Loading...
HomeMy WebLinkAbout1997/07/02 - Agenda PacketC 1' '~~ iCOi/:-UNC IL A N D A · '.~ and 3hi w~/" .~s --?:oo p... James L. 'Mm'km~ (~it), A .dotty Civ/ City Council Agenda July 2, 1997 All items submitted forthe City Council Agenda must be in writing. The deadline for submitting these items is 6:00 p.m. on the Tuesday of the week prior to the meeting. The City Clerk's Office receives all such items. 1. Roll Call: A. CALLTO ORDER Alexander , Biane , Curatalo ... Gutierrez , and Williams B. ANNOUNCEMENTS/PRESENTATIONS C. COMMUNICATIONS FROM THE PUBLIC This is the time and place for the general public to address the City Council. State law prohibits the City Council from addressing any issue not previously included on the Agenda. The City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual. D. CONSENT CALENDAR The following Consent Calendar items are expected to be routine and non-controversial. They will be acted upon by the Council at one time without discussion. Any item may be removed by a Councilmember or member of the audience for discussion. Approval of Warrants, Register Nos. 6/11/97 and 6/18/97 and Payroll ending 5/29/97 for the total amount of $1,401,851.26. . Approval to appropriate $593,055 for Fund 28-4333-9315 (Community Development Block Grant) and approval to appropriate $29,350 for Fund 28-4333-9620 (Community Development Block Grant), and approval to appropriate $328,500 for Fund 21-4647- XXXX (Beautification) for the Lions West Community Center Improvement Project for F'~,cal Year 1997/98; and approval to award a contract (CO97-027) to Old Hickory Construction Inc., in the amount of $804,695, plus a 10% contingency ($29,350 to be funded from Fund 28-4333-9620, $548,504 to be funded from Fund 28- 4333-9315, and the balance from Fund 21-4647-XXXX); and approval to award a Professional Services Agreement (CO97-028) with Peter Pitassi, AIA, Architect, for a fee of $22,300, plus a 10% contingency from Fund 21-4647-XXXX; and authorization to award a contract to Siebe Environmental Controls (CO97-029) for installation of the HVAC controls in the amount of $30,741, to be funded from Fund 28-4333-9315. 10 City Council Agenda July 2, 1997 , , Approval to executive a Professional Services Agreement (CO97- 030) with LSA Associates, Inc., not to exceed $103,000, for the preparation of an Environmental Impact Report for General Plan Amendments 96-03B and 97-01 and Victoria Community Plan Amendments 96-01 and 97-01, to be funded from Developer Deposit through Account No. 01-4333-0635. Approval and execution of State Master Agreement No. 08-5420 for Federal aid projects between the State of California, Department of Transportation and the City of Rancho Cucamonga. RESOLUTION NO. 97-~'~' A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING THE EXECUTION AND SIGNING OF STATE MASTER AGREEMENT NO. 08-5420 FOR FEDERAL AID PROJECTS BETWEEN THE STATE OF CALIFORNIA, DEPARTMENT OF TRANSPORTATION AND THE CITY OF RANCHO CUCAMONGA 12 16 17 E. CONSENT ORDINANCES The following Ordinances have had public hearings at the time of first reading. Second readings are expected to be routine and non- controversial. They will be acted upon by the Council at one time without discussion. The City Clerk will read the title. Any item can be removed for discussion. , ETIWANDA SPECIFIC PLAN AMENDMENT 97-01 - CITY OF RANCHO CUCAMONGA -A request to amend the Eftwanda Specific Plan to modify proposed Wardman Bullock Road/Youngs Canyon Road, between Wilson Avenue and Cherry Avenue, by eliminating the landscaped median and across the San Sevaine Basin by reducing the pavement width and eliminating the equestrian trail and modifying all applicable exhibits therein. A Notice of Categorical Exemption has been prepared. APNS 226-102-17, 226- 111-05 and 06, 226-112-02 and 03, 226-311-27, 226-321-01. ORDINANCE NO. 580 (second reading) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, APPROViNG ETIWANDA SPECIFIC PLAN AMENDMENT 97-01, TO MODIFY THE PROPOSED WARDMAN BULLOCK ROAD/YOUNGS CANYON ROAD, BY ELIMINATING THE LANDSCAPED MEDIAN AND REDUCING THE PAVEMENT WIDTH AND ELIMINATING THE EQUESTRIAN TRIAL ACROSS THE SAN SEVAINE BASIN AND MAKING FINDINGS IN SUPPORT THEREOF 18 City Council Agenda July 2, 1997 F. ADVERTISED PUBLIC HEARINGS The following items have been advertised and/or posted as public hearings as required by law. The Chair will open the meeting to receive public testimony. No Items Submitted. G. PUBLIC HEARINGS The following items have no legal publication or posting requirements. The Chair will open the meeting to receive public testimony. , APPROVAL OF AGREEMENT (CO 97-026) FOR G. C. SERVICES TO RECOVER CRIMINAL JUSTICE ADMINISTRATIVE FEES (BOOKING FEES~ FROM CONVICTED ARRESTEES ORDINANCE NO. 581 (first reading) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, ESTABLISHING A COST RECOVERY SYSTEM FOR BOOKING FEE COLLECTIONS 24 31 H. CITY MANAGER'S STAFF REPORTS The following items do not legally require any public testimony, although the Chair may open the meeting for public input. CONSIDERATION OF A RESOLUTION AUTHORIZING ISSUANCE OF BONDS FOR THE MASI PLAZA ASSESSMENT DISTRICT NO. 93-01 RESOLUTION NO. 97-090 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING ISSUANCE OF BONDS, APPROVING FORM OF BOND INDENTURE, BOND PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT, AND DISCLOSURE AGREEMENTS FOR ASSESSMENT DISTRICT NO. 93-1 (MASI PLAZA) 33 34 City Council Agenda July 2, 1997 I. COUNCIL BUSINESS The following items have been requested by the City Council for discussion. They are not public hearing items, although the Chair may open the meeting for public input. No Items Submitted. J. IDENTIFICATION OF ITEMS FOR NEXT MEETING This is the time for City Council to identify the items they wish to discuss at the next meeting. These items will not be discussed at this meeting, only identified for the next meeting. K. COMMUNICATIONS FROM THE PUBLIC This is the time and place for the general public to address the City Council. State law prohibits the City Council from addressing any issue not previously included on the Agenda. The City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual. L. ADJOURNMENT I, Debra J. Adams, City Clerk of the City of Rancho Cucamonga, or my designee, hereby certify that a true, accurate copy of the foregoing agenda was posted on June 26, 1997, seventy-two (72) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive. 040 l o ~ oo oo~ o UJI,4 ..d ej e 44JlJJJlJJJ ., o Ud f'3 M Z Q~ :~ C3 ¥- 44 .,J 3) .IgJ ,,(t-el-- eeeoeeeeeeeeeoeeeo N 2 eeeoeoeeeoeeeeeeo®eeo I-Z I' I1-,I I&,l IUI IV) l liLII t C:)l · lZl IU, JI I1--1 I)"'1 · I · · · I ~uo0 ~M Z &~ ~ V~ 00040 ~ZZO ~ 0 0 ~Z~00 ~000Z ~ZZZ~ ~ ~g 0 I~ l IZl I I li I I0 I I) I · · Z LL ~A ~d C3 t-4 Q, °.''1 · . · o ., Ill ;=." =.," ~.,,, == = = ==,,,.. = .. ~ZOO~44440~l~ooZ~44 z ~/) Qc I zu.~ I,L,10 C~0000~'~00C)~,i~,4 M~4~M~4 ~4~,4~4M~4MMIfM~4~4~4 f,4~.i~M,M ~4~4~4 ~MM ,M~4~4 · I · · · · · I' ; ! I · I · · · · · IZl' ).41 IQ.I ,''l l~l ii !uJI INt I · · · ! I · ! I · I · · · · I d · I · I · · I · · · · · · I .uJI I I dZI I~U I I) I · · · ZZ Z ·~Z Z) ~ZZ z z Z ~ ~ ~ z ~ zZ ~ ~ ~z z ~ ~zzz zz~o~~z zz eeeeeeeee · Z Z Z Z · V~ V~ O0 0~ C3 I-,, q,d I,M ~ 0 ).40 ~ ~ ,,., J 0 Z e~.) wl ,-4 °1'1 I~1 I~1 · · · · · · · I · · I · · · · · · I I · I ~C)! Ia.I I~1 IV) l k I · · I · · I · I · · I · · · · I · · · · · ! · · · · i ! · IZI ! ! Ia~l IO I · · o · · ,,,4 ~Z ~ ~z zOZ~ z z~zo z z~Z~Z~ ozz ~ ~Z ~Z~ )Z4 ~ 04~ ~ w~Z~ ~ Z · ~e ~ ~ Z ~ ~OZM~e ZZZ~ ~e ~z~ QC k4 °I'1 l~Ci NNNNNN N NNNNNN ~N : : I I I I :i ,,i IOI I I I I · ! I ~ ~Z~ ~w~ ZZ~ s · · · · it · · I ! II · · · · ! ! I ~ · ~1 · ! · · · · I · I l ! I I z · ! · · · ! ii I ! · · · ! · ! · · · · · · · I · · z ! I o I z # o)o~o d o : ~: ill tA k4 Z JI--MO0 ~JZ ~ C~ u Z I.) LM Z z~ ~ o ~ Z~ e~ 00~ Z~ z ~ ~ u Z~ ~ z oZ O0 ~ CITY OF RANCHO CUCAMONGA STAFF REPORT DATE: July 2, 1997 TO: Mayor and Members of the City Council Jack Lam, AICP, City Manager FROM: William J. O'Neil, City Engineer BY: Karen McGuire-Emery, Associate Park Planner SUBJECT: APPROVAL TO APPROPRIATE $593,055 FOR FUND 28-4333-9315 (COMMUNITY DEVELOPMENT BLOCK GRANT) AND APPROVAL TO APPROPRIATE $29,350 FOR FUND 28-4333-9620 (COMMUNITY DEVELOPMENT BLOCK GRANT) AND APPROVAL TO APPROPRIATE $328,500 FOR FUND 21-4647-XXXX (BEAUTIFICATION) FOR THE LIONS WEST COMMUNITY CENTER IMPROVEMENT PROJECT FOR FISCAL YEAR 1997-98. AND APPROVAL TO AWARD A CONTRACT TO OLD HICKORY CONSTRUCTION INC., IN THE AMOUNT OF $804,695, PLUS A 10% CONTINGENCY, ( $29,350 TO BE FUNDED FROM FUND 28-4333- 9620, $548,504 TO BE FUNDED FROM FUND 28-4333-9315, AND THE BALANCE FROM FUND 21-4647-XXXX), AND APPROVAL TO AWARD A PROFESSIONAL SERVICES AGREEMENT WITH PETER PITASSI, AIA, ARCHITECT FOR A FEE OF $22,300, PLUS A 10% CONTINGENCY FROM FUND 21-4647-XXXX, AND AUTHORIZATION TO AWARD A CONTRACT TO SIEBE ENVIRONMENTAL CONTROLS, FOR INSTALLATION OF THE HVAC CONTROLS IN THE AMOUNT OF $30,741, TO BE FUNDED FROM FUND 28-4333-9315. RECOMMENDATION It is recommended that the City Council approve the appropriation for the Community Development Block Grant (CDBG) and Beautification funds to facilitate completion of the Lion's West Community Center Improvement Project. It is also recommended that the City Council authorize the award of a contract to Old Hickory Construction Inc., in the amount of $804,695, plus a 10% contingency, and approve a Professional Services Agreement with Peter Pitassi, AIA, Architect, for a fee of $22,300, plus a 10% contingency, for construction administrati6n services. In addition, it is recommended that the City Council authorize the award of a contract for installation of HVAC controls to Siebe Environmental Controls, in the amount of $30,741. CITY COUNCIL STAFF REPORT LIONS WEST AWARD July 2, 1997 Page 2 BACKGROUND On September 20, 1995, the City Council awarded a contract to Peter Pitassi, AIA, Architect, for the Lions Community Center Renovation Project, which included architecturally transforming the newly acquired 11,160 sq. tL "Old County Library" building into a community center, as well as renovating the existing 8,420 sq. t~. Lions Community Center building to provide accessibility. The schedule for completing the improvements at both facilities included renovating the old library ("Lions East") first, and then shifting all programs from the Lions West facility into Lions East while Lions West was under construction. Ultimately, the Lions Community Center Complex will provide for youth programs at the Lions East facility, while Lions West will offer programs for adults. In September 1996, Council approved the award of the Lions East Community Center Improvement Project. Renovations at this facility are scheduled to be completed by mid July. On May 7, 1997, Council authorized the advertising of the Lions West Community Center Improvement Project, and on June 17, bids were received. The Architect's estimate for the project was $928,866, including the parking lot and landscape improvements. The low bid for the project, provided by Old Hickory Construction Inc., was $804,695. Staff anticipates the project to begin construction in late July with completion by mid December of 1997, barring any unforseen delays. The 1997-98 Fiscal Year Budget is proposed to be adopted this year in September, instead of July, due to the Proposition 218 election. As of July 1,'1997, the City will be operating under the temporary 97-98 budget which, by design, does not include any Capital Projects. Therefore, it is necessary to appropriate the funds noted above at the present time to keep the project on schedule. Respect s~ William J. O'Neil City Engineer WJO:KME:dlw // CITY OF RANCHO CUCAMONGA STAFF REPORT DATE: TO: FROM: BY: SUBJECT: July 2, 1997 Mayor and Members of the City Council Jack Lam, AICP, City Manager Brad Buller, City Planner Nancy Fong, AICP, Senior Planner APPROVAL TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH LSA ASSOCIATES. INC.. NOT TO EXCEED $103.000, FOR THE PREPARATION OF AN ENVIRONMENTAL IMPACT REPORT FOR GENERAL PLAN AMENDMENTS 96-03B AND 97-01 AND VICTORIA COMMUNITY PLAN AMENDMENTS 96-01 AND 97-01. TO BE FUNDED FROM DEVELOPER DEPOSIT THROUGH ACCOUNT NO. 01-4333-0635. RECOMMENDATION Staff recommends the City Council, through minute action, authorize the Mayor to execute the Professional Services Agreement awarding the contract to LSA Associates, Inc. BACKGROUND/ANALYSIS The applicant, Southern California Edison Company, submitted two General Plan and two Victoria Community Plan Amendment Applications for their land area that was set aside as a utility corridor in July 1996 and February 1997. The project site is lineal in shape with a width of 330 feet and a length of 10,756 feet and contains multiple parcels. The total area for the site is 84.15 acres. It is located 1,200 feet east of Day Creek Channel and extends from the 1-15 Freeway north to Highland Avenue, as shown in F!gure "A." The applicant proposes to change the current land use designation of Utility .Corridor to the surrounding land use designations of commercial and residential zones that are contiguous to the site. There is no development proposal for the site at this time. On August 8, 1996, and February 25, 1997, staff determined that the proposed land use changes have several significant impacts which would require a focused Environmental Impact Report (EIR). After the initial notifications, the applications became inactive. On March 17, 1997, staff was contacted by a new project manager from the Edison Company, Bob Schuur. He informed staff that there had been major personnel changes at Edison which resulted in the inactivity; however, they are now ready to pursue the applications. The applicant agreed with staff's determination that a focused EIR is necessary and submitted a $5,000 good-faith deposit to the City to initiate the selection process for an environmental consultant. CITY COUNCIL STAFF REPORT PROFESSIONAL SERVICES AGREEMENT- LSA ASSOCIATES, INC. July 2, 1997 Page 2 Staff began the selection process by distributing a Request for Qualifications (RFQ) to several environmental consulting firms in Southern California, from which a list of the three most qualified was established. Based on a review of their proposals for Scope of Services/Work with cost estimates and an interview with the representatives of the three highly qualified firms on June 9, 1997, staff determined that LSA Associates, Inc. best matches the City's needs for the project. The contract is for $103,000 with the remainder of the requested amount as a 5 percent contingency. City Planner BB:NF:taa Attachments: Exhibit "A" - Project Site i i MID~O~E LUGC) M~K,'~-L~rv'~ L~z' ,,kM~N~MENTS '... C~NERAL PtAN & V~CTOi~A ¢~..~UNn'Y (GPA / SPEgF1C PLAN AM. EMENDMENT MAP) i ; FOOTHILL -- L'~ 8A..~.L I ~ ROAO PROPOSED LAND USE: VICTORIA PL ANNI~O C01~JN [ TY ACJRE S HII~ I~NSl T¥ (H) 4.8 (24-~} ~/AC) I~OlU~-HIGH (~1) 8.6 ( 14-24 ou/xc) ~DILkl (u) : 7.4 REGICt~L RELATED (RR) OFFICE / ~RClAL 27.7 TOTAL 48.5 PROPO..~.D GENERAL PLAN LAND US~ DESIC~NATIONS: CO~RClAL ':.~ 35.4 Him CENS I TY (24-~ ~/AC) iSS] ~ 5. ~ TOTAL. 48. s AC APN 227-161-33, 22g-021-55 L=nd G~e Designation FIGURE 'AI' I j l ~:--~.o~ s'~.--.[ :-, J I , : ~ 2.~." ~--" -2 < '.) ..'..:: ..'.: .:.-...'. t':' ~"1 ~"~ ..".:y:.;:'.9':.:!:':: ~ ::::::::::::::::::::::::::::: / . .:.. -.'. '. c. ?.'...'..'.,,'9: ;o i:i::i:.:,'.'..':ii!i~!¢!::i:i:::i::i::~ii:.'j~- . ... .¢:::.'p( p( J'..?'. .... '.6?:'"' '/ / / //A AP~227-151-55. 229-021-56 /.// . / ?z~t ]ein Illliea Fr:s~ k ~scc. .- / / / /,-/ MilDIDLE LUGC) MIKA-LU~4,A AUK AMENDMENTS TO GENERAL PLAN & VICTORIA COMMUNITY PLAN HI(;HLA~O Ag.t.'.CO'~D R. R .--~ R [ G'~q'-C¢- ~AY I! //~oeows S ~ L V~8~RR~ SUG~~ S I TE PLAN APN: 227-351-65. 227-393-01 .02 227-401-78. 227-091-41 AREA: 35.65 ACRES LEGEND -- -- SiTE BOUNOARY · · NORTHERN LIMITS OF THE VICTOR[A C0~UNIT¥ PLAN GENERAL. PLAN L~No USE (PROPOSED) (2-4 OU/AC) (4-8 DU/AC) ~ I~EDIUM DENSITY (8-~4 DU/AC) UTILITY CC~RIO(3~ A,..~A ,~L50 C{3',,I~SI{)~RATIC:~I FOi~ A (~DA/(DDA F~KDM 8AS~.LINE RO,q) ~(ZITH TO 1-15. LAND USE DESIGNATIONS PER VICTOR[A PLANNED C0~AJNITY (PROPOSED) LOW DENSITY (2-40U/AC) L0w-uEDIU~ 0ENSITY (4-8 DU/AC) ~{DIUM DENSITY (8-~4 0U/AC) FIGURE 'A2' ~ Raberl D~in ~illic.'~ Frost L' Ass¢c. /~ CITY OF RANCHO CUCAMONGA STAFF REPORT DATE: TO: FROM: BY: SUBJECT: July 2, 1997 Mayor and Members of the City Council Jack Lam, AICP, City Manager William J. O'Neil, City Engineer Mike Olivier, Senior Civil Engineer APPROVAL AND EXECUTION OF STATE MASTER AGREEMENT NO. 08-5420 FOR FEDERAL AID PROJECTS BETWEEN THE STATE OF CALIFORNIA, DEPARTMENT OF TRANSPORTATION, AND THE CITY OF RANCHO CUCAMONGA RECOMMENDATION It is recommended that the City Council approve and execute the attached Reiolution that authorizes the execution of the subject master agreement for Federal Aid projects. BACKGROUND/ANALYSIS Attached herewith are the duplicate original copies of the above subject master agreement between the City and the State of California, Department of Transportation. In 1979 the City and the State of California, Department of Transportation, entered into an agreement that covered the general requirements of all Federal Aid projects. As projects qualified for Federal funding, supplemental agreements specific to the eligible project were executed with the master agreement covering the general requirements such as project administration, right-of-way, maintenance, retention of records and fiscal provisions. The subject master agreement is basically the same as the one executed in 1979 except that it has been modified to reflect the new provisions of the Intermodal Surface Transportation Efficiency Act (ISTEA). The State has requested that all local agencies enter into this master agreement with them so that ifa local project is successful in obtaining federal funds only the supplemental agreement would need to be executed. · . Respectfully submitted, City Engineer Attachments WJO:MO:sd RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING THE EXECUTION AND SIGNING OF STATE MASTER AGREEMENT NO. 08-5420 FOR FEDERAL AID PROJECTS BETWEEN THE STATE OF CALIFORNIA, DEPARTMENT OF TRANSPORTATION, AND THE CITY OF RANCHO CUCAMONGA WHEREAS, the State of California, Department of Transportation, desires that Local Agencies and themselves replace the existing master agreement for Federal Aid projects, dated December 5, 1979, with an agreement that has been modified to reflect the new provisions of the Intermodal Surface Transportation Efficiency Act (ISTEA). WHEREAS, the City Council of the City of Rancho Cucamonga (hereinafter referred to as "Local Agency"), has for its consideration and execution a master agreement covering the general requirements of all federal aid projects reflecting the new provisions at ISTEA. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, does hereby resolve to: Authorize the Execution of State Master Agreement No. 08-5420 for Federal Aid projects between the State of California, Department of Transportation, and the City of Rancho Cucamonga. . To authorize the Mayor to sign said Agreement and direct the City Clerk to attach a certified copy of this Resolution and for the return of the original copies of said Agreement to the State of California, Department of Transportation, along with the certified copy of this Resolution. /'7 ORDINANCE NO. 580 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, APPROVING ETIWANDA SPECIFIC PLAN AMENDMENT 97-01, TO MODIFY THE PROPOSED WARDMAN BULLOCK ROAD/YOUNGS CANYON ROAD, BY ELIMINATING THE LANDSCAPED MEDIAN AND REDUCING THE PAVEMENT WIDTH AND ELIMINATING THE EQUESTRIAN TRAIL ACROSS THE SAN SEVAINE BASIN AND MAKING FINDINGS IN SUPPORT THEREOF. A. RECITALS. 1. The City of Rancho Cucamonga has filed an application for the amendment described in the title of this Ordinance. Hereinafter in this Ordinance, the subject Etiwanda Specific Plan Amendment is referred to as "the application." 2. On the 14th day of May 1997, the Planning Commission of the City of Rancho Cucamonga conducted a duly noticed public headng on the application and recommended to the City Council approval of Etiwanda Specific Plan Amendment No. 97-01. 3. On the 18th day of June 1997, the City Council of the City of Rancho Cucamonga conducted a duly noticed public headng and concluded said hearing on that date. 4. All legal prerequisites pdor to the adoption of this Ordinance have occurred. B. ORDINANCE. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA DOES HEREBY DETERMINE AND ORDAIN AS FOLLOWS: 1. The Council hereby specifically finds that all of the facts set forth in the Recitals, Part A, of this Ordinance are true and correct. 2. Based upon the substantial evidence presented to the Planning Commission dudng the above-referenced public headng on May 14, 1997, and to this Council dudng the above-referenced public headng on June 18, 1997, including written and oral staff reports, together with public testimony, this Commission hereby specifically finds as follows: a. The application applies to a stdp of land, of varying widths, extending southerly from Wilson Avenue and curving southeasterly to Cherry Avenue, planned to be Wardman Bullock Road/Youngs Canyon Road and is presently vacant undeveloped land. Ordinance 580 Page 2 bo The proposed modification is a minor alteration to a planned road and is categorically exempt per section 15305, class 5 Minor Alterations in Land Use Limitations of the California Environmental Quality Act. 3. Based upon the substantial evidence presented to this Council dudng the above-referenced public headng and upon the specific findings of facts set forth in paragraphs I and 2 above, this Council hereby finds and concludes as follows: a. The proposed modification is a minor alteration to a planned road and is categorically exempt per section 15305, class 5 Minor Alterations in Land Use Limitations of the California Environmental Quality Act. b. The segment of community trail crossing the San Sevaine Basin does not conform with the policies and objectives of the City's trail system. c. The proposed amendment is in conformance with the General Plan. 4. The City Council hereby finds that the project has been prepared and reviewed in compliance with the California Environmental Quality Act of 1970, as amended and the Guidelines promulgated thereunder, and further specifically finds that based upon substantial evidence, it can be seen with certainty there is no possibility the proposed amendment will have an effect on the environment and therefore, the proposed amendment is categorically exempt pursuant to State CERA Guidelines, Section 15305. 5. Based upon the findings and conclusions set forth in paragraphs 1, 2, 3, and 4 above, the City Council hereby approves Etiwanda Specific Plan Amendment 97-01 to amend the Street System, Figure 5-6, the Community Trails, Figure 5- 18, Proposed Wardman Bullock/Youngs Canyon Road Section, Figure 5-34 and Proposed Youngs Canyon Road Section, Figure 5-34^, as shown on exhibits I through 4 attached hereto. 6. The City Clerk shall certify to the adoption of this Ordinance. 7. The Mayor shall sign this Ordinance and the City Clerk shall cause the same to be published within fifteen (15) days after its passage at least once in the Inland Valley Daily Bulletin, a newspaper of general circulation published in the City of Ontado, California, and circulated in the City Rancho Cucamonga, California. Ordinance 580 Page 3 WARDMAN BULLOCK ROAD YOUNGSCANYON ROAD i ~m WILSON AVENUE ~:::~5'32 ~ 5-35A ~:~,5-35,_ --- ITEM: ESPA 97-01 TITLE:. EXHIBIT 1 _. Freeway Access I!11111111111 Ililtllllll# Major Arterial Secondary Arterial Special Design Collector Local Streets [ Fcx)thlll blvd. S.P. ~tltle Figure Number Location STREET SYSTEM figure~ 5-6 ~ Ordinance 580 :' : Page 4 r Equestrian Trails ~! Foothill Boulevard r-- Specific Plan ................ Bike (On Lane* or Bike Route* · Pavement Shoulder) ,,,..,,..,,,. Bike Path (In Parkway) · Consult Trail Implementation Plan ,~title figurel ITEM: TT"T~T 1~. I~'~Z'T-TTI:!T'T' 9 . I !"! li ;I li COMMUNITY ~', ~I, TRAILS ESPA 97-01 REVISED 9/7188 ~;VIRED 411/92 Ordinance 580 Page 5 N/E Large Columnar Tree Type A Large Columnar Tree Type A Equestrian Trail / / 20' 102' ROW ,,, WARDMAN BULLOCK ROAD /YOUNGS CANYON ROAD Between Wilson and San Sevaine Basins FIG. 5-34 S/W ITEM: ESPA 97-01 TITLE: EXHIBIT 3 Ordinance 580 Page 6 Large Columnar Tree Type Large. /,Columnar Tree Type A N ~, 5'. '3 54' / 71' YOUNGS CANYON ROAD Between San Sevaine Basins and Cherry Avenue FIG 5-34A iTEM: ESPA 97-01 't't't'LE: EXHIBIT 4 CITY OF RANCHO CUCAMONGA STAFF REPORT DATE: July 2, 1997 TO: FROM: SUBJECT: Mayor and Members of the City Council Jack Lain, AICP, City Manager Jerry B. Fulwood, Deputy City Manager Ordinance and Agreement to Provide Authorization to Recover Criminal Justice Administrative Fees (Booking Fees) From Convicted Arrestees RECOMMENDATION: That the City Council: . Introduce Ordinance of the City of Rancho Cucamonga establishing a cost recovery system for booking fee collections. 2. Designate the City Manager as the contact per paragraph 36 of the Agreement. . Authorize the Mayor to sign the agreement for a pilot program for the collection of booking fees with G. C. Services. FISCAL IMPACT: There are no costs to the City for the implementation of this program. The cost of the collection program will be paid out of the fee/commission process. There is the potential for the reimbursement to the general fund for costs charged by the County for the booking of persons arrested. Since this is a pilot program, it is difficult to project the amount of funds that would be collected. However, it is currently estimated that the City would receive'approximately $18,828 per year through the collections process. BACKGROUND: History of Booking Fees in San Bernardino CounF: The cities in San Bernardino County were involved in a protracted lawsuit with San Bernardino County regarding the payment of Booking Fees. In July of 1990, Senate Bill 2557 was signed by Staff Report- Jerry Fulwood July 2, 1997 Page 2 the Governor. Senate Bill 2557 was codified as California Government Code Section 29550, and became effective January 1, 1991. Because of Government Code Section 29550, counties were authorized to retroactively charge cities and other entities for expenses incurred after July 1, 1990, in connection with the booking or other processing of persons arrested by employees of the cities and other entities. Government Code Section 29550 requests that the amount of the fee not. exceed the actual administrative costs, including applicable overhead costs as permitted by' Federal Circular A-87 standards, incurred in booking or otherwise processing those arrested persons. Based on Section 29550, in January of 1991, the County adopted Ordinance No. 3428 (County Code Section 16.027A) authorizing the County to charge each city a criminal justice administrative fee, retroactive to July 1, 1990, in the amount of $122.90 for each designated booking performed by the County in connection with arrests made within the jurisdictional boundaries of the respective city. In February of 1991, the County began charging each city a criminal justice administrative fee pursuant to the provisions of Ordinance No. 3428. If the fees were not paid by the city, the County began withholding certain funds for payment (i.e., property taxes). In March of 1991, the cities filed suit against the County challenging the validity of Ordinance No. 3428. In May of 1991, the San Bernardino Superior Court issued a temporary restraining order, and on May 28, 1991, issued a preliminary injunction, prohibiting the County from unilaterally withholding any criminal justice administrative fees which had been disputed by the cities under Government Code Section 907 from certain funds which were due and owing to the cities. In October of 1991, the Lawsuit was added onto Judicial Counsel Coordination Proceeding No. 2584 wherein several cities in the State challenged the legality of Government Code Section 29550 and actions taken by their respective counties in connection therewith. In September of 1992, the court in the Coordinated Proceeding that had previously upheld the validity and constitutionality of criminal justice administrative fees entered an order providing that the Contract Cities of San Bernardino County were exempt from payment of any such fee under the language of their contracts with the County for law enforcement services. Subsequently, the County threatened to discontinue providing law enforcement service to the Contract Cities if the language of the contracts was not changed to permit the County to collect both the contract amount and the criminal justice administrative fee from the Contract Cities. Staff Report- Jerry Fulwood July 2, 1997 Page 3 As a result, in April of 1994, the County and the City of Rancho Cucamonga entered into a Settlement Agreement for the purpose of resolving many of the issues addressed in the initial lawsuit. Several other issues concerning the proper amount of the criminal justice administrative fee remained unresolved by the Settlemere Agreement. Pursuant to the terms of the Settlement, the Contract Cities executed the Amended Law Enforcement Service Contract with the County which allowed the County to charge the Contract Cities Booking Fees not withstanding the court's ruling in the Coordinated Proceeding to the contrary. In August of 1994, the court in the Coordinated Proceeding entered an Order setting forth the time flame during which the booking process takes place, and identifying those activities occurring within said parameters which may be included as costs in the calculation of the criminal justice administrative fee, and those activities that must be excluded from the fee. In January of 1995, the County adopted Ordinance No. 3594, to be effective on February 9, 1995. Among other provisions, Ordinance No. 3594 increased the amount of the criminal justice administrative fee from $122.90 to $168.20. On February 9, 1995, the Cities filed suit against the County in Superior Court challenging the validity of Ordinance No. 3594. In August of 1995, an agreemere was entered into by the Cities and the County for the purpose of resolving many of the issues addressed in the initial lawsuit, the cross-complaint, and the new lawsuit without further litigation. The Contract Cities and the County negotiated a settlemere as follows: . For bookings occurring between July 1, 1990 and December 31, 1993 - The Contract Cities will pay a criminal justice administrative fee in the amount of $61.45 (50%) for each booking. . For bookings occurring from January 1, 1994 through February 9, 1995 - The Contract Cities will pay a criminal justice administrative fee in the amount of $122.90. . . For bookings occurring from February 10, 1995 through February 10, 1996 - The Contract Cities will pay a criminal justice administrative fee in the amount of $152.00. For bookings occurring from February 11, 1996 through February 1 O, 2001 - The Contract Cities will pay a criminal justice administrative fee in the amount of $152.00, plus inflation as calculated in the Consumer Price Index for All Urban Consumers for the Los Angeles/Anaheim/Riverside area. Staff Report- Jerry Fulwood July 2, 1997 Page 4 . For bookings occurring from February 10, 2001 - The Contract Cities will pay a criminal justice administrative fee in the amount of the actual cost incurred by the County for performing the activities properly includable under State Law. Current Charge Per Booking: The current criminal justice administrative fee charged by the County is $156.90 due to the inflation factor as calculated in the CPI for All Urban Consumers for the Los Angeles/Anaheim/ Riverside area. Let?al Authority to Collect Booking Fees: Pursuant to Section 29550 of the Government Code, cities are entitled to recover any criminal justice administration fee imposed by a county from the arrested person if the person is convicted of any criminal offense related to the arrest. Cost Recove~ System Progosal: The Cost Recovery System for Booking Fee Collections has been in the process for more than one and one-half years. The cities and the County were approached by O. C. Services to provide the collection services for all local governments in the county. The idea was supported by the City Managers and was reviewed and approved at the Mayor/City Manager Conference in 1995. It was also determined at this time that it made sense that G. C. Services be allowed to act as a sole source provider during the pilot program process. G. C. Services has a proven track record in the County and is already established in the San Bernardino County Court system. Draft agreements were reviewed by both the Law Offices of Bnmiek, Alvarez and Battersby and G. C. Services' attorneys. The agreement that is being presented is the culmination of many hours of drafting and re~g. The term of the agreement is thirty-six (36) months. After expiration, the agreement may be extended under the same terms and conditions for two (2) additional periods of time, not to exceed twelve months each. The City also reserves the fight to reevaluate or recall any account that was assigned to G. C. Services. G. C. Services will collect the full booking fee and an administrative fee of 61% to 78%, depending on the percentage of recovery. Compensation of G. C. Services will be accomplished strictly through the commission process. The formula is explained as follows: Staff Report- Jerry Fulwood July 2, 1997 Page 5 The first step in calculating the overall recovery rate for determining adjustments to the contingency fee rate is to compute the weight thateach month of the review period will be given. This is accomplished by using a variation of the "Sum of the Years" depreciation method called the "Sum of the Months" method. This method provides greater weight to those accounts that have been in collections the longest, with lesser weights being assigned to accounts that have been in collections a lesser period of time. This weight is then converted to a percentage, the sum of the months percentage. The second step is determining the overall recovery rate. The overall recovery rate is calculated by gathering the collection percentages for each month in the review period. Then each month's collections percentage is multiplied by the sum of the months percentage for that month, resulting in the weighted monthly recovery rate. Finally, the weighted monthly recovery rates for each month in the review period are summed together. The result is the overall recovery rate. It should be noted that if the collection process does not start, i.e., the convict pays the booking fee immediately, the entire amount will be forwarded to the City and no additional fees will be charged by G. C. Services. The only time that the City will not collect the full amount of the booking fee is if the Court does not order payment and we settle for a lessor amount or if the account is not recoverable. Exhibit "1" is a flow chart detailing the overall process. What Amount Can The Cil:y Expect To Recover?: The City of Rancho Cucamonga averages approximately 200 prisoners booked per month. Assuming that all of these are billable bookings and with an 86% conviction rate, the City would have 172 potential accounts. G. C. Services estimates a recovery rate of approximately 6% (10 accounts). Therefore, it is estimated that the City would receive $569.00 per month or $18,828.00 per year through this process. Remaining Issues: As discussed earlier, if the Court does not order payment of the booking fee, the City may have to settle for a lessor amount. There are two solutions to this problem. One solution is to meet with the judges in San Bernardino County and request that they order all convicted individuals to pay their booking fees. The other solution is currently being discussed by the State Legislature. Staff Report- Jerry Fulwood July 2, 1997 Page 6 Assemblyman Joe Baca has introduced AB 211 which would require judges to order the paymere of the booking fee by the convicted person, and requires that the "... execution shall be issued on the order in the same manner as a judgment in a civil action .... "This language would amend Section 29550.1 of the California Government Code which currently states that "... execution may be issued on the order in the same manner as a judgemere in a civil action .... " Respectfully submitted, Jerry B. Fulwood Deputy City Manager Booking Fee Recovery Overview Exhibit '1 ' Day Zero Defendant is convic?ed Booking fee only is collected and forwarded to the Local Government Unit. Days 1-20 Convict is notified of, booking fee obligation Days 21- + Collection activity continued for full booking fee and collection costs Unreceivable account, Accounts are returned to Local Governmental Unit or origination Booking fee and collection costs are collected. Distribution of booking fee is remitted to the Local Governmental Unit net of collection costs. Discount - 0% Total Collected $475 Booking fee $152.50 Collection fee $322.50 Amounts for demonstration purposes only LOCAL GOVERNMENT UNIT OPTION: Discounted booking fee and collection costs are collected. Pro-rate distribution of booking fees is remitted to the Local Govemment Unit not of pro-rate collection costs. Discount - 58% Total Collected $200 Booking fee (pro-rate) $84 Collection fee (pro-rate) $136 Amounts for demonstration purposes only ORDINANCE NO. _5' ~'/ AN ORDINANCE OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, ESTABLISHING A COST RECOVERY SYSTEM FOR BOOKING FEE COLLECTIONS A. RECITAI,S (i) WHEREAS, Government Code Section 29550.1, et. Seq. allows cities to recover the costs charged by the counties for the booking or other processing of persons arrested and other costs incurred in connection therewith. (ii) WHEREAS, the City Council wishes to recover said costs charged by the County of San Bernardino for the booking or other processing of persons arrested and other costs incurred in connection therewith. (iii) WHEREAS, the City Council finds that the amount of the charges hereby adopted do not exceed the reasonably anticipated costs charged by the County for the booking or other processing of persons arrested and other costs incurred in connection therewith, and therefore the fee imposed hereby is not a "special tax" pursuant to Government Code Section 50076 and the actions taken herein are exempt from the additional notice and public meeting requirements of the Brown Act pursuant to Government Code Section 54954.6 (a) (1) (A) and (B). B. ORDINANCE NOW, THEREFORE, the City Council for the City of Rancho Cucamonga does hereby ordain as follows: SECTION !. The Rancho Cucamonga Municipal Code is hereby amended by adding CHAPTER COST RECOVERY SYSTEM FOR BOOKING FEE COLLECTIONS, as follows: A. "City" means the City of Rancho Cucamonga B. "County" means the County of San Bernardino Section I The City Manager is hereby authorized to enter into an agreement with an outside agency to provide for the recovery of City's costs and the charges imposed by the County for criminal justice administrative fees. Section 2 Fees collected shall be limited to those provided under Government Code Section 29550.1, et. Seq. The actual cost of recovery over and above the criminal justice administrative fees shall be charged to the person convicted if applicable. Section 3 If any section, subsection, part, clause, sentence, or phrase of this Chapter or the application thereof is for any mason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, the validity of the remaining portions of this Chapter, the application thereof, and the fees imposed, shall not be affected thereby but shall remain in full force and effect, it being the intention of the City Council to adopt each and every section, subsection, part, clause, sentence, or phrase regardless of whether any other section, subsection, part, clause, sentence, or phrase, or the application thereof, is held to be invalid or unconstitutional. Section 4 This ordinance shall become effective 30 days after its adoption. CITY OF RANCHO CUCAMONGA STAFF REPORT DATE: July 2, 1997 TO: FROM: BY: SUBJECT: Mayor and Members of the City Council Jack Lam, AICP, City Manager William J. O'Neil, City Engineer Mike Olivier, Senior Engineer ASSESSMENT DISTRICT 93-01; MASI DEVELOPMENT; BOND ISSUANCE RECOMMENDATION It is recommended that the City Council approve the attached Resolution a. pproving the issuance of Bonds and related Documents, including the Bond Indenture, Preliminary Official Statement, Bond Purchase Agreement and the continuing disclosure agreements. BACKGROUND/ANALYSIS On February 19, 1997 the City Council approved a Resolution, passing on the "Report of the Engineer", establishing guideline for "heatings" and "ballot procedures" which comply with the most recent interpretation of Proposition 218 in regards to assessment districts. Those guidelines and ballot procedures have been complied with and met. All public hearings have been held and the formation of special Assessment District 93-01 in accordance with the Municipal Improvement Act of 1913 and the regulations established under Proposition 218 regarding special Assessments have been completed. Respectfully submitted, W i <i ' j.O~ City Engineer Attachments WJO:JM:dlw RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING ISSUANCE OF BONDS, APPROVING FORM OF BOND INDENTURE, BOND PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT, AND DISCLOSURE AGREEMENTS FOR ASSESSMENT DISTRICT NO. 93-1 (MASI PLAZA) WHEREAS, the City Council of the City of Rancho Cucamonga, California, is conducting proceedings for the acquisition of certain public improvements in a special assessment district pursuant to the terms and provisions of the "Municipal Improvement Act of 1913," being Division 12 of the Streets and Highways Code of the State of Califomia, said special assessment district known and designated as Assessment District No. 93-1 (Masi Plaza) hereinafter referred to as the "Assessment District," and WHEREAS, this legislative body has previously declared in its Resolution of Intention to issue bonds to finance the acquisition of said improvements, said bonds to issue pursuant to the terms and provisions of the "Improvement Bond Act of 1915," being Division 10 of said Code; and WHEREAS, at this time this legislative body is desirous to set forth the general terms and conditions relating to the authorization of the issuance and sale and subsequent administration of said bonds; and WHEREAS, there has been presented for consideration by this legislative body the form of the following document: mo Bond indenture by and between the City and First Trust of California., as fiscal agent, setting forth the terms and conditions relating to the issuance and administration of the bonds (the "Bond Indenture"); g. Bond purchase agreement authorizing the sale of to Stone & Youngberg LLC, the designated underwriter (the "Bond Purchase Agreement"); C. Preliminary Official Statement containing original disclosure information pertaining to the Assessment District and the bonds, including terms and conditions thereof (the "Preliminary Official Statement"); D. Continuing disclosure agreement by and between the City and First Trust of California, as dissemination agent, and developer disclosure agreement by and between Masi Commerce Center Partners and First Trust of California, as dissemination agent (collectively, the "Disclosure Agreements"); and RESOLUTION NO. July 2, 1997 Page 2 WHEREAS, this legislative body hereby further determines that the unpaid assessments shall be specifically in the amount as shown and set forth in the Certificate of Paid and Unpaid Assessments as certified by and on file with the Treasurer, and for particulars as to the amount of said unpaid assessments, said Certificate and list shall control and govern. NOW, THEREFORE, the City Council of the City of Rancho Cucamonga does hereby resolve as follows: SECTION 1: The above recitals are true and correct. SECTION 2: This legislative body authorizes the issuance of limited obligation improvement bonds in an aggregate principal amount not to exceed the aggregate principal amount of the unpaid assessments pursuant to the terms and provisions of the "Improvement Bond Act of 1915," being Division 10 of the Streets and Highways Code of the State of California, and also pursuant to the specific terms and conditions as set forth in the Bond Indenture presented herein. SECTION 3: The Bond Indenture is approved substantially in the form presented herein. The City Manager is hereby authorized and directed for and on behalf of the City to execute the Bond indenture with such additions thereto or changes therein as may be approved by the City Manager, subject to the review of the City Attorney and Bond Counsel, such approval by the City Manager to be conclusively evidenced by the execution and delivery thereof. A copy of said Bond Indenture shall be kept on file with the transcript of these proceedings and open for public inspection. SECTION 4: The Bond Purchase Agreement as submitted by Stone & Youngberg LLC, the designated underwriter, is hereby approved substantially in the form presented herein. The City Manager is hereby authorized and directed for and on behalf of the City to evidence the City's acceptance of the terms and provisions of the Bond Purchase Agreement in the form presented to the City Council at this meeting, with such changes therein as are approved by the City Manager, subject to the review and approval of the City Attorney, Bond Council and Disclosure Counsel, such approval by the City Manager to be conclusively evidenced by the execution and delivery thereof; provided, however, the City Manager shall execute the Bond Purchase Agreement only if the aggregate principal amount of the bonds is equal to the unpaid assessments within the Assessment District, the underwriter's discount does not exceed 2.25 percent (2.25%) and the interest rate on the bonds shall not exceed 7.25 percent (7.25%) per annum. SECTION 5: The form of the Preliminary Official Statement is hereby approved substantially in the form presented herein. The underwriter is authorized to distribute copies of the Preliminary Official Statement to persons who may be interested in the purchase of the bonds from the underwriter acting in such capacity. Prior to the distribution of the Preliminary Official Statement, the City Manager of the City is authorized, subject to the review of Disclosure Counsel, RESOLUTION NO. July 2, 1997 Page 3 to approve changes in the Preliminary Official Statement and to certify to the underwriter that the Preliminary Official Statement is deemed final as of its date within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. The officers of the City and their authorized representatives are, and each of them acting alone and with the concurrence of Disclosure Counsel is, hereby authorized and directed for and in the name of the City, to prepare or cause the preparation of a final official statement (the "Official Statement") and execute such Official Statement with such revisions from the Preliminary Official Statement as are reasonable and customary to describe accurately the bonds and matters contained in the Bond Purchase Agreement and the Bond Indenture. Such approval shall be evidenced by the execution thereof. The underwriter is directed to distribute the Official Statement to the purchasers of the bonds. SECTION 6: The Continuing Disclosure Agreement indenture is approved substantially in the form presented herein. The City Manager is hereby authorized and directed for and on behalf of the City to execute the Continuing Disclosure Agreement with such additions thereto or changes therein as may be approved by the City Manager, subject to the review of the City Attorney and Disclosure Counsel, such approval by the City Manager to be conclusively evidenced by the execution and delivery thereof. The Developer Disclosure Agreement is approved substantially in the form presented herein. The City Manager, subject to the review of Disclosure Counsel, is hereby authorized to consent to such changes in the Developer Disclosure Agreement as are deemed appropriate. SECTION 7: The Certificate of Paid and Unpaid Assessments, as certified by the Treasurer, shall remain on file in that office and be open for public inspection for all particulars as it relates to the amount of unpaid assessments to secure bonds for this Assessment District. SECTION 8: This legislative body does further specifically covenant for the benefit of the bondholders to commence and prosecute to completion foreclosure actions regarding delinquent installments of the assessments in the manner, within the time limits and pursuant to the terms and conditions as set forth in the Bond Indenture as submitted and approved through the adoption of the Resolution. SECTION 9: All actions heretofore taken by the officers and agents of the City with respect to the sale and issuance of the bonds are hereby approved, confirmed and ratified, and the 'City Manager and any and all other officers of the City are hereby authorized and directed, for and ion the name and on behalf of the City, to do any and all things and take any .and all actions relating to the execution and delivery of any and all certificates, requisitions, agreements and other documents, which the City Manager may deem necessary or advisable in order to consummate the lawful issuance and delivery of the bonds in accordance with this Resolution. Bill: Please announce at the conclusion of the City Council meeting that the Council will adjourn to Tuesday, July 8, 5:30 p.m. for a Central Park Task Force workshop. Thanks, Deb cc: Jack Lam CITY OF RANCHO CUCAMONGA MEMORANDUM DATE: July 2, 1997 TO: May~ and Members of the City Council,' ~Lam, AICP, City Manager ,~ ~ Larry Henderson, AICP, Principal Planner SUBJECT: ISLES HOUSE STATUS This memorandum is intended to update the City Council on the Isles House relocation efforts. City staff has been in contact with Etiwanda Historical Society members, CALTRANS, and State Historic Preservation Office Staff. The following actions have been taken: , Established a meeting day and time with EHS representative to begin reviewing potential relocation sites within the Etiwanda Community. . Mr. Hotchkis of CALTRANS informed us as of Tuesday, July 1, 1997, the purchase offer has not been responded to by the owners. Additional photo documentation is underway at the site. . Mr. Clarence Caesar of the State Historic Preservation Office was contacted concerning the content of the required marketing strategy. He indicated that SHPO does not review the actual strategy, but will ultimately review the efforts that were made to assure a good faith effort. Staff was then referred to Mr. Snider at the CALTRANS Administration office for examples of successful marketing strategies. A message was left for Mr. Snider. Staff is continuing to monitor and assess the situation and will report on a biweekly basis to the Council. We will move to weekly memos once more activity begins to happen. Please feel free to call Larry Henderson or myself if you have questions or comments. BB:LJH:taa Best Best & Krieger LLP DRAFT June 25, 1997 PRELIMINARY OFFICIAL STATEMENT DATED ,1997 NEW ISSUE - BOOK ENTRY ONLY NOT RATED In the opinion of Brown, Diven& Hentschke, San Diego, California, Bond Counsel, subject, however, to certain qualifications described herein, under existing law, the interest on the Bonds 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 minimum tax imposed on individuals and corporations, although, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "LEGAL MATTERS" herein. $2,990,000* CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 (Masi Plaza) LIMITED OBLIGATION IMPROVEMENT BONDS Dated: Date of Delivery Due: September 2, as shown below The Bonds are being issued by the City of Rancho Cucamonga, California (the "City") pursuant to the Improvement Bond Act of 1915 to finance the acquisition of certain public improvements in the City's Assessment District No. 93-1 (Masi Plaza) (the "District"). All of the proceedings of the City to form the District, to levy the assessments and to acquire the improvements described herein and being financed with proceeds of the Bonds have been undertaken pursuant to the Municipal Improvement Act of 1913. The Bonds are limited obligation improvement bonds of the City and will be issued as fully registered Bonds in the denominations of $5,000 or any integral multiple thereof, except for one Bond maturing in 1999. Interest is payable on March 2, 1998, and semiannually thereafter on March 2 and September 2 each year. The Bonds will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company CDTC"), New York, New York. Purchases of beneficial interests in the Bonds will be made in book-entry only form. Accordingly, principal of and premium, if any, and interest on the Bonds will be paid by First Trust of California, National Association, as Fiscal Agent (the "Fiscal Agent"), directly to DTC as the registered owner thereof. Upon receipt of payments of principal and interest, DTC is to remit such principal and interest to the DTC Participants (as defined herein) for subsequent disbursement to the beneficial owners of the Bonds. Purchasers will not receive certificates representing Bonds purchased by them. The Bonds are subject to redemption prior to maturi.tv as described herein. Under the provisions of the Improvement Bond Act of 1915, installments of principal and interest sufficient to meet annual debt service on the Bonds are to be included on the regular county property tax bills sent to owners of property against which there are unpaid assessments. These annual assessment installments are to be paid into the Redemption Fund established and held by the Fiscal Agent and used to pay debt service on the Bonds as it becomes due. See "SECURITY FOR THE BONDS." Unpaid assessments constitute fixed liens on the lots and parcels assessed within the District and do not constitute personal indebtedness of the respective owners of such lots and parcels. Thus, the value of the land within the District is a critical factor in determining the investment quality of the Bonds. See "APPENDIX A - SUMMARY OF THE APPRAISAL REPORT" for a discussion of the value of the land within the District and the assumptions underlying the appraisal. To provide funds for the repayment of the Bonds and interest thereon in the event of any deficiency in the Redemption Fund resulting from delinquencies in the payment of assessment installments, the City will establish a Reserve Fund from Bond proceeds in an amount equal to the lesser of (i) maximum annual debt service on the Bonds or, (ii) 125 % of the average debt service on the Bonds, or (iii) 10 % of the original principal amount thereof. The City has a duty to transfer the amount of any such deficiency from the Reserve Fund into the Redemption Fund. The Reserve Fund will be restored upon the reinstatement, redemption or sale of the delinquent property. The City's obligation to advance funds to the Redemption Fund in the event of a deficiency in the Redemption Fund shall not exceed the balance in the Reserve Fund. The City has covenanted to initiate judicial foreclosure in the event of a delinquency in the payment of an assessment installment under certain circumstances and to commence such procedure within 150 days of the delinquency. See "Security For The Bonds." See "SPECIAL RISK FACTORS" herein for a discussion of the risk factors that should be considered in evaluating the investment quality of the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF SAN BERNARDINO, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING INFORMATION UNDER THE HEADING "SPECIAL RISK FACTORS", SHOULD BE READ IN ITS ENTIRETY. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. RVPUB'O'R.R~21073 MATURITY SCHEDULE* Maturity Principal Interest Price/ Maturity Principal (Seotember 2) Amount Rate Yield (September 2) Amount 1998 2004 1999 2005 2000 2006 2001 2007 2002 2008 2003 2009 2004 2010 2005 2011 2012 Interest Rate Price/ Yield % Term Bonds due September 2, 2022 The Bonds are offered when, as and if issued and accepted by the Underwriter subject to the approval, as to their legality, of Brown, Diven& Hentschke, San Diego, California, Bond Counsel. Certain matters will be passed on for the City by Best Best & Krieger LLP, Riverside, California, Disclosure Counsel. It is expected that the Bonds will be available for delivery through DTC in New York, New York, on or about July 15, 1997. Stone & Youngberg LLC , 1997 Preliminary, subject to change. RVPUB'xJR.R'O. 1073 CITY OF RANCHO CUCAMONGA, CALIFORNIA CITY COUNCIL William J. Alexander, Mayor Diane Williams, Mayor Pro Tem Paul Biane, Councilperson James Curatalo, Councilperson Rex Gutierrez, Councilperson CITY STAFF Jack Lam, City Manager Jerry Fulwood, Deputy City Manager James L. Markman, City Attorney James C. Frost, City Treasurer Rick Gomez, Community Development Director Lawrence I.Temple, Administrative Service Director William J. O'Neil, City Engineer SPECIAL SERVICES Bond Counsel Brown, Diven & Hentschke San Diego, California Disclosure Counsel Best Best & Krieger LLP Riverside, California Assessment Engineer GFB - Friedrich & Associates, Inc. Riverside, California Financial Advisor Fieldman, Rolapp & Associates Irvine, California Fiscal Agent First Trust of California, National Association Los Angeles, California Appraiser Len Perdue & Associates Riverside, California RN~PUB'ffRR",21073 TABLE OF CONTENTS INTRODUCTION .................................................................. 1 The City ....................................................................... 1 The District ..................................................................... 1 Sources of Payment for the Bonds ....................................................... 1 Property Value and Value to Lien ....................................................... 1 Bondowner's Risks ................................................................ 2 Continuing Disclosure .............................................................. 2 Other Information ................................................................. 2 THE IMPROVEMENT PROJECT AND THE FINANCING PROGRAM .............................. 2 Improvement Project ................................................................ Debt Service Schedule .............................................................. 5 Estimated Sources and Uses of Funds .................................................... 6 THE BONDS .................................................................... 5 General Provisions ................................................................ 5 Authority for Issuance .............................................................. 6 Investment of Bond Proceeds .......................................................... 7 Redemption ..................................................................... 7 SECURITY FOR THE BONDS ......................................................... 9 Assessments ..................................................................... 9 Covenant to Commence Foreclosure Proceedings ............................................. 9 Priority of Lien ................................................................... 9 Property Values ................................................................. 10 Reserve Fund ................................................................... 10 Sales of Tax-Defaulted Property Generally ................................................ 10 Delinquency Resulting in Ultimate or Temporary Loss on Bonds .................................. 11 Limited Obligations of the City Upon Delinquency ........................................... 12 THE IMPROVEMENT PROJECT AND METHOD OF SPREAD .................................. 13 Improvement Project .............................................................. 13 THE DISTRICT .................................................................. 14 General ....................................................................... 17 Method of Assessment Spread .......................................................... Proposed Development in the District ................................................... 17 Property Values ................................................................. 18 Direct and Overlapping Debt ......................................................... 20 SPECIAL RISK FACTORS ........................................................... 21 Special Risks Associated with the Assessment Bonds secured by the District ............................. Risks Associated With Assessment Bonds Generally .......................................... 21 Risks Associated with Commercial Real Estate Investments and Proposed Development in the District .......... 27 LEGAL MATTERS ................................................................ 28 Tax Exemption .................................................................. 28 Absence of Litigation .............................................................. 29 29 Legal Opinion .................................................................. MISCELLANEOUS ................................................................ 29 No Rating ..................................................................... 29 Underwriting ................................................................... 30 Additional Information ............................................................. 30 -ii- RVPUB~RR'~21073 APPENDIX A - APPENDIX B - APPENDIX C - APPENDIX D - APPENDIX E - APPENDIX F - Summary Appraisal Report .............................................. A-1 Summary of the Indenture ............................................... B-1 General Information Regarding the City ..................................... C-1 Form of Opinion of Bond Counsel ......................................... D-1 Book-Entry System .................................................... E-1 Forms of Continuing Disclosure Certificates .................................... F-1 No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations other than as contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein, and the description of the Bonds included in this Official Statement, do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to such documents, statutes and constitutional provisions. The information set forth herein has been obtained from sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the City. The information and expressions of opinions herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the District since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENTS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. RVPUB~'RR~21073 ... -111- [Page for Regional Map] -iv- RVPUB~-RR~21073 OFFICIAL STATEMENT $2,990,000* CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 (Masi Plaza) LIMITED OBLIGATION IMPROVEMENT BONDS INTRODUCTION The purpose of this Official Statement, which includes the cover page and Appendices hereto (the "Official Statement") is to provide certain information concerning the sale and issuance of the City of Rancho Cucamonga Assessment District No. 93-1 (Masi Plaza) Limited Obligation Improvement Bonds in the principal amount of $2,990,000* (the "Bonds"). This Introduction is not a summary of this O~cial Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Offcial Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. The City The City of Rancho Cucamonga (the "City") is located in the County of San Bernardino, California. The City was incorporated on November 30, 1977, and is a general law city of the State of California (the "State"). The City has a current estimated population of 116,000. See Appendix C - General Information Regarding the City herein. The District Assessment District No. 93-1 (Masi Plaza) (the "District") was created by the City pursuant to proceedings taken under the Municipal Improvement Act of 1913 (the "Improvement Act"). Proceeds of the Bonds will be used to acquire certain streets, curbs, gutters, sidewalks, street lighting, traffic signal, water, sewer, storm drainage and certain public utility improvements if completed, constructed within the District and necessary for the proposed development. See "THE BONDS - Purpose of Issue" herein. The District, comprising approximately 23.64 acres, is situated along the south side of Foothill Boulevard and the west side of Rochester Avenue in the City and consists of 27 finished lots subject to assessment (the "Assessment Parcels"). The District encompasses the "Masi Plaza" commercial/retail development. Construction of buildings has been completed on Assessment Parcels. These improvements consist of a Mobil Service station and mini mart, Jack in the Box fast food restaurant, a Goodyear Tire store, and Denny's Restaurant. An additional five buildings are under construction on Assessment Parcels, comprising: two multi-tenant retail outlets, two multi-tenant automotive repair shops; and a mini-lube garage. A sixth structure, a former winery, is being renovated for reuse as a brew pub. Additional proposed development includes four multi-tenant retail buildings, three multi-tenant automotive repair buildings, a garden center and five multi-tenant commercial buildings. * Preliminary, subject to change. -1- RVPUB LIRR~210 7 3 Sources of Payment for the Bonds The Bonds are limited obligation improvement bonds of the City. The Bonds are issued upon and are secured by the unpaid assessments against the Assessment Parcels together with interest thereon. These unpaid assessments together with interest thereon constitute a trust fund for the redemption and payment of the principal of the Bonds and the interest thereon. The Bonds are also secured by the monies in the Redemption Fund and the Reserve Fund created pursuant to the assessment proceedings. The City's obligation to advance funds to pay debt service on the Bonds in the event assessment installment collections are insufficient is limited to amounts on deposit from time to time in the Reserve Fund, and if so advanced will reduce the Reserve Fund by the amount of the funds advanced. See "SECURITY FOR THE BONDS" herein. Property Values and Value to Lien An appraisal of the property within the District with a valuation date of May 2, 1997 (the "Appraisal") has been prepared by Len Perdue & Associates of Riverside, California (the "Appraiser"). The Appraisal was prepared to determine an "as is" retail value opinion of completed and occupied commercial buildings and a bulk sale discounted value opinion of the unoccupied buildings and vacant commercial finished lots in the District. According to the Appraisal, the estimated bulk sale discounted value of land and improvements in the District is $14,293,000, which is approximately 4.78 times the aggregate unpaid assessment lien of $2,990,748. Such "value to lien" represents an average for the Assessment Parcels comprising the District. The value to lien of a portion of the Assessment Parcels is below that of the District-wide average. See "APPENDIX A--Summary of the Appraisal Report", herein. The table below summaries the range of property values to unpaid assessments as determined by the Appraiser. TABLE 1 CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 97-1 Value To Lien Summary Value to Lien Ratio Assessment Lien (1) Percent of Total Assessment 1.0:1 to 2.5:1 2.6.1 to 3.0:1 3.1:1 to 4.0:1 4.1:1 to 5.0:1 5.1;1 to 6.0:1 Over 6.1:1 Totals Source: (1) Figures may not add due to rounding Bondowner's Risks THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY, OF THE STATE OF CALIFORNIA OR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE AND NEITHER THE CITY NOR THE STATE NOR ANY POLITICAL SUBDIVISION OF THE STATE HAS PLEDGED ITS FULL FAITH AND CREDIT FOR THE PAYMENT THEREOF. RVPUBXJI~R.\21073 -2- As a result of these and other factors, the Bonds, as an investment, have speculative elemems. See "SPECIAL RISK FACTORS" herein for a discussion of the risk factors that should be considered, in addition to the other matters set forth herein, in determining the investment quality of the Bonds. Continuing, Disclosure The City and Masi Commerce Center Partners have each covenamed for the benefit of holders of the Bonds to provide certain financial information and operating data relating to themselves and the District by not later than February 1 in the case of the City, and February 1 in the case of Masi Commerce Center Partners, in each year commencing for the City's 1997/98 fiscal year and Masi Commerce Center Partners' year ending December 31, 1997 (the "City Annual Report" and, the "Masi Commerce Cemer Partners Annual Report") and to provide notices of the occurrence of certain enumerated evems, if material. The City Annual Report and the Masi Commerce Cemer Partners Annual Report will be filed by the City and the Masi Commerce Center Parreefs, as applicable, with each Nationally Recognized Municipal Securities Information Repository and with the appropriate State information depository, if any. The notices of material evems will be filed by the City and Masi Commerce Center Partners, as applicable, with the Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any.) The specific nature of the information to be contained in the City Annual Report and the Masi Commerce Center Partners Annual Report or the notices of material evems is set forth below under the caption "APPENDIX F - FORMS OF CONTINUING DISCLOSURE CERTIFICATES." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Neither the City nor Masi Commerce Center Parreefs has ever failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material evems. Other Information This Official Statemere speaks only as of its date, and the information contained herein is subject to change. Copies of documents referred to herein and information concerning the Bonds are available from First Trust Company, National Association, Los Angeles, California. The City may impose a charge for copying, mailing and handling. THE IMPROVEMENT PROJECT AND THE FINANCING PROGRAM Improvement Project Proceeds of the Bonds will be used to acquire certain public infrastructure in the District described as follows. Construction of Masi Drive. The construction of Masi Drive includes paving and the installation of curb & gutter, sidewalk, commercial driveways, sidewalk drains, street lighting, street trees and landscaping, signage and striping, and public utilities. Masi Drive has a centerline length of approximately 750 linear feet. Paving width is 44 feet from curb to curb, and the right of way width is 66 feet. A traffic signal has been constructed at the intersection of Foothill Boulevard and Masi Drive. Water, sewer, and storm drain facilities have also been constructed in the street. Construction of Sebastian Way. The construction of Sebastian Way includes construction, paving and the installation of curb & gutter, sidewalk, commercial driveways, sidewalk drains, street lighting, street trees, landscaping, signage and striping and public utilities. Sebastian Way has a centerline length of RVPUBLIRRL21073 -3- approximately 1,010 linear feet, has a pacing width of 44 feet from curb to curb and has a 66 foot right of way. Water, sewer, and storm drain facilities have also been constructed in the street. Foothill Boulevard. This scope of work includes the widening of Foothill Boulevard from the centerline of Rochester Avenue west beyond the west line of the subject property and the construction of a raised landscaped median. Construction of Vitners Walk, a historic and decorative feature commemorating area wine growers. Installation of a 10 inch steel water pipe in Foothill Boulevard. Rochester Avenue. The work extends from the centerline of Foothill Boulevard south to the south line of the subject property. Street improvements had recently been constructed by the city and the acquired additional improvements consist of minor curb, pavement widening, repositioning of a traffic signal at the southwest corner of Foothill Boulevard and Rochester Avenue, landscaping, and a bus bay. A storm drain ranging in diameter from 24 to 30 inches in diameter has also been constructed east to west across the northern half of the subject site between Masi Drive and Rochester Avenue to provide relief from overflow should storm drain improvements within the Foothill Boulevard zone fail. Landscaping and irrigation improvements are also part of the project and are situated along Masi Drive and Sebastian Way. As previously stated, Vitners Walk, a special historic feature will be constructed along the south side of Foothill Boulevard. Costs of the acquired improvements are as follows' TABLE 2 CITY OF RANCHO CUCAMONGA ASSESSMENTS DISTRICT NO. 93-1 SUMMARY OF IMPROVEMENTS Construction Costs Streets Traffic Signals Street Light Electrical Landscaping and Irrigation Sewer Improvements Storm Drain Improvements Water Line Improvements Underground Utilities Gas Main Improvements Vintner's Walk Historical Monument Area City in-lieu Fees ~ Total Construction Costs Incidental Costs Financing Costs Balance to Assessment Cost of Improvements $382,789.50 77,742.00 34,941.52 104,225.00 131,027.00 127,934.00 290,479.00 102,500.00 18,921.10 241,479.05 30,283.50 $1,549,263.17 850,814.86 590.673.41 $2,990,751.44 Source: Engineer's Report. Represents the cost allocated to special pavers for the Rochester/Foothill Blvd. intersection and from undergrounding utilities. -4- RVPUB~-RRL21073 Estimated Sources and Uses of Funds The proceeds to be received from the sale of the Bonds and prepaid assessments are estimated to be applied as follows: TABLE 3 CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 SOURCES USES Estimated Sources and Uses* Par Amount of the Bonds Prepaid Assessments TOTAL SOURCES Improvement Fund Redemption Fund (1) Reserve Fund (2) Costs of Issuance and Underwriter's Discount (3) TOTAL USES (1) Interest is capitalized through the September 2, 1998 interest payment date. (2) Reserve Fund equals the lesser of 10% of the original principal amount of the Bonds, 125 % of average annual debt service on the bonds or maximum annual debt service on the Bonds. (3) The Costs of Issuance include legal fees, financial advisor fees, engineering fees, fiscal agent fees, appraisal fees, printing costs and other costs associated with the issuance of the Bonds. * Preliminary, subject to change. Debt Service Schedule* TABLE 4 CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 Debt Service Schedule The following table presents the debt service schedule for the Bonds, assuming no redemptions are made: Year Ending September 2 Principal Interest Total 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 TOTALS *Preliminary, subject to change. RVPUBXIRR~21073 -5- General Provisions THE BONDS The Bonds will be dated the date of their delivery, and will be issued in the aggregate principal amount of $2,990,000*. The Bonds will bear interest from their dated date, at the rates per annum set forth on the cover page hereof, payable semiannually on each March 2 and September 2, commencing March 2, 1998 (individually an "Interest Payment Date"), and will mature in the amounts and on the dates set forth on the cover page hereof. The Bonds will be issued in fully registered form in denominations of $5,000 each or any integral multiple thereof, except for one Bond maturing in 1999. Each Bond will bear interest from the interest payment date next preceding the date on which it is authenticated, unless said Bond is authenticated as of an Interest Payment Date, in which case it shall bear interest from said Interest Payment Date, or unless said Bond is authenticated prior to the first Interest Payment Date, in which case it shall bear interest from its date, or unless a prior interest payment is in default on such date, in which case it shall bear interest from the last day on which interest was paid in full or from their dated date if no interest has been paid, until payment of its principal sum has been discharged. The Bonds, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ("DTC"), New York, New York. Purchases of beneficial interests in the Bonds will be made in book-entry only form. Accordingly, principal of and interest on the Bonds will be paid by the Trustee directly to DTC as the registered owner thereof. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC Participants and the Indirect Participants, as more fully described herein. Any purchaser as a beneficial owner of a Bond must maintain an account with a broker or dealer who is, or acts through, a DTC Participant to receive payment of the principal of and interest on such Bond. Transfers of ownership will be made in the records of DTC for the beneficial owners of the Bonds. Authority for Issuance The improvement proceedings with respect to the District are being conducted pursuant to the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code (the "Improvement Act"), and Resolution of Intention No. ~ adopted by the City Council on February 19, 1997. The Bonds, which represent the unpaid assessments levied against the Assessment Parcels, are issued pursuant to the provisions of the Improvement Bond Act of 1915, Division 10 of the California Streets and Highways Code (the "Bond Law"), a Resolution authorizing issuance of the Bonds adopted by the City Council on June 18, 1997 (the "Bond Resolution") and a Bond Indenture, dated as of June 1, 1997 (the "Indenture"), by and between the City and the Fiscal Agent. Investment of Bond Proceeds Moneys held in the Improvement, Redemption and Reserve Funds shall be invested in accordance with the requirements of the Indenture. See "APPENDIX B - SUMMARY OF THE INDENTURE." Investment income on moneys in the Improvement Fund shall be retained therein until the Improvement Fund is closed. Following completion of all improvements and the making of all acquisitions and the payment of all project costs and expenses, the Improvement Fund will be closed and any amounts remaining therein shall be credited to the assessments or used to call Bonds or otherwise used as set forth in the improvement proceedings and pursuant to the applicable provisions of the Improvement Act. Investment income on moneys in the Reserve Fund shall be retained therein to the extent necessary to bring the balance of the Reserve Fund up to the Reserve Requirement and shall thereafter be transferred to the Redemption Fund. Whenever the balance in the Reserve Fund is sufficient to retire all remaining outstanding Bonds, the Reserve Fund shall be liquidated in retirement of the Bonds. RVPUB~RRL21073 -6- Investment income on moneys in the Redemption Fund will be retained therein. The Redemption Fund will be liquidated in retirement of the Bonds. Redemntion Optional Redemption. Any Bond may be called for redemption and redeemed prior to maturity on March 2 or September 2 in any year, from any source of funds including without limitation the prepayment of assessments or excess construction proceeds, by paying the Redemption Price (expressed as percentages of principal amount to be redeemed) and accrued interest thereon to the date of redemption as set forth below: Redemption Dates Price On or before September 2, 2004 March 2 or September 2, 2005 March 2 or September 2, 2006 March 2, 2007 and thereafter 103% 102% 101% 100% Mandatory Redemption From Sinking Fund Payments. The Bonds maturing on September 2, 2022 are subject to mandatory redemption, in part by lot, from sinking fund payments set forth in the following schedule on September 2, 2013 and on September 2 in each year thereafter to and including September 2, 2022 at a redemption price equal to the principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption; provided, however, that if some but not all of the Bonds maturing September 2, 2022 have been redeemed pursuant to the above described redemption provisions, the total amount of sinking fund payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Bonds maturing September 2, 2020 so redeemed by reducing each such future sinking fund payment on a pro rata basis (as nearly as practicable) in integral multiples of $5,000. Redemption Date Principal* Redemption Date Principal* (September 2) Amount (September 2 Amount 2013 2018 2014 2019 2015 2020 2016 2021 2017 2022 (maturity) * Preliminary, subject to change. Prepayment of Assessments and Refunding Bonds. An optional redemption of all or a portion of the Bonds may occur prior to their stated maturities. Such complete or partial optional redemption would occur as the result of any prepayment of all or part of any assessment and the issuance of refunding bonds. Furthermore, the accumulation of investment income in the Redemption Fund may result in optional redemption of all or a portion of the Bonds. Pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds, the City may issue refunding bonds for the purpose of redeeming the Bonds. See "Optional Redemption," above. See "SECURITY FOR THE BONDS - Reserve Fund" for a discussion of the transfer of investment income from the Reserve Fund to the Redemption Fund. Selection of Bonds(or Redemption. If less than all of the Bonds are to be redeemed, the Fiscal Agent is required by the Indenture to select the Bonds to be redeemed in authorized denominations from each maturity in the same proportion which such maturity represents with respect to all of the Bonds and by lot within a -7- RVPUBLIRRX21073 single maturity; provided, however, that the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and that, in selecting portions of such Bonds for redemption, the Fiscal Agent is required to treat each such Bond as representing that number of Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The Fiscal Agent is required to promptly notify the City in writing of the Bonds, or portions thereof, selected for redemption. Owners of Bonds to be redeemed are required to reserve notice of redemption at least 30 days but no more than 45 days prior to the redemption date. So long as the Bonds are held in DTC's book-entry only system, all such notices will be given to Cede & Co. as the registered owner of the Bonds. -8- RVPUB~IRR~1073 SECURITY FOR THE BONDS The Bonds are not secured by the general taxing power of the City or the State or any political subdivision of the State, and neither the City nor the State nor any political subdivision of the State has pledged its full faith and credit for the payment thereof Assessments The Bonds are issued upon and are secured by the unpaid assessments against the Assessment Parcels, together with interest thereon. The unpaid assessments together with interest thereon constitute a trust fund for the redemption and payment of the principal of the Bonds and the interest thereon. All the Bonds are also secured by the monies in the Redemption Fund and the Reserve Fund created pursuant to the assessment proceedings. Principal of and interest on the Bonds are payable exclusively out of the Redemption Fund. Although the unpaid assessments constitute fixed liens on the Assessment Parcels, they do not constitute personal indebtedness of the owners of the Assessment Parcels. Furthermore, there can be no assurance as to the ability of the owners to pay the unpaid assessments. The unpaid assessments levied on the Assessment Parcels will be collected in annual installments, together with interest on the declining balances, on the tax roll of the County of San Bernardino (the "County") on which general taxes on real property are collected, and the annual assessment installments, together with interest thereon are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes. The Assessment Parcels are subject to the same provisions for sale and redemption as are properties for nonpayment of general taxes, subject to the foreclosure covenants discussed below. These annual assessment installments together with interest are to be paid into the Redemption Fund which will be used to pay the principal of and interest on the Bonds as they become due. Covenant to Commence Foreclosure Proceedin~,s -- The Act provides that in the event any assessment or installment thereof or any interest thereon is not paid when due, the City may order the institution of a court action to foreclose the lien of the unpaid assessment. In such an action, the real property subject to the unpaid assessment may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory under the Bond Law. However, in the Indenture, the City has covenanted with the Bondowners that, in the event any assessment or installment thereof, including any interest thereon, is not paid when due, it will order, and cause to be commenced by 150 days following the occurrence of a delinquency, and thereafter diligently prosecute to completion, court foreclosure proceedings upon the lien of any and all delinquent unpaid assessments and interest. Such foreclosure proceedings may be deferred if funds are advanced to the Reserve Fund to keep the Reserve Fund continually at the level originally funded with proceeds of the Bonds; provided, however, if the aggregate assessment installment for any parcel or parcels owned by a single owner are in excess of $10,000, then the City shall cause judicial foreclosure proceedings to be brought against such parcel or parcels within 150 days of such delinquency. In the event court foreclosure proceedings are necessary, there may be a delay in payments to Bondowners pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale. It is also possible that no bid for the purchase of the applicable property would be received at the foreclosure sale. See also the section herein entitled "SPECIAL RISK FACTORS." RVPLrBXJRR~21073 -9- Priority of Lien Each assessment (and any reassessment thereof) and each installment thereof, and any interest and penalties thereon, constitutes a lien against the parcel of land on which it was imposed until the same is paid. The lien is subordinate to all fixed special assessment liens imposed upon the same property prior to the date that the assessments became a lien on the property assessed, but has priority over all private liens and over all fixed special assessment liens which may thereafter be created against the property. The lien is co-equal to and independent of the lien for general taxes and any community facilities district (Mello-Roos district) special taxes, including general taxes and community facilities district special taxes levied or imposed subsequent to the date the assessment lien securing the Bonds was imposed on land in the District. Property in the District is currently encumbered by certain fixed and special tax liens. The land within the District is a part of certain larger assessment districts and community facilities districts. The City has issued assessment bonds in 199 pursuant to the Bond Law and community facilities district bonds in 199 pursuant to the Mello Roos Act of 1984. Consequently, the prior assessment bonds have a priority over the lien securing the Bonds and the prior community facilities district bonds are on a parity with the lien securing the Bonds. The direct and overlapping debt of property within the District as of June 10, 1997 is shown below under the heading "THE DISTRICT - Overlapping Debt." Property Values The District is comprised of 27 assessors parcels which will have assessment liens remaining unpaid after formation of the District. An appraisal of the property in the District with unpaid assessments liens, dated May 28, 1997 (the "Appraisal") was conducted by Len Perdue & Associates, Riverside, California (the "Appraiser"). The value opinion set forth in the Appraisal is stated as of May 2, 1997. The Appraisal is based on a number of limiting assumptions. See "THE DISTRICT - Property Values" and "APPENDIX A - SUMMARY OF THE APPRAISAL REPORT" for a discussion of certain assumptions as well as the methodology used in the Appraisal. Property values (including value-to-lien data on a parcel-by-parcel basis) are set forth under the caption "THE DISTRICT - Property Values." Reserve Fund Out of the proceeds of the sale of the Bonds, the City will set aside the Reserve Fund an amount equal to the lesser of (i) 10% of the original principal amount of the Bonds, (ii) 125 % of average annual debt service on the Bonds, or (iii) maximum annual debt service on the Bonds, which equals the Reserve Requirement as of the date of issuance of the Bonds. Interest earnings above the amounts necessary to bring the balance in the Reserve Fund to the Reserve Requirement are transferred to the Redemption Fund and credited towards unpaid assessments. Amounts in the Reserve Fund are required to be transferred to the Redemption Fund whenever there are insufficient funds in the Redemption Fund to pay principal or interest on the Bonds. The amounts so advanced are required to be reimbursed upon receipt of proceeds of redemption or sale of the parcels for which payment of delinquent installments of assessments and interest thereon have been made from the Reserve Fund. In the event an unpaid assessment is paid in cash in advance of the final Bond maturity date, the City is required to credit such prepaid assessment with a proportionate share of the Reserve Fund, thus reducing the total amount of the Reserve Fund to the new Reserve Requirement based on the smaller amount of outstanding Bonds. The amount to be so credited shall be the pro-rata share of the original amount deposited in the Reserve Fund, less any amount previously credited to the parcel with respect to a prior prepayment and less any amount previously transferred from the Reserve Fund to the Redemption Fund as a result of any RVPUBURR~21073 -10- outstanding delinquency in the payment of assessment installments for the parcel for which the assessment is being prepaid. Whenever the balance in the Reserve Fund is sufficient to retire all the remaining Bonds, whether by advance retirement or otherwise, collection of the assessments shall be discontinued and amounts in the Reserve Fund shall be applied to retire the Bonds. All sums remaining in the Reserve Fund in the year in which the last installments of assessments become due will be credited toward the assessments in the manner set forth in the Indenture and applied to the final payment on the Bonds. Sales of Tax-Defaulted Property Generally Property securing delinquent assessment installments which is not sold pursuant to the judicial foreclosure proceedings described above may be sold, subject to redemption by the property owner, in the same manner and to the same extent as real property sold for nonpayment of general County property taxes. On or before June 30 of the year in which such delinquency occurs, the property becomes tax-defaulted. This initiates a five- year period during which the property owner may redeem the property. At the end of the five-year period the property becomes subject to sale by the County Treasurer and Tax Collector. Except in certain circumstances, as provided in the Bond Law, the purchaser at any such sale takes such property subject to all unpaid assessments, interest and penalties, costs, fees and other charges which are not satisfied by application of the sales proceeds and subject to all public improvement assessments which may have priority. Delinquency Resultin_o in Ultimate or Temporary Loss on Bonds If a temporary deficiency occurs in the Redemption Fund with which to pay Bonds which have matured, past due interest or the principal and interest on Bonds coming due during the current tax year, but it does not appear to the Treasurer that there will be an ultimate loss to the Bondholders, the Treasurer shall, pursuant to the Bond Law, pay the principal of Bonds which have matured as presented and make interest payments on the Bonds when due as long as there are available funds in the Redemption Fund, in the following order of prioriw: (1) All matured interest payments shall be made before the principal of any Bonds is paid. (2) Interest on Bonds of earlier maturity shall be paid before interest on Bonds of later maturity. (3) Within a single maturity, interest on lower-numbered Bonds shall be paid before interest on higher- numbered Bonds. (4) The principal of Bonds shall be paid in the order in which the Bonds are presented for payment. Any Bond which is presented but not paid shall be assigned a serial number according to the order of presentment and shall be returned to the Bondholder. When funds become available for the payment of any Bond which was not paid upon presentment, the Treasurer shall notify the registered owner of such Bond by registered mail to present the Bond for payment. If the Bond is not presented for payment within ten days after the mailing of the notice, interest shall cease to run on the Bond. If it appears to the Treasurer that there is a danger of an ultimate loss accruing to the Bondholders for any reason, he or she is required pursuant to the Bond Law to withhold payment on all matured Bonds and interest on all Bonds and report the facts to the City Council so that the City Council may take proper action to equitably protect all Bondholders. Upon the receipt of such notification from the Treasurer, the City Council is required to fix a date for a hearing upon such notice. At the hearing the City Council shall determine whether in its judgment there will ultimately be insufficient money in the Redemption Fund to pay the principal of the unpaid Bonds and interest thereon. If the City Council determines that in its judgment there will -11- RVPUBXIRRX21073 ultimately be a shortage in the Redemption Fund to pay the principal of the unpaid Bonds and interest thereon (an "Ultimate Loss"), the City Council shall direct the Treasurer to pay to the owners of all outstanding and unpaid Bonds such proportion thereof as the amount of funds on hand in the Redemption Fund bears to the total amount of the unpaid principal of the Bonds and interest which has accrued or will accrue thereon. Similar proportionate payments shall thereafter be made periodically as moneys are deposited into the Redemption Fund. Upon the determination by the City Council that an Ultimate Loss will occur, the Treasurer shall notify all Bondholders to surrender their Bonds to the Treasurer for cancellation. Upon cancellation of the Bonds, the Bondholder shall be credited with the principal amount of the Bond so canceled. The Treasurer shall then pay by warrant the proportionate amount of principal and accrued interest due on the Bonds of each Bondholder as may be available from time to time out of the money in the Redemption Fund. Interest shall cease on principal payments made from the date of such payment, but interest shall continue to accrue on the unpaid principal at the rate specified on the Bonds until payment thereof is made. No premiums shall be paid on payments of principal on Bonds made in advance of the maturity date thereon. If Bonds are not surrendered for registration and payment, the Treasurer shall give notice to the Bondholder by registered mail, at the Bondholder's last address as shown on the registration books maintained by the Registrar, of the amount available for payment. Interest on such amount shall cease as of ten days from the date of mailing of such notice. If the City Council determines that in its judgment there will not be an Ultimate Loss, it shall direct the Treasurer to pay matured Bonds and interest as long as there is available money in the Redemption Fund. The priority of payments will be as set forth in the first paragraph of this subsection. Note that while the Bonds are in the book-entry only system of DTC, DTC is the legal owner of all of the Bonds, and there will be one Bond for each maturity in the total principal amount of such maturity. Payments to beneficial owners will be in accordance with the practices of DTC and their Participants. See "THE BONDS - Book-Entry-Only System." Limited Oblifations of the City Upon Delinquency If a delinquency occurs in the payment of any assessment installment, the City has no duty to transfer into the Redemption Fund the amount of the delinquency except from monies available in the Reserve Fund. There is no assurance that funds will be available in the Reserve Fund for this purpose and if, during the period of delinquency, there are insufficient funds in the Reserve Fund, a delay may occur in payments to the Bondowners or there may be insufficient funds to make such payments. If there are additional delinquencies after exhaustion of funds in the Reserve Fund, the City has no direct or contingent liability to transfer into the Redemption Fund the amount of delinquency out of any other available monies of the City. THE DISTRICT General The District, comprising approximately 23.64 acres situated along the south side of Foothill Boulevard and the west side of Rochester Avenue in the City, consists of 27 parcels of land which will have unpaid assessments (the "Assessment Parcels"). The District is centrally located along an approximately four mile retail corridor that extends along Foothill Boulevard in the City. Terra Vista Power Center, an approximately 800,000 square foot regional retail center, lies one mile to the west of the District. The Foothill Marketplace, a 60 acre power retail center, lies approximately one mile east of the District. The Promenade, a 450,000 square foot retail center now under construction, is located opposite the District on the North side of Foothill Boulevard; Home Depot, the Promenade's anchor tenant opened in September 1996. -12- RVPUB~RR'~21073 The land in the District is predominantly vacam. The proposed development, Masi Plaza, is emirely retail and commercial, consisting of separate developable parcels. Currently completed construction includes a Mobil Service Station and Mini Mart on parcel 2, a Jack in the Box fast food restaurant on parcel 3, a Goodyear Tire Store on lot 8 and a Denny's restaurant on lot 6. Five additional buildings are under construction on lots one and eight, four and seven and nine and ten. The existing building on lot five, a former winery building in shell condition, is being renovated for reuse as a brew pub. The area situated between the and Denny's restauram is to be an expanded sidewalk area featuring historic displays about the history of wine making in the area, a vintner "walk of fame" featuring the names of prominem area vintner families and a bronze statue of Sebastian Masi. Method of Assessment Spread The "Improvemere Act" requires that the assessments be spread among the parcels in the District based on benefit received from the works of improvements to be acquired. Under the Improvemere Act the benefit received by the property owners must represem a special and direct benefit distinguished from that received by the general public. The Improvemere Act does not specify the method or formula that should be used in any special assessmere district proceedings. The responsibility for such determination rests with the Assessmere Engineer, who is appointed for the purpose of making the analysis of the facts and determining the correct apportionmere of the assessmere obligation. The boundaries of the District correspond to the boundaries of Parcel Map No. 13845. The special benefits that inure to the property owners within the District through the acquisition of street, storm drainage, water system, and sewerage improvemeres, and the associated appurtenant work, are the provision of ingress and egress, flood comrol protection and provision of water and sewer service to each of the parcels of land within the District. The construction costs and proportionate share of the incidental costs for bid items will be spread on a net assessable acreage basis to those areas or subareas of the District that specifically benefit from the works of improvemere to be acquired. The Assessmere Engineer has determined that the special benefit received form the above-cited works of improvements are in direct proportion to the number of assessable net acres of the record lots. Assessmeres are spread over all parcels within the Assessmere District in the following manner: Because each lot within this subdivided commercial project receives direct and special benefit from Improvements, each lot will be assessed based upon its proportion of the total assessable acreage within the District. Net assessable acreage for all lots within the District is taken directly from the "per lot" net acreage shown on the recorded parcel without offset for easemeres. The Assessmere Engineer has determined that all benefit received by the land in the District are of a special benefit. In this review, the Assessmere Engineer concluded that the water, sewerage, and storm drain improvements represem special benefits to the project because they provide necessary services only to parcels with the District, with no general benefit being received by the general public. The street improvements are also a special benefit to each of the parcels within the District because they provide access to the existing or future businesses within the Masi Plaza development. The street improvemeres do not improve or aid the through traffic on Foothill Boulevard or Rochester Avenue, therefore the Assessmere Engineer concluded that there is no general benefit received by the general public. Furthermore, there are no lots or parcels of land that are owned by a public agency that specifically benefit from the works of improvemere. Maps showing the location of the District and the site plan for the improvements, appear on the following pages. -13- RVPUB~JRR~21073 [Page for Location Map] -14- RVPUB',,JR.R'~21073 [Page for Site Map] -15- RVPUB',YRR~21073 Proposed Development in the District Information in this section, entitled "Proposed Development in the District." is included because it is considered relevant to an informed evaluation and analysis of the Assessed Parcels and any existint, or future improvements thereon as security for the Bonds. The information contained in this section does not I, uarantee that pro0erty ownership will not change. that development within the District will occur as described herein or that the current or any subsequent owners will pay the Assessments when due. The Assessments will constitute a lien on the Assessed Parcels and not a personal indebtedness of the owners of the Assessed Parcels. Information in this section has been provided by the property owner. and the City cannot ensure its completeness or accuracy. Masi Plaza. The proposed development in the District is the Masi Plaza. Masi Plaza is a specialty retail, home improvement, auto service and multi-tenant commercial center of approximately 230,000 leasable square feet, now under construction. The specialty retail component includes a significant retail entertainment element, totalling approximately 145,000 square feet which include five or more restaurants and a garden center, in addition to other retail and commercial uses. The retail center is bounded by Foothill Boulevard, Rochester Avenue Sebastian Way and Masi Drive. The automotive service court contains approximately 40,000 square feet. This portion of the development, which lies to the west of Masi Drive, is anchored by a gas station with a mini-mart and car wash. The multi-tenant commercial center, totalling approximately 42,000 square feet, is planned for service, discount retail, recreation and office uses. The multi-tenant commercial center is located to the south of Sebastian Way and extends along the southern property line of the project, contiguous to the City Sports Center. Development of Masi Plaza is scheduled to occur in two phases. Phase I, consisting of the development of Parcels 1-10 is substantially complete except for the renovation of lot 5, the existing winery building; Phase II, consisting of the development of the remaining Parcels is scheduled to begin in late 1997. Phase I development includes a Mobil Service Station and Mini Mart (the only parcel owned other than by Masi Commerce Centers Partners), a Jack in the Box fast food restaurant, a Goodyear Tire Store, a Denny's restaurant, two multi-tenant automotive buildings, two multi-tenant retail/restaurant buildings and the renovation of the existing winery building. Phase II development consists of [describe]. Total cost of constructing the Masi Plaza is estimated to be $20,000,000; with Phase I cost, including all redevelopment expenses and expenditures estimated at $10,000,000, and Phase II cost estimated at $10,000,000. Construction financing for the Phase I improvements has been provided by GNS Development Corporation. The Developer is currently seeking permanent take-out financing for Phase I and construction financing for Phase II. All property taxes in the District are current. lamd Owners. There currently are two property owners in the District having unpaid assessments, Masi Commerce Center Partners of Eagle Caspian Enterprise LLC. The Masi family has owned lots 1 and 3 through 27 since 1943. This portion of the District is responsible for approximately 96.9% of the Assessment Lien. Eagle Caspian Enterprise LLC purchased Lot 2 in August of 1996 for an indicted price of $700,000. Eagle Caspian Enterprise LLC is a parmership of Oscar Etedmadian and Dr. Nasser Redial. Mr Etedmadian operates the Mobil station in the District. Dr. Redjal is a physician practicing in Los Angeles, California. Certain information with respect to the property owners set forth below. Masi Commerce Center Partners. Masi Commerce Centers Partners is a California general partnership comprised of Jack Masi, Inc., Masi Rochester Associates and Masi Commerce Center Partners II. Masi Commerce Center Parmers is owned and controlled by various members of the Masi family. Jack Masi, Inc. -16- RVPUB~JRR~. 1073 is the Managing Parmer. Masi Rochester Associates is a California limited partnership with Jack Masi, Inc. as the sole General Parmer. Jack Masi, Jennie Masi (Jack Masi's mother) and the Sebastian Masi Trust are Limited Parmers. Jack Masi is the Trustee of the Sebastian Masi Trust. Masi Commerce Center Partners II is a California limited partnership. SMT Masi, Inc. is the General Partner; Jack Masi, Inc. is its President. The Sebastian Masi Trust and Jennie Masi are the Limited Partners. The following provides a brief description of the Masi family, Jack Masi and Michael Scandiffio, project managers for the Masi Plaza development. The Masi Family. Sebastian and Jennie Masi acquired the property in 1943 and operated it as the Masi Winery until the early 1960's. The Masi family name is associated strongly with the history of Rancho Cucamonga. The late Sebastian Masi was one of the instrumental citizens behind the successful effort to incorporate the communities of Cucamonga, Alta Loma and Etiwanda into the City of Rancho Cucamonga. Jack Masi. Jack Masi received his bachelor degree from Loyola University in 1959 with a specialization in business. From 1960 through 1964, Mr. Masi served as a Lieutenant in the U.S. Navy. Upon release from active duty, he assumed management of the family vineyards until 1969. From 1969 to 1992, Mr. Masi was employed by the U.S. Air Force as a Management Specialist. Michael Scandiffio. Michael Scandiffio is acting as the project manager of Masi Plaza. He has over 20 years experience in real estate development, architecture and urban planning. From 1980 to the founding of his company, Mr. Scandiffio was employed in the real estate development field. He worked for Cadillac Fairview in New York as a Development Manager overseeing 1.5 million square feet of high-rise office development. He also was Associate Vice President in charge of development at Kajima Development Corporation and Development Director at Josephson Properties, both located in Los Angeles. Mr. Scandiffio's development experience includes projects ranging from industrial parks, office buildings, retail centers and both single family and multi-family residential developments. Prior to 1980, Mr. Scandiffio was a practicing Architect and Urban Planner in New York City. He was employed as an Urban Designer for the Department of City Planning: City of New York; there he was responsible for creating incentive zoning districts and community redevelopment plans in Manhattan. He also worked for the architectural fu-m of Edward Larabee Barnes and Associates. Mr. Scandiffio has been an Associate Professor of Finance at the Graduate School of Business Administration, New York University and an Assistant Professor in Urban Design at the School of Architecture, The City College of New York. Mr. Scandiffio has a Master's Degree in Management from Yale University. He also has a Master's Degree in Urban Planning and a Bachelor's Degree in Architecture from the City College of New York. He is a licensed architect in California and New York, as well as a licensed Real Estate Broker in California. Below is a list of development projects in which Mr. Scandiffio acted as development manager: Rancho Cucamonga, CA a 27-acre, retail/commercial development totalling approx. 500,000 square feet of building space Castaic, CA 200-acre, master planned industrial development totalling nearly 2.4 million square feet E1 Segundo, CA 250,000 square feet office building. Monterey Park, CA 110,000 square feet office building. San Pedro, CA 226 unit condominium complex. -17- RVPUB~R~1073 San Pedro, CA 75,000 square feet retail center. Palos Verdes, CA 34 unit single-family housing development. Property Values The Appraisal expresses an opinion as to the market value of the property in the District taking into account the Improvements to be acquired by the District and existing privately financed improvements as of the May 2, 1997 date of appraisal. In the opinion of the Appraiser, the property in the District subject to assessment had an aggregate market value of $14,293,000 as of May 2, 1997, assuming a retail sale of completed and occupied commercial buildings and a bulk sale discounted valuation of the unoccupied buildings and vacant commercial finished lots. Based on this valuation, the value-to-lien ratio for the Bonds and all other obligations on a parity or senior lien to the Bonds is [4.78:1]. Such "value to lien" represents an average for the Assessment Parcels comprising the District. As indicated in the table below, the value to lien of a portion of the Assessment Parcels is below that of the District-wide average. See "Appendix A--Summary of the Appraisal Report" for a discussion of the Appraisal. TABLE 5 City of Rancho Cucamonga Assessment District No. 93-1 Parcel No. Bulk Sale Retail Valuation (1) Value to Lien Ratios by Parcel Discounted AD 93-1 Other Assessments Value (2) Assessment (3) or Mello Roos (4) Lien to Value Ratio 1 $397,000 2 1,619,000 3 1,079,000 4 1,474,000 (2) 5 760,000 6 850,000 7 1,018,000 (2) 8 604,000 9 880,000 (2) 10 508,000 (2) 11 958,000 12 749,000 13 1,056,000 14 629,000 15 717,000 16 1,135,000 17 453,000 18 230,000 19 206,000 20 220,000 21 220,000 22 211,000 23 220,000 24 244,000 25 407,000 26 359,000 27 1,142,000 $397,000 1,619,000 1,079,000 746,000 590 000 850 000 577 000 604 000 560 000 292 000 745 000 583 000 821 000 472,000 558,000 882,000 328,000 167,000 14.9,000 160,000 160,000 153,000 160,000 177,000 306,000 270,000 888,000 $64,521 93,619 86,028 173,321 137,898 91,089 77,173 67,051 113,861 55,665 197,359 154,345 217,601 135,368 154.345 244 169 97 414 60.726 54.400 58.196 58.196 55.665 58.196 64,521 107,535 77,173 235,313 6.15 17.29 12.54 4.30 4.28 9.33 7.48 9.01 4.92 5.25 3.77 3.78 3.77 3.49 3.62 3.61 3.37 2.75 2.74 2.75 2.75 2.75 2.75 2.74 2.85 3.50 3.77 (1) Appraised Values reported by Len Perdue & Associates as of May 2, 1997. (2) Retail Values As Though Finished (3) Assessment liens as determined by the Assessment Engineer (4) Represents the portion of the overlapping assessment and community facilities district bonds a!locable to each of the Assessed Parcels. (5) Figures may not add due to rounding. Source: Engineers Report and Appraisal. RVPUB~IRR'~21073 -18- The table below summarizes the range of property values to unpaid assessments as determined by the Appraiser. TABLE 6 CITY OF RANCHO CUCAMONGA COMMUNITY FACILITIES DISTRICT NO. 93-3 Value to Lien Ratio Assessment Lien (1) Percent of Total Assessment 1.0:1 to 2.5:1 2.6:1 to 3.0:1 3.1:1 to 4.0:1 4.1:1 to 5.0:1 5.1:1 to 6.0:1 Totals Source: (1) Figures may not add due to rounding. No assurance can be given that should an Assessment Parcel with delinquent assessment installments be foreclosed and sold for the amount of the delinquency that any bid will be received for the parcel, or if a bid is received that the bid will be sufficient to pay the delinquent installments. The Bond Law requires that a parcel be sold only for the amount delinquent and not for the entire outstanding assessment. Direct and Overlapping Debt CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 The property included within the District is included in several other special districts which are authorized to levy special assessments. The liens of special taxes of overlapping community facilities districts are of equal priority to the lien of the Special Taxes. The following discussion summarizes the special districts overlapping the District: The City has established both street light and landscape maintenance districts, pursuant to the Landscaping and Lighting Act of 1972 (the "1972 Act") which levies annual assessments against property within the City for the purpose of maintaining the irrigation system, perimeter landscaping, erosion control, trash pick-up and plant replacement of seven public spaces and parks, as well as the maintenance of lighting of major streets and local street lighting. The City's Lighting District No. 1 covers lighting and traffic signals for major streets within the City. Each parcel of commercial property in the City is assessed $35.54 per acre per year. Lighting District No. 6 pays for local area lighting, for which the assessment is $51.40 per acre per year per parcel of commercial property. The properties in the District will be annexed into Landscape District No. 36 over a period of time. The annual charge for lots in Landscape District No. 36 for the 1993/94 Fiscal Year is a fiat fee of $352.80 per acre of commercial property which is collected on the 1993/94 property tax bill. The fee is dependent upon actual maintenance costs, and is subject to review by the City each June for the following fiscal year. The District is located within Parks and Recreation District No. 85-PD ("District No. 85-PD") and Parks and Recreation District No. 85-PD-R ("District No. 85-PD-R"). District No. 85-PD was created under the 1972 Act to provide for the construction of the City's Red Hill and Heritage Parks through the issuance of bonds and the maintenance of the improvements. District No. 85-PD-R subsequently issued refunding bonds -19- RVPUBXJP,.R~21073 with a final maturity in the year 2005. District No. 85-PD and District No. 85-PD-R are overlapping with a City-wide boundary, except for properties within planned communities. The total assessment for each property within the two districts depends on the size of the lot. Parcels that are less than 1.5 acres are assessed $26, while parcels that are between 1.5 and 3.5 acres are assessed $78. Parcels that are within 3.51 and 7.0 acres are assessed $182, while parcels that are within 7.1 and 14.0 acres are assessed $364. Parcels that are between 14.01 and 25.0 acres are assessed $728, and parcels that are over 25.0 acres are assessed $1,300. TABLE 7 CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 Direct and Overlapping Debt 1996-97 Assessed Valuation: $273,092 DIRECT AND OVERLAPPING TAX AND ASSESSI~ I..]NT DEBT: Metropolitan Water District Cucamonga County Water District Cucamonga County Water District, I.D. No. 5 City of Rancho Cucamonga Community Facilities District No. 84-1 City of Rancho Cucamonga Assessment District No. 85-PD-R City of Rancho Cucamonga Assessment District No. 93-1 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT % Applicable (1) Debt 7/1/97 0.000005 % $ 29 0.001 17 0.001 4 0.708 84,712 0.144 6,890 100. -(2) $91,652 OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Bernardino County General Fund Obligations San Bernardino County Pension Obligations Chaffey Community College District Certificates of Participation Chaffey Union High School District Certificates of Participation Cucamonga School District Certificates of Participation City of Rancho Cucamonga General Fund Obligations TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT 0.0001% $1,086 0.0001 385 0.0002 15 0.0004 22 0.003 453 0.001 12 $1,973 COMBINED TOTAL DEBT (1) Based on redevelopment adjusted assessed valuation of $41,182. (2) Excludes 1915 Act bonds to be sold. (3) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to Assessed Valuation: Direct Debt Total Direct and Overlapping Tax and Assessment Debt Combined Total Debt -% 33.56% 34.28% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/96: $ SPECIAL RISK FACTORS This Special Risk Factors section of the Official Statement does not summarize the Official Statement. Rather it supplements other sections in order to highlight certain risks of the investment. Necessarily, the listing and discussion of risks is neither comprehensive nor definitive. It is based largely upon experience with special assessment bonds in other situations. This Special Risk Factors section is divided into three major -20- RVPUBLIRRX21073 sections: (i) Special Risks associated with the Assessment Bonds secured by the Distirct (ii) Risks Associated With Assessment Bonds Generally and (iii) Risks Associated With Commercial Real Estate Investments and the Proposed Development in the District. Special Risks Associated with the Assessment Bonds Secured by the District Introduction In addition to the general risks applicable to assessment bonds (see "Risks Associated with Assessment Bonds Generally," below), the Bonds are subject to certain special risks reflecting the concentration of ownership of the Assessment Parcels. Furthermore, given that the proposed development in the District is entirely retail and commercial in nature, the continued viability of the Masi Plaza development is integral in the willingness and ability of the property owners to pay the assessment payments when due. See "Risks Associated with Commercial Real Estates Investments and the Proposed Development in the District." Lack of Diversity of Ownership There currently are only two property owners in the District with unpaid assessments. The Masi Commerce Center Partners own land responsible for approximately 96.9% of the assessment lien. The rema'ming property owner is responsible for 3.1% of the assessment lien. This lack of diversity of ownership presents a special risk factor. If a property owner who owns a large portion of the land in the District experiences financial difficulties and is unwilling or unable to pay the unpaid assessments on an Assessment Parcel, a potential shortfall in assessment revenues available to pay debt service on the Bonds could significantly impact the security of the Bonds. See "THE DISTRICT - Land Owners." (In addition, because the proposed land use in the District is entirely retail and commercial, Bondholders should also consider the general risks associated with commercial and retail real estate investments, and the effect these risks may have on the ability and willingness of property owners in the District to pay assessments when due. See, "Risks Associated With Commercial Real Estate Investments and the Proposed Development in the District." Lack of Development Experience Masi Commerce Center Partners, the owner of approximately 97 % of the land in the District, has no previous experience developing projects similar to the Masi Plaza and consequently rely heavily on the experience and expertise of others. Masi Commerce Center Partners has retained the services of Michael Scandiffio to complete and operate Masi Plaza. The completion of the Phase II improvements and successful operations of Masi Plaza may depend on Mr. Scandiffio's continued involvement in the project. [discuss employment arrangements] See "Proposed Development in the District." Lack of Permanent Financing. Masi Commerce Center Partners has construction financing for only Phase I of Masi Plaza. Masi Commerce Center Parmers is currently seeking permanent take out financing for Phase I and construction and permanent financing for Phase II. The costs to complete the Phase II Construction of Masi Plaza will be paid, in large measure, from the proceeds of financing to be obtained by Masi Commerce Center Partners. The terms of a loan agreement for permanent financing typically impose upon the borrower numerous conditions including, without limitation, leasing requirements, mechanics lien assurances, title insurance, insurance and bonding requirements, loan balancing and equity requirements, financing reporting requirements, financial covenants and other similar conditions to funding the construction loan. The failure to comply with or satisfy such conditions may cause a reduction, modification or termination of the loan. If any such condition were to take place, there are no assurances that Masi Commerce Center Parreefs would have sufficient resources or assets at the time to provide the funding necessary to construct and complete Masi Plaza. In the event that any lender is entitled to foreclosure on its security, the lender may not be required to complete Masi Plaza as currently contemplated. -21- RVPUB~.IRR~21073 Risks Associated With Assessment Bonds Generally and the District Introduction. Debt service on the Bonds is payable from installment payments of principal and interest on unpaid assessments on the Assessment Parcels. The principal of the assessment is the aggregate of the amounts of the individual assessments levied against the Assessment Parcels. The individual assessment on a parcel will be paid in annual installments, together with interest on the unpaid balance, unless the unpaid balance is subsequently prepaid. The annual installments of principal and interest with respect to an Assessment Parcel will be collected on the County tax roll at the same time and in the same manner as general real property taxes are collected. The annual installments of principal and interest with the respect to all Assessment Parcels are equal in the aggregate to the annual debt service on the Bonds. The remaining unpaid balance will be paid in annual installments together with interest thereon. In the event an assessment installment is not paid when due, the City Council has covenanted to institute foreclosure proceedings in court to cause the Assessment Parcel to be sold in order to recover the delinquent amount from the proceeds of the sale of the Assessment Parcel. Foreclosure and sale and tax collection procedures, however, may not result in the recovery of the full amount of delinquent assessment installments. See the discussion below under the caption "Foreclosure and Sale Proceedings." The sufficiency of tax or foreclosure sale proceeds to cover delinquent amounts depends in part on the market for and the value of the Assessment Parcel at the time of the tax or foreclosure sale. The facts and circumstances determining value at any given time may include contemplated land ownership, development plans and other factors affecting the progress of land development, economic conditions affecting real estate values and natural conditions affecting the use of the Assessment Parcels, as well as a number of additional factors many of which are discussed or referred to herein. Future substantial changes may result in future values and value re-lien relationships that differ significantly from the present value and value re-lien relationships. See the discussion below under the caption "Factors Affecting Parcel Value and Aggregate Values." The sufficiency of tax or foreclosure sale proceeds to cover delinquent amounts may also depend on the value of any prior or parity liens and similar claims. Governmental liens presently exist and may arise in the future with respect to the Assessment Parcels which, unless subordinate to the assessment, may effectively reduce the realizable value of the parcel for the benefit of the assessment. See, "THE DISTRICT - Overlapping Debt." Other claims, such as hazardous substance claims, may also affect the realizable value even though such claims may not rise to the status of liens. See the discussion below under the caption "Other Possible Claims Upon the Value of an Assessment Parcel and "Factors Affecting Parcel Value and Aggregate Values." Timely foreclosure and sale proceedings with respect to an Assessment Parcel may be forestailed or delayed in the event the owner of the parcel becomes the subject of bankruptcy proceedings. Not only may foreclosure and sale proceedings be forestailed and delayed, but sale of an Assessment Parcel by the County Tax Collector may be similarly affected by bankruptcy or other factors beyond the City's control. Further, payment of assessment installments may be subordinated to bankruptcy law priorities. See the discussion below under the caption "Bankruptcy Proceedings." Although bankruptcy proceedings may forestall or delay a foreclosure and sale or a tax sale of a delinquent parcel the assessment is secured by a lien which, assuming proper procedures are followed, may be enforced against the parcel. The owner of an Assessment Parcel however, is not personally obligated to pay the installment. See the discussion below under the caption "Payment of the Assessment Not a Personal Obligation." Further, except from the Reserve Fund, the City is not obligated to pay debt service on the Bonds in the event assessment installment collections are delinquent, nor is the City obligated to advance funds to pay -22- RVPUBXJR.RL21073 debt service. See the discussion below under the caption "Limited Obligation to Pay Debt Service." [In addition, interest on the Bonds may become includable as gross income for federal income taxation purposes, see "Loss of Tax Exemption." Foreclosure and Sale Proceedings. The City Council is obligated under certain conditions to institute foreclosure and sale proceedings against Assessment Parcels which have delinquent assessment installments, and may do so in other circumstances even if not so obligated. Foreclosure proceedings are instituted by the bringing of an action in the superior court of the county in which the Assessment Parcel lies, naming the owner and other interested persons as defendants. The action is prosecuted in the same manner as other civil actions. Upon judgment of foreclosure the Assessment Parcel may be offered for sale at a minimum price. The established minimum price will be sufficient to cover the amount of the delinquent installments and unpaid interest together with penalties, costs, fees and charges and the costs of execution and sale. The buyer in a foreclosure sale takes the parcel subject to the remaining assessment installments and regular taxes. However, in the event an Assessment Parcel does not sell for the minimum price the court may modify its judgment and reduce or eliminate the minimum price. In order to do so, however, written notice of a hearing on the matter of reducing or eliminating the minimum price is required to be given all registered Owners of the Bonds. If at the hearing the court determines that such a sale will not result in an ultimate loss to the Bondowners, or if the owners of 75 % of the outstanding Bonds by principal amount consent and the sale will not result in an ultimate loss to the nonconsenting owners of Bonds, the court may reduce or eliminate the minimum price at which an Assessment Parcel may be sold. Further, if the owners of 75 % of the outstanding Bonds by principal amount consent the court may reduce or eliminate the minimum price at which a Assessment Parcel may be sold even if sale below the minimum price will result in an ultimate loss to nonconsenting owners of Bonds, provided that the court makes certain additional determinations specified by statute including the reasonable unavailability of any other remedy acceptable to the owners of 75 % or more of the outstanding Bonds by principal amount. Upon sale of the Assessment Parcel for less than the minimum price the remaining unpaid balance of the assessment on the Assessment Parcel will be reduced by the difference between the minimum price and the sale price. By such a reduction the aggregate principal amount of the outstanding Bonds will exceed the aggregate principal amount of the unpaid assessment. Under such circumstances, unless other funds are available or unless consenting owners of Bonds agree to the protection from ultimate loss of nonconsenting owners of Bonds, proportionate payments are to be made, periodically, of the unpaid principal and interest of the Bonds without priority or preference between Bondowners as funds become available from collection of the unpaid assessment installments. The maturity dates of the Bonds are to be disregarded and no redemption premiums are to be payable on payments of the principal of Bonds the maturity dates of which are subsequent to the date of any such payments. The Bondowners may be required to surrender the Bonds for cancellation in order to participate in such proportionate payments. Factors Affecting Parcel Value and Aggregate Values. The facts and circumstances concerning the values of the Assessment Parcels that are of importance are not confined to those relating to individual Assessment Parcel values because the Bonds are not individually secured by particular Assessment Parcels. The Bonds are secured by all of the unpaid assessments on all of the Assessment Parcels. Therefore the value of the Assessment Parcels must also be evaluated in the aggregate. The following are some of the factors which may affect the market for and value of particular Assessment Parcels individually and in the aggregate. RVPUBXIP, RL21073 -23- Geologic, topographic and climatic conditions. Values of Assessment Parcels can be adversely affected by a variety of natural events and conditions. These include, without limitation: geologic conditions such as earthquakes; topographic conditions such as earth movements and floods; and climatic conditions such as droughts. The possibility of the occurrence of some of these conditions and events has been taken into account to a limited extent in the design of the District improvements and has been or will be taken into account to a limited extent in the designs of other public improvements which may be approved by the City or other public agencies. Building codes require that some of these conditions be taken into account to a limited extent in the design of private improvements. Design criteria in any of these circumstances are established upon the basis of a variety of considerations and may change from time to time leaving previously designed improvements unaffected by more stringent subsequently established criteria. In general, design criteria, at the time of their establishment, reflect a balance between the present costs of protection and the future costs of lack of protection, based in part upon a present perception of the probability that the condition will occur and the seriousness of the condition should it occur. Also reflecting that balance are decisions not to impose design criteria at all. The City expects that one or more of these conditions may occur from time to time, and, even if design criteria do exist, such conditions may result in damage to property improvements. That damage may entail significant repair or replacement costs, and repair or replacement may never occur. Under any of these circumstances, the value of the Assessment Parcels could depreciate substantially notwithstanding the establishment of design criteria. The land in the District is basically flat, sloping slightly to the south at an average grade of one to two percent. Elevations range from 1140 to 1220 feet above mean sea level. All of the land in the District is in unshaded Zone X and is determined to be outside the 500 year Federal Plan of the FEMA prepared Flood Insurance map for the region. No geologic faults are known to occur within or to cross the boundaries of the District. However, the land in the District is subject to ground shaking as a result of known active faults in the region. The Cucamonga, Red Hill, San Jose, Indian Hill, and Chino/Elsinore Faults are potentially active faults within a 5 to 15 mile radius of the District. The San Jacinto and San Andreas Faults are historically active and are located approximately 9 to 12 miles northeast of the area of the District. Legal requirements. Other events which may affect the value of an Assessment Parcel include changes in the law or application of the law. Such changes may include, without limitation, the following: local growth control initiatives; local utility connection moratoriums; and the local application of statewide tax and governmental spending limitation measures. Prepayment of assessments. There is rarely a uniform relationship between the value of Assessment Parcels and the proportionate share of debt service on the Bonds to be borne by the Assessment Parcels. See "THE DISTRICT - Property Values" One of the factors that may effect a significant change in the relationship between the aggregate Assessment Parcel values and the assessment is the prepayment before the final bond maturity of the remaining balance of the assessments on particular Assessment Parcels. Should the assessments on Assessment Parcels having a relatively high ratio of value to assessment be prepaid, the security for the Bonds, as evidenced by the ratio of the aggregate remaining Assessment Parcel values to the remaining balance of the assessment, will be reduced. Other Possible Claims Upon the Value of an Assessment Parcel. While the assessment is secured by the Assessment Parcels the security only extends to the value thereof that is not subject to priority and parity liens and similar claims relative to the assessments. RVPUB'xJR.R',21073 -24- Other governmental obligations may be authorized and undertaken or issued in the future the tax, assessment or charge for which may become an obligation of one or more of the Assessment Parcels and may be secured by liens on a parity with the liens of the assessments securing the Bonds. As of the date hereof certain parity liens exist with respect to parcels in the District. See "THE DISTRICT - Overlapping Debt." In general, as long as installments of the assessment are collected on the County tax roll, the installments and all other taxes, assessments and charges also collected on the tax roll are on a parity. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings of foreclosure for delinquency of installments of an assessment securing the Bonds, the assessment will have priority over specific-amount special assessments levied subsequent to the levy of the assessments. Otherwise, in the event of such foreclosure proceedings the installments of the assessment will generally be on a parity with the other taxes, assessments and charges. The assessment will have priority over non-governmental liens on an Assessment Parcel regardless of whether or not the non-governmental liens are in existence at the time of the levy of the assessment. While governmental taxes, assessments and charges are a common claim against the value of an Assessment Parcel other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the assessment installments is a claim with regard to a hazardous substance. In general, the owners and operators of an Assessment Parcel may be required by law to remedy conditions of the Assessment Parcel relating to released or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or "Superfund Act", is the most well known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws the owner or operator of a property is obligated to remedy a hazardous substance condition whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect therefore, should any of the Assessment Parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition. The values shown in the section herein entitled "THE DISTRICT - Property Values" do not take into account, the possible reduction in marketability and value of any of the Assessment Parcels by reason of the possible liability of the owner or operator for the remedy of a hazardous substance condition of the Assessment Parcel. Further, it is possible that liabilities may arise in the future with respect to any of the Assessment Parcels resulting from the current existence on the Assessment Parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence on the Assessment Parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of an Assessment Parcel that is realizable upon delinquency. Bankruptcy Proceedings. Regardless of the priority of the assessment securing the Bonds over non-governmental liens, the exercise by the City of the foreclosure and sale remedy or by the County of the tax sale remedy may be forestailed or delayed by bankruptcy, reorganization, insolvency or other similar proceedings affecting the owner of an Assessment Parcel. The federal bankrupt laws provide for an automatic stay of foreclosure and sale or tax sale proceedings thereby delaying such proceedings perhaps for an extended period. Delay in exercise of remedies, especially if the bankruptcy property owner owns Assessment Parcels constituting a significant portion of aggregate assessment lien, may result in periodic assessment installment collections which, even in conjunction with the Reserve Fund, may be insufficient to pay the debt service on the Bonds as it comes due. Further, should remedies be exercised under the bankruptcy law against the Assessment Parcels, payment of installments of the assessment may be subordinated to bankruptcy law priorities. RVPLrBXJRR',21073 -25- Therefore, certain claims may have priority over the assessment lien, even though they would not were the bankruptcy law not applicable. Payment of the Assessment Not a Personal Obligation. Under the proceedings authorizing the assessments, the owners of Assessment Parcels are not personally liable for the paymere of the assessmere or the assessment installments. Rather, the assessment is an obligation only of the Assessment Parcels. If the value cf an Assessment Parcel is not sufficient to fully secure the assessment on it the City has no recourse against the owner under the laws by which the assessment has been levied and the Bonds have been issued. Depletion of Reserve Fund. Bond proceeds in an amount equal to the lesser of maximum annual debt service and 10% of the principal amount of the Bonds will be deposited in the Reserve Fund. Whenever there are insufficient funds in the Redemption Fund to pay the next maturing installment of principal and interest on the Bonds, the amoums necessary to make up the deficiency, to the extent available, will be transferred from the Reserve Fund to the Redemption Fund. Amoums so transferred will be reimbursed to the Reserve Fund from the paymeres of delinquem installmeres and from the proceeds of redemption or sale of delinquent parcels. The Reserve Fund is subject to reduction if and when the unpaid balance of the assessment on a parcel is prepaid. Upon prepaymere of an assessment in whole, the City is required to reduce the Reserve Fund by a proportional reduction equal to the ratio of the amount initially provided for the Reserve Fund to the total amount originally assessed. Upon prepayment of an assessment in part only, the Reserve Fund is reduced by a proportionate lesser amoum. A reduction in the Reserve Fund by prepayment of an assessment is a permanem, non-reimbursable reduction, but the amount remaining in the Reserve Fund after a prepayment will bear approximately the same proportionate relationship to outstanding Bonds as would be the case if the prepaymere was not made because accumulating assessmere prepayments will be used to redeem Bonds earlier than their maturity dates. The Reserve Fund may be invested, and, to the extent that investment earnings will not result in the interest on the Bonds becoming subject to federal income taxation, the investmere earnings may be deposited in the Reserve Fund thereby increasing the balance up to the Reserve Requirement, if necessary. Nevertheless, there is no assurance that the amount in the Reserve Fund will, at any particular time, be sufficiem to pay debt service on the Bonds nor that the Reserve Fund will be fully reimbursed for any amounts expended for debt service. Limited City Obligation to Pay Debt Service. The City has an obligation to advance funds to pay debt service on the Bonds in the event assessment installmere collections are insufficient. HOWEVER, THE CITY'S OBLIGATION TO ADVANCE FUNDS IS LIMITED, WILL NOT EXCEED THE AMOUNT ON DEPOSIT FROM TIME TO TIME IN THE RESERVE FUND, AND IF SO ADVANCED WILL REDUCE THE RESERVE FUND BY THE AMOUNT OF THE FUNDS ADVANCED. OWNERS OF BONDS MAY NOT RELY UPON THE CITY TO ADVANCE FUNDS TO PAY DEBT SERVICE ON THE BONDS UPON DEPLETION OF THE RESERVE FUND EVEN IF THE CITY MAY HAVE PREVIOUSLY DONE SO OR MAY DO SO CONTEMPORANEOUSLY WITH RESPECT TO OTHER BONDS OR OBLIGATIONS. Loss of Tax Exemption. As discussed in the section herein emitled "LEGAL MATTERS - Tax Exemption", interest on the Bonds could become includable in gross income for purposes of federal income taxation, retroactive to the date of issuance, as a result of acts or omissions of the City subsequent to issuance in violation of the City's covenants applicable to the Bonds. Should interest become includable in gross income, the Bonds are not -26- RVPUB~RR\21073 subject to redemption by reason thereof and may remain outstanding. The Bonds are subject to redemption for other reasons as discussed in the section herein entitled "THE BONDS - Redemption." Risks Associated With the Proposed Development in the District and Conunercial Real Estate Investments Reliance on Development Viability. The Masi Commerce Center Partners own land in the District responsible for approximately 96.9 % of the assessment lien securing the Bonds. The Masi Commerce Center Partners is a general partnership which has been established to own, operate and/or sell Masi Plaza. It is not anticipated that the Masi Commerce Center Partners will engage in any other business activities. As a result of the foregoing, the ability of the Masi Commerce Center Partners to pay the assessments securing the Bonds will depend on the profitability of Masi Plaza. Dependence on Tenants. The income and funds available for the payment of assessments derived from Masi Plaza would be adversely affected if multiple tenants were unable to meet their obligations or if space in Masi Plaza could not be leased on economically favorable lease terms. In the event of default by a tenant, delays may be experienced in enforcing rights and substantial costs may be incurred in protecting its owner's investment. Moreover, at any time, a tenant may seek the protection of the bankruptcy laws, which could result in the termination of such tenant's lease at any time during the bankruptcy proceeding and cause a reduction in cash flow generated by Masi Plaza. The bankruptcy of a major store, if followed by its closing or by its sale to a less desirable retailer, could adversely affect customer traffic in Masi Plaza and thereby reduce the income generated by Masi Plaza. Ability to Rent Unleased Space. The ability of the Masi Commerce Center Partners' to rent unleased space will be affected by many factors, including covenants contained in leases with certain tenants in Masi Plaza restricting the use of other space at Masi Plaza. Costs in making improvements or repairs to property required by a new tenant may also be incurred. The failure to rent unleased space on a timely basis, or at all, would likely adversely affect the financial condition and results of operations of the Masi Plaza, and could affect their ability to pay assessments securing the Bonds. Tenant Lease Expirations and Reletting of Space. The Masi Plaza tenants are generally expected to enter into leases with an initial term ranging between five and fifteen years. Although the standard Masi Plaza lease provides for a full pass through of a proportionate share of real estate taxes and assessments, it should not be assumed that tenant leases will obligate tenants to make or pay their share of real property taxes or the assessments securing the Bonds. No assurance can be given that any tenant whose lease expires in the future will renew its lease at that time or that a replacement tenant will be found. Consequently, Masi Plaza will be subject to the risks that upon expiration of leases for space located in Masi Plaza, the leases may not be renewed, the space may not be relet or the terms of renewal or reletting (including the cost of required renovations or concessions to tenants) may be less favorable than current lease terms. Construction Contracts. Masi Commerce Center Parmers will enter into certain construction contracts to construct and complete Masi Plaza. Said contracts will obligate the contractors thereunder to construct the improvements for fixed RVPUB'JRR'21073 -27- or guaranteed prices, subject to adjusunent, pursuant to approved plans and specifications on or before agreed upon dates for completion. In the event that any of said contractors fail to perform as required under their respective contracts, the Masi Commerce Center Parmers may be unable to replace the defaulting contractors for the same contract price or complete the work within budget and for an amount equal to available funds from the consauction loan and equity sources. As a result, completion of Masi Plaza may be delayed or not achieved as currently projected. Changes in Marketing and Consumer Tastes. The property in the District comprising Masi Plaza is responsible for a majority of the assessments securing the Bonds. Masi Plaza is designed as a retail commercial center. There can be no assurance that the concept of a Commercial Center will remain economically viable throughout the 25 year term of the Bonds. Factors Affecting Economic Performance and Value of Properties. The economic performance and value of Masi Plaza will be affected by a number of factors, including: the national economic climate; the regional economic climate (which may be adversely impacted by plant closings, industry slowdowns and other factors); local real estate conditions such as an oversupply of retail space or a reduction in demand for real estate in the area; the attractiveness of Masi Plaza to tenants; competition from other available space; the quality of maintenance, insurance and management services; and increased operating costs. In addition, other factors may adversely affect Masi Plaza's value, including changes in government regulations and other laws, rules and regulations governing real estate, zoning or taxes, changes in interest rate levels, the availability of financing and potential liability under environmental and other laws. Uninsured Loss. The Masi Commerce Center Partners intend to carry comprehensive liability, fire, flood, extended coverage and rental loss insurance for each building upon its completion with respect to Masi Plaza with policy specifications and insured limits that they believe are customary for similar properties. Although buildings that are under consauction are insured for comprehensive liability risks, the Masi Commerce Center Partners have, as a general practice, not insured such structures for fire and other extended property coverage. Furthermore, the Masi Commerce Center Parmers do not intend to carry earthquake coverage on Masi Plaza. There are certain additional types of losses (generally of a catastrophic nature, such as wars or acts of God) which may be either uninsurable or not economically insurable. Should an uninsured loss occur with respect to Masi Plaza or should insurance proceeds be unavailable to the Masi Commerce Center Partners, the Masi Commerce Center Partners will lose both their invested capital and anticipated profits from Masi Plaza and may be unable to reconstruct Masi Plaza and be unable to pay the assessments securing the Bonds. LEGAL MATTERS Tax Exemption In the opinion of Brown, Diven& Hentschke, San Diego, California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, excluded from gross income for federal Rx~PUB',JRR',21073 -28- income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should be aware that, under existing law, for the purpose of computing the 20 percent federal alternative minimum tax imposed on corporations for a taxable year beginning in 1989, an amount equal to 50 percent of the amount by which adjusted net book income exceeds alternative minimum taxable income is added to alternative minimum taxable income, and for taxable years beginning after 1989, an amount equal to 75 percent of the amount by which adjusted current earnings exceed alternative minimum taxable income is added to alternative minimum taxable income. Interest otherwise excluded from gross income, such as interest on the Bonds, is included in adjusted net book income and in adjusted current earnings. Prospective purchasers of the Bonds should also be aware that (a) with respect to insurance companies subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Bonds (b) for taxable years beginning before January 1, 1992, interest on the Bonds earned by some corporations could be subject to the environmental tax imposed by section 59A of the Code, (c) interest on the Bonds 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, (d) passive investment income, including interest on the Bonds, 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 percent of the gross receipts of such Subchapter S corporation is passive investment income and (e) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Bonds. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California Personal income taxes. Absence of Litigation No litigation is pending or threatened concerning the validity of the Bonds. There is no action, suit or proceeding known by the City to be pending at the present time restraining or enjoining the delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the execution thereof. A no litigation certificate executed by the City will delivered to the Underwriter simultaneously with the delivery of the Bonds. Legal Opinion All proceedings in connection with the issuance of the Bonds are subject to the approval as to their legality of Brown, Diven& Hentschke, San Diego, California, Bond Counsel for the City of Rancho Cucamonga in connection with the District. The unqualified opinion of Brown, Diven& Hentschke approving the validity of the Bonds will be printed on each Bond. Bond Counsel's employment is limited to a review of legal procedures required for the approval of the Bonds and to rendering an opinion as to the validity of the Bonds and the exemption of interest on the Bonds from income taxation. MISCELLANEOUS No Rating The City has not made, and does not contemplate making, an application to any rating agency for the assignment or a rating of the Bonds. RVPUB'dRR'~210 7 3 -29- Underwriting The Bonds are being purchased by Stone & Youngberg (the "Underwriter") at a purchase price of $ (representing a par amount of $ less underwriters' discount of $ ), plus accrued interest. The Purchase Agreement relating to the Bonds provides that all Bonds will be purchased if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in said Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. Additional Information References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or Owners of any of the Bonds. The execution and delivery of this Official Statement has been duly authorized by the City. CITY OF RANCHO CUCAMONGA By: RVPL'B'O'RR~,21073 -30- APPENDIX A SUMMARY APPRAISAL REPORT RVPUB~3'RRL21073 A- 1 APPENDIX B SUMMARY OF THE INDENTURE The following is a brief summary of the provisions of the Indenture not otherwise summarized in the text of this Official Statement. This summary is not intended to be definitive, and reference is made to the complete documents for the complete terms thereof. Transfer and Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books of registration required to be kept pursuant to the provisions of the Indenture, by the owner in whose name it is registered, or by his duly authorized attorney or legal representative, upon surrender of such Bond for registration of such transfer, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee and duly executed by the owner of said Bond. The Trustee will require the payment by the owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer and such charges as provided for in the system of registration for registered debt obligations. No transfer of Bonds may be made during the 15 days preceding the selection of any Bonds for redemption prior to the maturity thereof, nor with respect to any Bond which has been selected for redemption prior to the maturity thereof. Upon any such registration of transfer, a new Bond or Bonds shall be authenticated and delivered in exchange for such Bond, in the name of the transferee, of any denomination or denominations authorized by the Indenture, and in an aggregate principal amount equal to the principal amount of such Bond or principal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchanged or transferred, the Trustee shall authenticate at the earliest practical time, Bonds in accordance with the provisions of the Indenture. All Bonds surrendered in such exchange or registration transfer will forthwith be canceled. Bonds may be exchanged at the principal office of the Trustee for a like aggregate principal amount of Bonds of the same series, interest rate and maturity, subject to the terms and conditions provided in the system of registration for registered debt obligations, including the payment of certain charges, if any, upon surrender and cancellation of the Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity for the same aggregate principal amount will be issued to the transferee in exchange therefor. Establishment of Funds and Accounts; Flow of Funds Creation of Funds. Under the Indenture, the Trustee is authorized and directed to establish and maintain the following funds for purposes of making payment for the costs and expenses for the works of improvement and payment of principal and interest on the Bonds. The funds to be created are designated as follows: Improvement Fund. The proceeds from the sale of the Bonds (after deposit of required amounts in the Reserve Fund and Redemption Fund), the amount representing the good faith security deposit, if any, and the proceeds of the prepayment of assessments collected prior to , if any, will be placed by the Trustee in the Fund hereby created, pursuant to the Act, which is called the "Improvement Fund", and the monies in the Improvement Fund will be used only for Project Costs as that term is defined hereinafter. "Project Costs" means the costs of acquisition or construction of the works of improvement as authorized in the assessment proceedings and all incidental costs related thereto, all as more particular described in the Rwtm.m~2~o73 B- 1 Engineer's Report for Assessment District No. 93-1 (Masi Plaza) on file in the Office of the City Clerk of the City. Upon receipt of a "Payment Request Form" in substantially the form attached to the Indenture as Exhibit "B", duly executed by the City Manager, the Treasurer or the designee of either official (each an "Authorized Representative"), the Trustee shall pay the Project Costs from amounts in the Improvement Fund directly to the contractor or such other person, corporation or entity entitled to payment under the Indenture unless the City requests payment to be made to the contractor or such other party jointly, in which case said Project Costs shall be paid jointly. The Trustee is responsible for the safekeeping and investment of the monies held in the Improvement Fund and the disposition thereof in accordance with the written instructions of the City and the Indenture. The Trustee may rely on an executed Payment Request Form as complete authorization for said payments. Any surplus in the Improvement Fund after completion of the improvements may remain in the Improvement Fund for a period of not less than two nor more than three years from the receipt of Bond proceeds and thereafter shall be transferred to the Prepayment Account of the Redemption Fund and applied to the redemption of Bonds prior to maturity. Redemption Fund. Under the Indenture, the Trustee is authorized and directed to keep a Redemption Fund designated by the name of the proceedings, into which shall be placed (i) initially, an amount from proceeds of the Bonds which, together with accrued interest, if any, on the Bonds equals the interest on the Bonds through and (ii) all sums received from the City representing the collection of the assessments. The City shall transfer or cause to be transferred all sums received for the collection of the assessments, interest and penalties thereon and required by the Act to be deposited in the Redemption Fund, and all sums received for the prepayment of assessments (excepting therefrom any administrative fee for the cost of collection the prepayments and of redeeming Bonds) to the Trustee within fifteen business days of the receipt thereof by the City. Principal of and interest on said Bonds shall be paid by the Trustee to the registered owners out of the Redemption Fund to the extent funds on deposit in said Redemption Fund are available therefor. In all respects not recited in the Indenture, said Bonds shall be governed by the provisions of the Act. Under no circumstances shall the Bonds or interest thereon be paid out of any other fund except as provided by law. Prior to the first redemption date there will be established by the Trustee a prepayment subaccount within the Redemption Fund to be known as the "Prepayment Account." The Trustee is required to deposit in the Prepayment Account all monies received from the Treasurer representing the principal of and redemption premium on any prepaid assessments. Such amounts must be identified in writing to the Trustee. Such monies must be applied solely to the payment of principal of and premium on Bonds to be redeemed prior to maturity pursuant to the provisions of the Indenture. Reserve Fund. Pursuant to the Act there shall be created a special reserve fund for the Bonds to be designated by the name of the Assessment District and specified as the "Reserve Fund." An amount equal to the lesser of maximum annual debt service or 10% of the principal amount of the Bonds issued shall be deposited in the Reserve Fund out of the Bond proceeds. Monies in the Reserve Fund shall be applied by the Trustee as follows: A. Whenever there are insufficient funds in the Redemption Fund to pay the next maturing installment of principal of or interest on the Bonds on the business day preceding such date of payment, the Trustee shall transfer the amount necessary to make up such deficiency from the Reserve Fund to the Redemption Fund. The amounts so advanced will be reimbursed upon receipt thereof by the City and transfer thereof to the Trustee for deposit into the Reserve Fund from the proceeds of redemption or sale of the parcels for which RVPU'B~R.R~21073 B-2 payment of delinquent installments of assessments and interest thereon have been made from the Reserve Fund. Within ten business days of receipt thereof by the Treasurer, such proceeds will be transferred by the Treasurer to the Trustee, together with written instructions to the Trustee directing the Trustee to deposit such proceeds in the Reserve Fund, and the Trustee must immediately deposit such proceeds in the Reserve Fund. B. In the event an unpaid assessment is paid in cash in advance of the final Bond maturity date, the City will credit such prepaid assessment with a proportionate share of the Reserve Fund, thus reducing the total amount of the Reserve Fund. The amount to be so credited will be the pro-rata share of the original amount deposited in the Reserve Fund, less any amount previously credited to the parcel with respect to a prior prepayment and less any amount previously transferred from the Reserve Fund to the Redemption Fund as a result of the delinquency in the payment of assessment installments for the parcel for which the assessment is being prepaid. The City must direct the Trustee in writing to transfer the amount representing such credit from the Reserve Fund to the Redemption Fund. C. Interest earned on permitted investments of Reserve Fund monies must remain in the Reserve Fund so that the amount therein may accumulate to and subsequently be maintained at the "Reserve Requirement." "Reserve Requirement" means an amount equal to the least of (i) tine maximum principal interest payable on the Bonds in any year, (ii) 125% of the average principal and interest payable on the Bonds in any year, or (iii) 10% of the dated principal amount of the Bonds. D. Prior to each interest payment date, any interest earned on the investment of monies on deposit in the Reserve Fund which would cause the amount therein to exceed the Reserve Requirement will be transferred by the Trustee to the Redemption Fund and will be credited towards unpaid assessments each year during which part of the Bonds remain outstanding. The Auditor's Record prepared by the City pursuant to Section 8682 of the Act shall reflect credits against each of the unpaid assessments in the manner provided in Section 10427.1 therein in amounts equal to each assessment parcels' proportionate share of any such Reserve Fund disbursement. E. All sums remaining in the Reserve Fund in the year in which the last installments of the assessments become due and payable will be credited toward the assessments as follows: Prior to June 30th of the fiscal year next preceding the fiscal year in which the last unpaid assessment installment becomes due and payable, the City will determine the amount remaining in the Reserve Fund, if any, after all sums advanced and interest thereon have been reimbursed, and shall order the same to be distributed and/or credited pursuant to its written direction in the manner set forth in Section 10427.1 of the Act, provided only that where all or any part of such assessments remain unpaid and are payable installments, the amount apportioned to each parcel shall be credited against the last unpaid assessment installment, then such excess shall be credited against the next to last unpaid assessment installment. Whenever the balance in the Res6rve Fund is sufficient to retire all remaining Bonds, whether by advance retirement or otherwise, collection of the principal of and interest on the assessments will be discontinued and the Reserve Fund will be liquidated by the Trustee pursuant to the written direction of the Treasurer and utilized in the retirement of the Bonds. In the event that the balance in the Reserve Fund at the time of liquidation exceeds the amount required to retire all Bonds in the issue, the excess shall be apportioned by the City to each parcel upon which the individual assessment remained unpaid at the time the balance in the Reserve Fund was sufficient to retire all Bonds in the issue. The payments shall be made in cash by the Trustee pursuant to written instructions of the Treasurer to the respective owners of the parcels except that, if the excess is not greater than $1,000, the excess may be transferred to the General Fund of the City. RVPUB~-RRX21073 B-3 Rebate Fund. The Trustee is required to transfer into the Rebate Fund all amounts required by written instructions of the Treasurer to be transferred in accordance with the provisions of the Arbitrage Rebate Provisions attached to the Indenture as Exhibit "C" (which set forth instructions regarding the investment and disposition of monies deposited in various funds and accounts established in connection with the issuance of the Bonds.) Subject to the provisions of said Arbitrage Rebate Provisions, amounts on deposit in the Rebate Fund shall only be applied to payments made to the United States Department of Treasury in accordance with written instructions of the Treasurer. Notwithstanding any other provisions of the Indenture, all earnings on alnounts on deposit in the Rebate Fund shall remain therein until paid to the federal government. Investment of Funds Obligations purchased as Investments of monies in any of the funds and accounts in which investments are authorized shall be deemed at all times to be part of such funds and accounts. Except as provided in the Indenture with respect to the Reserve Fund and the Rebate Fund, all investment earnings on monies held under the Indenture must, prior to the earlier of (i) the substantial completion of the works of improvement, which shall be established by receipt by the Trustee of a written notice signed by the Treasurer stating that the authorized improvements have been completed, (ii) three years from the date of delivery of the Bonds, or (iii) the date on which the Trustee receives written notice from the Treasurer stating that an amount equal to the Bond proceeds allocable to the works of improvement and authorized incidental expense have been expended ("Completion Date"), be deposited into the Improvement Fund. After the Completion Date, all such investment earnings must be deposited in the Redemption Fund. Subject to the restrictions set forth in the Indenture, monies in said funds and accounts may from time to time be invested by the Trustee at the written direction of the City, or if no such written direction is given, in Authorized Investments (as defined hereinafter) and described in (7) below, provided that: (a) Monies in the Improvement Fund shall be invested in obligations which will by their terms nature as close as practicable to the date the City estimates the monies represented by the particular investment will be needed for withdrawal from such fund; (b) Monies in the Redemption Fund shall be invested only in obligations which will by their terms mature on such dates so as to ensure the payment of principal of and interest on the Bonds as the same become due; and (c) Half of the monies in the Reserve Fund may be invested in obligations which shall mature not more than five (5) years from the date of purchase by the Trustee and the balance may be invested in obligations which shall mature not more than ten years from the date of purchase by the Trustee, provided that no such obligation shall mature later than the final maturity of the bonds. The Trustee is required to sell at the best price reasonably obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide monies to meet any payment or transfer for such funds and accounts or from such funds and accounts. For the purpose of determining at any given time that balance in any such funds or accounts, any such Investments constituting a part of such funds and accounts will be valued at the lesser of their market value or cost. Notwithstanding anything herein to the contrary, the Trustee will not be responsible for any loss from any investments pursuant to the Indenture. "Authorized Investments" means any of the following to the extent such securities are eligible for the legal investment of funds of the City: (1) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the faith and credit of the United States is pledged for the payment of principal and interest; RVPUB',JRR'~ 1073 B-4 (2) Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank or trust company, Including the Trustee, or a state or federal savings and loan association; provided, that such certificates of deposit shall be (i) continuously and fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or (ii) issued by any bank or n'ust company organized under the laws of any state of the United States of America or any national banking association (including the Trustee) having a combined capital and surplus of at least one hundred million dollars ($100,000,000), and such certificates shall have maturities of six (6)months or less, or (iii) continuously and fully secured by such securities as are described in clause (1) above, which securities shall have a market value (as determined on a marked-to-market basis calculated at least weekly, and exclusive of accrued interest) of not less than the principal amount of such certificates of deposit; (3) Bills of exchange or time drafts drawn on and accepted by a commercial bank (including the Trustee), otherwise known as bankers' acceptances, which are eligible for purchase by members of the Federal Reserve System; provided, that purchases of eligible bankers' acceptances may not exceed two hundred seventy (270) days' maturity; (4) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody's or Standard & Poor's, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets In excess of five hundred million dollars ($500,000,000) and that have an "A" or higher rating for the issuer's debentures, other than commercial paper, as provided led by either Moody's or Standard & Poor's; provided that purchases of eligible commercial paper may not exceed one hundred eighty (180) days' maturity nor represent more than ten percent (10%) of the outstanding commercial paper of an issuing corporation; (5) Any repurchase agreement with any bank or trust company organized under the laws of any state of the United States of America (including the Trustee) or any national banking association or government bond dealer reporting to, trading with and recognized as a primary dealer by, the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities described in clause (1) above; provided that the underlying securities are (i) required by the repurchase agreement to be held by any such bank, trust company or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and being independent of the issuer of such repurchase agreement, and (ii) maintained at a market value (as determined on a marked-to-market basis calculated at least weekly) of not less than 103 % of the amount so invested; (6) Bonds, notes, warrants or other evidence of indebtedness of the State of California or of any political subdivision or public agency thereof which are rated in one of the two highest short-term or long-term rating categories by either Moody's or Standard & Poor's; (7) Units of a taxable government money market portfolio restricted to obligations issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States government or repurchase agreements collateralized by such obligations; and (8) The Local Agency Investment Fund established pursuant to Section 16429.1 of the Government Code of the State of California. Covenants of the City In the Indenture, the City covenants that it will initiate, no later than 150 days following any delinquency, Superior Court foreclosure proceedings to foreclose the assessment lien on such parcels and thereafter diligently prosecute to completion such proceedings; provided, however, that so long as the Reserve Fund is fully funded foreclosure proceedings need not be commenced against parcels owned by a single owner having aggregate delinquencies less than 1% of the current year aggregate levy. RVPUBLIRR~21073 B-5 The City shall from time to time, subject to any agreement between the City and the Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent accountants or council employed by it in the exercise and performance of its powers and duties under the Indenture, and indemnify and save the Trustee harmless against expenses and liabilities not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties under the Indenture. Certain Duties and Responsibilities; Removal or Resignation of the Trustee Except during the continuance of an Event of Default (as defined below), (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in the Indenture, and no implied covenants or obligations will be read into the Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of the Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the sale to determine whether or not they conform to the requirements of the Indenture. In case an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. The City may at any time at its sole discretion remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors thereto; provided that any such successor is a bank or trust company having (or whose parent or holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, and subject to supervision or examination by federal or State authority. Any removal will become effective only upon acceptance of appointment by the successor Trustee. If any bank or trust company appointed as a successor 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 purposes of this paragraph, 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 may at any time resign by giving written notice to the City and by giving to the owners notice of such resignation, which notice shall be mailed to the owners at their addresses appearing in the registration books in the office of the Trustee. Upon receiving such notice of resignation, the City must promptly appoint a successor Trustee by an instrument in writing. Any resignation of the Trustee shall become effective only upon acceptance of appointment by the successor Trustee; provided that if such successor has not been appointed within 30 days of such resignation or removal, the Trustee may petition any court of competent jurisdiction for such relief as may be proper in the premises. Events of Default, Remedies Events of Default. "Event of Default", wherever used in the Indenture, means any one of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 1. Default in the payment of any interest on any Bond when such interest becomes due and payable; RVPUBLIRR~,21073 B-6 2. Default in the payment of the principal of (or premium, if any, on) any Bond at its maturity; or default in the performance, or 3. Default in the performance, or breach, of any covenant or warranty of the City in the Indenture (other than a covenant or warranty a default in the performance or breach of which is elsewhere in this section specifically dealt with), and continuance of such default or breach for a period 90 days after there has been given, by registered or certified mail, to the issuer or the City by the Trustee or to the City or the City and the Trustee by the Holders of at least 10% in principal amount of the Bonds, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under the Indenture. Remedies. A. If an Event of Default occurs, then, and in each and every such case during the continuance of such Event of Default, the Trustee may exercise any and all remedies available pursuant to law or granted pursuant to he Indenture. B. The Trustee will not be deemed to have knowledge of any Event of Default under the Indenture unless and until it has actual knowledge thereof, or has received written notice thereof, at its corporate trust office in Los Angeles, California. No remedy conferred upon or reserved to the Trustee or to the 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 under the Indenture or now or hereafter existing, at law or in equity or by statute or otherwise. Institution of Legal Proceedings. If one or more Events of Default occurs and is continuing, the Trustee in its discretion may, and upon the written request of the owners of a majority in principal amount of the Bonds then outstanding, and upon being indemnified to its satisfaction therefor, may proceed to protect or enforce it rights or the rights of the owners by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained in the Indenture, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual In support of any of its rights or duties under the Indenture. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the occurrence of an Event of Default, has taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request the owners a majority in principal amount of the Bonds then outstanding, it will have full power, in the exercise of its discretion for the best interest of the owners the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee will not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise disposed of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the owners of at least a majority in principal amount the Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Limitation on Bond Owners' Right to Sue. No owner of any Bond executed under the Indenture will have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (a) such owner shall have previously given to the Trustee written notice of the occurrence of an Event Default; (b) the owners of a majority In aggregate principal amount of all the Bonds then outstanding 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 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 has refused or omitted to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee. RVPUB\JRRL21073 B-7 The Indenture declares such notification, request, tender of indemnity and refusal or omission, in every case, to be conditions precedent to the exercise by any owner of any remedy under the Indenture, it being understood and intended that no one or more owners shall have any right any manner whatever by his or their action to enforce any fight under the Indenture, except the manner herein provided and for the equal benefit all owners of the Bonds. The right any owner of any Bond to receive payment as the same becomes due, or to institute suit for the enforcement such payment, shall not be impaired or affected without the consent such Owner, notwithstanding the foregoing provisions of this section or any other provision the Indenture. Application of Revenues and Other Funds after Default. If a default in the payment of the Bonds or any Parity Bonds has occurred and is continuing, all revenues and any other funds then held or thereafter received under any the provisions the Indenture must be applied by the City as follows and in the following order. A. To the payment of any expenses necessary in the opinion of the City to protect the interest of the owners of the Bonds and payment of reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under the Indenture; B. To the payment of the principal of and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of the Indenture, as follows: First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available is not sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity or redemption, and if the amount available is not sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principle due on such date to the persons entitled thereto, without discrimination or preference. Unclaimed Funds Notwithstanding any provisions of the Indenture, subject to applicable state escheat laws, any monies held by the Trustee in trust for the payment of the principal or premium, if any, or interest on, any Bonds and remaining unclaimed for four years after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in the Indenture), if such monies were held at such date, or four years after the date of deposit of such monies if deposited after said date when all of the Bonds became due and payable, will be repaid to the City free from the lien created by the Indenture, and all liability of the Trustee with respect to such monies will thereupon cease and the Bond owners may, upon such payment, look only to the City for payment; provided, however, that before the repayment of such monies to the City as aforesaid, the Trustee may (at the cost of the City) first publish at least once in a nationally recognized financial publication published in New York, New York, and Los Angeles, California a notice, in such form as may be deemed appropriate by the Trustee, with respect to the provisions relating to the repayment to the City of the monies held for the payment thereof. x~vvt~m~2~o73 B-8 Amendments or Supplements The City may, by adoption of a resolution from time to time, and at any time, without notice to or consent of any of the Bond owners, approve an amendment or supplemental Indenture for any of the following purposes: (a) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision in the Indenture, or to make any other provision with respect to matters or questions arising under the Indenture or in any supplemental indenture, provided that such action shall not materially adversely effect the interests of the Bondholders; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the City contained in the Indenture, other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with the Indenture as theretofore in effect; (c) to modify, alter, amend or supplement the Indenture in any other respect which is not materially adverse to the interests of the Bond owners; or (d) to maintain the tax exempt status of the interest payable on the Bonds. Exclusive of the supplemental indentures as provided for above, the owners of not less than 60% in aggregate principal amount of the Bonds then outstanding will have the right to consent to and approve the adoption by the City of such supplemental indentures as are deemed necessary or desirable by the City for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Indenture, provided, however, that nothing in the Indenture will permit, or be construed as permitting, (a) an extension of the maturity date of the principal of, or the payment date of interest on, any Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate principal amount of the Bonds the owners of which are required to consent to such resolution or order, without the consent of the owners of all Bonds then outstanding. RVPLq30'RRL21073 B-9 APPENDIX C GENERAL INFORMATION ON THE CITY OF RANCHO CUCAMONGA Introduction The following information concerning the City and surrounding areas is presented only to provide information concerning the community, and nothing contained herein is intended to suggest that the City is in any way responsible, directly or indirectly, for the payment of debt service on the Bonds. The Bonds are not obligations of the City. The City of Rancho Cucamonga (the "City") is located in the foothills of the Los Angeles-San Bernardino Basin in the western portion of the County, approximately 40 miles east of the City of Los Angeles and 18 miles west of the City of San Bernardino. The City covers approximately 34.3 square miles and is bordered by Ontario on the south, Upland on the west, and Fontana on the east; to the north are Cucamonga Peak and Mount Baldy. The City was incorporated November 30, 1997 as a general law city. It is governed by a five-member City Council which includes a Mayor who is elected at large for a two year term, and four Council Members who are elected at large for staggered four year terms. The City Council appoints the City Manager and City Attorney. The City Manager is responsible for the daily administration of City affairs and for implementing Council policy and program decisions. The City's General Plan provides a coordinated policy of development planning, balancing residential, commercial, and industrial expansion. Coordinated transportation planning with the Southern California Regional Association of Governments and the County of San Bernardino is being provided by a traffic model that sets forth the optimum size of streets and timing necessary to accommodate traffic on both existing and future streets. Population Prior to incorporation, the area generally within the corporate boundaries experienced a rapid growth in population. Between 1970 and 1980 the population grew approximately 250%. Between 1980 and 1994 the population grew approximately 108%. Table C-1 sets forth population estimates for the City, County and State for the period from 1980 through 1994. TABLE C-1 CITY OF RANCHO CUCAMONGA POPULATION ESTIMATES City of Year Rancho Cucamonga Annual Annual Percentage San Bernardino Percentage Chant, e County Chan~,e State of California Annual Percentage Chanoe 1980 55,250 1985 65,500 1990 98,400 1995 114,600 1996 115,900 1997 116,000 895,016 1,056,900 1,423,800 1,572,700 1,587,200 1,587,400 23,668,145 25,857,500 29,558,000 31,910,007 32,223,000 32,609,000 Source: State Department of Finance. RVPLrBX3RR~ 1073 C- 1 The Economy The City is primarily a residential community. 52% of the City is zoned residential, 6% is zoned commercial, 22% is zoned industrial, 11% is zoned for public/institutional use, and nine percent is zoned for open space. Table C-2 sets forth the recent history of taxable sales in both the County and the City. TABLE C-2 COUNTY AND CITY TAXABLE SALES SAN BERNARDINO COUNTY CITY OF RANCHO CUCAMONGA Taxable No. of Transactions Permits (000 Dollars) Percent Chanre Taxable No. of Transactions Percent Permits (000 Dollars) Chanre 1988 33,779 $9,537,717 1989 35,042 10,662,647 1990 36,849 11,269,631 1991 37,665 11,070,342 1992 39,911 11,188,389 1993 41,010 11,131,798 1994 41,598 11,843,466 1995 41,683 12,482,309 1,866 2,051 2,225 2,422 2,617 2,660 2,687 2,709 $361,564 417,064 476,610 531,916 579,648 632,037 686,196 769,615 Source' California State Board of Equalization. Employment Located in the western portion of San Bernardino County, City residents benefit from a wide geographical area of employment opportunities in Los Angeles and Orange Counties, as well as local employment opportunities. Many residents commute to places of employment in both Los Angeles and Orange Counties. The City is located with the Riverside-San Bernardino-Ontario Standard Metropolitan Statistical Area (the "SMSA"), which comprises all of San Bernardino and Riverside Counties. Table C-3 is a four-year summary of employment by economic sector. RVPUBXJP,_RX21073 C-2 TABLE C-3 ANNUAL AVERAGE WAGE AND SALARY EMPLOYMENT Riverside-San Bernardino-Metropolitan Area March 1996 Benchmark 1992-1996 Employment !992 1993 1994 1995 1996 Total 751,500 755,700 772,800 801,700 830,400 Agriculture (1) 21,900 21,900 21,500 21,800 Mining 1,300 1,200 1,200 1,100 Construction (2) 40,400 37,500 40,300 43,100 Manufacturing 86,800 86,100 88,400 94,400 Transportation & Public Utilities 36,400 37,200 39,100 40,800 Wholesale Trade 31,500 31,900 33,700 35,900 Retail Trade 157,700 162,700 164,500 170,000 Finance, Insurance & Real Estate 31,500 32,000 31,100 29,400 Services 186,500 189,600 195,200 202,600 Government (3) 157,500 155,600 157,800 162,600 22,900 1. 200 46 400 99 200 42.000 37 800 172 100 29 700 211 700 167 400 (1) (2) (3) Excludes farmers and unpaid family workers. Includes employees of construction contractors and operative builders; does not include force account or government construction workers. Includes all civilian employees of federal, state and local government regardless of the activity in which the employee is engaged. Source: State Employment Development Department. ~vv~'w~2~o?3 C-3 Table C-4 sets forth a five-year summary of employment, unemployment, and the unemployment rate for the MSA. TABLE C-4 CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT Riverside-San Bernardino-Metropolitan Area Annual Averages, 1992-1996 Civilian Employed Unemployed Labor Unemployment Year Labor Force Labor Force (1) Force (2) Rate (3) 1992 684,900 620,600 64,300 9.4 % 1993 672,700 606,200 66,500 9.9 % 1994 677,500 619,300 58,200 8.6 % 1995 682,400 628,500 53,900 7.9 % 1996 695,100 645,100 50,000 7.2 % (1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unfounded data; therefore, it may differ from rates computed from rounded figures in this table. Source: California Employment Development Department, based on March 1996 Benchmark As of June 1995, the largest manufacturing and non-manufacturing firms in the City were: TABLE C-5 LARGEST EMPLOYERS City of Rancho Cucamonga Manufacturing and Non-Manufacturing Firms Service Employment Chaffey College Sears Credit Center Alta Loma School District - Mission Foods Central School District TAMCO Eftwanda School District County Courthouse City of Rancho Cucamonga Frito-Lay Education Finance Education Tortilia Manufacturer Education Steel/Wire Manufacturer Education Court Services Government Snack Foods Manufacturer 1,018 960 727 600 430 363 353 339 330 325 Source: Rancho Cucamonga Chamber of Commerce, June 1995 10-Jun-97 RVPLrB\JRR\21073 C-4 Table C-6 shows construction activity in the City for the past five years. TABLE C-6 CITY OF RANCHO CUCAMONGA BUILDING PERMIT VALUATION (In Thousands of Dollars) Residential !992 1993 1994 1995 1996 New single-family New multi-family Additions, alterations Total Residential $39,341 $54,603 $75,770 $46,806 $89,906 5,508 10,166 9,110 2,180 748 9.039 9.397 7.949 8.651 0 $53.948 $74.164 $92.830 $57.640 Non-Residential New commercial New industrial Other Additions, alterations Total Non-residential $90.654 $8,072 $1,662 $15,040 $7,587 N/A 121 1,933 15,432 11,315 N/A 5,917 6,745 6,830 8,982 N/A 7.952 8,017 9.581 13.900 N/A Total Valuation $22.063 $18.360 $46.880 $41.782 Number of New Dwe!!in[, Units Single-family dwelling Multi-family dwelling Total Units $76,011 $92,524 $139,710 $99,422 N/A Source: City of Rancho Cucamonga. N/A 243 315 460 245 387 69 128 102 24 25 312 443 562 269 412 RVPUBLIR.R\21073 C-5 Table C-7 set forth assessed valuation of property for the City of Rancho Cucamonga. TABLE C-7 CITY OF RANCHO CUCAMONGA Assessed Valuation History 1986/87- 1993/94 Before Redevelopment Adjustments Fiscal Year Local Secured Utility Unsecured Total Percentage Increase 1986/87 $2,678,753,824 $311,258,610 $151,427,130 $3,141,439,564 1987/88 3,276,453,488 311,545,190 175,043,138 3,763,041,816 1988/89 3,842,089,811 6,603,300 212,624,063 4,061,317,174 1989/90 4,613,563,132 6,481,996 251,517,317 4,871,562,445 1990/91 5,514,842,348 11,789,655 302,448,845 5,829,080,848 1991/92 6,121,479,538 11,518,465 340,092,869 6,473,090,872 1992/93 6,426,034,492 9,406,074 366,777,098 6,802,217,464 1993/94 6,570,073,161 5,492,700 426,717,891 7,002,283,752 1994/95 1995/96 1996/97 Source: California Municipal Statistics Inc. Public Utilities and Services Police protection is contracted from the San Bernardino County Sheriff's Department. A Sheriff's substation is located within the City limits. Fire protection and rescue service are provided by the City-managed Fire Protection District, which covers an area of approximately 53 square miles. Southern California Edison Company furnishes electricity and Southern California Gas Company furnishes natural gas to the City. Industrial waste and sewer services are provided by the Chino Basin Municipal Water District and water is furnished to the City by the Cucamonga County Water District. Telephone service is provided by General Telephone Company. Community Facilities The City provides four parks and two community centers for residents. Library services are provided by the San Bernardino County Library System at a branch library located in the City. RVPUB~IRR',21073 C-6 Education Six school districts serve the residents of the City providing local educational opportunities from kindergarten through junior college. Major colleges and universities are located within commuting distance to the City providing residents with both public and private educational opportunities in most of the major professions. Transportation Two interstate highways traverse the area. Interstate 10 is located south of the City's boundary and runs east and west. Interstate 15 in the eastern section of the City runs north and south; thus, the City is linked by interstate highways to all areas of the State and to other states to the east. Airline service from Ontario International Airport is provided to approximately 50 cities in the United States. The airport has the capacity to serve wide-bodied jet airplanes to better serve the increase in passenger and cargo activity. Ontario International Airport is constructing a new passenger terminal. The new 550,000 square foot facility will have 28 aircraft gates and 10,000 parking spaces to better accomodate the expected nine million annual passengers. Los Angeles International Airport is located approximately 40 miles to the west of the City. The Port of Los Angeles, located approximately 45 miles to the southwest, provides major international cargo and passenger service. Three transcontinental railroads provide freight service to the City: Union Pacific Railroad, Southern Pacific Railroad, and the Atchison, Topeka and Santa Fe Railroad. Amtrak provides passenger service to the City. Greyhound and Continental Trailways provide transcontinental bus service. The Southern California Rapid Transit District and Omnitrans furnish intercounty and local bus service. Airport Expansion To better serve the increase in passenger and cargo activity, Ontario International Airport is constructing a new passenger terminal. The new 550,000 square foot facility will have 28 aircraft gates and 10,000 parking spaces to better accommodate the expected nine million annual passengers. Recreation The California Speedway is a two-mile tri-oval superspeedway located on 475 acres near Fontana, in San Bernardino County, approximately ~ miles from the District. The California Speedway has an ultimate capacity of 107,000, with free parking for over 32,000 vehicles and 117 buses. Total project cost is approximately $100 million. It is also located near the intersection of U.S. Interstate 10, 15 and 60. The speedway is approximately five miles from the Ontario International Airport. The California Speedway will be the only permanent superspeedway in the Southern California region. An area comprising a population of 16,000,000 people within 150 miles of the California Speedway. This region is the second largest economic area in the United States, having the largest automotive and trucking sales area in the world. The Epicenter, the City's 6,000 seat stadium, is adjacent to the South side of the District. The Epicenter, which is home to a minor league baseball team, is a focal point of community activity. RvPLrB ~iR.R~21073 C-7 (THIS PAGE INTENTIONALLY LEFT BLANK) RVPUB~-RR~,21073 APPENDIX D FORM OF OPINION OF BOND COUNSEL RVPUBX3RR\21073 D- 1 APPENDIX E Book-Entry-Only System The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, 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. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. NEITHER THE CITY NOR THE FISCAL AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT~ (II) ANY NOTICE (INCLUDING ANY NOTICE OF REDEMPTION) THAT IS PERMITFED OR REQUIRED TO BE GIVEN TO BONDHOLDERS UNDER AN INDENTURE~ (III) THE SELECTION BY DTC OR ANY DTC PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE BONDS (IV) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL, PREMIUM, IF ANY, OR INTEREST DUE WITH RESPECT TO THE BONDS~ OR, (V) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC PARTICIPANTS, AS ASSIGNEES OF DTC AS BONDHOLDER. THE RULES APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DTC PARTICIPANTS ARE ON FILE WITH DTC. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of Bonds ("Beneficial Owner") is in mm to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirrnation from DTC of their purchase, but Beneficial Owners are expected to receive written confmnations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Ovmer entered into the transaction. Transfer of ownership interests are to be accomplished by entries made on the books of the Participants acting on behalf of Beneficial Cheers. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. RVPUB\JRR'x21073 E- 1 To facilitate future transactions, all Bonds deposited by Participants with DTC are registered in the name of DTC's parmership nominee, Cede & Co. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participant to whose account the Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Ommbus Proxy to an issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on a payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, the Bonds are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfer through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered. The information in this appendix concemmg DTC and DTC's book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. Procedure in the Event of Revision or Termination of Book-Entry Only System: Replacement Bonds. The book-entry system with DTC shall be discontinued upon (a) the resignation of DTC from its functions as depository for the Bonds, (b) a determination by the City that DTC is no longer able to carry out its functions as depository or (c) a determination by the City that it is in the best interest of the City to remove DTC from its functions as depository. If the City replaces DTC with another qualified securities depositor5.', a fully registered Bond for each maturity of each series, registered in the name of the successor, shall be prepared, consistent with the applicable Indenture. If no successor securities depositor3' is chosen, the Cit3,~ shall execute and the Trustee shall authenticate and deliver new bonds registered in the names of such persons as are requested by the City. RVPUBLIRR~ 1073 E-2 APPENDIX F FORMS OF CONTINUING DISCLOSURE CERTIFICATES RVPU'BWRR~21073 F- 1 $ CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 (Masi Plaza) LIMITED OBLIGATION IMPROVEMENT BONDS Developer Disclosure Agreement THIS DEVELOPER DISCLOSURE AGREEMENT (the "Developer Disclosure Agreement") is executed and delivered by MASI COMMERCE CENTER PARTNERS, a California parmership (the "Developer") and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association (the "Dissemination Agent") in connection with formation of Assessment District No. 93-1 (Masi Plaza) (the "District") and the issuance by the Issuer of $ aggregate principal amount City of Rancho Cucamonga Assessment No. 93-1 (Masi Plaza) Limited Obligation Improvement Bonds, (the "Bonds"). The Bonds are being issued pursuant to a Bond Indenture (the "Indenture") dated as of ,1997, between the City of Rancho Cucamonga (the "Issuer") and the Fiscal Agent. The Issuer, the Dissemination Agent and the Developer hereby covenant and agree as follows: Section 1. Purpose of the Developer Disclosure Agreement. This Developer Disclosure Agreement is being executed and delivered by the Issuer, the Dissemination Agent and the Developer for the benefit of the holders of the Bonds and in order to assist the Participating Underwriters (as defined herein) in complying with SEC. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Developer Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Affiliate" shall means (i) any of the following persons or entities: Jack Masi Inc., Masi Rochester Associates, Masi Commerce Center Partners II, Jack Masi, Jeanme Masi, SMT Masi, Inc. and the Sebastian Masi Trust, and (ii) any entity with respect to which fifty percent (50%) or more of the ownership or voting power is held individually or collectively by any of the persons and/or entities listed in the preceding clause (i) and any other entity owned, controlled or under common ownership or control by or with, as applicable, the Developer, and includes all general partners of any entity which is a partnership. Control shall mean ownership of fifty percent (50%) or more of the voting power of or ownership interest in the respective entity. "Annual Report" shall mean any Annual Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Developer Disclosure Agreement. "Disclosure Representative" shall mean the President of the General Partner of the Developer or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Fiscal Agent from time to time. "Dissemination Agent" shall mean the Fiscal Agent, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Dissemination Agent or Fiscal Agent a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Developer Disclosure Agreement. RVPCq3XJR.R'x23534 "National Repository" shall mean an)' Nationally Recognized Municipal Securities Repository for purposes of the Rule. "Participating Underwhter" shall mean any of the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities Exchange Commission. As of the date of this Agreement, there is no State Repository. Section 3. Provision of Annual Reports. (a) The Dissemination Agent shall, not later than February 1, 1998, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Developer Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the Developer shall provide the Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Developer Disclosure Agreement. The Developer shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the Developer and shall have no duty or obligation to review such Annual Report. (b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Developer and the Dissemination Agent to determine if the Developer is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and (ii) file a report with the Developer and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Developer Disclosure Agreement, stating that the date it was provided and listing all the Repositories to which it was provided. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: RVPUBXJRR~23534 -2- Status of completion of the public improvements to be constructed as described in the Official Statement for the Bonds (the "Improvements") which are not funded with the proceeds of the Bonds. Statement as to construction loans and any permanent financing with respect to Masi Plaza, as described in the Official Statement (the "Development") the improvements not financed with bond proceeds, including loan balance, interest rate, existence of deeds of trust or other similar encumbrances against the property within the District, existence of any default under any loan of the Developer or any Affiliate (whether or not such loan is secured by propert), within the District) and remaining tenn. A statement as to the sufficiency of available funds to complete the improvements under construction as contemplated. . A statement summarizing the current state of phasing and financing of the Development and presented in the same general form as the information in the Official Statement under the caption "The District - Proposed Development in the District." . A statement summarizing the leasing activity with respect to the Development for the last year including tenant identification and vacancy rates. . Status of any legislative, administrative and judicial challenges to the construction of the Improvements or the Development as known to the Developer. . Total parcels (including the combined acreage thereof) sold and the identification of such purchaser. . Any significant amendments to land use entitlements or legal challenges to the construction of the Development that are known to the Developer; and development activity in the District in the prior year as measured by one or more of the following: actual construction, issuance of certificates of occupancy, transfers of ownership from Developer or its affiliates, or such other measurement of such activity as is deemed appropriate by the Developer. A statement summarizing all assessments, special taxes or other liens imposed on the propert)' in the District imposed by governmental entities other than the Issuer. 9. An update to the sections in the Official Statement entitled" ," ' , ' , ' , Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission or any offenng statement of any securities offering of the Developer or any related party of the Developer. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Developer shall clearly identify each such other document so incorporated by reference. RVPUBXJRRL23534 - 3- Section 5. Reporting of Significant Events. (a) This Section 5 shall govem the giving of notices of the occurrence of any of the following events: (1) Pursuant to the provisions of this Section 5, the Developer shall give, or cause to be given, notice of the occurrence of any of the following events, if material: (A) failure to pay any real property taxes (including the Assessment) levied within the District on a parcel owned by the Developer or any Affiliate; (B) material damage to or destruction of any of the Improvements or the Development; (c) material default by the Developer or any Affiliate on any loan with respect to the construction or permanent financing of the Development; (D) material default by the Developer or any Affiliate on any loan secured by property within the District owned by Developer or any Affiliate; (E) payment default by the Developer or any Affiliate on any loan of Developer or any Affiliate (whether or not such loan is secured by property within the District); (F) the filing of the Developer or any Affiliate, the general partner of the Developer or any owners of more than 25% interest in Developer in bankruptcy or any determination that the Developer or an owner of interest in Developer or a subsidiary of Developer or any Affiliate is unable to pay its debts as they become due; and (G) the filing of any lawsuit with claim for damages in excess of $1,000,000 against the Developer which may adversely affect the completion of the Improvements or the development of property within the District or litigation which would mateddally adversely affect the financial condition of the Developer. (2) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable Federal securities law. (3) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal Securities law, the Developer shall promptly file a notice of such occurrence with the Dissemination Agent which shall then distribute to the Municipal Securities Rulemaking Board and each State Repository, with a copy to the Issuer and the Fiscal Agent. Section 6. Termination of Reporting Obligation; Reporting Obligation of Transferees. The Developer's obligations under this Developer Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. The Developer shall have no further obligation under this Developer Disclosure Agreement if the Developer and any owners of interest in Developer or a subsidiary of Developer own undeveloped property which is subject to less than 10% of the Assessment in the current Fiscal Year. If such termination occurs prior to the final maturity of the Bonds, the Developer shall give notice of such termination RVPUB~IR.RL23534 -4- in the same manner as for a Listed Event under Section 5(c). Additionally, the Developer will, in connection with any sale or transfer of ownership of land within the District whereby the transferee will be responsible for 10% or more of the Assessment in the Fiscal Year following such transfer, cause such transferee to enter into a disclosure agreement with terms substantially similar to the terms of this Agreement, or agree in writing to be bound by the terms and obligations under this Agreement as an additional obligated party. Section 7. Amendment. (a) This Disclosure Agreement may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the Developer or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the Issuer or Developer shall have delivered to the Fiscal Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities law, addressed to the Issuer and the Fiscal Agent, to the same effect as set forth in clause (2) above, (4) the Issuer shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities law, addressed to the Issuer, to the effect that the amendment does not materially impair the interests of the Owners, and (5) the Issuer or Developer shall have delivered copies of such opinion and amendment to each Repository. (b) This Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Owners of at least 25% of the outstanding Bonds. (c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information. Section 8. Additional Information. Nothing in this Developer Disclosure Agreement shall be deemed to prevent the Issuer or the Developer from disseminating any other information, using the means of dissemination set forth in this Developer Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Developer Disclosure Agreement. If the Issuer or the Developer choose to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Developer Disclosure Agreement, the Issuer or the Developer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. The Developer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Developer, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such laws. RVPUBLIRRX23534 -5- Section 9. Default. In the event of a failure of the Developer to comply with any provision of this Developer Disclosure Agreement, any beneficial owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer to comply with its obligations under this Developer Disclosure Agreement. A default under this Developer Disclosure Agreement shall not be deemed a default under the Indenture and the sole remedy under this Developer Disclosure Agreement in the event of any failure of the Developer to comply with this Developer Disclosure Agreement shall be an action to compel performance. Section 10. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination Agent. Article VII of the Indenture is hereby made applicable to this Developer Disclosure Agreement as if this Developer Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent (if other than the Fiscal Agent or the Fiscal Agent in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Developer Disclosure Agreement, and the Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the District, the Issuer, the Bond Owners, or any other party. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 11. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: If to the Issuer: City of Rancho Cucamonga 10500 Civic Center Drive P.O. Box 807 Rancho Cucamonga, CA 91729 Attention: City Manager Telephone: (909) 477-2740 Telecopier: (909) 477-2849 If to the Dissemination Agent: First Trust of California, National Association 333 South Grand Avenue, Suite 3020 Los Angeles, CA 90071 Attention: Corporate Trust Telephone: (213) 346-9220 Telecopier: (213) 346-9222 RVPUBXJRR~23534 -6- If to the Developer: Section 12. Beneficiaries. This Developer Disclosure Agreement shall inure solely to the benefit of the Issuer, the Developer, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. RVPUB~RR~3534 -7- Section 13. Counterparts. The Developer Disclosure 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 instrument. Date. ,1997 MASI COMMERCE CENTER PARTNERS, a California parmership By: Its: FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION By: RVPUB~R.R~23534 -8- EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: CITY OF RANCHO CUCAMONGA Name of Bond Issue: Date of Issuance: Assessment District No. 93-1 (Masi Plaza)Limited Obligation Improvement Bonds [to come] NOTICE IS HEREBY GIVEN that the Masi Commerce Center Partners has not provided an Annual Report with respect to the above-named Bonds as required by Section __ of the Indenture dated as of ,1997 between the Issuer and [the Fiscal Agent]. [The Masi Commerce Center Partners anticipates that the Annual Report will be filed by .] Dated: [the Fiscal Agent], on behalf of ISSUER cc: Issuer RVPUBLrRR~23534 A- 1 (THIS PAGE INTENTIONALLY LEFT BLANK) RVPUBLIRR~21073 $ CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 (Masi Plaza) LIMITED OBLIGATION IMPROVEMENT Continuing Disclosure Agreement THIS CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") is executed and delivered by the CITY OF RANCHO CUCAMONGA, a municipal corporation, organized and existing under the laws of the State of Califomia (the "Issuer") on behalf of THE CITY OF RANCHO CUCAMONGA ASSESSMENT DISTRICT NO. 93-1 (MASI PLAZA) (the "District") and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as dissemination agent and fiscal agent (the "Dissemination Agent and Fiscal Agent") in connection with the issuance of $ aggregate principal amount Assessment District No. 93-1 (Masi Plaza) Limited Obligation Improvement Bonds (the "Bonds"). The Bonds are being issued pursuant to a Bond Indenture dated as of 1, 1997, between the City and the Fiscal Agent (the "Indenture"). The Issuer, the Dissemination Agent and the Fiscal Agent hereby covenant and agree as follows: Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer, the Dissemination Agent and the Fiscal Agent for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriters (as defined herein)in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Disclosure Representative" shall mean the City Manager of the Issuer or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Fiscal Agent from time to time. "Dissemination Agent" shall mean the Fiscal Agent, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Dissemination Agent and the Fiscal Agent a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. RVPUB~R\23540 "National Repository" shall mean any Nationally Recognized Municipal Securities Repository for purposes of the Rule. "Participating Underwriters" shall mean the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities Exchange Commission. As of the date of this Agreement, there is no State Repository. Section 3. Provision of Annual Reports. (a) The Dissemination Agent shall not later than February 1 of each year, commencing February 1, 1998, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report. Not later than fifteen (15) Business Days prior to said date, the Issuer shall provide the Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Agreement. The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. (b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer and the Disclosure Representative to determine if the Issuer is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and RVPUB~RR\23540 -2- (ii) file a report with the Issuer and, if the Dissemination Agent is not the Fiscal Agent, the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating that the date it was provided and listing all the Repositories to which it was provided. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: A statement summarizing all assessments, special taxes and other levies imposed on property in the District by the Issuer. . Annual information required to be filed by the District with the California Debt and Investment Advisory Commission pursuant to Section 53359.5(b) of the Act as of February 1, 1998, which shall include, but not be limited to, the principal amount of Bonds outstanding, the balance in the Reserve Fund (as established by the Indenture), the balance of capitalized interest in the Redemption Fund (as established by the Indenture), if any, the number of parcels delinquent in the payment of Assessment, the amount of delinquent Assessment for each parcel, the length of time that each parcel has been delinquent, when foreclosure proceedings were commenced on each delinquent parcel, the balance in the Improvement Fund (as established by the Indenture), the assessed value of all parcels subject to the Assessment as shown on the most recent equalized roll. 3. Assessed valuation and Assessment for all parcels within the District. . Listing of any District property owned representing more than ten percent of the Assessment in such fiscal year, the amount of the Assessment against such landowners and the percentage of such Assessment relative to the entire Assessment within the District. . Any significant amendments to land use entitlements or legal challenges to the construction of the proposed projects that are known to the Disclosure Representative of the Issuer. . Any changes in the types of public facilities constructed from those stated in the Official Statement and the status of completion of public facilities constructed or acquired with the proceeds of the Bonds since the report of the previous year. . Development activity or diversification of ownership within the District in the prior year as measured by one or more of the following: filing of final tract maps, issuance of building permits for new commercial units, certificates of occupancy, or such other measurement of such activity as is deemed appropriate by the Issuer. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been RVPUBXJR. RX23540 -3 - submitted to each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Significant Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events: 1. Delinquency in payment when due of any principal of or interest on the Bonds. 2. Occurrence of any event of default under and as defined in the Indenture (other than as described in clause (1) above). 3. Amendment to the Indenture or this Disclosure Agreement modifying the rights of the holders of the Bonds. 4. Giving of a notice of optional or unscheduled redemption or any Bonds. 5. Defeasance of the Bonds or any portion thereof. 6. Any change in the rating, if any, on the Bonds. 7. Adverse tax opinions or events affecting the tax-exempt status of the Bonds. . . difficulties. Any unscheduled draw on the Reserve Fund reflecting financial difficulties. Any unscheduled draws on any credit enhancement reflecting financial 10. Any change or substitution in the provider of any credit enhancement, or any failure by the credit enhancer to perform on the credit enhancement. 11. The release, substitution or sale of property securing repayment of the Bonds (including property leased, mortgaged or pledged as such security). (b) The Fiscal Agent shall, promptly after obtaining actual knowledge of the occurrence of any of the Listed Events (except events listed in clauses (a)(1), (4) or (5)), contact the Disclosure Representative, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f) and promptly direct the Fiscal Agent whether or not to report such event to the Bond holders unless otherwise required to be reported by the Fiscal Agent to the Bond holders under the Indenture. For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events RVPUB~R.R\23540 -4- shall mean actual knowledge by the officer at the office of the Fiscal Agent with responsibility for matters regarding the Indenture. (c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Issuer shall as soon as possible determine if such event would constitute material information for holders of the Bonds under applicable Federal securities law, provided, that any event under subsection (a)(6) will always be deemed to be material. (d) If the Issuer has determined that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). (e) If in response to a request under subsection (b), the Issuer determines that the Listed Event would not be material under applicable Federal securities law, the Issuer shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (f) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing: (i) notice of the occurrence of a Listed Event described in subsections (a)(1), (4) or (5) shall be given by the Dissemination Agent unless the Issuer gives the Dissemination Agent affirmative instructions not to disclose such occurrence; and (ii) notice of Listed Events described in subsections (a)(4) and (5) shall not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds pursuant to the Indenture. Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5. Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out their obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Fiscal Agent shall be the Dissemination Agent. The Dissemination Agent may resign by providing thirty days' written notice to the Issuer and the Fiscal Agent. Upon receiving notice of such resignation, the Issuer shall promptly appoint a successor Dissemination Agent by an instrument in writing. Any resignation or removal of the Dissemination Agent shall become effective upon acceptance of appointment by the successor Dissemination Agent. RVPUB\JRRX23540 -5- If no appointment of a successor Dissemination Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Dissemination Agent shall have given to the Issuer written notice or after a vacancy in the office of the Dissemination Agent shall have occurred by reason of its inability to act, the Dissemination Agent or any beneficial owner may apply to any court of competent jurisdiction to appoint a successor Dissemination Agent. Said court may thereupon, after such notice, if any, a such court may deem proper, appoint a successor Dissemination Agent. If, by reason of the judgment of any court, or reasonable agency, the Dissemination Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Dissemination Agent hereunder shall be assumed by and vest in the Issuer in trust for the benefit of the beneficial owners. The Issuer covenants for the direct benefit of the beneficial owners that its Finance Director in such case shall be vested with all of the rights and powers of the Dissemination Agent hereunder, and shall assume all of the responsibilities and perform all of the duties of the Dissemination Agent hereunder, in trust for the benefit of the beneficial owners of the Bonds. In such event, the Finance Director may designate a successor Dissemination Agent qualified to act as Dissemination Agent hereunder. Section 8. Amendment. (a) This Disclosure Agreement may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the Issuer or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the Issuer shall have delivered to the Fiscal Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities law, addressed to the Issuer and the Fiscal Agent, to the same effect as set forth in clause (2) above, (4) the Issuer shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities law, addressed to the Issuer, to the effect that the amendment does not materially impair the interests of the Owners, and (5) the Issuer shall have delivered copies of such opinion and amendment to each Repository. (b) This Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Owners of at least 25% of the outstanding Bonds. (c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a RVPUBXJRR\23540 -6- quantitative and, to the extent feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Issuer or the Fiscal Agent to comply with any provision of this Disclosure Agreement, any beneficial owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer or the Fiscal Agent, as the case may be, to comply with their obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed a default under the Indenture and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer or the Fiscal Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination Agent. Article VII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture and the Dissemination Agent shall be entitled to the protection, immunities and limitation of liabilities afforded to the Fiscal Agent thereunder. The Dissemination Agent (if other than the Fiscal Agent or the Fiscal Agent in its capacity as Dissemination Agent and the Fiscal Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and the Fiscal Agent, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or Fiscal Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the District, the Issuer, the Bond Owners, or any other party. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: RVPLrB\JRR\23540 -7- If to the Issuer: City of Rancho Cucamonga 10500 Civic Center Drive P.O. Box 807 Rancho Cucamonga, CA 91729 Attention: City Manager Telephone: (909) 477-2740 Telecopier: (909) 477-2849 If to the Fiscal Agent: First Trust of California, National Association 333 South Grand Avenue, Suite 3020 Los Angeles, CA 90071 Attention: Corporate Trust Telephone: (213) 346-9225 Telecopier: (213) 346-9222 If to the Dissemination Agent: First Trust of California, National Association 333 South Grand Avenue, Suite 3020 Los Angeles, CA 90071 Attention: Corporate Trust Telephone: (213) 346-9220 Telecopier: (213) 346-9222 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent. Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. RVPUB\J-RR\23540 - 8- Section 13. Counterparts. The Disclosure 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 instrument. Date: ,1997 CITY OF RANCHO CUCAMONGA By: Authorized Signatory FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION By: Authorized Officer RVPUB\JRR~.3540 -9- EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: CITY OF RANCHO CUCAMONGA Name of Bond Issue: City of Rancho Cucamonga Assessment District No. 93-1 (Masi Plaza) Limited Obligation Improvement Bonds Date of Issuance: [to come] NOTICE IS HEREBY GIVEN that the City of Rancho Cucamonga has not provided an Annual Report with respect to the above-named Bonds as required by Section ~ of the Indenture dated as of ,1997 between the Issuer and [the Fiscal Agent]. [The Issuer anticipates that the Annual Report will be filed by . ] Dated: [the Dissemination Agent], on behalf of ISSUER cc: Issuer RVPUB\JR.R\23540 A- 1