City represents and covenants that: (a) The City is a governmental unit of general taxing powers. Resolution No. 87-188 Page 18 (b) The Original Proceeds will be used, in part, to construct and acquire the Improvements and to pay costs and expenses incident thereto. (c) The Improvements are owned and operated by the City, except for certain improvements that are under the ownership, management and control of other public agencies or regulated public utilities. Section 12.04. Private Activity Bond Prohibition. The City represents and covenants that the Original Proceeds will not be used in a manner that would cause the Bonds to become "private activity bonds" within the meaning of Section 141 of the Code, including; (a) No part of the Original Proceeds will be used for any private business use within the meaning of Section 141 of the Code. (b) None of the payment of the principal of or the interest on the Bonds is directly or indirectly secured by any interest in: (i) Property used or to be used for a private business use; or (ii) Payments in respect to such property, or to be derived from such payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for a private business use, all within the meaning of Section 141 of the Code. (c) None of the Original Proceeds will be used directly, or indirectly, to make or finance loans to persons other than governmental units, within the meaning of Section 141 of the Code. Section 12.05. Substantial Expenditure. The City represents and covenants that substantially all of the Original Proceeds and investment earnings thereon will be expended on or before May 1, 1990 Section 12.06. Investment of Proceeds. The City represents and covenants that; (a) The Original Proceeds will not exceed the amount necessary to achieve the purposes stated herein and no portion of the Bonds is issued solely for the purpose of investing such portion at a materially higher yield (taking into account the discount) than the Yield on the Bonds. (b) The Redemption Fund has been established primarily to achieve a matching of revenues and payments due with respect to the Bonds in each year. Amounts deposited in the Redemption Fund will be depleted at least once a year except for a reasonable carry-over amount not to exceed one year's earnings on such Fund and all monies deposited in such Fund will be expended within a thirteen (13) month period beginning on the date of Resolution No. 87-188 Page 19 deposit. The amount in the Redemption Fund will be invested without regard to yield, but in no event will the aggregate earnings on the Redemption Fund be permitted to exceed $100,000 in any Bond Year. If the aggregate earnings exceed $100,000 in any Bond Year, then all amounts earned on the Redemption Fund shall be subject to Article VIII. (c) A portion of the Original Proceeds in an amount not to exceed 10% of the Original Proceeds will be deposited into a reasonably required Reserve Fund. At no time will the amounts deposited to the Reserve Fund be in excess of 10% of the Original Proceeds. Amounts held in the Reserve Fund will be invested without regard to yield. Amounts earned on the Reserve Fund will be subject to Article VIII. (d) No funds held by the City and pledged to the payment of the Debt Service or the Bonds shall be invested so as to produce a yield in the excess of the Yield on the Bonds. (e) Notwithstanding the foregoing, any Original Proceeds and other amounts held in the Fund described above may be invested in obligations earning interest which is exempt from federal taxation under Section 103 of the Code, and any amounts earned from so investing shall not be subject to Article VIII. Section 12.07. Private Loan Use Limitation. The City represents and covenants to assure that not in excess of the lesser of $5,000,000 or five percent (5%) of the Net Proceeds of the Bonds is used, directly or indirectly, to make or finance a loan (other than loans constituting Non-purchase Obligations) to persons other than state or local government units. Section 12.08. Federal Guarantee Prohibition. The City represents and covenants that: (a) Neither the principal of nor the interest on the Bonds is directly or indirectly guaranteed in whole or in part by the United States or any agency or instrumentality of the United States so as to cause the Debt Service or the Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code or any Regulations. (b) No significant portion of the Original Proceeds will be used to make any loan, the payment of principal or interest of which is to be guaranteed (in whole or in part) by the United States or any agency or instrumentality of the United States so as to cause the 1987 Certificates to be federally guaranteed within the meaning of Section 149(b) of the Code or any Regulations. Section 12.09. Prohibition Against Artifice or Device. The City represents and covenants that the Bonds are not and will not be part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code or any Regulations: Resolution No. 87-188 Page 20 (a) Enabling the City to exploit the difference between tax-exempt and taxable interest rates to gain material financial advantage; and (b) Increasing the burden on the market for tax-exempt obligations. Section 12.10. Pledged Revenues. The City represents and covenants that no revenues or amounts in other accounts or funds of the City are reserved or pledged for Debt Service or the Bonds. Section 12.11. No Arbitrage. The City represents and covenants that the City shall not take, or permit or suffer to be taken, any action with respect to the Gross Proceeds of the Bonds 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 an "arbitrage bond" within the meaning of Section 148(a) of the Code or any Regulations. Section 12.12. Registration. The City represents and covenants to cause the Bonds to be delivered (and transferred if requested) in fully registered form. Section 12.13. Amendment. The City represents and covenants to amend this Resolution and the assessment proceedings to make such additions, deletions or modifications as may be necessary to assure compliance with Section 148(f) of the Code relating to required rebate of Excess Investment Earnings to the United States or otherwise as may be necessary to assure exemption from federal income taxation of the interest on the Bonds. ARTICLE XIII GENERAL PROVISIONS Section 13.01. Covenant to Foreclosure. The City covenants that upon default of any assessment payment due, it will cause foreclosure proceedings to be brought within one hundred fifty (150) days of such default and thereafter diligently prosecute such proceedings to completion. Furthermore, the City covenants to bid the minimum of any delinquent amount at any foreclosure sale. Section 13.02. Unpaid Assessments as Trust Fund. The unpaid assessments shown on the Unpaid List presented to and determined by the City to be correct, together with the interest thereon, shall remain and constitute a trust fund for the redemption and payment of the Bonds and of the interest which may be due thereon. An installment of each assessment shall be payable in each year preceding the date of maturity of each of the several series of bonds which have been issued, sufficient to pay the bonds when due. Section 13.03. Reassessment. If any assessment heretofore or hereafter issued is void or unenforceable, for any cause, or if Bonds are issued to represent or be secured by any assessments and such issuance is not effective Resolution No. 87-188 Page 21 through the curative provisions under Division 10 or Division 12 of the Streets and Highways Code to make the Bonds valid and enforceable, then a reassessment shall be made in the manner and form provided by Division 10. Section 13.04. Incontestability. After the sale and delivery of the Bonds by the City, the Bonds shall be incontestable by the City. Section 13.05. Contract with Bondowners. The provisions of this Resolution and of any other resolution supplementing or amending this Resolution shall constitute a contract between the City and the Bondowners and such provisions shall be enforceable by any Bondowner for the equal benefit and protection of all Bondowners similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. This contract is made under and is to be construed in accordance with the laws of the State of California. No remedy conferred hereby upon any Bondowner is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by law. No waiver of any default or breach of duty or contract or shall impair any right or remedies on said subsequent default or breach. No delay or omission of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any default or acquiescence therein. Every substantive right and every remedy conferred upon the Bondowners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and should said suit, action or proceeding be abandoned, or be determined adversely to the Bondowners, then, in every such case, the City and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. Section 13.06. Cessation of A~reements. When all of the Bonds and all interest to accrue thereon have been fully paid and discharged, the agree- ments in this Resolution shall cease and terminate, and the City shall be under no further obligation to do or perform any of the covenants, condi- tions, or agreements in this Resolution. Section 13.07. Partial Invalidity. If any section, subsection, sentence, clause or phrase of this Resolution shall be for any reason held by a court of competent jurisdiction to be unconstitutional, invalid or unenforceable, such holding shall not affect the validity of the remaining portions hereof. The City Council hereby declares that it would have passed this Resolution and each section, subsection, sentence, clause or phrase hereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared to be unconstitutional, invalid or unenforceable, such holding shall not affect the validity of the remaining portions hereof. Resolution No. 87-188 Page 22 Section 13.08. Liberal Construction. This Resolution shall be liberally construed to the end that its purpose may be effected. No error, irregula- rity or informality and no neglect or omission herein or in any proceeding had pursuant hereto which does not directly affect the jurisdiction of the City Council shall void or invalidate this Resolution or such proceeding or any part thereof, or any act or determination made pursuant thereto. Section 13.09. Authorization to Authenticate. The Paying Agent is hereby authorized and directed to authenticate and deliver the Bonds to the Underwriter upon payment of the purchase price thereof. Section 13.10. Authorization of Officers. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the issuance, sale and delivery of the Bonds, and otherwise to effectuate the purposes of this Resolution, and such actions previously taken by such officers are hereby ratified and con fi rmed. Section 13.11. Effective Date. This Resolution shall become effective upon adoption. NO ACTION this 15TH day of May, 1987. AYES: NOES: Dennis L. Stout, Mayor ATTEST: Beverly A~/A~thelet, City Clerk I, BEVERLY A. AUTHELET, CITY CLERK of the City of Rancho Cucamonga, California, do hereby certify that the foregoing Resolution was duly passed, approved, and adopted by the City Council of the City of Rancho Cucamonga, California, al a regular meeting of said City Council held on the 15th day of May, 1987. Executed this 15th day of May, 1987 at Rancho Cucamonga, California. Beverly,. ~uthelet, City Clerk Resolution No. 87-188 Page 23 ~A ~ STkTES OF AMERICA STATE OF ~ C~JNTY OF SAN ~%RD~ Number Amount [ ] [$ ] CITY OF RANCID ASSESSMENT DISTRICT NO. 86-2 Under and by virtue of the "Improvement Bond Act of 1915", being Division 10 (cc~mencing with Section 8500) of the Streets and Highways Code of the State of California (the "Act"), the City of ~ O~e2 ~/a, California (the "City") will, out of the r~_~on fund for ~ payment of the bends issued upon the_assessments ma_de for the acquisition and conmtz%~ton of certain public works of improvement in the Assessment District, being Assessment District No. 86-2, more fully described in I~olLfcion of Intention No. (the '~solution of Intantion',), adoptsd by the' City Council of the City of Rancho Cucamcnga on the day of , 19 , pay to the Re~/stered Owner indicated above, or reg~ assigns, on the--Maturity Date ir~licated above, the Principal Amount indicated above in lawful money of the United States of America, with interest ~ from the Irfaerest Payment Date (as hereinafter defined) r~xt preceding the date on which this bund is aLfchenticated and registered, unless th/s bond is authenticated and registered as of an Interest Payment Date, in .w~. 'ch ? it shall bear interest ~£~. said Interest Payment Date, or unless th~ bond is authenticated and reFistered prior to the fLrst Interest Payment Date, in which case it shall bear interest from its date, per annum, at the office of the Treasurer of the City, as paying agent, reg/stl-ar and transfer agent (the "Registzar"), located in the City of Rancho Cucamonqa, California (tb~ "Principal Office"). A-1 Res61ution No. 87-188 Page 24 ~ bond will c~ntimm to bear ~ ~ maturity at the Interest Rate above stated; provided, it is pre.~_nted at maturity and payment hereof is refused upon the sole grcur~ that there are not sufficient mc~eys in the redemption fund with which to pay same. If it is not presented at maturity, tb~-~ bc~d will cease to bear interest at maturity. ~s bond shall not be entitled to any benefit ~ =he A~t or the pz~in~s or beco~ valiU or obligatory for any pur~, until tn. Certificate of Authentication and ~-~cratic~ hereon er~orsed shall have been ~ bond is one of several annual series of bonds of lika date, tenor and effect, b~c differir~ i~ amo~fas, ~ rates a~d maturities, issued by the City under the Act and the Resolution of Issuanoe in the a~te principal amount of TWo Million Fifty Nine ~ ~%ree Hundred Fifty One and 81/100 Dollars ($2,059,351.81) for the purpose of providing mear~ for paying for the work and /m~x~wements described in the Resolution of Intention, and is secured unpaid assessments made for the payment of said work, and, incl~ principal ar~ interest, is payable exclusively out of said ~und. ~he interest is payable semiannually to maturity, on the 2nd day of March and 2nd day of Se~mmber in each year hereafter (an "~ Payment Date"), to the registermd owner hereof by check or draft mailed to such owner at his address as it appears on the registration books of the Registrar, or at such address as may have been filed with the Registrar for that purpose, as of the fifteenth day immediately preced/ng an Interest Payment Date; provided, that the first installment is for the interest to the 2nd day of March, 1988, and The bor~s are i~_~hle only as fully reg~ bonds in denominations of $5,000 or any integTal multiple ~f, except for one bond maturing in the first year of maturity which includes the amount by which the total issue exceeds the maximum integral multiple of $5,000 conta/ned therein. This bond is transf~le by the regi~ owner hereof in person or by his attorney duly authorized in writir~ at the Principal Office of the Registrar, subject to the texms and ~tions provided in the Registrar's system for transfer of re~~ 8ebt obligations, includir~ the payment of certain char~es, if any, upon surrmnder and cancellation of this bend. Upon such transfer a new reg~ bo~d or bonds of any authorized denomination or denominations of the same maturities for. the same aggregate principal amcunt, will be issued to the tra~.'feree in ~e therefor. This bond, or a portion thereof if issued in a denomination greater than $5,000, shall be subject to redemption and payment in advance of maturity in ir~r~merffcs of $5,000 as provided in Section 8768 of the Act, on the 2nd day of March or 2nd day of September in any year by giving the notice provided in the Act to the registered owner hereof at his address as it appears on the registration books of the Registrar and by paying principal of and accrued interest on such redee~d amount, together with a Dr~mium equal to ~ percent (3%) of the redeemed principal amount. If less than the entire bond thereof. A-2 Resolution No. 87-188 Page 25 fa~e ~ ~ ~~ of ~ Ci~ of ~ O~c~, ~ifo~, ~ ~ fa~e ~ ~ ~ ~__ ~y of , 1987. City Clerk Th/s Bond has been authen- ticated and registmred on By: [SEAL] TRFASURER, CITY OF RANCHO CUCAMONC4%, CA~IFORNTA I2~AL OPINION The opinion of Bond Counsel is attached hereto and made a part hereof by reference. ~ Bond is transfez-able only upon the bond re~ister kept for that purpose at the office of the Transfer Agent and Registrar by the registered owner bmreof in person, or by his attorney duly autorized in writing, upon the sur--~ of this Bond together with a written instrument of transfer satisfactory to the Transfer Agent and Registrar duly executed by the registered owner or b l ~ attorney. A-3 Re§olution No. 87-188 Page 26 For value received the undersigned does hereby sell, assign and transfer unto the within-m~ion~d R~~ B~d a~ h~r~y ~~y c=sti~(s) and appoint(s) full power of substitution in the premises. Notice: The assignor s signatur~ to this assign- ment ~m~st corre~ with the name as it appears upon the face of t_he within Bond in every particular, without altaration or any chan~e Signatur~ Guarantee: A-4