HomeMy WebLinkAbout1993-07-13; Housing & Redevelopment Commission; 233; Village Redevelopment Project 1993 Tax BondsMMJSING AND -EDEVEtOPMENT CQMMlS~C”3N - AGENDA BIL /.,w/&
APPROVAL AND AUTHORIZA’I’ION OF THE ISSUANCE AND SALE OF VILLAGE REDEVELOPMENT PROJECT 1993 TAX
ALLOCATION BONDS IN A PRINCIPAL AMOUNT NOT TO
WT. EXCEED $17,000,000
aECOMMENDED ACTION:
Adopt Carlsbad Housing and Redevelopment Commission Resolution No.2 2 7 APPROVING the
issuance of Village Redevelopment Project 1993 Tax Allocation Bonds in a principal amount not to
exceed $17,000,000;
Adopt Carlsbad Housing and Redevelopment Commission Resolution No.a.3 0 AUTHORISING
the issuance and sale of Village Redevelopment Project 1993 Tax Allocation Bonds in a principal
amount not to exceed $17,000,000, and authorizing and directing execution of related indenture
of trust and publication of notices and authorizing official actions and related matters.
ITEM EXPLANATION:
In 1988, the Carlsbad Housing and Redevelopment Commission issued $12,000,000 in Tax
Allocation Bonds (the 1988 Bonds) to provide funding for capital projects within the Village
Redevelopment Project Area. These funds were used to build the Senior Center and to finance the
various phases of the Downtown Village Streetscape Project.
In November 1992, the Commission directed staff to analyze the feasibility of refunding the 1988
Bonds due to the low interest rates now available on municipal bonds. At this same time, the
Commission selected a financing team to assist staff in the analysis which consisted of Stone &
Youngberg as financial advisor, Jones, Hall, Hill & White as bond counsel, and Keyser Marston
Associates, Inc. as fiscal consultants.
The financing team has completed their analysis and staff has reviewed their work. Based on this
information, staff recommends that the Agency proceed with the refinancing of these bonds. The
refinancing will permit the Agency to reduce their annual debt service payments .and to obtain
additional funds for new projects. These results can be achieved due to the current low interest rate
bond market and through increasing the amount of bonds issued and extending their term.
The refinancing will be an advance refunding as the 1988 Bonds are not able to be called and
redeemed until 1997. An advance refunding is one in which the new bonds will be issued and a
certain amount of the proceeds set aside in a trust fund to pay off the old bonds when they become
subject to redemption.
The 1993 Bonds (the new ones) will be issued in an amount not to exceed $17,000,000. There are
currently $11,185,000 outstanding on the 1988 Bonds. The term will be extended to 2023 while
the 1988 Bonds have a final maturity of 2011. The interest rates on the new bonds will not be
known until-the bonds are’issued; however, they are expected to be lower than on the 1988 Bonds.
For exampf<<Tthe long term rate on the 1988 Bonds is 7.8% whereas the current rate is down to
about 5.7%:’
The bonds will be sold in a competitive underwriting as required by State law. A competitive
underwriting is one is which the Agency requests bids from potential underwriters for the bonds and
then sells the bonds to the underwriter offering the lowest bid meeting the terms of the sale. As
such, the rates on the bonds and thus, the annual debt service payment, will not be known until
that time. However, it is anticipated that the refinancing will result in a lower debt service payment
for the Agency.
If, when received, the bids for the bonds are not acc’eptable to the Agency (rates too high, etc.), they
may be rejected and the refinancing canceled or the Agency may re-bid the issue at a later date.
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PAGE TWO OF AGENDA BILL NO.-
As a result of the refinancing, the Agency will realize two significant benefits:
1) Lower Debt Service Payments: Although it is difficult to predict what the rates will be when
the bonds are finally issued, it is expected that the annual debt service payment will decrease.
The Agency currently pays approximately $1,160,000 per year. We are estimating that the new
payment will be approximately 1,050,OOO per year despite increasing the amount of
outstanding bonds. This would result in a decrease in the cash ‘requirements for the Agency
of approximately $110,000 per year.
2) Additional Bond Proceeds: The Agency will receive additional bond proceeds which could
amount to $2,000,000 or more. If $2,000,000 were received, the following is an example of
projects that could be financed with these additional funds.
PROJECTS:
Development of Transit Center Proiectfs)
Market analysis, developer outreach and potential land acquisition.
Project would ultimately result in 30,000 to 45,000 square feet of
retail and office uses to be located at the comer of State St. and
Grand Ave.
Development of Roosevelt Center Proiect(s)
Purchase of lot and feasibility analysis/conceptual plan for a commer-
cial development in the block between Carlsbad Village Drive and Grand
Avenue on Roosevelt Street. This land purchase along with the parking
lot to be purchased from a lease option currently held by the Agency
would give the Agency ownership of a substantial portion of the block.
Barrio Area Visions Analvsis/Study
Market analysis for a proposed Barrio/Hispanic theme project including
a quality Mexican restaurant as well as retail and office uses.
TOTAL REDEVELOPMENT PROJECTS/STUDIES
AMOUNT AVAILABLE TO REPAY GENERAL FUND DEBT
$525,000
$400,000
$50,000
$1,025,000
$925,000
The balance of additional bond proceeds, if any, could then be used by
the Redevelopment Agency to repay a portion of the Agency’s debt to the
City of Carlsbad. As of June 30, 1993, the Agency will owe the City’s
General Fund approximately $8,000,000. Any amounts repaid could then
be used by the City on capital projects such as improvements to Cannon
Road. The only restrictions on the use of the funds is that they must
be spent on capital projects which have public benefit.
TOTAL USES $2.000.000
The text of the preliminary official statement which is on file in the City Clerk’s office will be
updated to reflect the above plans for any additional bond proceeds received.
Commission Actions Required
The following actions which are set forth in the attached resolutions are required by the Commission
in order to proceed with the refinancing:
1. Approve Issuance of Bonds in a principal amount not to exceed $17,OOO,OOO.
PAGE THREE OF AGENDA BILL NO. 2.33
2. Approve the following documents as to form:
0 Indenture of Trust: Sets forth the rules of the financing between the Carlsbad Housing
and Redevelopment Commission and Bank of America National Trust and Savings
Association (Trustee).
0 Form of Preliminarv Official Statement: Used by the Bond Underwriter as information for
buyers of the bonds.
0 Notice of Intention to Sell Bonds: This notice will be published in the Bond Buyer and
a local newspaper as required by state law.
3. Appoint Bank of America National Trust and Savings Association as Bond Trustee.
4. Call for bids to be received for the purchase of the bonds.
5. Authorize the Chairman, the Executive Director, the Community Development Director, the
Treasurer and the Clerk of the Commission and any and all other officers of the Commission
to do what is deemed necessary and advisable to consummate the issuance and sale of the
bonds.
By approving the attached resolutions, the Commission is authorizing staff to complete the issuance
of the bonds under the general terms as described above. This includes calling for bids to be
received, opening the bids and determining the winning bidder, awarding the bonds to the winning
bidder, finalizing and printing the official statement and handling the receipt and distribution of
cash and payment for all services associated with the bond issuance.
Upon completion of the refunding, staff will report back to Commission with the final results.
FISCAL IMPACT:
The refinancing of the bonds is expected to reduce the annual debt service payments of the Agency
as well as provide additional proceeds which the Agency can use for various redevelopment projects
and to repay amounts owed to the General fund of the City of Carlsbad.
The exact amount of annual debt service savings expected to be achieved and the amount of
additional proceeds can not be calculated until the bonds are priced and sold. Based on current
calculations, staff expects the debt service savings to be in the $100,000 range and to receive
additional proceeds of up to $2,000,000. All debt service amounts will continue to be paid from tax
increment received by the Agency.
Bond counsel and financial advisor fees will be paid according to agreements previously approved
and executed by the Commission. These agreements call for payments to bond counsel based on
the principal amount of the bonds sold and payment to the financial advisor of approximately
$37,500. These and any other associated costs will be paid from bond proceeds.
EXHIBITS:
1. Resolution No$d 9 approving the issuance by the Carlsbad Housing and Redevelopment
Commission of not to exceed $17,000,000 principal amount of 1993 Tax Allocation Bonds
relating to the Village Redevelopment Project.
PAGE FOUR OF AGENDA BILL NO.2 3 ?
2. Resolution No. 2 3 0 authorizing the issuance and sale of Tax Allocation Bonds in the
aggregate principal amount of not to exceed $17,000,000 relating to the Village Redevelopment
Project, authorizing and directing execution of relation Indenture of Trust and publications of
notices, and authorizing official actions and related matters.
3. Form of Indenture of Trust (on file in City Clerk’s Office).
4. Form of Preliminary Official Statement (on file in City Clerk’s Office).
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RESOLUTION NO. 3 2 9
RESOLUTION OF THE CARLSBAD HOUSING AND
REDEVELOPMENT COMMISSION APPROVING THE
ISSUANCE BY THE CARLSBAD HOUSING AND
REDEVELOPMENT COMMISSION OF NOT TO EXCEED
$17,000,000 PRINCIPAL AMOUNT OF 1993 TAX ALLOCATION BONDS RELATING TO THE VILLAGE
REDEVELOPMENT PROJECT
WHEREAS, the Carlsbad Housing and Redevelopment Commission
(the “Commission”) is undertaking the redevelopment of the Village Project
in the City of Carlsbad (the “Redevelopment Project”), and for such purpose
the Commission has previously issued its Village Redevelopment Project Area
Tax Allocation Bonds, Series A, in the aggregate principal amount of
$12,000,000 (the “1988 Bonds”); and
WHEREAS, the Commission has determined that it is in the
financial interests of the Commission at this time to advance refund the 1988
Bonds, and in order to provide for such refunding and to provide additional
funding for the Redevelopment Project, the Commission proposes to
authorize the issuance of its Carlsbad Housing and Redevelopment
Commission Village Redevelopment Project 1993 Tax Allocation Bonds (the
“Bonds”) under the provisions of the California Community Redevelopment
Law, the principal of and: interest on which will be payable from tax
increment revenues derived from the Redevelopment Project; and
WHEREAS, in accordance with the requirements of Section 33640
of the California Health and Safety Code, the Commission wishes at this time
to approve the issuance and sale of the Bonds by the Commission.
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NOW, THEREFORE, BE IT RESOLVED by the Carlsbad Housing
and Redevelopment Commission that the issuance and sale of the Bonds by
the Commission, in the aggregate principal amount of not to exceed
$17,000,000, b e and is hereby approved. The Secretary shall certify to the
adoption of this Resolution and shall cause this Resolution and certification
to be filed in the Office of the City Clerk.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
Carlsbad Housing and Redevelopment Commission on the 13th day of JULY,
1993, by the following vote, to wit:
AYES: Commissioners Lewis, Stanton, Kulchin, Nygaard, Finnila
NOES: None
ABSENT: None
CLAUDE A. LEWIS, C&&man
ATTEST: I
(SEAL)
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RESOLUTION NO. 230
RESOLUTION OF THE CARLSBAD HOUSING AND
REDEVELOPMENT COMMISSION AUTHORIZING
THE ISSUANCE AND SALE OF TAX ALLOCATION
BONDS IN THE AGGREGATE PRINCIPAL AMOUNT
OF NOT TO EXCEED $17,000,000 RELATING TO
THE VILLAGE REDEVELOPMENT PROJECT, AUTHO-
RIZING AND DIRECTING EXECUTION OF RELATED
INDENTURE OF TRUST AND PUBLICATIONS OF
NOTICES, AND AUTHORIZING OFFICIAL ACTIONS
AND RELATED MATTERS
WHEREAS, the Carlsbad Housing and Redevelopment Commission
(the “Commission”) is undertaking the redevelopment of the Village Project
in the City of Carlsbad (the “Redevelopment Project”), and for such purpose
the Commission has previously issued its Village Redevelopment Project Area
Tax Allocation Bonds, Series A, in the aggregate principal amount of
$12,000,000 (the “1988 Bonds”); and
WHEREAS, the Commission has determined that it is in the
financial interests of the Commission at this time to advance refund the 1988
Bonds, and in order to provide therefore and to provide additional funding
for the Redevelopment Project, the Commission proposes to authorize the
issuance of its Carlsbad Housing and Redevelopment Commission Village
Redevelopment Project 1993 Tax Allocation Bonds (the “Bonds”) under the
provisions of the California Community Redevelopment Law (the “Law), the
principal of and interest on which will be payable from tax increment
revenues derived from the Redevelopment Project; and
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WHEREAS, the Commission has duly considered such transactions
and wishes at this time to authorize proceedings for the issuance of the
Bonds and for the public sale thereof.
NOW, THEREFORE, be it resolved, determined, and ordered by
the Carlsbad Housing and Redevelopment Commission as follows:
Section 1. Issuance of Bonds: Approval of Indenture. The
Commission hereby authorizes the issuance of the Bonds in the aggregate
principal amount of not to exceed $17,000,000. The Bonds shall be issued
pursuant to the Law and pursuant to an Indenture of Trust dated as of
August 1, 1993, by and between the Commission and Bank of America
National Trust and Savings Association as trustee (the “Indenture”). The
Commission hereby approves the Indenture in substantially the form on fle
with the Clerk, together with such additions thereto and changes therein as
the Executive Director shall deem necessary, desirable or appropriate, the
execution of which by the Executive Director shall be conclusive evidence of
the approval of any such additions and changes. The Executive Director is
hereby authorized and directed to execute, and the Clerk is hereby
authorized and directed to attest and affix the seal of the Commission to, the
final form of the Indenture for and in the name and on behalf of the
Commission. The Commission hereby authorizes the delivery and
performance of the Indenture.
Section 2. Call for Bids: Authorization of Competitive Sale of
The Commission hereby calls for bids to be received for the purchase Bonds.
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of the Bonds on Tuesday, August 10, 1993 at 10:00 a.m. California time.
Bids shall be received, and the Bonds shall be sold, subject to the terms and
conditions set forth in the Official Notice of Sale of the Bonds in substantially
the form attached hereto as Exhibit A and by this reference incorporated
herein, together with any additions thereto or changes therein (including but
not limited to changes in the time and date fured for sale of the Bonds) as
may be deemed necessary or advisable by the Executive Director. The
Executive Director or his designee is hereby authorized and directed to accept
the best bid determined in accordance with the Official Notice of Sale, in the
name and on behalf of the Commission.
Section 3. Publication of Notices. Pursuant to 53692 of the
Government Code, Jones Hall Hill & White, as bond counsel to the
Commission, is hereby authorized and directed to cause the Notice of
Intention to Sell Bonds, in substantially the form attached hereto as Exhibit
B and by this reference incorporated herein, together with any additions
thereto or changes therein deemed necessary or advisable by the Executive
Director, to be published once in The Bond Buver. Such publication shall be
made not later than July 26,1993. pursuant to Section 33646 of the Health
and Safety Code, the Clerk of the Commission is hereby authorized and
directed to cause said Notice of Intention to Sell Bonds to be published once
in a newspaper of general circulation published in the City of Carlsbad, such
publication to be made not later than August 5, 1993.
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Section 4. Official Statement. The Commission hereby approves
the preparation of, and hereby authorizes the Executive Director to deem
final within the meaning of Rule 15~2-12 of the Securities Exchange ,Act of
1934 except for permitted omissions, a preliminary form of Official
Statement describing the Bonds. Distribution of such preliminary Official
Statement by the financial advisor to prospective bidders on the Bonds is
hereby approved. The Executive Director is hereby authorized to execute the
final form of the Official Statement, including as it may be modified by such
additions thereto and changes therein as the Executive Director shah deem
necessary, desirable or appropriate, and the execution of the final Official
Statement by the Executive Director shall be conclusive evidence of the
approval of any such additions and changes. The Commission hereby
authorizes the distribution of the final Official Statement by the purchaser
of the Bonds. The final Official Statement shall be executed in the name and
on behalf of the Commission by the Executive Director.
Section 5. Engagement of Professional Services. The firm of
Stone & Youngberg is hereby retained as financial advisor to the Commission
and the firm of Jones Hall Hill & White is hereby retained as bond counsel
to the Commission, in connection with the issuance and sale of the Bonds.
Such f%ms shall be retained upon the terms and conditions set forth in their
respective proposals which are on file with the Clerk, the execution of which
is hereby approved and authorized.
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Section 6. Official Actions. The Chairman, the Executive
Director, the Community Development Director, the Treasurer and the Clerk
of the Commission, and any and all other officers of the Commission, are
hereby authorized and directed, for and in the name and on behalf of the
Commission, to do any and all things and take any and all actions, including
execution and delivery of any and all assignments, certificates, requisitions,
agreements, notices, consents, instruments of conveyance, warrants and other
documents (including but not limited to an escrow deposit and trust
agreement relating to the .refunding of the 1988 Bonds) which they, or any
of them, may deem necessary or advisable in order to consummate the lawful
issuance and sale of the Bonds as described herein. Whenever in this
resolution any officer of the Commission is authorized to execute or
countersign any document or take any action, such execution, countersigning
or action may be taken on behalf of such officer by any person designated
by such officer to act on his or her behalf in the case such officer shall be
absent or unavailable.
Section 7. Effective Date. This Resolution shall take effect from
and after the date of its passage and adoption.
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Section 8. Certification Hereof. The Clerk of the Commission
shall certify to the adoption of this Resolution and shah cause this Resolution
and certification to be filed in the Office of the Clerk.
PASSED, APPROVED AND ADOPTED at a regular meeting of the
Carlsbad Housing and Redevelopment Commission on the 13th day of JULY
1993, by the following vote, to wit:
AYES: Commissioners Lewis, Stanton, Kulchin, Nygaard, Finnila
NOES: None
ABSENT: None
EXHIBITA
OFFICIAL NOTICE OF SALE
$ *
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION Village Redevelopment Project 1993 Tax Allocation Bonds
NOTICE IS HEREBY GIVEN by the Carlsbad Housing and Redevelopment
Commission (the “Commission”) that bids will be received by a representative of the
Commission at the offices of Bowne of Los Angeles, 633 West Fifth Street, 14th Floor, Los
Angeles, California 90071, on
TUESDAY,AUGUST10,1993
at 10:00 a.m. Pacific Time for the purchase of $ * principal amount of bonds of
the Commission designated the “Village Redevelopment Project 1993 Tax Allocation Bonds”
(the “Bonds”). The Bonds will be issued under the provisions of an Indenture of Trust by
and between the Commission and Bank of America National Trust and Savings Association
as Trustee (the ‘Trustee”) dated as of August 1, 1993 (the “Indenture”), and pursuant to
the laws of the State of California. The Bonds are more particularly described in the
proposed form of the Indenture on file with the Clerk of the Commission (which is
incorporated herein by reference) and copies thereof will be furnished to the bidder upon
request.
DESCRIPTION OF THE BONDS
Form of Bonds: The Bonds will be issued in fully registered form in
denominations of $5,000 or authorized integral multiples thereof, to be dated initially as
of August 1, 1993.
Maturities: The Bonds will mature, or be subject to mandatory sinking fund
redemption, 001 February 1 in each of the years and in the amounts, as set forth in the
following table. Each bidder is requ+ed to specify in its bid whether, for any park&r year, the Bonds will mature or, alkmately, be subject to mandatory sinking fund
redemption in such year.
Year Principal
(February 11 Amount
Year
JFebruarv 1)
Principal
Amount
* Subject to adjustment as described herein. See “Adjustment of Principal Amounts” below.
Payment Provisions: Interest on the Bonds will be payable on February 1,
1994, and on February 1 and August 1 in each year thereafter (the “Interest Payment
Dates”), to the registered owners by check or draft of the Trustee or, in the case of the
owner of Bonds in an aggregate principal amount of at least $l,OOO,OOO, at the written
request of such owner by wire transfer. Principal of and premium (if any) on any Bond
will be paid upon presentation and surrender thereof at the corporate trust office of the
Trustee in Los Angeles, California. Both the principal of and interest and premium (if any)
on the Bonds are payable in lawful money of the United States of America.
Optional Redemption: The Bonds shall be subject to redemption in whole, or
in part either on a pro rata basis among maturities or in inverse order of maturity, and in
any case by lot within a maturity, on any date on or after February 1, 20. at the option
of the Commission from any available source of funds, at a redemption price equal to one
hundred percent (100%) of the principal amount thereof to be redeemed together with
accrued interest thereon to the redemption date, plus a redemption premium (expressed
as a percentage of the principal amount of the Bonds to be redeemed) as set forth in the
following table:
Redemntion Period Redemption Premium
Sinking Fund Redemption: Any bidder may, at its option, specify that one
or more maturities of the Bonds will consist of term Bonds which are subject to mandatory
sinking fund redemption in consecutive years immediately preceding the maturity thereof,
as ‘designated in the bid of such bidder. In the event that the bid of the successful bidder
specifies that any maturity of Bonds will be term Bonds, such term Bonds will be subject
to mandatory sinking fund redemption on February 1 in each year so designated in the bid,
in the respective amounts for such years as set forth above under the heading
“MATURITIES”, at a redemption price equal to the principal amount thereof to be redeemed
together with accrued interest thereon to the redemption date, without premium.
Purpose: The proceeds of the Bonds will be applied by the Commission to
the advance *ding of an outstanding bond issue of the Commission and to finance
certain redevelopment activities of the Agency relating to the Village Redevelopment
Project, a duly designated community fedevelopment project area in the City of Carlsbad, California (the “Project Area”).
Securiw The Bonds are special obligations of the Commission, payable solely
from and secured by a first lien on and pledge of the Tax Revenues pledged therefor in the
Indenture, and from amounts held in the funds and accounts established under the
Indenture. The Bonds are not obligations of the City of Carlsbad. The Commission has no
direct power of taxation and cannot control the rate of taxation imposed by taxing agencies
upon property in the Project Area. Bidders should be aware of certain factors affecting the
availability and amount of the Tax Revenues in amounts and at times sufficient to pay the
Bonds, and the bidders are referred to the Indenture and the Official Statement for further
details.
Municipal Bond Insurance: The Agency has obtained a commitment for the
issuance of a policy of municipal bond insurance by Municipal Bond Investors Assurance
Corporation (“MBIA”), insuring the payment of principal of and interest on the Bonds when
due. Such insurance may be obtained at the election of any bidder. In the event the
successful bidder elects to obtain such insurance, the premium therefor shall be the sole
responsibility of the successful bidder, and the Agency shall not be required to pay such
premium from the proceeds of the Bonds or otherwise. The Agency will cooperate with
the successful bidder and with MBIA as required to obtain such insurance if it is elected by
the successful bidder.
Tax-Exempt Status: In the opinion of Jones Hall Hill & White, A Professional
Law Corporation, bond counsel to the Commission, interest on the Bonds is excluded from
gross income for federal income tax purposes and is not an item of tax preference for
purposes of the federal individual and corporate alternative minimum taxes, although it is
included in certain income and earnings in computing the alternative minimum tax imposed
on certain corporations. In the further opinion of Bond Counsel, such interest is exempt
from California personal income taxes. In the event that prior to the delivery of the Bonds
(a) the interest on other obligations of the same type and character shall be declared to be
taxable (either at the time of such declaration or at any future date) under any federal
income tax laws, either by the terms of such laws or by ruling of a federal income tax
authority or official which is followed by the Internal Revenue Service, or by decision of
any federal court, or (b) any federal income tax law is adopted which will have a
substantial adverse effect upon owners of the Bonds as such, the successful bidder for the
Bonds may, at its option, prior to the tender of the Bonds, be relieved of its obligation
under the contract to purchase the Bonds, and in such case the deposit accompanying its
proposal will be returned.
Legal Opinion: The legal opinion of Jones Hall Hill & White, A Professional
Law Corporation, San Francisco, California, approving the validity of the Bonds and the
Indenture, will be furnished to the purchaser of the Bonds without cost. A copy of the
legal opinion, certified by the official in whose office the original is filed, will be printed
on each Bond at the expense of the Commission.
plather Information: A copy of the preliminary Official Statement describing
the Bonds, and any other information concerning the proposed financing, will be furnished
upon request to the financial consult&t to the Commission, Stone & Youngberg, 15260
Ventura Blvd., Suite 900, Sherman Oaks, California 91403, telephone: (818) 789-2663.
Form of Bid; Maximum Discount: Each bid must be for not less than all of
the Bonds hereby offered for sale. The purchase price to be paid for the Bonds may not
be less than ninety-eight percent (98%) of the par value thereof and accrued interest
thereon to the delivery date. The amount of any discount specified for the Bonds shall not
exceed two percent (2%) of the aggregate principal amount of the Bonds. Each bid must
be delivered in writing to the Commission at the address set forth above, to be received not
later than the date and time of sale set forth above.
Jkaignation of Interest Bates: Each bidder must specify the rate or rates of interest which the Bonds shall bear. The maximum rate bid on any Bonds may not exceed percent ( %) per annum. A bidder will be permitted to bid different rates of
interest for each maturity of Bonds; but (i) each interest rate specified must be in a multiple of one-twentieth or one-eighth of one percent; (ii) no Bond shall bear more than one rate of interest; (iii) interest on each Bond shah be computed from August 1, 1993, to its stated maturity (or, in the case of term Bonds, to the respective dates of mandatory sinking fund redemption thereof as designated in the bid) at the interest rate specified in
the bid, payable on the Interest Payment Dates as set forth above; (iv) all Bonds maturing
at any one time shall bear the same rate of interest; and (v) any premium must be paid as
part of the purchase price, and no proposal will be accepted which contemplates the waiver of any interest or other concession by the bidder as a substitute for payment in full of the purchase price.
Determination of Best Bid: The Bonds will be awarded to the responsible bidder whose bid produces the lowest true interest rate on the Bonds. The true interest rate specified in any bid will be that rate which, when used in computing the present worth of all payments of principal and interest to be paid on all Bonds from August 1, 1993, to their respective maturity dates and mandatory sinking fund redemption dates (if any),
produces an amount equal to the purchase price specified in such bid. For purposes of
computing the true interest rate represented by any proposal, the purchase price specified in such proposal shall be equal to the par amount of the Bonds less any discount specikd
in such proposal or plus any premium specified in such proposal, and the true interest rate
shall be calculated by the use of a semiannual interval of compounding interest based on
the Interest Payment Dates for the Bonds. The purchaser must pay accrued interest,
computed on a 360-day year basis consisting of twelve 30-day months, from the date of
the Bonds to the date of delivery.
Adjustment of Fkincipal Amounts: The Agency reserves the right to increase or decrease the principal amount of any maturity of the Bonds (or, in the case of the term
Bonds, the principal amount thereof which is subject to mandatory sinking fund redemption
on February 1 in any year) as the Agency deems advisable in order to accomplish the
financing program; provided that the aggregate amount of adjustment of any maturity of
the Bonds shalt’not exceed % of the aggregate principal amount thereof. Notice of
such increase ok decrease shall be given to the successful bidder as soon as practicable following the notification of award, asdescribed below. No such adjustment will have the effect of altering the basis upon which the best bid is determined.
Right to Reject any Bid: The Commission reserves the right, in its discretion, to reject any and all proposals and to waive any irregularity or informality in any proposal.
Time of award: The Commission has authorized its Executive Director to
award the sale of the Bonds to the bidder whose proposal is the best responsible proposal
determined in accordance herewith. Notice of the award will be given in writing to the
successful bidder within twenty-six (26) hours from the time proposals are received.
D&my and Payment: Delivery of the definitive Bonds will be made to the
purchaser upon the issuance thereof, which is expected to occur on August - 1993.
Payment for the Bonds must be made by wire transfer of Federal Reserve Bank funds, or Federal Reserve Bank funds check, which is immediately available to the Trustee on the
date of delivery. Any expense in providing immediately available funds shall be borne by
the purchaser.
Right of Cancellation: The purchaser shall have the right, at its option, to
cancel the contract of purchase if the Commission fails to execute the Bonds and tender the same for delivery within 60 days from the date of award thereof, and in such event the accompanying good faith deposit will be returned.
Good Faith Check: A certified or cashier’s check drawn on a responsible bank or trust company having an office in Los Angeles, California, or in San Francisco, California, in the amount of $ , payable to the order of the Commission, must accompany each proposal as a guaranty the bidder, if successful, will accept and pay for the Bonds in accordance with the terms of its proposal. The check accompanying any accepted proposal will be cashed by the Commission following the award to the successfuI
bidder. The check of the successful bidder will be cashed by the Commission and applied
as a credit towards the payment of the purchase price by the successful bidder. If after the
award of the Bonds the successful bidder fails to complete its purchase on the terms stated in its proposal, the amount of the check will be retained by the Commission. The check
accompanying each unaccepted proposal will be made available for recovery by each
unsuccessful bidder. No interest will be paid upon any good faith check held or deposited
by the Commission.
Statement of True J&zest Rate: Each bidder is requested, but not required, .
to state in its proposal the percentage true interest rate represented by its proposal,
determined as described above, which shall be considered as informative only and not binding on either the bidder or the Commission.
Certification of Re-offering Price: The successful bidder shall be required, as
a condition to the delivery of the Bonds by the Commission, to deliver to the Commission
a certificate, in form and substance satisfactory to the Commission, stating (i) that, as of the date of award, the Bonds were expected to be re-offered in a bona fide public offering,
(ii) the initial of&ring price at which a substantial amount (at least 10%) of each maturity
of the Bonds were sold to the public,‘and (iii) that no Bonds of a single maturity were
offered at one price to the general public and at a discount from that price to institutional
or other investors.
No Litigation: There is no litigation pending concerning the validity of the
Bonds, the corporate existence of the Commission or the City of Carlsbad, or the entitlement of the office’& thereof to their respective offices, and the purchaser will be furnished a no-litigation certificate certifying to the foregoing as of and at the time of
delivery of the Bonds.
CUSIP Numbers: It is anticipated that CUSIP numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error .with respect thereto will constitute cause for a failure or refusal by the purchaser to accept delivery of and pay for the Bonds in accordance with the terms hereof. All expenses in
relation to the printing of CUSIP numbers on the Bonds will be paid for by the Commission; provided, however, that the CUSIP Service Bureau charge for the assignment of said numbers will be the responsibility of and shall be paid for by the purchaser.
Califomia Debt Advisory Commissi on Fees: All fees payable to the California
Debt Advisory Commission in connection with the issuance of the Bonds shall be the
responsibility of the purchaser of the Bonds.
Ofikial Statement: The Commission has approved a preliminary Official Statement relating to the Bonds. Copies of such prehminary Official Statement will be distributed to any bidder, upon request, prior to the sale in a form “deemed final” by the Commission for purposes of Rule 15~2-12 under the Securities Exchange Act of 1934 (the “Rule”). Within seven business days from the sale date, the Commission will deliver to the purchaser copies of the final Official Statement, executed by an author&d representative of the Commission and dated the date of delivery thereof to the purchaser, in sufficient number to allow the purchaser to comply with paragraph (b)(4) of the Rule and to satisfy
the Municipal Securities Rulemaking Board (the “MSRB”) Rule G-32 or any other rules
adopted by the MSRB, which shall include information permitted to be omitted by
paragraph (b)(l) of the Rule and such other amendments or supplements as shall have been approved by the Commission (the “Final Official Statement”). The purchaser agrees that it will not confirm the sale of any Bonds unless the conknation of sale is accompanied or preceded by the delivery of a copy of the Final Official Statement.
Dated: July 13, 1993
CARLSBAD HOUSING AND
REDEVELOPMENT COMMISSION
Executive Director
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EXHIBITB
NOTICE OF INTENTION TO SFLL BONDS
Not to Exceed $17,000,000
CARLSBAD HOUSING AND REDlWELOPMEN’l
Village Redevelopment Project
1993 Tax Allocation Bonds
. COMMISSION
NOTICE IS HEREBY GIVEN by the Carlsbad Housing and Redevelopment
Commission (the “Commission”) that bids will be received by a representative of the Commission at the offices of Bowne of Los Angeles, 633 West Fifth Street, 14th Floor,
Los Angeles, California 90071, on
TUESDAY,AUGUST10,1993
at 10:00 a.m. Pacific Time for the purchase of not to exceed $17,000,000 principal amount of bonds of the Commission designated the “Village Redevelopment Project 1993 Tax Allocation Bonds” (the “Bonds”). The sale of the Bonds will be conducted upon the terms and conditions set forth in the Official Notice of Sale for the Bonds. Such Official Notice of Sale and the preliminary form of the Official Statement
describing the Bonds may be obtained from the financial consultant to the Commission, Stone & Youngberg, 15260 Ventura Blvd., Suite 900, Sherman Oaks, California 91403,
telephone: (818) 789-2663.
Dated: July 13, 1993
CARLSBAD HOUSING AND
REDEVELOPMENT COMMISSION
By: Executive Director
l 13100-01 Indenture
.
JHHW:CFA:jev
AC
l/06/93 l/21/93 04/02/93 06/23/93
INDENTURE OF TRUST
Dated as of July 15, 1993
by and between the
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
Relating to
Carlsbad Housing and Redevelopment Commission Village Redevelopment Project 1993 Tax Allocation Bonds
.
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.02. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.10.
ARTICLE II
AUTHORIZATION AND TERMS OF 1993 BONDS
Authorization and Purpose of 1993 Bonds ............................................................... .9 Terms of the 1993 Bonds ......................................................................................... .9 Redemption of 1993 Bonds.. .................................................................................. .10 Book-Entry System ................................................................................................. 12 Form of 1993 Bonds ............................................................................................... 13 Transfer of 1993 Bonds.. ........................................................................................ .14 Exchange of 1993 Bonds ....................................................................................... .14 Registration Books.. ................................................................................................ .14 Temporary Bonds ................................................................................................... .14 1993 Bonds Mutilated, Lost, Destroyed or Stolen ..................................................... 14
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF 1993 BONDS;
ISSUANCE OF PARITY DEBT
Section 3.01. Issuance of 1993 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 3.02. Deposit and Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 3.03. Costs of Issuance Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 3.04. Issuance of Parity Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 3.05. Issuance of Subordinate Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 3.06. Validity of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS;
INVESTMENTS
Section 4.01. Security of Bonds; Equal Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 4.02. Special Fund; Deposit of Tax Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 4.03. Debt Service Fund; Transfer of Amounts to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 4.04. Investment By Trustee of Moneys in Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.05. Valuation and Disposition of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3’:
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ARTICLE V
OTHER COVENANTS OF THE COMMISSION
Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Section 5.08. Section 5.09. Section 5.10. Section 5.11. Section 5.12. Section 5.13.
Section 6.0 1. Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08.
Punctual Payment.. . Retirement of 1988 Bonds ........................................................................................................................................................................................ zi
Limitation on Additional Indebtedness. ................................................................... .22
Extension of Payment of Bonds.. ............................................................................ .22 Payment of Claims.. ................................................................................................ .22 Books and Accounts; Financial Statements ............................................................... Protection of Security and Rights of Owners ............................................................ Payments of Taxes and Other Charges.. .................................................................. .23
Disposition of Property.. Maintenance of Tax Revenues ........................................................................................................................................................................... g z
Tax Covenants Relating to 1993 Bonds .................................................................... Rebate of Excess Investment Earnings to United States.. .......................................... ;1
Further Assurances ................................................................................................. .25
ARTICLE VI
THE TRUSTEE
Duties, Immunities and Liabilities of Trustee.. ......................................................... .26
Merger or Consolidation.. ....................................................................................... .27
Liability of Trustee.. ............................................................................................... .2 7 Right to Rely on Documents.. ................................................................................. .28 Preservation and Inspection of Documents.. ............................................................ .2 8 Compensation and Indemnification ........................................................................ .29 Accounting Records and Financial Statements ......................................................... 29
Appointment of Co-Trustee or Agent ..................................................................... .29
ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 7.01. Amendment With Consent of Owners ...................................................................... .3 1
Section 7.02. Effect of Supplemental Indenture.. ......................................................................... .3 1
Section 7.03. Endorsement or Replacement of Bonds After Amendment ..................................... .32
Section 7.04. Amendment by Mutual Consent ............................................................................. .32
Section 7.05. Trustee’s Reliance ................................................................................................... .32
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
Section 8.01. Events of Default and Acceleration of Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.02. Application of Funds Upon Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.03. Power of Trustee to Control Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.04. Limitation on Owners’ Right to Sue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . it
Section 8.05. Non-waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 8.06. Actions by Trustee as Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8.07. Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05. Section 9.06. Section 9.07. Section 9.08. Section 9.09. Section 9.10. Section 9.11. Section 9.12.
ARTICLE IX
MISCELLANEOUS
Benefits Limited to Parties ...................................................................................... .3 6 Successor is Deemed Included in All References to Predecessor ............................... Defeasance of Bonds ............................................................................................... 2 Execution of Documents and Proof of Ownership by Owners.. ............................... .3 7 Disqualified Bonds ................................................................................................. .3 7 Waiver of Personal Liability.. .................................................................................. .3 7 Destruction of Canceled Bonds.. ............................................................................. .37 Notices .................................................................................................................... . 7 Partial Invalidity ...................................................................................................... Unclaimed Moneys.. ................................................................................................ 2 Execution in Counterparts ....................................................................................... 38 Governing Law ........................................................................................................ 38
EXHIBIT A - FORM OF 1993 BONDS
. . . -ill-
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (this “Indenture”) is made and entered into as of July 15, 1993, by and between the CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION, a public body corporate and politic duly organized and existing under the laws of the State of California, (the “Commission”), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as Trustee (the “Trustee”);
WITNESSETH:
WHEREAS, the Commission is a public body, corporate and politic, duly established and authorized to transact business and exercise powers under and pursuant to the provisions of the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California (the “Redevelopment Law”), including the power to issue bonds for any of its corporate purposes; and
WHEREAS, a redevelopment plan for the Village Redevelopment Project (the “Redevelopment Project”) has been adopted by the Commission pursuant to all applicable requirements of the Redevelopment Law; and
WHEREAS, the Commission has previously issued its $12,000,000 aggregate principal amount of Carlsbad Housing and Redevelopment Commission Village Redevelopment Project Area Tax Allocation Bonds, Series A (the “1988 Bonds”) under the Redevelopment Law for the purpose of providing funds to finance the Redevelopment Project; and
WHEREAS, the Commission wishes at this time to issue its $ aggregate principal amount of Carlsbad Housing and Redevelopment Commission Village Redevelopment Project 1993 Tax Allocation Bonds (the “1993 Bonds”) for the purpose of providing funds to advance refund the 1988 Bonds and to provide additional financing for the Redevelopment Project; and
WHEREAS, in order to provide for the authentication and delivery of the 1993 Bonds and any obligations issued on a parity therewith (collectively, the “Bonds”), to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and interest and redemption premium (if any) thereon, the Commission and the Trustee have duly authorised the execution and delivery of this Indenture; and
M’HEREAS, all acts and proceedings required by law necessary to make the 1993 Bonds, when executed by the Commission, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Commission, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done or taken;
NOW, THEREFORE, in order to secure the payment of the principal of and the interest and redemption premium (if any) on all the Outstanding Bonds under this Indenture according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the Commission and the Trustee do hereby covenant and agree with one another, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS;RULES OFCONSTRUCTION
SECTION 1 .Ol. DeJinitions. Unless the context otherwise requires, the terms defined in this Section 1.01 shall, for all purposes of this Indenture, of any Supplemental Indenture, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified.
“Additional Revenues” means, as of the date of calculation, the amount of Tax Revenues which, as shown in the Report of an Independent Fiscal Consultant, are estimated to be receivable by the Commission within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to the completion of construction which is not then reflected on the tax rolls, or due to transfer of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls. For purposes of this definition, the term “increases in the assessed valuation” means the amount by which the assessed valuation of taxable property in the Project Area is estimated to increase above the assessed valuation of taxable property in the Project Area (as evidenced in the written records of the County) as of the date on which such calculation is made.
“Annual Debt Service” means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year upon the maturity or mandatory Sinking Account redemption thereof.
“Bond Counsel” means (a) Jones Hall Hill & White, A Professional Law Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Commission of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.
“Bond Year” means any twelve-month period beginning on February 2 in any year and extending to the next succeeding February 1, both dates inclusive; except that the first Bond Year shall begin on the Closing Date and end on February 1,1994.
“Bonds” means, collectively, the 1993 Bonds and any Parity Debt.
“Business Dav” means a day of the year (other than a Saturday or Sunday) on which banks in California, are not required or permitted to be closed, and on which the New York Stock Exchange is open.
“Certificate of the Commission” means a certificate in writing signed by the Chairman, Executive Director, Community Development Director, Treasurer or Secretary of the Commission, or any other officer of the Commission duly authorized by the Commission for that purpose.
Qy” means the City of Carlsbad, a municipal corporation organized and existing under the laws of the State.
“Closinp Date” means May -, 1993, being the date on which the 1993 Bonds are delivered by the Commission to the Original Purchaser.
“Commission” means the Carlsbad Housing and Redevelopment Commission, a public body corporate and politic duly organized and existing under the Redevelopment Law.
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“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Commission relating to the authorization, issuance, sale and delivery of the 1993 Bonds and the refunding of the 1988 Bonds, including but not limited to the fees and expenses of the Original Purchaser, printing expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee, the 1988 Bond Trustee and their respective counsel, including the Trustee’s first annual administrative fee, fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the 1993 Bonds and any other cost, charge or fee in connection with the original issuance of the 1993 Bonds and the refunding of the 1988 Bonds.
“Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“County” means the County of San Diego, a county duly organized and existing under the Constitution and laws of the State.
“Denository” means (a) initially, DTC, and (b) any other Securities Depositories acting as Depository pursuant to Section 2.04.
“Depository Svstem Participant” means any participant in the Depository’s book-entry system.
“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Debt Service Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.03.
“Event of Default” means any of the events described in Section 8.01.
“s” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; (b) obligations of any agency or department of the United States of America which represent the full faith and credit of the United States of America or the timely payment of the principal of and interest on which are secured or guaranteed by the full faith and credit of the United States of America; and (c) any obligations issued by the State or any political subdivision thereof the payment of the principal of and interest and premium (if any) on which are fully secured by Federal Securities described in the preceding clauses (a) or (b), as verified by an Independent Accountant.
“Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve-month period selected and designated by the Commission as its official fiscal year period pursuant to a Certificate of the Commission filed with the Trustee.
“Indenture” means this Indenture of Trust by and between the Commission and the Trustee, as amended or supplemented from time to time pursuant to any Supplemental Indenture entered into pursuant to the provisions hereof.
“Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by or acceptable to the Commission, and who, or each of whom: (a) is in fact independent and not
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under domination of the Commission; (b) does not have any substantial interest, direct or indirect, with the Commission; and (c) is not connected with the Commission as an officer or employee of the Commission, but who may be regularly retained to make reports to the Commission.
“Indenendent Fiscal Consultant” means any consultant or firm of such consultants appointed by or acceptable to the Commission and who, or each of whom: (a) is judged by the Commission to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under domination of the Commission; Cc) does not have any substantial interest, direct or indirect, with the Commission other than as the Original Purchaser; and (d) is not connected with the Commission as an officer or employee of the Commission, but who may be regularly retained to make reports to the Commission.
“Information Services” means Financial Information, Inc.‘s “Daily Called Bond Service”, 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services’ “Called Bond Service,” 65 Broadway, 16th Floor, New York, New York 10006; Moody’s Investors Service “Municipal and Government,” 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor’s Corporation “Called Bond Record,” 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to the redemption of bonds as the Commission may designate in a Request of the Commission delivered to the Trustee.
“Interest Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(a).
“Interest Pavment Date” means February 1, 1994, and each February 1 and August 1 thereafter so long as any of the Bonds remain unpaid.
“Maximum Annual Debt Service” means, as of the date of calculation, the largest amount of Annual Debt Service on all Outstanding Bonds for the current or any future Bond Year. For purposes of such calculation, there shall be excluded a pro rata portion of each installment of principal of any Parity Debt, together with the interest to accrue thereon, in the event and to the extent that the proceeds of such Parity Debt are deposited in an escrow fund from which amounts may not be released to the Commission unless the Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County), plus at the option of the Commission the Additional Revenues, at least equal one hundred twenty-five percent (125%) of the amount of Maximum Annual Debt Service.
“Minimum Rating” means, with respect to any Permitted Investment, a long-term rating of A or better from S&P, or a short-term rating which is in the highest general rating category of S&P, in any event determined without regard to any refinement or gradation of such rating by a numerical modifier, a plus or a minus sign, or otherwise.
“I 988 Bond Trustee” means Bank of America National Trust and Savings Association, its successors and assigns, as successor trustee for the 1988 Bonds and as escrow bank under the Refunding Agreement.
“1988 Bonds” means the $12,000,000 aggregate principal amount of Carlsbad Housing and Redevelopment Commission Village Redevelopment Project Area Tax Allocation Bonds, Series A issued by the Commission under and pursuant to the Indenture of Trust dated as of February 1,1988, by and between the Agency and Security Pacific National Bank as trustee.
“1993 Bonds” means the Carlsbad Housing and Redevelopment Commission Village Redevelopment Project 1993 Tax Allocation Bonds authorized by and at any time Outstanding pursuant to this Indenture.
“Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated pursuant to Section 2.04(a).
“Office” means the corporate trust office of the Trustee in Los Angeles at 555 South Flower Street, 5th Floor, Los Angeles, California 90071, and in San Francisco at 55 Hawthorne Street, 8th Floor, San Francisco, California 94105, or at such other place or places as may be designated by the Trustee from time to time in written notice filed with the Commission.
‘I Oriainal Purchaser” means , as original purchaser of the 1993 Bonds.
“Outstanding”, when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.05) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Commission pursuant hereto.
“0~” means, with respect to any Bond, the person in whose name the ownership of such Bond shall be registered on the Registration Books.
“Paritv Debt” means any bonds, notes, loans, advances or other indebtedness issued or incurred by the Commission on a parity with the 1993 Bonds pursuant to Section 3.04.
“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(a) Federal Securities;
(b) any obligations or indebtedness (other than Federal Securities) issued or guaranteed by any federal agencies and entities which have a Minimum Rating;
(c) interest-bearing demand or time deposits (including certificates of deposit) in federal or state chartered savings and loan associations or in national or State banks (including the Trustee) provided that either: (i) the long-term obligations of such association or bank or the long-term obligations of the holding company of such association or bank have a Minimum Rating; or (ii) such deposits are fully insured by the Federal Deposit Insurance Corporation;
(d) obligations issued by any corporation organized and operating within the United States of America, which obligations have a Minimum Rating;
(e) commercial paper which has a Minimum Rating or which is backed by a letter of credit or line of credit which has a Minimum Rating;
(f) money market funds either (i) the policy of which is to invest solely in Permitted Investments, or (ii) which have a Minimum Rating;
(g) bills of exchange or time drafts drawn on and accepted by a commercial bank (including the Trustee), otherwise known as bankers acceptances,
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which are eligible for purchase by the Federal Reserve System and the long-term obligations of which commercial bank or the long-term obligations of the holding company of which has a Minimum Rating;
(h) obligations the interest on which is excludable from gross income for federal income tax purposes, and which have a Minimum Rating;
(i) shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State of California, provided the Trustee has access to, and control over withdrawals from and deposits to, such trust; and
ci) any guaranteed investment agreement or similar investment which is the obligation of, or which is secured or guaranteed by the obligations of, a financial institution whose long-term obligations at the time of such investment have a Minimum Rating, by the terms of which the Trustee is authorized to withdraw all amounts therefrom in the event such Minimum Rating ceases to be maintained.
“Plan Limitations” means the limitations contained or incorporated in the Redevelopment Plan on fa) the aggregate principal amount of indebtedness payable from Tax Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Commission pursuant to the Redevelopment Plan, and (c) the period of time for establishing or incurring indebtedness payable from Tax Revenues.
“Principal Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(b).
“Oualified Reserve Fund Credit Instrument” means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee pursuant to Section 4.03(d), provided that all of the following requirements are met: (a) the long-term credit rating of such bank or insurance company is in the highest rating category by S&P, or the claims paying ability of such insurance company is rated in the highest rating category by A.M. Best & Company; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to Section 4.03(d); and (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account, the Principal Account for the Sinking Account or the purpose of making payments required pursuant to Section 4.03.
“Rebate Fund” means the fund by that name established and held by the Trustee pursuant to Section 5.12(b).
“Record Date” means, with respect to any Interest Payment Date, the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day.
“Redemotion Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(e).
“Redevelooment Law” means the Community Redevelopment Law of the State, constituting Part 3 of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto.
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“Redevelonment Plan” means the Redevelopment Plan for the Village Redevelopment Project, approved by Ordinance No. 9591, enacted by the City Council of the City on July 7, 1981, together with any amendments thereof heretofore or hereafter duly enacted pursuant to the Law.
“Redevelonment Proiect” means the project area described in the Redevelopment Plan.
“Refundin Agreement” means the Escrow Deposit and Trust Agreement dated as of July 15, 1993, by and between the Commission and the 1988 Bond Trustee, with respect to the advance refunding of the 1988 Bonds.
“Re&ration Books” means the records maintained by the Trustee pursuant to Section 2.08 for the registration and transfer of ownership of the 1993 Bonds.
“Report” means a document in writing signed by an Independent Accountant or an Independent Fiscal Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of this Indenture to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable such person or firm to express an informed opinion with respect to the subject matter referred to in the Report.
“Reauest of the Commission“ means a request in writing signed by the Chairman, Executive Director, Community Development Director, Treasurer or Secretary of the Commission, or any other officer of the Commission duly authorized by the Commission for that purpose.
“Reserve Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(d).
“Reserve Reauirement” means, as of the date of any calculation, the lesser of (a) Maximum Annual Debt Service on all Outstanding Bonds, or (b) the maximum amount permitted to be deposited in the Reserve Fund under the Tax Code, as certified to the Trustee by the Commission.
“Sm” means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215) 496- 5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Commission may designate in a Request of the Commission delivered by the Commission to the Trustee.
“Sinking Account” means the account by that name established and held by the Trustee pursuant to Section 4.03(c).
‘I Suecial Fund” means the fund by that name established and held by the Commission pursuant to Section 4.02.
“S&P” means Standard & Poor’s Corporation of New York, New York, and its successors.
“&a&” means the State of California.
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“Subordinate Debt” means any loans, advances or indebtedness issued or incurred by the Commission in accordance with the requirements of Section 3.05, which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax Revenues hereunder for the security of the Bonds.
“Supplemental Indenture” means any resolution, agreement or other instrument which amends, supplements or modifies this Indenture and which has been duly adopted or entered into by the Commission; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Tax Code” means the Internal Revenue Code of 1986, as amended from time to time. Any reference to a provision of the Tax Code shall be deemed to include the applicable Tax Regulations promulgated with respect to such provision.
‘Tax Repulations” means temporary and permanent regulations promulgated under Section 103 and all related provisions of the Tax Code.
‘Tax” means all taxes annually allocated to the Commission with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the Commission specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Commission in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law, except to the extent permitted under the Redevelopment Law to be applied to the payment of the principal of and interest and premium (if any) on the Bonds.
‘Term Bonds” means, collectively, (a) the 1993 Bonds maturing on February 1,20-, and (b) any maturity of Parity Debt which is subject to mandatory Sinking Account redemption pursuant to the Supplemental Indenture author-king the issuance thereof.
‘Trustee” means Bank of America National Trust and Savings Association, as Trustee hereunder, or any successor thereto appointed as Trustee hereunder in accordance with the provisions of Article VI.
SECTION 1.02. Rules of Construction. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture, and the words “herein,” “hereof,” ” hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
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ARTICLE II
AUTHORIZATION ANDTERMS 0~1993 BONDS
SECTION 2.01. Authorization and Purpose of 1993 Bonds. The Commission has reviewed all proceedings heretofore taken and has found, as a result of such review, and hereby finds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the 1993 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Commission is now duly empowered, pursuant to each and every requirement of law, to issue the 1993 Bonds in the manner and form provided in this Indenture.
1993 Bonds in the aggregate principal amount of Dollars ($ ) are hereby authorized to be issued by the Commission under the Redevelopment Law for the purpose of refunding all of the outstanding 1988 Bonds in accordance with the Refunding Agreement and for the purpose of providing additional financing for the Redevelopment Project. The 1993 Bonds shall be authorized and issued under, and shall be subject to the terms of, this Indenture and the Redevelopment Law. The 1993 Bonds shall be designated the “Carlsbad Housing and Redevelopment Commission Village Redevelopment Project 1993 Tax Allocation Bonds.”
SECTION 2.02. Terms of the 1993 Bonds. The 1993 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity date. The 1993 Bonds shall mature on February 1 in each of the years and in the respective principal amounts, and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the respective rates per annum, as set forth in the following table:
Maturity Date Principal (Februarv 1) Amount Interest
Rate
Maturity Date (February 1) Principal Interest Amount Rate
Interest on the 1993 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a 1993 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a 1993 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any 1993 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid on each Interest Payment Date to the persons in whose names the ownership of the 1993 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any 1993 Bond which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the ownership of such 1993 Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten (10) days prior to such special record date.
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Interest on the 1993 Bonds shall be paid by check or draft of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the 1993 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; provided, however, that at the written request of the Owner of 1993 Bonds in an aggregate principal amount of at least $1 ,OOO,OOO, which written request is on file with the Trustee as of any Record Date, interest on such 1993 Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States of America as shall be specified in such written request. The principal of and premium (if any) on the 1993 Bonds shall be payable in lawful money of the United States of America by check or draft of the Trustee upon presentation and surrender thereof at the Office of the Trustee.
SECTION 2.03. Redemption of 1993 Bonds.
(a) Optional Redemption. The 1993 Bonds shall be subject to redemption in whole, or in part at the Request of the Commission either on a pro rata basis among maturities or in inverse order of maturity, and in any case by lot within a maturity, on any date on or after February 1, 20-, at the option of the Commission from any available source of funds, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, plus a redemption premium (expressed as a percentage of the principal amount of the 1993 Bonds to be redeemed) as set forth in the following table:
Redemntion Period Redemntion Premium
The Commission shall be required to give the Trustee written notice of its intention to redeem 1993 Bonds under this subsection (a), and the manner of selecting such 1993 Bonds for redemption from among the maturities thereof, at least forty-five (45) days prior to the date fixed for such redemption.
(b) Mandatorv SinkinP Account Redemntion of 1993 Bonds. The 1993 Bonds maturing on February 1,20-, shall also be subject to redemption in whole, or in part by lot, on February 1,20- and on February 1 in each year thereafter as set forth in the following table, from Sinking Account payments made by the Commission pursuant to Section 4.03(c), at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased pursuant to the succeeding paragraph of this subsection (b), in the aggregate respective principal amounts and on the respective dates as set forth in the following tables; provided, tilvever, that if some but not all of such 1993 Bonds have been redeemed pursuant to subsection (a) above, the total amount of all future Sinking Account payments pursuant to this subsection (b) shall be reduced by the aggregate principal amount of such 1993 Bonds so redeemed, to be allocated among such Sinking Account payments on a pro rata basis in integral multiples of $5,000 as determined by the Commission (written notice of which determination shall be given by the Commission to the Trustee).
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Sinking Fund Redemption Date (Februarv 11 Principal Amount To Be Redeemed
In lieu of redemption of the 1993 Bonds maturing on February 1, 20- pursuant to the preceding paragraph, amounts on deposit in the Special Fund (to the extent not required to be transferred to the Trustee pursuant to Section 4.03 during the current Bond Year) may also be used and withdrawn by the Commission at any time for the purchase of such 1993 Bonds at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Commission may in its discretion determine. The par amount of any of such 1993 Bonds so purchased by the Commission in any twelve-month period ending on December 1 in any year shall be credited towards and shall reduce the par amount of 1993 Bonds required to be redeemed pursuant to this subsection (b) on the next succeeding February 1.
(c) Notice of Redemntion. The Trustee on behalf and at the expense of the Commission shall mail (by first class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any 1993 Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) the Securities Depositories and to one or more Information Services designated in a Request of the Commission delivered to the Trustee; provided, however, that such mailing shall not be a condition precedent to such redemption and neither failure to receive any such notice nor any defect therein shall affect the validity of the proceedings for the redemption of such 1993 Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall designate the CUSIP number of the 1993 Bonds to be redeemed, shall state the individual number of each 1993 Bond to be redeemed or state that all 1993 Bonds between two stated numbers (both inclusive) or shall state that all of the 1993 Bonds Outstanding of one or more maturities are to be redeemed, and shall require that such 1993 Bonds be then surrendered at the Office of the Trustee for redemption at the said redemption price, giving notice also that further interest on the 1993 Bonds to be redeemed will not accrue from and after the date fixed for redemption.
(d) Partial Redemption of 1993 Bonds. In the event only a portion of any 1993 Bond is called for redemption, then upon surrender thereof the Commission shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Commission, a new 1993 Bond or Bonds of the same interest rate and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the 1993 Bond to be redeemed.
(e) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the 1993 Bonds so called for redemption shall have been duly deposited with the Trustee, such 1993 Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice.
(f) Manner of Redemution. Whenever provision is made in this Indenture for the redemption of less than all of the 1993 Bonds, the Trustee shall select the 1993 Bonds to be
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redeemed by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all 1993 Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate 1993 Bonds which may be separately redeemed.
SECTION 2.04. Book-Entry System.
(a) Oriainal Deliver-v. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the ownership of each such Bond shall be registered on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be registered in the name of the Nominee on the Registration Books.
With respect to Bonds the ownership of which shall be registered in the name of the Nominee, the Commission and the Trustee shall have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee or the Depository System Participant holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, the Commission and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of prepayment, (iii) the selection by the Depository of the beneficial interests in the Bonds to be prepaid in the event the Commission elects to prepay the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal of .or interest or premium, if any, on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds. The Commission and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal or and interest and premium, if any, on such Bond, for the purpose of giving notices of prepayment and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee shall pay the principal of and interest and premium, if any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest and premium, if any, on the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a Bond evidencing the obligation of the Commission to make payments of principal, interest and premium, if any, pursuant to this Indenture. Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the Commission shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the Commission and the Trustee shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the Commission or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Bond Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Commission in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the Commission may take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
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(c) Transfers Outside Book-Entrv Svstem. In the event that either (i) the Depository determines not to continue to act as Depository for the Bonds, or (ii) the Commission determines to terminate the Depository as such, then the Commission shall thereupon discontinue the book-entry system with such Depository. In such event, the Depository shall cooperate with the Commission and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the Commission fails to identify another Securities Depository to replace the Depository, then the Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall designate, in accordance with the provisions hereof.
In the event the Commission determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Commission may notify the Depository System Participants of the availability of such certificated Bonds through the Depository. In such event, the Trustee will issue, transfer and exchange Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the Commission shall cooperate with the Depository in taking appropriate action (y) to make available one or more separate certificates evidencing the Bonds to any Depository System Participant having Bonds credited to its account with the Depository, or (z) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Bonds, all at the Commission’s expense.
(d) Pavments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal of and interest and premium, if any, on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section or as otherwise instructed by the Depository.
SECTION 2.05. Form of 1993 Bonds: Authentication and Delivery. The 1993 Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.
The 1993 Bonds shall be executed on behalf of the Commission by the signature of its Chairman and the signature of its Secretary who are in office on the date of execution and delivery of this Indenture or at any time thereafter. Either or both of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on any 1993 Bond ceases to be such officer before the Closing Date, such signature shall nevertheless be as effective as if the officer had remained in office until the Closing Date. Any 1993 Bond may be signed and attested on behalf of the Commission by such persons as at the actual date of the execution of such 1993 Bond shall be the proper officers of the Commission, duly authorized to execute debt instruments on behalf of the Commission, although on the date of such 1993 Bond any such person shall not have been such officer of the Commission.
Only such of the 1993 Bonds as shall bear thereon a certificate of authentication in the form set forth in Exhibit A, manually executed and dated by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that such 1993 Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
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SECTION 2.06. Transfer of 1993 Bonds. Any 1993 Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such 1993 Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. The Trustee shall collect any tax or other governmental charge on the transfer of any 1993 Bonds pursuant to this Section 2.06. Whenever any 1993 Bond or Bonds shall be surrendered for transfer, the Commission shall execute and the Trustee shall authenticate and deliver to the transferee a new 1993 Bond or Bonds of like maturity and aggregate principal amount. The Trustee may refuse to transfer, under the provisions of this Section 2.06, any 1993 Bonds selected by the Trustee for redemption pursuant to Section 2.03.
SECTION 2.07. Exchange of 1993 Bonds. The 1993 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of 1993 Bonds of other authorized denominations and of the same maturity. The Trustee shall collect any tax or other governmental charge on the exchange of any 1993 Bonds pursuant to this Section 2.07. The Trustee may refuse to exchange, under the provisions of this Section 2.07, any 1993 Bonds selected by the Trustee for redemption pursuant to Section 2.03.
SECTION 2.08. Registration Books. The Trustee will keep or cause to be kept, at its Office, sufficient records for the registration and registration of transfer of the 1993 Bonds, which shall at all times during normal business hours, and upon reasonable notice, be open to inspection by the Commission; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books, 1993 Bonds as hereinbefore provided.
SECTION 2.09. Temporary Bonds. The 1993 Bonds may be initially issued in temporary form exchangeable for definitive 1993 Bonds when ready for delivery. The temporary 1993 Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Commission, and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary 1993 Bond shall be executed by the Commission upon the same conditions and in substantially the same manner as the definitive 1993 Bonds. If the Commission issues temporary 1993 Bonds it will execute and furnish definitive 1993 Bonds without delay, and thereupon the temporary 1993 Bonds shall be surrendered, for cancellation, in exchange therefor at the Office of the Trustee, and the Trustee shall deliver in exchange for such temporary 1993 Bonds an equal aggregate principal amount of defmitive 1993 Bonds of authorized denominations. Until so exchanged, the temporary 1993 Bonds shall be entitled to the same benefits pursuant to this Indenture as definitive 1993 Bonds authenticated and delivered hereunder.
SECTION 2.10. 1993 Bonds Mutilated, Lost, Destroyed or Stolen. If any 1993 Bond shall become mutilated, the Commission, at the expense of the Owner of such 1993 Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new 1993 Bond of like tenor in exchange and substitution for the 1993 Bond so mutilated, but only upon surrender to the Trustee of the 1993 Bond so mutilated. Every mutilated 1993 Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Commission. If any 1993 Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory and indemnity satisfactory to the Trustee shall be given, the Commission, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new 1993 Bond of like tenor in lieu of and in substitution for the 1993 Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new 1993 Bond issued under this Section and of the expenses which may be incurred by the Trustee in connection therewith. Any 1993 Bond issued
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under the provisions of this Section in lieu of any 1993 Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Commission whether or not the 1993 Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other 1993 Bonds issued pursuant to this Indenture.
Notwithstanding any other provision of this Section 2.10, in lieu of delivering a new Bond for which principal has or is about to become due for a Bond which has been mutilated, lost, destroyed or stolen, the Trustee may make payment of such Bond in accordance with its terms.
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ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF 1993 BONDS;
ISSUANCE OF PARITY DEBT
SECTION 3.01. Issuance of 1993 Bonds. Upon the execution and delivery of this Indenture, the Commission shall execute and deliver 1993 Bonds in the aggregate principal amount of Dollars ($ ) to the Trustee and the Trustee shall authenticate and deliver the 1993 Bonds to the Original Purchaser upon receipt of a Request of the Commission therefor.
SECTION 3.02. Deposit and Application of Proceeds. On the Closing Date, the proceeds of sale of the 1993 Bonds shall be paid to the Trustee and deposited by the Trustee as follows:
(a) The Trustee shall deposit the amount of $ in the Interest Account, constituting interest coming due and payable on the Bonds through , 199-.
(b) The Trustee shall deposit the amount of $ Issuance Fund. in the Costs of
(c) The Trustee shall deposit the amount of $ in the Reserve Account, constituting the full amount of the Reserve Requirement.
(d) The Trustee shall deposit the amount of $ in a special fund to be transferred on the Closing Date to the 1988 Bond Trustee for deposit in accordance with the Refunding Agreement.
SECTION 3.03. Costs of Zssuance Fund. There is hereby established a separate fund to be known as the “Costs of Issuance Fund”, which shall be held by the Trustee in trust. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Request of the Commission stating (a) the person to whom payment is to be made, (b) the amount to be paid, (c) the purpose for which the obligation was incurred, (d) that such payment is a proper charge against the Costs of Issuance Fund, and (e) that such amounts have not been the subject of a prior Request of the Commission; in each case together with a statement or invoice for each amount requested thereunder. On the earlier of (i) July 15, 1993, or (ii) the date of receipt by the Trustee of a Request of the Commission therefor, all amounts (if any) remaining in the Costs of Issuance Fund shall be withdrawn therefrom by the Trustee and transferred to the Interest Account.
SECTION 3.04. Issuance of Parity Debt. In addition to the 1993 Bonds, the Commission may issue or incur Parity Debt in such principal amount as shall be determined by the Commission, pursuant to a Supplemental Indenture adopted or entered into by the Commission. The Commission may issue or incur such Parity Debt subject to the following specific conditions precedent:
(a) The Commission shall be in compliance with all covenants set forth in this Indenture and all Supplemental Indentures.
(b) The Tax Revenues estimated to be received for the then current Bond Year, plus (at the option of the Commission) the Additional Revenues, shall be at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt
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Service on all Bonds which will be Outstanding immediately following the issuance of such Parity Debt.
(c) The Supplemental Indenture providing for the issuance of such Parity Debt shall provide that interest thereon shall not be payable on any dates other than February 1 and August 1, and principal thereof shall be payable on February 1 in any year in which principal is payable.
(d) The Supplemental Indenture providing for the issuance of such Parity Debt shall provide for the deposit into the Reserve Account of an amount required to cause the balance therein to equal the full amount of the Reserve Requirement (which may be maintained in whole or in part in the form of a Qualified Reserve Fund Credit Instrument as provided herein).
(e) The issuance of such Parity Debt shall not cause the Commission to exceed any applicable Plan Limitations.
(f) The Commission shall deliver to the Trustee a Certificate of the Commission certifying, and an opinion of Bond Counsel stating that the conditions precedent to the issuance of such Parity Debt set forth in the foregoing subsections (a), (b), (c), (d) and (e) of this Section 3.04 have been satisfied.
SECTION 3.05. Issuance of Subordinate Debt. In addition to the Bonds and any Parity Debt, from time to time the Commission may issue or incur Subordinate Debt in such principal amount as shall be determined by the Commission, provided that the issuance of such Subordinate Debt shall not cause the Commission to exceed any applicable Plan Limitations.
SECTION 3.06. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the Redevelopment Project or upon the performance by any person of its obligation with respect to the Redevelopment Project.
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ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS;
INvEsTMENTs
SECTION 4.01. Security of Bonds; Equal Security. The Bonds shall be secured by a first pledge of and lien on all of the Tax Revenues and all of the moneys on deposit in the Special Fund. In addition, the Bonds shall be secured by a first and exclusive pledge of and lien upon all of the moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account. Such pledges and liens shall be for the equal security of the Outstanding Bonds without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Tax Revenues and such moneys, no funds or properties of the Commission shall be pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if any) on the Bonds.
In consideration of the acceptance of the Bonds by those who shall hold the same from time to time, this Indenture shall be deemed to be and shall constitute a contract between the Commission and the Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the Commission shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.
SECTION 4.02. Special Fund; Deposit of Tax Reventies. There is hereby established a special fund to be known as the “Special Fund”, which shall be held by the Commission. The Commission shall deposit all of the Tax Revenues received in any Bond Year in the Special Fund promptly upon receipt thereof by the Commission, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account, the Sinking Account and the Redemption Account in such Bond Year pursuant to Section 4.03 and for deposit in such Bond Year into the funds and accounts established with respect to Parity Debt, as provided in any Supplemental Indenture.
All Tax Revenues received by the Commission during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding paragraph of this Section 4.02 shall be released from the pledge and lien hereunder for the security of the Bonds and may be applied by the Commission for any lawful purposes of the Commission, including but not limited to the payment of any amounts due and owing to the United States of America pursuant to Section 5.12. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the Bonds, and the payment in full of all other amounts payable hereunder and under any Supplemental Indentures, the Commission shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in this Indenture.
SECTION 4.03. Debt Service Fund: Transfer of Amounts to Trustee. There is hereby established a special trust fund to be known as the “Debt Service Fund”, which shah be held by the Trustee hereunder in trust. Moneys in the Special Fund shall be transferred by the Commission to the Trustee in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, which accounts are hereby established with the Trustee, in the following order of priority:
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(a) Interest Account. On or before the fifth (5th) Business Day preceding each date on which interest on the Bonds becomes due and payable, the Commission shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to this Indenture).
(b) Princioal Account. On or before the fifth (5th) Business Day preceding each date on which principal of the Bonds becomes due and payable at maturity, the Commission shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, will be equal to the amount of principal coming due and payable on such date on the Outstanding Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds upon the maturity thereof.
(c) Sinking Account. On or before the fifth (5th) Business Day preceding each date on which any Outstanding Term Bonds become subject to mandatory Sinking Account redemption, the Commission shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required subject to mandatory Sinking Account redemption on such date. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon the mandatory Sinking Account redemption thereof.
(d) Reserve Account. In the event that the amount on deposit in the Reserve Account at any time becomes less than the Reserve Requirement, the Trustee shall promptly notify the Commission of such fact. Promptly upon receipt of any such notice, the Commission shall transfer to the Trustee an amount of available Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account, the Principal Account and the Sinking Account, in such order of priority, on any date which the principal of or interest on the Bonds becomes due and payable hereunder, in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all the Bonds then Outstanding. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement on the fifth (5th) Business Day preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account.
The Commission shall have the right at any time to release funds from the Reserve Account, in whole or in part, by tendering to the Trustee: (1) a Qualified Reserve Fund Credit Instrument, and (2) an opinion of Bond Counsel stating that neither the release of such Funds nor the acceptance of such Qualified Reserve Fund Credit Instrument will cause interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Commission to the Trustee of written
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calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account to the Commission to be used to provide financing for the Redevelopment Project. The Trustee shall comply with all documentation relating to a Qualified Reserve Fund Credit Instrument as shall be required to maintain such Qualified Reserve Fund Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under this subsection (d). Upon the expiration of any Qualified Reserve Fund Credit Instrument, the Commission shall be obligated either (i) to replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an amount of funds equal to the Reserve Requirement, to be derived from the first available Tax Revenues.
The Reserve Account may be maintained in the form of one or more separate sub-accounts which are established for the purpose of holding the proceeds of separate issues of the Bonds in conformity with applicable provisions of the Tax Code.
(e) Redemption Account. On or before the fifth (5th) Business Day preceding any date on which Bonds are subject to redemption, other than mandatory Sinking Account redemption of Term Bonds, the Commission shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on such date. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds upon the redemption thereof, on the date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds.
SECI-ION 4.04. Investment By Trustee of Moneys in Funds. Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account, the Redemption Account, the Costs of Issuance Fund and the Rebate Fund shall be invested by the Trustee in Permitted Investments specified in the Request of the Commission delivered to the Trustee at least two (2) Business Days in advance of the making of such investments; provided, however, that in the absence of any such direction from the Commission, the Trustee shall invest any such moneys solely in Permitted Investments described in clause (f) of the definition thereof. Moneys in the Special Fund shall be invested by the Commission in any obligations in which the Commission is legally authorized to invest funds within its control.
Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. Whenever in this Indenture any moneys are required to be transferred by the Commission to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee hereunder shall be retained in the respective fund or account from which such investment was made; provided, however, that (i) all interest or gain from the investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest Account to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement, and (ii) so long as no Event of Default shall have occurred and be continuing, at the written election of the Commission filed with the Trustee, all interest or gain on investments of amounts in the Special Fund shall be released from the pledge hereof and used by the Commission for any lawful purposes. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder upon receipt by the Trustee of the Request of the Commission. The Trustee may act as principal or agent in the acquisition or disposition of any
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investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made pursuant to this Section.
SEmON 4.05. Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account established hereunder, the value of investments credited to such fund shall be calculated at the lesser of (a) the par amount thereof or (b) the cost thereof, excluding accrued interest and brokerage commissions, if any; except that any investments having a maturity of more than five (5) years from the date of investment shall be valued at least annually (not later than February 1 in each year) at the market value thereof. Such valuation shall include the amount of accrued interest to the valuation date.
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ARTICLE V
OTHER COVENANTS OF THE COMMISSION
SECTION 5.01. Punctual Payment. The Commission shall punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all the Bonds in strict conformity with the terms of the Bonds and of this Indenture. The Commission shall faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures. Nothing herein contained shall prevent the Commission from making advances of its own moneys howsoever derived to any of the uses or purposes referred to herein.
SECTION 5.02. Retirement of 1988 Bonds. The Commission hereby covenants that it shall cause a portion of the proceeds of the Bonds to be applied to the payment and redemption in full of the 1988 Bonds. To that end, the Commission shall deposit a portion of the proceeds of the Bonds with the 1988 Bond Trustee for investment and application as provided in the Refunding Agreement, and the Commission hereby covenants that the indebtedness represented by the 1988 Bonds will be fully discharged and defeased on the Closing Date.
SECTION 5.03. Limitation on Additional Indebtedness;. The Commission hereby covenants that it shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in any case payable from all or any part of the Tax Revenues, excepting only the 1993 Bonds, any Parity Debt, any Subordinate Debt, and any obligations entered into pursuant to Section 5.10. The Commission shall take no action, including but not limited to the issuance of its bonds, notes or other obligations, which causes or which, with the passage of time, would cause any of the Plan Limitations to be exceeded or violated. The Commission shall manage its fiscal affairs in a manner which ensures that it will have sufficient Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Commission to pay the principal of and interest and premium (if any) on the Bonds when due.
SECTION 5.04. Extension of Payment of Bonds. The Commission shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Outstanding Bonds and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Commission to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
SECTION 5.05. Payment ofClaims. The Commission shall pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Commission or upon the Tax Revenues or any part thereof, or upon any funds held by the Trustee pursuant hereto, or which might impair the security of the Bonds. Nothing herein contained shall require the Commission to make any such payment so long as the Commission in good faith shall contest the validity of said claims.
SECTION 5.06. Books and Accounts: Financial Statements. The Commission shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Commission and the City, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Tax Revenues and the Special Fund.
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Such books of record and accounts shall at all times during business hours be subject to the inspection of the Owners of not less than ten percent (10%) in aggregate principal amount of the Bonds then Outstanding, or their representatives authorized in writing.
The Commission will cause to be prepared and delivered to the Trustee annually, within one hundred and eighty (180) days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements from the Special Fund and the financial condition of the Redevelopment Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year, which statement shall be accompanied by a Certificate of the Commission stating that the Commission is in compliance with its obligations hereunder. The Commission shall furnish a copy of such statements to any Owner upon reasonable request and at the expense of such Owner.
SECTION 5.07. Protection of Security and Rights of Owners. The Commission will preserve and protect the security of the Bonds and the rights of the Owners. From and after the date of issuance of any Bonds, such Bonds shall be incontestable by the Commission.
SECTION 5.08. Payments of Taxes and Other Charges. The Commission will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission or the properties then owned by the Commission in the Redevelopment Project, when the same shall become due. Nothing herein contained shall require the Commission to make any such payment so long as the Commission in good faith shall contest the validity of said taxes, assessments or charges. The Commission will duly observe and conform with all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof.
SECTION 5.09. Disposition of Property. The Commission will not participate in the disposition of any land or real property in the Redevelopment Project to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property dedicated for public right-of-way and except property planned for public ownership or use by the Redevelopment Plan in effect on the date of this Indenture) so that such disposition shall, when taken together with other such dispositions, aggregate more than ten percent ( 10%) of the land area in the Redevelopment Project unless such disposition is permitted as hereinafter provided in this Section 5.09. If the Commission proposes to participate in such a disposition, it shall thereupon appoint an Independent Redevelopment Consultant to report on the effect of said proposed disposition. If the Report of the Independent Redevelopment Consultant concludes that the security of the Bonds or the rights of the Owners will not be materially adversely impaired by said proposed disposition, the Commission may thereafter make such disposition. If said Report concludes that such security will be materially adversely impaired by said proposed disposition, the Commission shall not approve said proposed disposition.
SECTION 5.10. Maintenance of Tax Revenues. The Commission shall comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and the State, and shall promptly forward information copies of each such filing to the Trustee. The Commission shall not enter into any agreement with the County or any other governmental unit pursuant to Section 33401 of the Redevelopment Law which would have the effect of reducing the amount of Tax Revenues unless the Commission shall first obtain the Report of an Independent Redevelopment Consultant stating that the Tax Revenues remaining after the entering into of such agreement, estimated to be received in each of the three (3) succeeding Bond Years, plus the Additional Allowance, are at least equal to one hundred twenty-five percent (125%) of average Annual Debt Service on the Bonds during such three Bond Years.
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SECTION 5.11. Tax Covenants Relating to 1993 Bonds.
(a) d. The Commission shall assure that the proceeds of the 1993 Bonds are not used in a manner which would cause the 1993 Bonds to be “private activity bonds” within the meaning of Section 141(a) of the Tax Code.
(b) Private Loan Limitation. The Commission shall assure that no more than five percent (5%) of the proceeds of the 1993 Bonds are used, directly or indirectly, to make or finance a loan (other than loans constituting nonpurpose obligations as defined in the Tax Code or constituting assessments) to persons other than state or local government units.
(c) C. The Commission shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the 1993 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
(d) No Arbitrage. The Commission shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the 1993 Bond proceeds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the 1993 Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code.
SECTYON 5.12. Rebate of Excess Investment Earnings to United States.
(a) Obligation to Calculate Excess Investment EarninPs. The Commission shall calculate or cause to be calculated, and shall provide or cause to be provided written notice to the Trustee of, all amounts of excess investment earnings with respect to the 1993 Bonds which are required to be rebated to the United States of America pursuant to Section 148(f) of the Tax Code, at the times and in the manner required pursuant to the Tax Code.
(b) Deposits to Rebate Fund: Rebate to United States. Immediately following the calculation of excess investment earnings by the Commission pursuant to the preceding clause (a), the Commission shall pay the full amount thereof to the Trustee from any amount of available Net Revenues. The Trustee shall establish and hold a special account to be known as the Rebate Fund, into which the Trustee shall deposit all amounts so paid to it by the Commission.
The Commission shall file with the Trustee a Request of the Commission directing the payment from the Rebate Fund of an amount equal to excess investment earnings to the United States of America in such amounts, at such times and in such manner as may be required pursuant to the Tax Code. In the event that there are amounts remaining on deposit in the Rebate Fund following such payment, the Trustee shall apply such remaining amounts pursuant to the Request of the Commission. In the event that amounts on deposit in the Rebate Fund are insufficient to make any payment to the United States of America required pursuant to this subsection (b), the Commission shall make such payment when due hereunder, from any funds which are lawfully available for such purpose.
(c) Maintenance of Records. The Commission shall keep or cause to be kept, and retain or cause to be retained for a period of six (6) years following the retirement of the 1993 Bonds, records of the determinations made pursuant to this Section 5.12.
(d) EnPapement of Professional Services. In order to provide for the administration of this Section 5.12, the Commission may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Commission may deem appropriate.
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le) Trustee’s Reliance on Agency. The Trustee shall conclusively be entitled to rely upon all calculations and directions made and furnished by the Commission under this Section 5.12, and the Trustee shall not incur any liability whatsoever in acting upon and as instructed by such calculations and directions. The Trustee shall have no duty or obligation with respect to the matters contained in this Section 5.12, other than to follow the written directions of the Commission furnished pursuant to this Section 5.12.
SECTION 5.13. Further Assurances. The Commission will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners the rights and benefits provided in this Indenture.
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ARTICLE VI
THETRUSTEE
SECXION 6.01. Duties, Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to the occurrence of an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants shall be read into this Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use in the conduct of such person’s own affairs.
(b) The Commission may remove the Trustee at any time, unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee (i) if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time the Trustee shall cease to be eligible in accordance with subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. In each case such removal shall be accomplished by the giving of 30 days’ written notice of such removal by the Commission to the Trustee, whereupon the Commission shall appoint a successor Trustee by an instrument in writing.
(c) The Trustee may at any time resign by giving written notice of such resignation to the Commission and by giving the Owners notice of such resignation by first class mail, postage prepaid, at their respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the Commission shall promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days following giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Owner (on behalf of himself and all other Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the Commission and to its predecessor Trustee a written acceptance thereof, and to the predecessor Trustee an instrument indemnifying the predecessor Trustee for any costs or claims arising during the time the successor Trustee serves as Trustee hereunder, and after payment by the Commission of all unpaid fees and expenses of the predecessor Trustee, such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless, upon the receipt by the predecessor Trustee of the Request of the Commission or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the
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trusts and conditions herein set forth. Upon request of the successor Trustee, the Commission shall execute and deliver any and all instruments as may be reasonably required for more fully and cenainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Commission shall mail or cause the successor Trustee to mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to S&P and to the Owners at the addresses shown on the Registration Books. If the Commission fails to mail such notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Commission.
(e) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company or bank having the powers of a trust company having a trust office in the State, having a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection 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. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this Section.
SECTION 6.02. Merger or Consolidation. Any bank or trust company into which the Trustee may be merged or converted or with which either of them may be consolidated or any bank or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank or trust company shall be eligible under subsection (e) of Section 6.01, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
SECTION 6.03. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Commission, and the Trustee shall not assume responsibility for the correctness of the same, nor make any representations as to the validity or sufficiency of this Indenture or of the Bonds nor shall incur any responsibility in respect thereof, other than as expressly stated herein. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall not be liable for the acts of any agents of the Trustee selected by it with due care. The Trustee may become the Owner of any Bonds with the same rights it would have if they were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding.
(b) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.
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(d) The Trustee shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, except for actions arising from the negligence or willful misconduct of the Trustee. The permissive right of the Trustee to do things enumerated hereunder shall not be construed as a mandatory duty.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default hereunder unless and until it shall have actual knowledge thereof, or shall have received written notice thereof at its Office. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of an Event of Default hereunder or thereunder. The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. Without limiting the generality of the foregoing, the Trustee shall not be responsible for reviewing the contents of any financial statements furnished to the Trustee pursuant to Section 5.06 and may rely conclusively on the Certificate of the Commission accompanying such financial statements to establish the Commission’s compliance with its financial covenants hereunder, including, without limitation, its covenants regarding the deposit of Tax Revenues into the Special Fund and the investment and application of moneys on deposit in the Special Fund (other than its covenants to transfer such moneys to the Trustee when due hereunder).
(f) No provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder.
SECTION 6.04. Right to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties, in the absence of negligence or willful misconduct by the Trustee. The Trustee may consult with counsel, including, without limitation, Bond Counsel or other counsel of or to the Commission, with regard to legal questions, and in the absence of negligence or willful misconduct by the Trustee the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Trustee hereunder in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto is established to the satisfaction of the Trustee.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of the Commission, which shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but in its discretion the Trustee may (but shall have no duty to), in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. The Trustee may conclusively rely on any certificate or Report of any Independent Accountant or Independent Redevelopment Consultant appointed by the Commission.
SECI-ION 6.05. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject during normal business hours, and upon 24 hours’ prior written notice, to the inspection of the Commission and any Owner, and their agents and representatives duly author&d in writing.
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SECTION 6.06. Compensation and Indemnification. The Commission shall pay to the Trustee from time to time compensation for all services rendered under this Indenture and also all expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Indenture. Upon the occurrence of an Event of Default, the Trustee shall have a first lien on the Tax Revenues and all funds and accounts held by the Trustee hereunder to secure the payment to the Trustee of all fees, costs and expenses, including compensation to its experts, attorneys and counsel incurred in declaring such Event of Default and in exercising the rights and remedies set forth in Article VIII.
The Commission further covenants and agrees to indemnify and save the Trustee and its officers, directors, agents and employees, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability and of enforcing any remedies hereunder and under any related documents, but excluding any and all losses, expenses and liabilities which are due to the negligence or willful misconduct of the Trustee, its officers, directors, agents or employees. The obligations of the Commission under this Section 6.06 shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture.
SECTION 6.07. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds and all funds and accounts established and held by the Trustee pursuant to this Indenture. Such books of record and account shall be available for inspection by the Commission at reasonable hours, during regular business hours, with reasonable prior notice and under reasonable circumstances. The Trustee shall furnish to the Commission, at least monthly, an accounting (which may be in the form of its customary statements) of all transactions relating to the proceeds of the Bonds and all funds and accounts held by the Trustee pursuant to this Indenture.
SECTION 6.08. Appointment of Co-Trustee or Agent. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of national banking associations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate co-Trustee. The following provisions of this Section 6.08 are adopted to these ends.
In the event that the Trustee appoints an additional individual or institution as a separate or co-Trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-Trustee but only to the extent necessary to enable such separate or co-Trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co-Trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Commission be required by the separate Trustee or co-Trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to
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it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Commission. In case any separate Trustee or co-Trustee, or a successor to either, shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate Trustee or co-Trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new Trustee or successor to such separate Trustee or co- Trustee.
The Trustee may perform any of its obligations or duties hereunder and under any related documents through agents or attorneys and shall not be responsible for the acts of any such agents or attorneys appointed by it with due care.
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ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
SECTION 7.01. Amendment With Consent of Owners. This Indenture and the rights and obligations of the Commission and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without the consent of any Owners, to the extent permitted by law and only for any one or more of the following purposes -
(a) to add to the covenants and agreements of the Commission contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the Commission; or
(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the Commission may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners in the opinion of Bond Counsel;
(c) to provide for the issuance of Parity Debt pursuant to Section 3.04, and to provide the terms and conditions under which such Parity Debt may be issued, including but not limited to the establishment of special funds and accounts relating thereto and any other provisions relating solely thereto, subject to and in accordance with the provisions of Section 3.04; or
(d) to amend any provision hereof relating to the requirements of or compliance with the Tax Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes, in the opinion of Bond Counsel.
Except as set forth in the preceding paragraph, this Indenture and the rights and obligations of the Commission and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Owners of a majority in agpegate principal amount of the Bonds then Outstanding are delivered to the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Commission to pay the principal, interest or redemption premium (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.
Promptly following the adoption of any Supplemental Indenture pursuant to this Section 7.01, the Commission shah deliver a copy of the executed Supplemental Indenture to S&P.
SECTION 7.02. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and
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amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any amendment or modification hereof pursuant to this Article VII, the Commission may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the Commission, as to such amendment or modification and in that case upon demand of the Commission the Owners of such Bonds shall present such Bonds for that purpose at the Office of the Trustee in San Francisco, California, and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the Commission may determine that new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in that case upon demand of the Commission the Owners of the Bonds shall present such Bonds for exchange at the Office of the Trustee without cost to such Owners.
SECTION 7.04. Amendment by Mutual Consent. The provisions of this Article VII shall not prevent any Owner from accepting any amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond.
SECTION 7.05. Trustee’s Reliance. The Trustee may rely, and shall be protected in relying, upon a Certificate of the Commission and an opinion of counsel stating that all requirements of this Indenture relating to the amendment or modification hereof have been satisfied and that such amendments or modifications do not materially adversely affect the interests of the Owners.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTJON 8.01. Events of Default and Acceleration of Maturities. The following events shall constitute Events of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on any Bonds when and as the same shall become due and payable.
(c) Failure by the Commission to observe and perform any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such failure shall have continued for a period of sixty (60) days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Commission by the Trustee; provided, however, if in the reasonable opinion of the Commission the failure stated in the notice can be corrected, but not within such sixty (60) day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Commission within such sixty (60) day period and the Commission shall thereafter diligently and in good faith cure such failure in a reasonable period of time.
(d) The Commission shall commence a voluntary case under Title 11 of the United States Code or any substitute or successor statute.
If an Event of Default has occurred and is continuing, the Trustee may, and if requested in writing by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding the Trustee shall, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and (b) exercise any other remedies available to the Trustee and the Owners in law or at equity.
Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee shall give notice of such Event of Default to the Commission by telephone confinned in writing. Such notice shall also state whether the principal of the Bonds shall have been declared to be or have immediately become due and payable. With respect to any Event of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners in the same manner as provided herein for notices of redemption of the Bonds, which shall include the statement that interest on the Bonds shall cease to accrue from and after the date, if any, on which the Trustee shall have declared the Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Commission shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue
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installments of principal and interest (to the extent permitted by law) at the net effective rate then borne by the Outstanding Bonds, and the fees and expenses of the Trustee, including any fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Commission and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.
SEOION 8.02. Application ofFunds Upon Acceleration. All of the Tax Revenues and all sums in the funds and accounts established and held by the Trustee hereunder upon the date of the declaration of acceleration as provided in Section 8.01, and all sums thereafter received by the Trustee hereunder, shall be applied by the Trustee as follows and in the following order:
(a) To the payment of any fees, costs and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds; payment of the fees, costs and expenses of the Trustee (including fees and expenses of its counsel) incurred in and about the performance of its powers and duties under this Indenture and the payment of all fees, costs and expenses owing to the Trustee pursuant to Section 6.06 hereofr
(b) To the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal with interest on such overdue amounts at the respective rates of interest borne by the Outstanding Bonds, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.
SECTION 8.03. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
SECTION 8.04. Limitation on Owners’ Right to Sue. No Owner of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in
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.
compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder, it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond as herein provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
SECTION 8.05. Non-waiver. Nothing in this Article VIII or in any other provision of this Indenture or in the Bonds, shall affect or impair the obligation of the Commission, which is absolute and unconditional, to pay from the Tax Revenues and other amounts pledged hereunder, the principal of and interest and redemption premium (if any) on the Bonds to the respective Owners when due and payable as herein provided, or affect or impair the right of action, which is also absolute and unconditional, of the Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds.
A waiver of any default by any Owner shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Redevelopment Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners.
If a suit, action or proceeding to enforce any right or exercise any remedy shall be abandoned or determined adversely to the Owners, the Commission and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
SECTION 8.06. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is hereby appointed (and the successive respective Owners by taking and holding the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, subject to the provisions of Article VI.
SECTION 8.07. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Benefits Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Commission, the Trustee and the Owners, any right, remedy, claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Commission shall be for the sole and exclusive benefit of the Trustee and the Owners.
SECTION 9.02. Successor is Deemed Included in A/l References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Commission or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Commission or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
SECTION 9.03. Defeasance of Bonds. If the Commission shall pay and discharge the entire indebtedness on any Bonds in any one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee or another fiduciary, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to this Indenture, in the opinion or report of an Independent Accountant is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any;
(c) by irrevocably depositing with the Trustee or another fiduciary, in trust, Federal Securities in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established pursuant to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before maturity; or
(d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation;
and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been duly given or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Commission, and notwithstanding that any such Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other funds provided for in this Indenture and all other obligations of the Trustee and the Commission under this Indenture with respect to such Bonds shall cease and terminate, except only (a) the obligations of the Commission and the Trustee under Section 5.12, (b) the obligation of the Trustee to transfer and exchange Bonds hereunder, (c) the obligation of the Commission to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and (d) the obligations of the Commission to compensate and indemnify the Trustee pursuant to Section 6.06. Notice of such election shall be filed with the Trustee. Any funds thereafter held by the Trustee, which are not required for said purpose, shall be paid over to the Commission.
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SECTION 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Indenture may require or permit to be executed by any Owner may be in one or more instruments of similar tenor, and shall be executed by such Owner in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
The ownership of Bonds and the amount, maturity, number and date of ownership thereof shall be proved by the Registration Books.
Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Commission or the Trustee in good faith and in accordance therewith.
SECTION 9.05. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the Commission or the City (but excluding Bonds held in any employees’ retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded.
SECTION 9.06. Waiver of Personal Liability. No member, officer, agent or employee of the Commission shall be individually or personally liable for the payment of the principal of or interest or any premium on the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any offtcial duty provided by law.
SECTION 9.07. Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender to the Commission of any Bonds which have been paid or canceled pursuant to the provisions of this Indenture, upon receipt by the Trustee of the Request of the Commission a certificate of destruction duly executed by the Trustee shall be deemed to be the equivalent of the surrender of such canceled Bonds and the Commission shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to. The Commission shall pay all costs of microfilming the Bonds to be destroyed.
SECTION 9.08. Notices. All written notices to be given under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Commission or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
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If to the Commission: Carlsbad Housing and Redevelopment Commission 1200 Carlsbad Village Drive Carlsbad, California 9200% 1989 Attention: Executive Director Fax: (619) 434-1987
If to the Trustee: Bank of America National Trust and Savings Association 555 South Flower Street, 5th Floor Los Angeles, California 90071 Attention: Corporate Trust Department 85 10 Fax: (213) 689-4772
SECI-ION 9.09. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The Commission and the Trustee hereby declare that they would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto itrespective of the fact that any one or more Sections, paragaphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable.
SECTION 9.10. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bonds which remains unclaimed for two (2) years after the date when the payments of such interest, premium and principal have become payable, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when the interest and premium (if any) on and principal of such Bonds have become payable, shall upon receipt by the Trustee of the Request of the Commission be repaid by the Trustee to the Commission as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Commission for the payment of the principal of and interest and redemption premium (if any) on of such Bonds.
SECTION 9.11. Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
SECTION 9.12. Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State.
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t
. h
IN WITNESS WHEREOF, the CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION has caused this Indenture to be signed in its name by its Assistant Executive Director and attested to by its Secretary, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly author&d, all as of the day and year first above written.
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
BY Executive Director
(SEAL)
Attest:
Secretary
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Trustee
Authorized Officer
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EXHIBIT A
FORM OF 1993 BONDS
A-l
.Peliminay Offkid Shhment Draft B/24/53
NEW ISSUE RATING: (See “RATINGS” herein)
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain
qu&fications described herein, 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 individual and corporate alternative minimum taxes, although it is included in adjusted current earnings in computing
the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes.
See “TAX EXEMPTION” herein.
%##&,Q00,000’
CARLSBAD HOUSING ANDREDEVELOPMENT COMMISSION
Village Redevelopment Project Area
1993 TAX ALLOCATION BONDS
Dated ##J&# 1993 Due #Q&Q&& as shown below
The Series 1992 Bonds will be issued in fully registered form in denominations of gS,OOO each or any integral multiple themof registered initially in the name
of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 1992 Bonds. See
“THE SERIES 1992 BONDS - Book-Entry-Only System” herein. Interest on the 1993 Tax Allocation Bonds will be payable OI##~ 1 and ##M 1,
commencing ##&larch 1. 1994 Principal of and redemption premium (if any) on the 1993 Tax Allocation Bonds will be payable at mm-f earlier redemption upon
surrender thereof at the principal corporate trust office of Bank of America National Trust and Savings Association as Trustee in Los Angeles. California
The Bonds maturing on or after August 1,2003, are subject to redemption prior to maturity, as set forth herein.
The Bonds are being issued to finance redevelopment activities within the Village Redevelopment Project Area (the “Project Area”) and to refinance certain
prior obligations of the Carlsbad Housing and Redevelopment Commission (the “Commission”), as described herein. The Bonds are special obligations of the
Commission and are equally and ratably secured by an irrevocable pledge of certain tax revenues derived from the Project Area and other funds as provided in the
Indenture pursuant to which the Bonds are being issued (the “Indenture”), as further discussed herein. See “SECURITY FOR THE BONDS.”
The Bonds arc not a debt of the City of Carlsbad, the State of California or any of its political subdivisions, and neither the City of Cartsbad, the State of California nor any of its political subdivisions is liable thereon. In no event shall the Bonds or any interest or redemption premium thercoh be payable
out of any funds or properties other than those of the Commission as set forth in the Indenture. The Bonds do not constitute an indebtedness within the
meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Commission nor any pcrsoas executing the Bonds are liable personally on the Bonds by reason of their issuance. For a discussion of some of the risks associated with the purchase of the Bonds, see
“BONDHOLDERS’ RISKS” herein.
This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors am
advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalixed terms used on this cover page
not otherwise defined shall have the meanings set forth herein.
Amounts, Maturities, Interest Rates and Prices*
s- Serial Bonds
Interest Price or Interest Price or
tv unt Rate Yield
s % 2000 S %
1995 2001
1996 2002
1997 2003
1998 2004
1999 2005
S- - -% Term Bonds due -price--o/o
(Plus Accrued Interest)
The Bonds arc offered, when, as and if issued, subject to the approval of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California,
Bond Counsel. Certain legal matters will be passed upon for the Commission by the City Attorney of the City of Carlsbad, California It is anticipated that the Bonds in
definitive form will be available for delivery in New York, New York on or about ##w11993.
Dated:
* Preliminay, subject to change.
Pm~minay Official St&mat D&t M/24/93
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
CITY OF CARLSBAD
COMMISSION BOARD AND CITY COUNCIL
Claude “Buddy” Lewis, Chairman and Mayor
Margaret Stanton, Vice-Chairman and Mayor Pro Tern
Ann J. Kulchin, Member
Julianne Nygaard, Member
Ramona Finnila, Member
COMMISSION AND CITY STAFF
Raymond R. Patchett, Executive Director and City Manager
James F. Elliott, City Financial Management Director
Lisa Hildabrand, City Finance Director
Martin Orenyak, Community Development Director
Ron Ball, City Attorney
Evan Becker, Housing and Redevelopment Director
Debra Fountain, Senior Management Analyst
SPECIAL SERVICES
Trustee
Bank of America National Trust & Savings Association
Los Angeles, California
Fiscal Consultant
Keyser Marston Associates, Inc.
Los Angeles, California
Bond Counsel
Jones Hall Hill & White,
A Professional Law Corporation
San Francisco, California
Financing Consultant
Stone & Youngberg
Los Angeles, California
TABLE OF CONTENTS
hhminuy Official Shkmmt Ddt 04/24/?3
INTRODUCTION ....................................................................................................................... 1
The City and the Commission.. ............................................................................................. 1
The Project Area ................................................................................................................... 2
TIE BONDS.. ............................................................................................................................. 4
Authority for Issuance ........................................................................................................... 4
Description of the Bonds .... . ................................................................................................ .4
Optional Redemption ............................................................................................................. 4
Sinking Account Redemption - Term Bonds.. ...................................................................... 5
Selection of Bonds ................................................................................................................ 6
Notice of Redemption ........................................................................................................... 6
Book-Entry-Only System.. ................................................................................................... .6
Estimated Sources and Uses of Funds .................................................................................. 9
Debt Service on Bonds .......................................................................................................... 10
PURPOSE OF THE BONDS ...................................................................................................... 11
SECURITY FOR THE BONDS.. ................................................................................................ 12
Pledge and Allocation of Taxes ............................................................................................ 12
Reserve Account ................................................................................................................... 13
Bonds Not a Debt of the City of Carlsbad or the State of California.. ................................. 13
BONDHOLDERS’ RISKS .......................................................................................................... 14
Reduction in Taxable Value.. ................................................................................................ 14
Recent Legislation ................................................................................................................ 15
Proposed State Budget.. ........................................................................................................ 15
Loss of Tax-Exemption ......................................................................................................... 15
Risk of Earthquake.. .............................................................................................................. 16
Book-Entry System.. .................................................................................... ?. ....................... 16
TAX ALLOCATION FINANCING ........................................................................................... 17
Introduction ........................................................................................................................... 17
Property Tax Rate and Appropriation Limitations ............................................................... 17
Property Tax Collection Procedures ..................................................................................... 18
Unitary Property.. ................................................................................................................. .20
Special Subventions .............................................................................................................. 20
Certification of Commission Indebtedness ........................................................................... 20
Redevelopment Plan Limitations.. ....................................................................................... .2 1
Low and Moderate Income Housing Fund .......................................................................... .2 1
The Carlsbad Housing and Redevelopment Commission.. ........................................................ .23
Authority and Personnel ....................................................................................................... 23
Commission Powers and Duties ........................................................................................... 25
The Village RedeveIopment PROJECT AREA .......................................................................... 26
Background ........................................................................................................................... 26
Project Area Description ....................................................................................................... 26
Property Ownership .............................................................................................................. 26
Major Development Activity in the Project Area.. .............................................................. .27
TAX REVENUES AND DEBT SERVICE ............................................................................... .29
CERTAIN INFORMATION CONCERNING THE CITY ......................................................... 32
SUMMARY OF THE INDENTURE .......................................................................................... 32
APPROVAL OF LEGAL PROCEEDINGS ............................................................................... 32
TAX EXEMPTION ..................................................................................................................... 32
... lu
P=liminq’ Offkid Sbbmsnt Dnft W/24/93
LITIGATION ............................................................................................................................. .33
RATING ...................................................................................................................................... 33
UNDERWRITING ...................................................................................................................... 34 EXPERTS .................................................................................................................................... 34
MISCELLANEOUS .................................................................................................................... 34
APPENDIX A
APPENDIX B
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
COMMISSION AUDITED FINANCIAL STATEMENTS FOR THE FISCAL
YEAR ENDED JUNE 30, 1992
APPENDIX C GENERAL INFORMATION REGARDING THE CITY OF CARLSBAD
APPENDIX D REPORT OF KEYSER MARSTON ASSOCIATES, INC.
APPENDIX E FORM OF BOND COUNSEL OPINION
APPENDIX F FORM OF BOND INSURANCE POLICY BOND INSURANCE
No dealer, broker, salesman or other person has been authorized to give any information or to make
any representations by the Carlsbad Housing and Redevelopment Commission (the “Commission”), other
than those contained in this Official Statement, and, if given or made, such other information or
representations must not be relied upon as having been authorized by the Commission. 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 any person in any jurisdiction in which it is unlawful for such person to make such
an offer, solicitation or sale.
This Offtcial Statement is not to be construed as a contract with the purchasers of the Bonds.
Statements contained in this Official Statement that 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 a
representation of fact. The information set forth herein has been obtained from the Commission, the City
of Carlsbad (the “City”) and other official sources which are believed to be reliable but it is not
guaranteed as to accuracy or completeness. The information and expression 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 Commission or the City since the date hereof. All summaries of the Indenture or other
documents are made subject to the provisions of such documents respectively and do not purport to be
complete statements of any or all of such provisions. Reference is hereby made to such documents on file
with the Commission for further information in connection therewith.
The 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.
iv
Rtlimlnay Offktd Shknmt Draft 06/24/93
%#iMl5.OOO.OOQ*
CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
VILLAGE REDEVELOPMENT PROJECT AREA
1993 TAX ALLOCATION BONDS
INTRODUCTION
The purpose of this Official Statement of the Carlsbad Housing and Redevelopment Commission
(the “Commission”) is to set forth information in connection with the sale of its $#~5.OOO.OOb principal
amount of Carlsbad Housing and Redevelopment Commission, Village Redevelopment Project, 1993 Tax
Allocation Bonds (the “Bonds”). Proceeds from the sale of the Bonds will be used to finance various
redevelopment activities of the Commission hereinafter defined and to refinance certain’prior obligations
of the Commission. In addition, proceeds of the Bonds will be used to fund a portion of the Reserve
Account for the Bonds and to pay costs of issuance of the Bonds. See PURPOSE OF THE BONDS,”
hereunder.
The Bonds are being issued pursuant to an Indenture of Trust, dated as of #Q&l, 1993 (the
“Indenture”) between the Commission and Bank of America National Trust & Savings Association, as
trustee (the “Trustee”). The Bonds and all bonds or other obligations issued on a parity therewith are
sometimes referred to as “Parity Bonds.” The Bonds are being issued in accordance with the
Redevelopment Law and other applicable laws and the Constitution of the State of California.
. . . Tfi
The City of Carlsbad (the “City”), encompassing approximately 39 square miles, is located in San
Diego County (the “County”), about 32 miles north of the City of San Diego and 88 miles south of the
City of Los Angeles. The City was incorporated as a general law city in 1952. It maintains council-
manager form of government, with the Council members elected at large for four-year terms.
The Redevelopment Agency of the City of Carlsbad (the “Agency”) was established pursuant to
the California Community Redevelopment Law, codified in Part 1 of Division 24 of the California Health
and Safety Code (the “Redevelopment Law”), and as such is a redevelopment agency under the
Redevelopment Law. The Agency was activated in July, 1976 by Ordinance No. 1191 of the City
Council at which time the City Council declared itself to be the governing board of the Agency. The
Commission was established pursuant to Part 1.7 of Division 24 of the California Health and Safety Code,
and as such is a community development commission which exercises the powers of and operates the
Agency pursuant to the Redevelopment Law.and Section 34112 of the California Health and Safety Code.
The Commission was activated in November, 1979.
* Preliminary, subject to change.
Pdimiruy Offkial Shtemmt DnH OS/Up3
. The Project Area
Pursuant to the Redevelopment Law, a portion of all property tax revenues, including certain
reimbursements by the State of California, collected by or for each taxing agency on any increase in the
taxable value of certain property within the Village Redevelopment Project Area (the “Project Area”) over
that shown on the assessment rolls for the base year applicable to the Project Area may be pledged to the
repayment of indebtedness incurred by the Commission in connection with the redevelopment of the
Project Area. The Project Area’s base year is the year in which taxable property was last equalized prior
to the effective date of the ordinance approving the redevelopment plan for the Project Area. Under the
Indenture, the Commission has pledged such tax increments to the payment of the principal of, premium,
if any, and interest on the Bonds. See “SECURITY FOR THE BONDS” herein.
The Project Area covers approximately 200 acres including 500 parcels encompassing that
portion of the City’s downtown village core bounded to the north by the Buena Vista Lagoon and Laguna
Drive, to the east by Jefferson Street, thence easterly along Grand Avenue until Interstate 5 and southerly
until Oak Avenue. The Project Area’s southern boundary is marked by an irregular line along Oak
Avenue Walnut Avenue and Carlsbad Boulevard. The Project Area’s western Boundary follows an
irregular line marked by Ocean Street and Garfield Avenue.
On July 7, 1981, the City Council adopted the Redevelopment Plan for the Project Area (the
“Redevelopment Plan”) by Ordinance No. 9591 and established the boundaries of the Project Area. The
assessed valuation of taxable property within the Project Area has increased from the base year value of
%45,985,512 million in 1982/83 to approximately $203,696,000 million in 1992/93. The Redevelopment’
Plan sets forth the general guidelines to implement and further the redevelopment, rehabilitation and
revitalization of the areas within the boundaries of the Project Area. The Redevelopment Plan also
establishes a limitation of outstanding bonded indebtedness totaling $30,000,000million and $4 million
limitation on the amount of tax increment revenues that may be divided and allocated to the Commission
pursuant to the Redevelopment law (the “Plan Limit”). There are currently no pass-through agreements
outstanding with other taxing agencies with respect to tax increment revenues allocated to the Project
Area.
The Commission has on behalf of the Project Area previously issued $12,000,000 Carlsbad
Housing and Redevelopment Commission Village Redevelopment Project Area, Tax Allocation Bonds,
Series A, of which $11,475,000 principal amount are currently outstanding (the “Prior Bonds”) pursuant
to Resolution 99 adopted by the Commission on February 2, 1988, (the “Prior Bonds Resolution”). The
Fiscal Agent for the Prior Bonds appointed pursuant to the Prior Bonds Resolution is Bank of America
National Trust & Savings Association (the “Escrow Agent”). A portion. of the proceeds of the Bonds will
be used to advance refund the Prior Bonds and defease the lien of the Prior Resolution on tax increment
revenues derived from the Project Area.
Any reference in the Preliminary Official Statement to the Redevelopment Agency of the City of
Carlsbad relating to any period following the effective date of that certain ordinance of the City creating
the Commission are intended to and shall refer to the Commission which operates and exercises all
powers of the Agency pursuant to Section 34112 of the California Health and Safety Code and the
Above-referenced ordinance.
There follows in this Official Statement brief descriptions of the Bonds, the security for the
Bonds, the Indenture, the Commission, the Project Area and certain other information relevant to the
issuance of the Bonds. All references herein to the Indenture are qualified in their entirety by reference to
2
~Prelimmay Official Shkment Draft C&/24/93
the definitive form thereof and all references to the Bonds are further qualified by references to the
information with respect thereto contained in the Indenture. The Commission’s audited financial
statements for the Fiscal Year ended June 30, 1992 are included in Appendix B. Selected information
regarding the City is included in Appendix C. The Report of Keyser Marston Associates, Inc. regarding
Tax Revenues is included in Appendix D. The proposed form of legal opinion for the Bonds is set forth
in Appendix E. All capitalized terms used herein and not normally capitalized have the meanings
assigned to them in the Indenture, unless otherwise stated in this Official Statement. The information set
forth herein and in the Appendices hereto has been furnished by the Commission and includes
information which has been obtained from other sources which are believed to be reliable but is not
guaranteed as to accuracy or completeness. Further information is available from the Commission and
the Financial Advisor, Stone & Youngberg, upon request. The Commission’s address and telephone
number for such purpose is as follows: Carlsbad Housing and Redevelopment Commission, Finance
Department, 1200 Carlsbad Village Drive, Carlsbad, California 92008-1989, (619) 434-2867. The
Financial Advisor’s address and telephone number is: Stone & Youngberg, Public Finance Department,
15260 Ventura Boulevard, Suite 900, Sherman Oaks, California 91403, (818) 906-03 15.
hltm~MyoffkidSbhmmt Draft W/24/93
THE BONDS
The Bonds have been authorized by, and are being issued pursuant to, the Indenture and in
accordance with the Redevelopment Law and other applicable laws and the Constitution of the State of
California.
f the Bon&
The Bonds will be issued in the aggregate principal amount of $##15.000.00@ , will be dated the
date, will bear interest at the rates per annum and will mature on the dates and in the amounts set forth on
the cover page hereof. The Bonds will be issued in fully registered from without coupons, in the principal
amount of $5,000 and integral multiples thereof for each maturity. Principal of and premium, if any, on
the Bonds is payable upon the surrender thereof at the principal corporate trust of&e of the Trustee.
Interest will be paid by check of the Trustee mailed by first class mail to the registered owners as of the
15th day of the month preceding each Interest Payment Date (or if such day is not a business day, the next
preceding business day) or, upon the request of a registered owner of at least % l,OOO,OOO in aggregate
principal amount of Bonds, by wire transfer in immediately available funds to an account of a bank or
financial institution in the United States designated by such owner.
Each Bond will bear. interest from the Interest Payment Date next preceding the date of
authentication thereof, unless (i) the Bond is authenticated on an Interest Payment Date, in which event it
shall bear interest from such date of authentication, or (ii) the Bond is authenticated prior to an Interest
Payment Date and after the close of business on the fifteenth (15th) day of the month preceding such
Interest Payment Date, in, which event it shall bear interest from such Interest Payment Date, or (iii) the
Bond is authenticated prior to the close of business on ##August 15, 1993, in which event it shall bear
interest from ###u 15, 1993; provided, however, that if, at the time of authentication of any Bond,
interest is in default, such Bond shall bear interest from the Interest Payment Date to which interest has
previously been paid or made available for payment.
. . Dhonal Redew
The Bonds maturing on or after ##Sepe 1,200$, shall be subject to redemption in whole, or
in part in inverse order of maturity and by lot within a maturity, at the option of the Commission, on any
Interest Payment Date on or after ##September I, 2002, from any available source of fimds, at a
redemption price expressed as a percentage of principal amount of the Bonds to be redeemed as follows,
plus accrued interest to the redemption date:
tion DateS
##Sepe 1,2003 through January 3 1,200_4 102%
##Sentew 1,2004 through January 3 1,2005 101%
##Septern& 1,2001 and thereafter 100%
* Preliminay, subject to change.
4
Relimmuy Official Shbmcnt Draft 06f 24/pJ
The Commission shall be required to give the Trustee written notice of its intention to redeem
Bonds under the Indenture at least thirty days prior to the date fixed for redemption, and shall deposit all
amounts required for any redemption pursuant to the Indenture at least one Business Day prior to the date
fixed for such redemption.
. bon - Term Bonds
The Term Bonds maturing on ##SeDtember 1,2023 shall be subject to redemption in part by lot,
on ##Sentem 1 in each year commencing ##September 1,2006, from Sinking Account payments ma& by the Commission pursuant to the Indenture, at a redemption price equal to the principal amount thereof
to be redeemed, without premium, or in lieu thereof shall be purchased pursuant to the Indenture, in the
aggregate respective principal amounts and on the respective dates as set forth in the following table;
provided, however, that if some but not all of such Term Bonds have been redeemed pursuant to the
Indenture, the total amount of all future Sinking Account payments set forth in the Indenture above shall
be reduced by the aggregate principal amount of Bonds so redeemed, to be allocated among such Sinking
Account payments on a pro rata basis in integral multiples of $5,000 as determined by the Commission
(notice of which determination shall be given by the Commission to the Trustee).
Sinking Account
Redemption Date
W%tember 1)
Principal Amount to be
Redeemed*-
Sinking Account
Redemption Date
(##Sep&,n.ber 1)
Principal Amount to be
d or PurM *
2006 2015
2007 2016
2008 2017
2009 2018
2010 2019
2011 2020
2012 2021
2013 2022
2014 2023
In lieu of redemption of Term Bonds pursuant to the Indenture amounts on deposit in the Special
Fund or in the Sinking Account may also be used and withdrawn by the Trustee at any time, upon the
Written Request of the Commission, for the purchase of Term Bonds of the same maturity as the Term
Bonds otherwise required to be redeemed, at public or private sale as and when and at such prices
(including brokerage and other charges, but excluding accrued interest, which is payable from the Interest
Account) as the Commission may in its discretion determine. The par amount of any Term Bonds so
purchased by the Commission in any twelve-month period ending on July 1 in any year shall be credited
towards and shall reduce the par amount of Term Bonds required to be redeemed pursuant to the
Indenture on the next succeeding ##September 1 in such year; provided that evidence satisfactory to the
Trustee of such purchase has been delivered to the Trustee by said July 1. In connection with any such
purchase of Term Bonds at a price in excess of the principal thereof and accrued interest thereon, the
Commission shall comply with the requirements of Section 33664 of the Law.
* Preliminary, subject to change.
. Select-m of &nda
Pdiminwy Cffkial Shhmcnt Draft OS/U/S
For purpose of selecting Bonds for redemption, Bonds shall be deemed to be composed of $5,000
portions, and any such portions may be separately redeemed.
The Trustee on behalf and at the expense of the Commission, shall send notice by first class mail,
postage prepaid, of any redemption to: (i) the respective Owners of any Bonds designated for
redemption, at least 30 but not more than 60 days prior to the redemption date, at their respective
addresses appearing on the Registration Books, and (ii) the Securities Depositories and to the Information
Services, at least 30 but not more than 60 days prior to the redemption date; provided, however, that such
mailing shall not be a condition precedent to such redemption and neither failure to mail or to receive any
such notice nor any defect therein shall affect the validity of the proceedings for the redemption of such
Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the
redemption date, the redemption place and the redemption price and shall designate the CUSIP numbers,
the serial numbers and the maturity or maturities (in the event of redemption of less than all of the Bonds
of such maturity or maturities) of the Bonds to be redeemed, and shall require that such Bonds be then
surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also
that further interest on such Bonds will not accrue from and after the redemption date.
rv-Only System
The information in this section concerning the Depository Trust Company (“DTC”) and DTC’s
book-entry system has been obtained from sources that the Commission believes to be reliable, but the
Commission takes no responsibility for the accuracy thereof.
DTC will act as securities depository for the Bonds. The ownership of one fully registered Bond
for each maturity as set forth on the cover hereof, each in the aggregate principal amount of such maturity
will be registered in the name Cede & Co. as nominee for 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 commission” registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities of its participating organizations (the “DTC
Participants”) and to facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entry changes in the accounts of DTC Participants, thereby
eliminating the need for physical movement of certificates. DTC Participants include securities brokers
and dealers include securities brokers and dealers, banks, trust companies, clearing corporations and
certain other organizations, some of which (and/or their representatives) own DTC. Indirect access to the
DTC system is also available to others such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either directly or indirectly.
Purchases of Bonds under the DTC system must be made by.or through DTC Participants, which
will receive a credit in DTC’s records. The ownership interest of each actual purchaser of each Bond
(“Beneficial Owner”) is in turn to be recorded through the records of the DTC Participants. Each
Beneficial Owner will receive a written confirmation of purchase providing details of the transaction.
6
Preliminary Officirl Statement On& 06/24/W
Transfers of ownership interests in the Bonds are to be accomplished by book entries made by DTC and,
in turn, by the DTC Participants acting on behalf of Beneficial Owners. 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.
Beneficial Owners that are not DTC Participants or indirect participants but desire to purchase,
sell or otherwise transfer ownership of, or other interests in, Bonds may do so only through DTC
Participants or indirect participants. So long as Cede & Co. is the registered owner of the Bonds, as
nominee of DTC, references herein to the Bondowners, the owners or registered owner of the Bonds, as
nominee of DTC, references herein to the Bondowners, the owners or registered owners of the Bonds
shall mean Cede & Co. (which shall be the registered owner of the Bonds as shown on the registration
books of the Trustee) and shall not mean the Beneficial Owners of the Bonds. See “RISK FACTORS --
Book-Entry System.”
The Commission and the Trustee will recognize DTC or its nominee as the *Bondowner for all
purposes, including notices and voting. Conveyance of notices and other communications by DTC to
DTC Participants and by DTC Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory and regulatory requirements as may be in effect from time to time.
Neither the Agency nor the Trustee will assume any responsibility or obligation with respect to the
payments to or the providing of notice for DTC Participants or the Beneficial Owners. Neither the
Commission nor the Trustee is responsible or liable for sending transaction statements to the Beneficial
Owners or for maintaining, supervising or reviewing such records.
Principal of and interest payments on the Bonds will be made to DTC or its nominee, Cede &
Co., as registered owner of the Bonds. Upon receipt of any such payments, DTC’s current practice is to
immediately credit the accounts of the DTC Participants in accordance with their respective holdings
shown on the records of DTC. However, Beneficial Owners may experience some delay in their receipt
of payments, since such payments will be forwarded by the Trustee to Cede & Co., as nominee for DTC.
DTC will then forward such payments to the DTC Participants, which thereafter will forward them to
DTC Participants or Beneficial Owners. See “RISK FACTORS -- Book-Entry System.” Payments by
DTC Participants to indirect participants and Beneficial Owners will be governed by standing instructions
and customary practices, as is now the case with municipal securities held for the accounts of customers
in bearer form or registered in “street name,” and will be the responsibility of such DTC Participant and
not of DTC or the Agency, subject to any statutory and regulatory requirements as may be in effect from
time to time.
THE COMMISSION AND THE TRUSTEE WILL NOT HAVE ANY RESPONSIBILITY OR
OBLIGATION TO DTC PARTICIPANTS, TO INDIRECT PARTICIPANTS, OR TO ANY
BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC, ANY DIRECT PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (II)
ANY NOTICE (INCLUDING ANY NOTICE OF REDEMPTION) THAT IS PERMITTED OR
REQUIRED TO BE GIVEN TO BONDOWNERS UNDER THE INDENTURE; (III) THE PAYMENT
BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH
RESPECT TO THE PRINCIPAL, PREMIUM (IF ANY) OR INTEREST DUE ON THE BONDS; (IV)
THE SELECTION BY DTC, DTC PARTICIPANTS OR INDIRECT PARTICIPANTS OF ANY
PERSON TO RECEIVE A PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE
BONDS; OR (V) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DIRECT
PARTICIPANTS, AS ASSIGNEES OF DTC AS BONDOWNER. THE RULES APPLICABLE TO
DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE
7
Preiimiruy Off3cial Sbkmmt Ddt 06/24/93
PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS AND
INDIRECT PARTICIPANTS ARE ON FILE WITH DTC.
Procedure in the Event of Revision or Termination of Book-Entry Only System
The book-entry system with DTC shall be discontinued if (a) DTC determines not to continue to
act as securities depository for the Bonds; or (b) the Commission has advised DTC that it does not wish
DTC to continue as securities -depository. If the Commission replaces DTC with another qualified
securities depository, a fully-registered Bond for each maturity registered in the name of the successor
shall be prepared, consistent with the requirements of the Indenture. If the Commission fails to select
another qualified securities depository to replace DTC, the Commission shall execute and the Trustee
shall authenticate and deliver Bond certificates (the “Replacement Bonds”) to the Beneficial Owners of
the Bonds.
Interest on the Bonds represented by Replacement Bonds shall be payable by check mailed by
first-class mail, postage prepaid, to each owner of such Replacement Bond at the address of such owner
as it appears at the close of business on the relevant Record Date in the bond registered maintained by the
Trustee. The principal of the Bonds represented by Replacement Bonds shall be payable upon
presentation of such Bonds at the office of the Trustee in Los Angeles, California. Bonds represented by
Replacement Bonds will be transferable only by presentation and surrender to the Trustee in Los Angeles,
California, together with an assignment duly executed by the owner of the Replacement Bonds or by his
representative in form satisfactory to the Trustee and containing information required by the Trustee in
order to effect such transfer. See “Transfer and Exchange of Bonds” below.
DTC Practices
The Commission can make no assurances that DTC Participants or other nominees of the
Beneficial Owners will distribute notices received as the registered owner of the Bonds, including
redemption voices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will
act in a manner described in this Official Statement. The Commission understands that the rules
applicable to DTC are on tile with the Securities and Exchange Commission, and the procedures of DTC
to be followed in dealing with DTC Participants are on file with DTC.
Pdiminay Official Statement Draft 04/24/?3
Transfer and Exchange of Bonds
Any Replacement Bond may be transferred by the person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such Replacement Bond for cancellation,
accompanied by delivery of an executed instrument of transfer in a form approved by the Trustee.
Replacement Bonds may be exchanged at the principal corporate trust office of the Trustee in Los
Angeles, California, for a like aggregate principal amount of Replacement Bonds of authorized
denominations and of the same maturity. The Trustee shall require the payment by the Bondowner
requesting such exchange of any tax or other governmental charge required to be paid with respect to
such exchange. No transfers or exchanges of RepIacement Bonds shall be required to be made between
the date which is 15 days before selection of Replacement Bonds for redemption and the date of mailing
notice of redemption or with respect to a Replacement Bond after such Replacement Bond has been
selected for redemption.
The table below summarizes the Sources and Uses of proceeds of the Bonds.
TABLE 1
Carlsbad Housing and Redevelopment Commission
Village Redevelopment Project Area
1993 Tax Allocation Bonds
Sources and Uses of Bond Proceeds
Sources of Funds
Principal Amount of the Bonds ........................................................
Original Issue Discount.. ..................................................................
Underwriter’s Discount.. ...................................................................
Accrued Interest.. ..............................................................................
Transfer of funds held under the Prior Resolution.. .........................
Total Sources of Funds.. ...............................................................
Uses of Fun&
Deposit into Refunding Escrow ........................................................
Deposit into Redevelopment Fund ...................................................
Deposit to Reserve Account( 1) .........................................................
Costs of issuance(2). .........................................................................
Interest’Account(3) ...........................................................................
Total Uses of Funds ......................................................................
(1) (2) An amount equal to maximum annual debt service on the Bonds.
(3) Includes a bond insurance premium of S
Represents accrued interest and capitalized interest through ##SeDtemberI, 1994.
9
PnAimiluy Offkid Shcm\mt Odt WZ4P3
. Debt SewIce on TABLE 2
Bond
Years
(ending
##September
Carlsbad Housing and Redevelopment Commission
Village Redevelopment Project
1993 Tax Allocation Bonds
Debt Service Schedule
Principal Interest
of the on the
1993 $ %
1994
1995
1996
1997
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
2023
Total
Total
Debt
!§
*To be paid from capitalized interest in the Interest Account.
10
-
Pdiminry Offkid Stahmmt Dr& M/24/93
PURPOSE OF THE BONDS
The Bonds are being issued by the Commission to allow for the financing of certain
redevelopment activities within the Project Area and to refinance the Prior Bonds of the Commission.
The projects anticipated to be funded from the proceeds of the Bonds include:
l Parking and Streetscape Improvements
l New Parking Facilities
l Commercial rehabilitation loans and grants
l Facade Improvement Loans and Grants
l Economic and Development Incentives
A portion of the proceeds of the Bonds will be deposited into the Interest Account to fund interest
due with respect to the Bonds through ##Sep&mber 1, 1994. The Agency intends to utilize the Tax
Revenues made available by such deposit for certain economic and development programs.
In order to provide for the advance refunding of the Prior Bonds, a portion of the proceeds of the
Bonds, together with certain other funds of the Commission, will be used to purchase United States
Treasury Obligations, the principal of which, together with the interest to be earned thereon, will be
sufficient to pay when due the interest on the prior Bonds to and including April 1, 1997, and to redeem
on such date the prior Bonds at the redemption price described in the prior Bonds’ Resolution. The
United States Treasury Obligations so purchased will be irrevocably deposited in a Refunding Escrow
(the “Refunding Escrow”) established pursuant to an Escrow Agreement, dated as of March 1, 1992 (the *
“Escrow Agreement”) between the Commission and the Escrow Bank.
The Prior Bonds shall remain the obligation of the Commission until paid or redeemed, but shall
be payable solely from the funds held by the Escrow Bank pursuant to the Escrow Agreement, and shall
not be payable from any other funds of the Commission. Under no circumstances will amounts held by
the Escrow Bank under the Escrow Agreement be available to pay debt service on the Bonds.
Upon making the deposit into the Refunding Escrow described above, and compliance with
certain requirements set forth in the Prior Resolution, the right, title and interest of the Trustee and the
owners of the Prior Bonds in the Tax Revenues and other moneys as provided in the Prior Bonds
Resolution shall cease.
11
Prdiminary Official ShLmmt Draft 06/24/B
SECURITY FOR THE BONDS
Under provisions of the California Constitution and the Redevelopment Law, taxes levied upon
taxable property in the Project Area each year by or for the benefit of the State of California, any city,
county, city and county or other public corporation (“taxing agencies”) for Fiscal Years beginning, with
respect to the Project Area, after the effective date of the ordinance approving the redevelopment plan for
the Project Area (the “Effective Date”), are divided as follows:
1. The portion equal to the amount of those taxes which would have been produced by the
current tax rate, applied to the assessed value of the taxable property in the Project Area as last equalized
prior to the Effective Date is paid (when collected) into the funds of those respective taxing agencies as
taxes by or for such taxing agencies;
2. Except as provided in subparagraph (3) below, that portion of such levied taxes each year
in excess of such amount is allocated to and when collected paid into a special fund of the Commission,
to the extent required to pay the principal of and interest on loans, moneys advanced to, or indebtedness
(whether funded, refunded, assumed or otherwise) incurred by the Commission to finance or refinance, in
whole or in part, (i) the Commission’s redevelopment projects within the Project Area, and (ii) under
certain circumstances, publicly owned improvements outside of the Project Area; and
3. That portion of the taxes identified in subparagraph (2) above that are attributable to a tax
rate levied by a taxing Agency for the purpose of producing revenues in an amount sufficient to make
annual repayments of principal of, and the interest on, any bonded indebtedness for the acquisition or
improvement of real property approved by the voters of the taxing Agency on or after January 1, 1989
shall be allocated to, and when collected shall be paid into, the fund of the taxing Commission.
“Tax Revenues” means, except as provided below, moneys allocated within the Plan Limit and
paid to the Commission derived from (a) that portion of taxes levied upon assessable property within the
Project Area allocated to the Commission pursuant to Article 6 of Chapter 6 of the Law and Section 16 of
Article XVI of the Constitution of the State of California, or pursuant to other applicable State laws, and
(b) reimbursements, subventions (but excluding payments to the Commission with respect to personal
property within the Project Area pursuant to Section 16110, et seq., of the Government Code of the State
of California), or other payments made by the State with respect to any property taxes that would
otherwise be due on real or personal property but for an exemption of such property from such taxes, and
including that portion of such taxes otherwise required by Section 33334.3 of the Law to be deposited in
the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the
Bonds and any Parity Bonds (including applicable reserves and financing costs) attributed to amounts
deposited in the Low and Moderate Income Housing Fund for use pursuant to Section 33334.2 of the
Redevelopment Law to increase, improve or preserve the supply of low and moderate income housing
within or of benefit to the Project Area; but excluding (i) all other amounts of such taxes (if any) required
to be deposited into the Low and Moderate Income Housing Fund of the Commission pursuant to Section
33334.3 of the Redevelopment Law.
Tax Revenues will be pledged in their entirety to the payment of the principal of, premium, if
any, and interest on all Parity Bonds, including the Bonds. The Commission has no power to levy and
collect property taxes, and any legislative property tax de-emphasis or provision of additional sources of
12
Pdiminary Official Shbzmnrt Draft 06/ 24193
income to taxing agencies having the effect of reducing the property tax rate would, in all likelihood,
reduce the amount of Tax Revenues that would otherwise be available to pay the principal of, interest on
and premium, if any, on the Bonds. Likewise, broadened property tax exemptions could have a similar
effect. For a further description of factors which may result in decreased Tax Revenues, see
“BONDHOLDERS RISKS” herein.
rve Account
The Bonds are additionally secured by the Reserve Account established pursuant to the Indenture,
and maintained in an amount equal to Maximum Annual Debt Service on all outstanding Parity Bonds.
All money in the Reserve Account shall be used by the Trustee solely for the purpose of replenishing the
Interest Account, the Principal Account and the Sinking Account, in, such order, in the event of any
deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of
or redemption premiums, if any, on Parity Bonds in the event that no Tax Revenues are lawfully available
therefor, or for payment to the Commission upon the retirement of all outstanding Parity Bonds. The
Commission reserves the right to substitute one or more letters of credit, surety bonds, bond insurance
policies or other form of guarantee from a financial institution (the long-term unsecured obligations of
which are then assigned a rating in the highest rating categories by Moody’s Investors Service or Standard
& Poor’s or the claims paying ability of each insurance company is rated in the highest rating category by
B.M. Best & Company) in lieu of or in substitution for all or any portion of the moneys then required to
be on deposit in the Reserve Account. Any such letter of credit, surety bond, bond insurance policy or
other form of guarantee must provide that the Trustee is entitled to draw amounts thereunder when
required for the purposes of making transfers from the Reserve Account to the Interest Account, the-
Principal Account and the Sinking Account in the event of a deficiency in any such account.
. . . Bonds Not a Debt of the ClW of Carlsbad or the State of Callfoma
The Bonds are special obligations of the Commission and as such are not a debt of the City, the
State of California or any of its political subdivisions. Neither the City, the State of California nor any of
its political subdivisions is liable for the payment thereof. In no event shall the Bonds be payable out of
any funds or properties other than those of the Commission as set forth in the Indenture. The Bonds do
not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or
restriction. Neither the members of the Commission nor any persons executing the Bonds are liable
personally on the Bonds.
13
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Pmliminuy Official Shtimt Dnft W/21/93
BONDHOLDERS’ RISKS
. . Reduaon m Ta&.le V&g
Tax Revenues allocated to the Commission by the County are determined in part by the amount
by which the assessed valuation of property in the Project Area exceeds the base year assessed valuation
for such property, as well as by the current rate at which property in the Project Area is taxed. Assessed
valuation of taxable property within the Project Area may be reduced by economic factors beyond the
control of the Commission or by substantial damage, destruction or condemnation of such property. As
evidenced by the events described in the paragraphs below, assessed valuation can be reduced as a result
of actions of the California Legislature or electorate. Such a reduction of assessed valuations or tax rates
could result in a reduction of the Tax Revenues that secure the Bonds, which in turn could impair the
ability of the Commission to make payments of principal of and/or interest on the Bonds when due.
Similarly, substantial delinquencies in the payment of property taxes by the owners of taxable property
within the County could also have an adverse effect on the ability of the Commission to make payments
of principal of and/or interest on the Bonds when due.
In order to estimate the total revenues available to pay debt service on the Bonds, the
Commission has engaged the fiscal consulting firm of Keyser Marston Associates, Inc. (the “Fiscal
Consultant”). The Commission and the Fiscal Consultant have made certain assumptions with regard to
the availability of Tax Revenues. The Commission and the Fiscal Consultant believe these assumptions
to be reasonable, but to the extent Tax Revenues are less than anticipated, the total revenues available to
pay debt service on the Bonds may be less than those projected herein. “TAX REVENUES AND DEBT *
SERVICE” and “APPENDIX D: REPORT OF KEYSER MARSTON ASSOCIATES, INC.
Constitutional Initiatives
Both Article XIIIA and Article XIIIB of the California Constitution, which significantly affected
the rate of property taxation and the expenditure of tax proceeds, were adopted pursuant to California’s
constitutional initiative process. From time to time, other initiative measures could be adopted by
California voters. The adoption of any such initiative might place limitations on the ability of public
entities to increase revenues or to increase appropriations. See “TAX ALLOCATION
FINANCING-Property Tax Rate and Appropriation Limitations.”
Reduction in InJationary Rate
As described in greater detail herein, Article XIIIA of the California Constitution provides that
the full cash value base of real property used in determining taxable value may be adjusted from year to
year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to
reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a
calendar year basis. The Commission has projected Tax Revenues to be received by it based, among
other things, upon such 2% inflationary increases. Should the assessed value of real property not increase
at the allowed annual rate of 2%, the Commission’s receipt of future Tax Revenues may be adversely
affected. See “TAX REVENUES AND DEBT SERVICE” herein.
14
Pdimmay Official Shbcmcnt Draft OS/ 24/O
Levy and Collection
The Commission has no independent power to levy and collect property taxes. Any reduction in
the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce
the tax increment revenues, and accordingly, could have an adverse impact on the ability of the
Commission to repay the Bonds secured by the Tax Revenues. Likewise, delinquencies in the payment
of property taxes could have an adverse effect on the Commission’s ability to make timely debt service
payments. Beginning in the 1992193 Fiscal Year, the County will allocate tax increment revenues to
redevelopment agencies within its jurisdiction with an adjustment for the Countywide property tax
payment delinquency rate.
. . Recent Lg&&um
On September 2, 1992, the State legislature adopted Senate Bill 844 which provides for a
contribution, on a one-time basis, by (or on behalf of) redevelopment agencies to the “Educational
Revenue Augmentation Fund.” The Fund was established to provide financial assistance to school
districts in Fiscal Year 1992/93. For Fiscal Year 1992193, the amount to be contributed by each agency is
a percentage applied to the amount of tax increment revenues apportioned to each redevelopment agency
in Fiscal Year 1990/91. The percentage is determined by dividing $205 million by an amount equal to
total tax increment revenues apportioned State-wide in 1990/9 1. This percentage is approximately 16%.
The State Director of Finance has informed the Commission that the allocation for the
Commission is approximately $257,279. In order to make this allocation, a Commission may use any’
funds that are legally available and not legally obligated for other uses, including but not limited to
reserves, proceeds of land sales, bond proceeds, lease revenues, interest and other earned income. The
Commission intends to fund this obligation, which is payable by May 10, 1993, from legally available
funds on hand.
Proposed State Bud&
The Governor has introduced a proposed budget for the 1993/94 Fiscal Year. The proposed
budget would re-allocate approximately $300 million from redevelopment agencies to other taxing
entities. $200 million of this amount would result from the proposed establishment of educational
augmentation revenue fund deposits by agencies in 1993/94 substantially similar to the requirement that
is a part of the 1992/93 budget solution. The proposed budget would further limit the amount of tax
increment redevelopment agencies could receive annually to an amount necessary to meet the current
year’s debt service. Under existing law, a redevelopment agency may receive tax increment revenues
equal to its total (multi-year) debt service requirements. The Governor’s budget estimates that this would
result in an additional $100 million being diverted from redevelopment agencies to other entities. The
Commission is unable to predict whether the State budget will be adopted in this form and what impact
the State budget will have on Tax Revenues.
. Loss of TmExm.@m -
In order to maintain the exclusion from gross income for federal income tax purposes of the
interest on the Bonds the Agency has covenanted in the Indenture to comply with each applicable
requirement of Section 103 and Sections 141 and 150 of the Internal Revenue Code of 1986, as amended.
The interest on the Bonds could become includable in gross income for purposes of federal income
15
hh’hta~offidd Stabmmt DnH W/24/W
taxation retroactive to the date of issuance of the Bonds as a result of acts or omissions of the Agency in
violation of this or other covenants in the Indenture. The Bonds are not subject to redemption or any
increase in interest rates should an event of taxability occur and will remain Outstanding until maturity or
prior redemption under one of the redemption provisions contained in the Indenture. See ‘TAX
MATTERS” herein.
Carlsbad is in an area considered seismically active. There are no known active faults within the
boundaries of the City. There are faults in the region which could result in damage to buildings, roads,
bridges and property within the City in the event of an earthquake. The Rose Canyon Fault is located
approximately eight miles to the southwest. The La Nation Fault, located thirty-eight miles to the
southeast, is considered a potentially active fault. The Elsinore Fault is located approximately twenty-
three miles to the northeast. Other faults in the vicinity of the northern portion of the County include the
San Jacinto Fault, located forty-six miles to the northeast of the City; and the San Andreas Fault, located
approximately seventy miles to the northeast of the City.
If an earthquake were to substantially damage or destroy taxable property within the Project Area,
the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could
result in a reduction of the Tax Revenues that secure the Bonds, which in turn could impair the ability of
the Commission to make payments of principal of and/or interest on the Bonds when due.
Book-Fatv System
Beneficial Owners of the Bonds may experience some delay in their receipt of distributions of
principal and Accreted Value of, and interest on, the Bonds since distributions will be forwarded by the
Trustee to DTC and DTC will credit such distributions to the accounts of the DTC Participants which will
thereafter credit them to the accounts of the Beneficial Owners either directly or indirectly through
indirect participants. See “THE BONDS -- Book-Entry Only System” herein.
Issuance of the Bonds in book-entry form may reduce the liquidity of the Bonds in the secondary
trading market since investors may be unwilling to purchase Bonds for which they cannot obtain physical
certificates. In addition, because transactions in the Bonds can be effected only through DTC, DTC
Participants, Indirect Participants and certain banks, the ability of a Beneficial Owner to pledge Bonds to
persons or entities that do not participate in the DTC system, or otherwise to take actions in respect of
such Bonds, may be limited due to lack of a physical certificate. Beneficial Owners will not be
recognized by the Trustee as registered Owners for purposes of the Indenture, and Beneficial Owners will
be permitted to exercise the rights of registered Owners only indirectly through DTC and the DTC
Participants. See “THE BONDS --- Book-Entry Only System” herein.
16
Preiiminwy Official Statement Draft Of,/ 24/93
TAX ALLOCATION FINANCING
. Introductmu
The Redevelopment Law and the California Constitution provide a method for financing and
refinancing redevelopment projects based upon an allocation of taxes collected within a project area.
First, the assessed valuation of the taxable property in a project area last equalized prior to adoption of the
redevelopment plan is established and becomes the base roll. Thereafter, except for any period during
which the assessed valuation drops below the base year level, the taxing agencies on behalf of which
taxes are levied on property within the project area will receive the taxes produced by the levy of the then
current tax rate upon the base roll. Except as discussed in the following paragraph, taxes collected upon
any increase in the assessed valuation of the taxable property in a project area over the levy upon the base
roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in
financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes
on property and must look specifically to the allocation of taxes produced as above indicated.
The California Legislature placed on the ballot ,for the November, 1988, general election
Proposition No. 87 (Assembly Constitutional’ Amendment No. 56) pertaining to allocation of tax
increment revenues. This measure, which was approved by the electorate, authorized the Legislature to
cause tax increment revenues attributable to certain increases in tax rates occurring after January 1, 1989,
to be allocated to the entities on whose behalf such increased tax rates are levied rather than to the.
Commission, as would have been the ease under prior law. The measure applies to tax rates levied to pay
principal of and interest on general obligation bonds approved by the voters on or after January 1, 1989.
Assembly Bill 89 (Statutes of 1989, Chapter 250), which implements this Constitutional Amendment,
became effective on January 1, 1990. The Commission’s projection of tax revenues to be allocated to the
Commission does not assume any increase in the tax rate applicable to properties within the Project Area.
. . . . . Property Tax Rate and Ag.gmgmtw&mtabom
Article MIL4 of State Constitution
On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the
California Constitution (“Article XIIIA”). Article XIIIA limits the amount of any ad valorem tax on real
property to one percent of the full cash value thereof, except that additional ad valorem taxes may be
levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and (as a result of
an amendment to Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness
for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by
two-thirds of the voters voting on such indebtedness. Article XIIIA defines full cash value to mean “the
,county assessor’s valuation of real property as shown on the 1975176 tax bill under ‘full cash value,’ or
thereafter, the appraised value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment.” This full cash value may be increased at a rate not to
exceed 2% per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in
the event of declining property values caused by damage, destruction or other factors, to provide that
there would be no increase in the “full cash value” base in the event of reconstruction of property
damaged or destroyed in a disaster and in various other minor or technical ways.
17
hliminay Offhd Sbhmmt Draft M/24/93
The Commission has no power to levy and collect taxes. Any further reduction in the tax rate or
the implementation of any constitutional or legislative property tax limitations could reduce Tax
Revenues, and, accordingly, would have an adverse impact on the ability of the Commission to pay debt
service on the Bonds.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement Article
XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except
to pay voter-approved indebtedness). The 1% property tax is automatically levied by the County and
distributed according to a formula among taxing agencies. The formula apportions the tax roughly in
proportion to the relative shares of taxes levied prior to 1978. Increases of assessed valuation resulting
from reappraisals of property due to new construction, change in ownership or from the 2% annual
adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective
“situs.” Any such allocation made to a local agency continues as part of its allocation in future years.
. Prop- Collectm Procedures
For assessment and collection purposes, property is classified either as “secured” or “unsecured”
and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the
assessment roll containing state-assessed public utilities property and property the taxes on which are a
lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes.’
Other property is assessed on the “unsecured roll.” A tax levied on unsecured property does not become a
lien against the unsecured property but may become a lien on certain other property owned by the
taxpayer. Every tax which becomes a lien on secured property has a priority over all other liens arising
pursuant to California law on the secured property, regardless of the time of creation of the other liens.
Property taxes on the secured roll are due in two installments, on July 1 and February 1 of each
Fiscal Year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a
10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to
which taxes are delinquent is sold to the State on or about June 30 of the Fiscal Year. Such property may
thereafter be redeemed by payment of the delinquent taxes and delinquent penalty, plus a redemption
penalty of l-1/2% per month to the time of redemption, If taxes are unpaid for a period of five years or
more, the property is deeded to the State and then is subject to sale by the County Tax Collector.
Historically, taxes were levied for each Fiscal Year on taxable real and personal property situated
in the City as of the preceding March 1. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498),
however, provided fbt the supplemental assessment and taxation of property as of the occurrence of a
change of ownership or completion of new construction. Thus, this legislation eliminated delays in the
realization of increased property taxes fkom new assessments. As amended, SB 813 provided increased
revenue to redevelopment agencies to the extent that supplemental assessments of new construction or
changes of ownership occur within the boundaries of redevelopment project areas subsequent to the
March 1 lien date.
Subsequent legislation, AB 399 (Statutes of 1983, Chapter 1102), was enacted, however, which
required that the revenues generated by these supplemental assessments be allocated solely to school
districts for the next two Fiscal Years, with the exception of a small amount which would be provided to
18
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Prdiminay Ofkid Sbtemmt Draft 06/24/93
the counties as reimbursement of increased administrative costs. The enactment of SB 794 (Statutes of
1984, Chapter 447), limits the allocation to school districts to the 1983184 Fiscal Year only. Thus,
beginning with the 1984/85 Fiscal Year, redevelopment agencies have received increases in revenues as
provided in SB 813.
Property taxes on the unsecured roll are due as of the March I lien date and become delinquent, if
unpaid, on the following August 3 1. A 10% penalty attaches to delinquent taxes on property on the
unsecured roll, and an additional penalty of l-1/2% per month begins to accrue on the first day of the
third month following the delinquency date. The taxing authority has four ways of collecting unsecured
personal property taxes: (i) a civil action against the taxpayer; (ii) filing a certificate in the offrce of the
County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (iii) filing a certificate of delinquency for recording in the County Recorder’s office, in order to
obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property,
improvements or possessory interests belonging or assessed to the assessee.
Current tax payment practices by the County provide for payment to the Commission of
approximately 50% of the secured taxes by the first week in January, an additional 35% of the secured
taxes by the middle of April, and the balance of the secured tax collections (excluding delinquency
collections which are paid to the Commission during July and November each year) by the end of May.
Approximately 80% of the unsecured taxes are paid to the Commission by the end of August in each
year, and substantially all of the unsecured taxes are paid to the Commission by the middle of October in
each year. Beginning in the 1992/93j?scai year, the County will allocate property taxes to redevelopment
agencies’with an allowance for the County-wide property tax delinquency rate.. For Fiscal Year 1991192 *
the delinquency rate for secured tax payments in the County was .6%.
Article XIIZB of State Constitution
An initiative to amend the California constitution entitled “Limitation of Government
Appropriations,” was approved on August 6, 1979 thereby adding Article XIIIB to the California
Constitution (“Article XIIIB”). Article XIIIB was substantially modified by Propositions 98 and Ill
adopted in 1988 and 1990, respectively. Under Article XIIIB state and local governmental entities have
an annual “appropriations limit” and are not permitted to spend certain moneys which are called
“appropriations subject to limitation” (consisting of tax revenues, state subventions and certain other
funds) in an amount higher than the “appropriations limit.” Proposition 111 revised the method for
making annual adjustments to the appropriations limit. As amended by Proposition 111, the
appropriations limit is tested over consecutive two-year periods. If an entity’s revenues in any two-year
period exceed the amounts permitted to be spent over such period, the excess has to be returned by
revising tax rates or fee schedules over the subsequent two years. Although provisions of law result in
redevelopment agencies being held harmless in the event such excess revenues are returned by revising
tax rates or fee schedules, it is possible that the adjustment of tax rates may impact the Tax Revenues of
the Commission.
The California State Legislature, by Statutes of 1980, Chapter 1342 enacted a provision of the
Redevelopment Law (Health and Safety Code Section 33678) providing that the allocation and payment
of taxes to a redevelopment agency for the purpose of paying principal of or interest on loans, advances
or indebtedness incurred for redevelopment activity as defined in the statute shall not be deemed the
receipt by the Commission of proceeds of taxes levied by or on behalf of a redevelopment agency within
the meaning or for the purpose of Article XIIIB of the State Constitution, nor shall such portion of taxes
be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other
19
Pdlminq Official Shbmmt Odt 06/24/93
public body within the meaning or for the purposes of Article MIIB of the State Constitution or any statu-
tory provision enacted in implementation of Article XIIIB.
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property
assessed by the State Board of Equalization (“Unitary Property”), commencing with the 1988/89 Fiscal
Year, will be allocated as follows: (1) each jurisdiction, including the Project Area, will receive up to
102% of its prior year State-assessed revenue; and (2) if county-wide revenues generated from Unitary
Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues,
each jurisdiction will share the burden of the shortfall or excess revenues by a specified formula. This
provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to
individual tax rate areas.
The provisions of AB 454 do not constitute an elimination of the assessment of any
State-assessed properties nor a revision of the method of assessing utilities by the State Board of
Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by
all jurisdictions in a county.
Litigation contesting the State Board of Equalization’s procedures determining the valuation of
the seven largest utilities in the State has resulted in a stipulation between the State Board of Equalization
and the utilities. The terms of the settlement provide that the valuation of the seven largest utilities will
decrease by a total of 10.5%, which decrease will be phased over Fiscal Years 1992/93, 1993/94 and .
1994/95. Although this adjustment may result in a 10.5% devaluation of existing property for the affected
utilities state-wide, devaluation of unitary value could be mitigated in the Project Area due to growth in
unitary value, accordingly the Fiscal Consultant has not adjusted unitary revenues to reflect the
settlement. See Appendix D: “REPORT OF KEYSER MARSTEFJ ASSOCIATES, MC.”
For the 1992/93 Fiscal Year, the Commission expects to receive approximately $26,908 of
revenues generated by Unitary Property, exclusive of railroads.
. clal Sybventi
The Project Area was created after the passage of AB 66 (Statute of 1979, Chapter 1130), thus
Business Inventory Replacement Subventions (“Special Subventions”) have not been available to the
Commission. Furthermore, Legislative changes in 1990 significantly altered the statutory scheme for
payment of these Special Subventions and prohibited redevelopment agencies from pledging Special
Subventions as security for bonds issued after July 3 1, 1990. Tax Revenues, as defined in the Indenture
and as numerically presented in this Official Statement, do not include any such Special Subventions, nor
are any such amounts pledged to pay debt service on the Bonds.
. . . cabon of Chmugumhdebteduw
A significant provision of the Redevelopment Law, Section 33675, was added by the Legislature
in 1976, providing for the filing not later than the first day of October of each year with the county auditor
of a statement of indebtedness certified by the chief fiscal officer of the Commission for each
redevelopment project which receives tax increment. The statement of indebtedness is required to contain
the date on which any bonds were delivered, the principal amount, term, purpose and interest rate of such
20
Rdhimy Offid Skmmt Ddt 06f 24/93
bonds and the outstanding balance and amount due on such bonds. Similar information must be given for each loan, advance or indebtedness that the Commission has incurred or entered into to be payable from
tax increment.
This Section also provides that the County Auditor is limited in payment of tax increment to the
Commission to the amounts shown on the Commission’s statement of indebtedness. The section further
provides that the statement of indebtedness is prima facie evidence of the indebtedness of the
Commission, but that the County Auditor may dispute the amount of indebtedness shown on the
statement in certain cases. Provision is made for time limits under which the dispute can be made by the
County Auditor as well as provisions for determination by the Superior Court in a declaratory relief action
of the proper disposition of the matter. The issue in any such action shall involve only the amount of the
indebtedness and not the validity of any contract or debt instrument, or any expenditures pursuant thereto.
An exception is made for payments to a public agency in connection with payments by such public
agency pursuant to a bond issue which shall not be disputed in any action under the section. The Bonds
should be entitled to the protection of that portion of the statute so that they cannot be disputed by the
County Auditor.
. . . Bedevelotmgnt Plan watropg
In 1976 the Legislature enacted AB 3674 (Statutes of 1976, Chapter 1337) which added Sections
33333.2, 33334.1 and 33354.6 to the Redevelopment Law. Section 33333.2 requires redevelopment
plans adopted on or after October 1, 1976 to contain a limit on the number of tax dollars which may be
divided and allocated to a redevelopment Agency pursuant to its redevelopment plan, a time limit on the’
establishing of loans, advances and indebtedness to finance, in whole or in part, the redevelopment
project and a time limit not to exceed twelve years for the commencement of eminent domain proceedings
to acquire property within the project area. Section 33334.1 requires a redevelopment plan adopted on or
after October 1, 1976 to contain a limit on the amount of bonds or indebtedness which can be outstanding
at one time. Section 33354.6 provides that with respect to any amendment of a redevelopment plan
(which provides for the allocation of taxes) to add new territory to a project area, the affected
redevelopment agency must follow the procedures and be subject to the same restrictions as provided in
the adoption of a new redevelopment plan.
The redevelopment plan for the Project Area was initially adopted on July 7, 1981.
Consequently, the Commission established various limitations in the Redevelopment Plan including a
$4,000,000 annual limit on the amount of tax increment revenues that may be divided and allocated to the
Commission and a 25-year limit on establishing new loans, advances or indebtedness to finance
redevelopment programs. Furthermore, the Redevelopment Plan imposes a $30 million limit on the
amount of bonded indebtedness that may be outstanding at any one time.
. Land- Income Hownclbnd
Under Section 33334.2 of the Redevelopment Law, redevelopment agencies in California are
generally required, unless certain annual findings are made, to set aside 20% of all tax increment
allocation annually in a Low and Moderate Income Housing Fund (the “20% Housing Set-Aside”) to be
used within the jurisdiction of the redevelopment agency to increase and improve the supply of low and
moderate income housing. The Redevelopment law allows redevelopment agencies to make certain
findings which, if annually made by a redevelopment agency, will reduce or eliminate the 20% Housing
Set-Aside. The Agency has elected to deposit the full 20% Housing Set-Aside into its and Moderate
21
Pdlminaly Officiai Statement DnH 06/24/93
Income Housing Fund. Consequently, the Commission’s calculation of Tax Revenues available for debt
service excludes the 20% Housing Set-Aside.
22
Pmliminay Official Shtesnmt Draft 06/24/?3
THE CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
On November 6, 1979, an ordinance was approved by the City Council which declared that there
was a “need for a Community Development Commission” to function within the City. The community
development commission, established as the Carlsbad Housing and Redevelopment Commission, was
created and established (pursuant as the Health and Safety Code) in order for the City to operate and
govern its redevelopment agency and its housing authority under a single operating entity and board. The
City Council was approved to serve as the Commission Board and thereby serve as the governing board
for the Redevelopment Agency of the City of Carlsbad. The Commission was created and is authorized
to exercise all powers reserved to housing authorities and redevelopment agencies. The Agency is a
separate public body and exercises governmental functions in planning and implementing redevelopment
projects. The Agency may facilitate the development of on and off-site improvements, acquire and sell
property, construct public buildings and provide other services to the redevelopment project area.
The members of the Agency, their term of office and occupations are outlined below:
Claude “Bud Lewis Chairman
Margaret Stanton Vice-Chairman
Ann Kulchin Member
Julianne Nygaard Member
Ramona Finnila Member
November, 1994
November, 1994
November, 1996
November, 1994
November, 1996
Claude “Bud” Lewis, Chairman, was first elected to the City Council in 1970; he has served the
City for over 22 years. Mr. Lewis was elected mayor of Carlsbad on November 4, 1986. After
graduation from San Diego State University, he was appointed to a teaching-coaching position at
Carlsbad High School in 1960. Mr. Lewis recently retired from his teaching/coaching position with the
high school.
Margaret Stanton, Vice-Chairman, was elected to the City Council in 1990. Prior to her election,
she was a member of the Committee to Study Open Space and the Sister City Committee. Ms. Stanton
has also served as president of the Chamber of Commerce, and is a member of the board of directors of
the North County Transportation Management Association. She has a Bachelor of Science degree in
Business Education from Carnegie Institute of Technology and earned a Masters of Business
Administration, with distinction, from National University in 1988. She currently serves as Executive
Vice-President of Jatzercise Incorporated, which has its headquarters in Carlsbad. Ms. Stanton has been
employed by Jazzercise, Inc. since 1978.
Ann Kulchin, Agency Member, has been a resident of Carlsbad since 1978. She was first elected
to the City Council in 1980 and has been serving the residents of Carlsbad in this capacity since that time.
Ms. Kulchin served as Mayor Pro Tern and Vice-Chairman of the Agency for approximately six years.
She was one of the first women selected as a CORO Public Affairs Foundation Intern in 1976. Ms.
Kulchin has a Bachelor of Arts degree in Education from the University of Miami and worked as an
elementary school teacher for seven years. She is an active member of several civic organizations.
23
Preliminary OfficidSbtmnmt Draft Of424/?3
Julianne Nygaard, Commission Member, was elected to the City Council in 1990. Previously,
she served on the Carlsbad Unified Board of Trustees for nine years. Other community involvement
includes service on the board of the Carlsbad Child Care Commission, Cable Television Foundation and
the Arboretum Foundation of Carlsbad. She is also a past president of the San Diego County School
Boards Association, founding board member of the Carlsbad Youth Club. Ms. Nygaard volunteers
regularly at the Carlsbad Senior Nutrition Center. She has resided in Carlsbad since 1976. Ms. Nygaard
has a Bachelor of Arts degree in Elementary Education from Arizona State University.
Ramona Finnila, Commission Member, is an 18 year resident of Carlsbad and was elected to the
City Council in 1992. She previously served the City as Vice-Chair and member of the Parks and
Recreation Commission, board member of the Agua Hedionda Lagoon Foundation, and member of the
Carlsbad Police Department Juvenile Justice Panel. Ms. Finnila has also served four terms as president of
the parent associations within the Carlsbad Unified School District. She holds a Bachelor of Science
degree cum laude from the University of Minnesota and completed graduate work at the University of
California Santa Barbara.
The following persons serve as senior staff for the Carlsbad Redevelopment Agency:
Raymond R. Patchett, Agency Executive Director and City Manager, was appointed to the
position of Carlsbad City Manager by the City Council in 1987. Prior to this position, he served for two
years as the City’s Assistant City Manager. Mr. Patchett has a Bachelor of Science degree in Public
Administration from the University of Southern California and has completed course work towards a
Masters Degree at California State University Los Angeles. He has worked in local government since’
1974 with the cities of Manhattan Beach, Redondo Beach and Burbank. Mr. Patchett is a member of the
International City Managers Association.
James Elliott, Financial Management Director, has served the City and the Commission since
1974. Prior to employment with the City, Mr. Elliott worked for the City of Phoenix, Arizona as a budget
analyst and auditor. He received a Bachelor of Science degree in accounting and business administration
from Arizona State University and is pursuing a Masters Degree in Public Administration.
Lisa Hildabrand, Finance Director, began her service with the City in 1991. She was formerly
with the San Diego Office of KPMG Peat Marwick for eight years specializing in local governments,
financial institutions and real estate. She is a Certified Public Accountant in the State of California. Ms.
Hildabrand received her Bachelor of Science degree from San Diego State University.
Martin Orenyak, Community Development Director, has over 24 years of experience in public
sector service, including more than ten years with the City. Mr. Orenyak provides administrative
direction, support and supervision for the Engineering, Planning, Building and Housing and
Redevelopment Departments. He received his Associate of Arts degree from Pasadena City College and
has a Bachelor of Arts degree from the University of Redlands.
Evan Becker, Housing and Redevelopment Director, was appointed to his position with the City
by the City Manager on September 14, 1992. Mr. Becker has been working in the housing and
redevelopment field for approximately 20 years. Prior to employment with the City, he served as the
Executive Director of the San Diego Housing Commission for four years and Assistance Executive
Director for the Redevelopment and Housing Authority in Norfolk, Virginia for 16 years. In Norfolk, Mr.
Becker was responsible for assisted housing development and redevelopment, including nationally
recognized programs in downtown revitalization and waterfront development.
24
Preliminary Official Sbbzmcnt Draft W/24/93
. . . ComgUSslon Powers and Duheg
All powers of the Commission are vested in five members. The Commission exercises al1 the
governmental functions as authorized under the Redevelopment Law and has among other powers the
authority to acquire, administer, develop, lease, or sell property, including the right of eminent domain
and the right to issue bonds and expend the proceeds thereof. The Commission can clear buildings and
other improvements and can develop as a building site any real property owned or acquired and in
connection with such development, cause streets, highways, and sidewalks to be constructed or
reconstructed and public utilities to be installed. !
The Commission may, out of funds available for such purposes, pay for all or part of the value of
land and the cost of building facilities, structures or other improvements to be publicly owned and
operated to the extent that such improvements are of benefit to the Project Area and no other reasonable
means of financing are available. The Commission must sell or lease remaining property.
25
F’diminwy Official Statement Draft 06/24/B
THE VILLAGE REDEVELOPMENT PROJECT AREA
ound
The City approved the Redevelopment Plan on July 7, 1981 through Commission Resolution No.
11 and City Council Ordinance No. 9591. It also specified the Project Area’s boundaries to encompass
the downtown commercial core area of the City. The Redevelopment Plan’s overall goal is “to create a
pleasant, attractive, accessible environment for living, shopping, recreation, civic, cultural and service
functions through the elimination of blighting influences and through restoration and new, private/public
development forms which preserve and enhance the existing character of the Village Area and the
surrounding community.”
The Commission is currently involved in the process of updating its Village Design Manual to
create a new “Master Plan” for the Project Area. This new Master Plan will set forth a vision for the
redevelopment area for the next 15 years. It is anticipated that the new Master Plan and Implementation
Strategy document will be complete by June 30, 1992. The new Master Plan proposes a change in the
direction of the Agency’s involvement in the redevelopment program set forth for the Project Area. This
change assumes a more aggressive approach toward support of commercial and residential projects that
are designed to attract people to the Project Area (both tourists and Carlsbad residents). The objective is
to increase business revenues and produce additional tax increment revenues, sales tax and transient
occupancy tax.
. . . rolect Area Des-
The Project Area covers approximately 200 acres and includes approximately 500 parcels of
property. The Project Area consists primarily of the City’s older downtown Village core. In general, the
Project Area’s boundaries encompass the portion of the City’s downtown village bounded to the north by
the Buena Vista Lagoon and Laguna Drive, to the east by Jefferson Street, thence easterly along Grand
Avenue until Interstate 5 and southerly until Oak Avenue. The Project Area’s southern boundary is
marked by an irregular line along Oak Avenue, Walnut Avenue and Carlsbad Boulevard. The Project
Area’s western boundary follows an irregular line marked by Ocean Street and Garfield Avenue.
The Project Area includes a variety of land uses, with a primary use consisting of commercial,
mixed use and light industrial applications. A 1986 study initiated by the Commission indicated that the
Project Area has approximately 142.5 developable acres. Developable acres include vacant land and
underdeveloped and non-conforming uses.
. PropeB
Property ownership within the Project Area is diverse. According to the Fiscal Consultant, the
combined assessed valuation of the top ten property owners in 1992193 equaled !§56,035,681 or 27.51%
of the total assessed value for the Project Area. Table 3 shows the ranking, by assessed value, of these
property owners.
26
Pdiminwy Officirl Statement Lhft 06/24/B
TABLE 3 CARLSBAD HOUSING AND REDEVELOPMENT COMMISSION
VILLAGE AREA REDEVELOPMENT PROJECT AREA
Ten Largest 1992193 Assessees
Asws
Wave Crest II Ltd, et al
TIL LtdCommercial
PGP Carlsbad Seniors LTD II
2848 Jefferson Street
3090 Jefferson Street
Tamarack Investments
Motel 6 Operating LP
Carlsbad Inn, Ltd
Carlsbad Grand G.P.
Wave Crest Properties Inc.
Murphy Trust
C. Thatcher
TOTAL
Source: Keyser Marston Associates, hc.
Timeshare
10,806,890
Apartments
Shopping Center 4,039,105 2.0
Motel 3,849,498 1.9
Restaurant/Retail 3,086,858 1.5
Commercial 2,439,557 1.2
Motel/Restaurant 2,332,856 1.1
Restaurant 2,062,646 1.0
Commercial 1,977,169 1.0
1992/93
Assessed Va&
% of
Total
lcal!&
$19,561,140 9.6%
5.3 5/17/91
5,879,960 2.9
27.5%
Assessment
2/29/92
3/21/91
9/27/90
g/28/84
8/l 5190
8/08/84
4/15/91
8/03/90
l/22/90
8/14/91
. . . . . alor DeveloDment Achwtv m the Prorect Area
The following discussion summarizes significant development within the Project Area in recent
years. Development costs may or may not equal the taxable values determined by the County assessor.
During the past five years the Project Area has experienced more than $12.5 million in new development
projects. Significant projects include:
l Village Faire -- 70,000 square foot specialty shopping center
l Tamarack Beach Resort -- Resort complex featuring 23 hotel rooms, 54 time share condos and a
3,600 square foot restaurant
l Motel 6 -- a 27,000 square foot motel with 109 rooms
l Carlsbad Grand Office -- 18,000 square foot professional office suite development
l Elm Avenue Commercial -- 6,600 square foot professional office suite development with 4,000
square feet of retail space
l Dooley’s Retail Center -- 5,750 square feet of retail space, 3,713 square feet of professional office
suites and a 4,209 square foot restaurant
27
Major development/redevelopment projects approved for construction include the following
projects:
. Fish Hotlse Vera Crux -- This project involves the demolition of existing structures and the
subsequent construction of a 3,300 square foot restaurant and fish market. The
restaurant/market complex is projected to be complete by the end of July, 1993.
Arco AMP&f-- The demolition of an existing Gasco gas station will precede the construction
of this 2,046 square foot gas station and mini-mart. The project is anticipated to be complete
by December 1993.
Gametowne -- This project entails the demolition of an existing retail building and the
subsequent construction of a 3,000 square foot two story commercial structure. This project
is anticipated to be complete by December 1993.
Prdimirwy Official Sbkmolt Lhft C6/24/ 95
28
-
Pnlimmq Official Sbtemmt Ddt 06/u/93
TAX REVENUES AND DEBT SERVICE
The Commission has retained the Fiscal Consultant to analyze Project Area Tax Revenues and to
project future Tax Revenues. Their report is included as Appendix D and should be read in its entirety.
The table below provides a summary of the Project Area’s taxable valuation and tax increment revenues
since 1987188.
TABLE 4
Carlsbad Housing and Redevelopment Commission
‘Village Redevelopment Project Area
Historical Taxable Valuations
Fiscal Years 1987/M - 1991/92
.E’87/88
Assessed Value (1)
Secured $114,182,844
State Assessed 3,213,350
Unsecured 10.564.500
Total Value 127,960,694
Less Base Value 45.985.5 12
Incremental Value 81,975,182
Tax Rate (1) 1.046910
Gross Tax Increment 858,688
Unitary Tax Revenue (1) Q
Total Receipts (2) 858,688
(000’s Omitted)
1988189 1989/90
%132,707,706 $152,801,457
2,308,268 2,257,566
U-261.186 12.811.19Q
146,277,160
45.985.512
67,870,2 13
45.985.5 12
100,291,648
1.040430
1,043,862
22328
1,066,190
21,884,701
1.039860
1,267,474
21.452
1,288,926 1,476,522 1,553,458
199Of9 1 1991/92
$170,666,286 % 176,820,449
2,240,191
9.77 1.966
182,678,443
45.985.5 12
136,692,93 1
1.059130
1,446,860
2,498,246
90,513,510 *
45.985.5 l.2
44,527,998
1.054770
1,524,703
28.751
(1) Amounts shown are as reported by the County Auditor-Controller.
(2) Total receipts represent actual amounts allocated for the current year. Supplemental and prior year
redemption payments are not included in the allocation. Secured values are taxed at current year
rate and unsecured values are taxed at previous year secured rate.
Source: Keyser Marston Associates, Inc.
Table 5 sets forth the Fiscal Consultant’s estimate of growth in tax increments in the Project Area.
The Fiscal Consultant has estimated a reduction in Project Area Tax Revenues in 1992/93 as a resuh of
the resolution of certain pending appeals, with a resulting decline in assessed valuation. As of the date of
the Fiscal Consultant’s report, such property tax appeals had not yet been resolved. The Fiscal
Consultant’s projections do not reflect receipt of supplemental assessments. Actual levels of future Tax
Revenues will depend upon the rate of growth in tax increment resulting from new development, change
of ownership and inflation, and changes in tax rates.
29
-
Preliminary Offkid Shinnmt Draft 061 la/?3
TABLE 5
Carlsbad Housing and Redevelopment Commission
Village Redevelopment Project Area
Forecasted Tax Increment Revenues
(000’s Omitted)
I Yeat 1992/93 l993/94 1994/95 1995/w 1996/97
Real Property 0 192,175
Less: Demolition 0 Q
Subtotal 0 192,175
lf%BQ Q 1%aziK!
Real Property (1)
Less: Appeal Changes (2)
Add: New Real Property
Total Real Property
192,175
0
Q
192,175
196,018
!4.724)
EG
l%la!-zu
A 1xaQ
Personal Property
Add: New Personal Property
Total Personal Property
4 11,521
11,521 11,521 11,521 11,673
Q Q 152 Q
11,521 11,521 11,673 11,673
Total Project Value
Less: Base Value ($45,986)
Incremental Value
Estimated Tax Rate
203,696 202.833 mzL au.28 21u -
157,710 156.847 Ri.L226 1CM2 169.335
1.055600 1.048960 1.044060 1.039660 1.03 5690
Gross Tax Revenue
Add: Unitary Tax Revenue
Less: SB 2557 Fee (3)
Less: Potential Appeal Refunds (4)
Less: 20% Housing Seat-Aside
$1,665
(2’47
(18)
@Q
$1,@5 21
(25)
i&2
w
% 1,684
27
(26)
&
Net Tax Increment Revenue $1.320 $1.293 %1.348
S1,7g
(2’97
&
%1.402
(1)
(2)
(3)
(4)
Real Property valuations are assumed to increase by 2% per year.
Reflects the Fiscal Consultant’s estimate of assessed valuation appeals approved by the County.
See “APPENDIX D: Report of Keyser Marston Associates, Inc.”
The County fee for property tax administration allowed by SB 2557 is assumed to increase by 4%
per year.
Reflects the Fiscal Consultant’s estimate of refunds due to property owners appealing their
1992193 property amendments.
Source: Keyser Marston Associates, Inc.
30
Rclimituy Offkid Shhmmt Dnk 06/24/93
The table below summarizes the projected coverage with respect to the Bonds assuming: (i) the
Tax Revenues as projected by the Fiscal Consultant###~ (ii) a $###I 5.OOO.OOQ * of Bonds at an average
interest rate of #Mo/o*W
TABLE 6
Carlsbad Housing and Redevelopment Commission
Village Redevelopment Project Area
Estimated Debt Service Coverage
Fiscal Year Ending June 30
(000’s Omitted)
Bond Year
Ending
##Seotember l.
++#fEstimated Projected
Debt Semjce Coveraee
## 1994 L22.J 1,055 1.23
1995 1,341 1,055 14
1996 1,325 1,055 l.lQ
1997 l& 1,055 1.2
1998 1.430 1.055 1.36
(1) See Table 5 “Forecasted Tax Increment Revenue”.
##
31
heliminq Official Shkment Dnft OS/U/W
CERTAIN INFORMATION CONCERNING THE CITY
Certain general information concerning the City is included herein as Appendix C hereto. Such
information is provided for informational purposes only. The General Fund of the City is not liable for
the payment of the Bonds or the interest thereon, nor is the taxing power of the City pledged for the
payment of the Bonds or the interest thereon.
SUMMARY OF THE INDENTURE
Included in Appendix A is a brief summary of certain of the provisions of the Indenture. Such
summary is not intended to be definitive, and reference is made to the complete documents for the
complete terms thereof. Except as otherwise defined in this summary, the terms previously defined in this
Official Statement have the respective meanings previously given.
APPROVAL OF LEGAL PROCEEDINGS
The legality of the issuance of the Bonds is subject to the approval of Jones Hall Hill & White, A
Professional Law Corporation, San Francisco, California, acting as Bond Counsel. A copy of its legal
opinion in substantially the form attached as Appendix E will be printed on each Bond. Certain legal
matters will be passed upon for the Commission by the City Attorney of the City of Carlsbad, California.
TAX EXEMPTION
In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco,
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 in
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 such corporations (as defined for federal income tax purposes), such interest is taken into
account in determining certain income and earriings.
The opinions set forth in the preceding paragraph are subject to the condition that the
Commission 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 income tax purposes. The Commission 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% federal alternative minimum tax imposed on corporations, an amount equal to 75% 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
payable with respect to the Bonds, is included in adjusted current earnings.
Prospective purchasers of the Bonds also should be aware that (i) Section 265 of the Code denies
a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the
32
P~liminay Offictd Shkmmt DnH M/24/93
case of a financial institution, that portion of the Bond Owner’s interest expense allocated to interest
payable with respect to the Bonds, (ii) with respect to insurance companies subject to the tax imposed by
Section 83 1 of the Code, Section 832(b)(5)(B)(‘) 1 re d uces the deduction for loss reserves by (15%) of the
sum of certain items, including interest payable with respect to the Bonds, (iii) for taxable years beginning
before January 1, 1996, interest payable with respect to the Bonds earned by some corporations could be
subject to the environmental tax imposed by Section 59A of the Code, (iv) interest payable with respect to
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, (v) passive investment income, including interest
payable with respect to 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%) of the gross receipts of such Subchapter S corporation is passive investment
income, and (vi) 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 payable with respect to the Bonds.
In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal
income taxes.
LITIGATION
At the time of delivery of and payment for the Bonds, the Commission will certify that, except as
disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, regulatory Commission, public board or body, pending or, to the knowledge of the’
Commission, threatened against the Commission in any way affecting the existence of the Commission or
the titles of its officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or
delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the
collection or application of Tax Revenues pledged or to be pledged to pay the principal of and interest on
the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the
Bonds, the Indenture, or any action of the Commission contemplated by any of said documents, or in any
way contesting the completeness or accuracy of this Official Statement or the powers of the Commission
or its authority with respect to the Bonds, the Indenture or any action of the Commission contemplated by
said documents, or which would adversely affect the exclusion of interest paid on the Bonds from gross
income for Federal income tax purposes or the exemption of interest paid on the Bonds from California
personal income taxation, nor, to the knowledge of the Commission, is there any basis therefor.
RATING
[Standard & Poor’s Corporation and Moody’s Investors Service have assigned their municipal
bond ratings of “AAA” and “Aaa”, respectively, to this issue of Bonds with the understanding that upon
delivery of the Bonds, a policy insuring the payment when due of the principal of and interest on the
Bonds will be issued by . There is no assurance that any credit ratings
given to the Bonds will be maintained for any period of time or that the ratings may not be lowered or
withdrawn entirely by such rating agencies if, in their judgment, circumstances so warrant. The
Commission undertakes no responsibility either to bring to the attention of owners of the Bonds any
downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal.
Any such downward revision or withdrawal of such rating may have an adverse effect on the market price
of the Bonds. Such ratings reflect only the views of such organizations and an explanation of the
significance of such ratings may be obtained from such rating agencies.]
33
Pdimuwy Official Shbmmt Dnft 06f 21f 93
UNDERWRITING .
The Bonds were purchased following receipt of competitive bids by We “Underwriter”). The Underwriter has agreed, subject to certain terms and conditions set forth in the
Notice of Sale and the Official Statement, to purchase the Bonds at a price of $ plus accrued interest to the date of delivery of the Bonds. The Bonds’ Underwriter will purchase all of the Bonds if any
are purchased.
The Bonds may be offered and sold to certain dealers (including dealers depositing Bonds into
investment trusts), dealer banks, banks acting as agents and others at prices lower than such offering
prices stated on the inside cover of this Official Statement.
EXPERTS
The Report of Keyser Marston Associates, Inc., included in Appendix D to this Official
Statement has been presented in reliance upon the knowledge, experience and authority of that firm as
experts in redevelopment consulting. The accuracy of (a) the mathematical and arithmetical computations
of the adequacy of the maturing principal amounts of and interest on certain United States Treasury
Obligations to pay when due all principal, interest and premium on the Bonds, as described herein under
“PURPOSE OF THE BONDS,” and (b) the mathematical and arithmetical computations supporting the
conclusion that the Bonds are not “arbitrage bonds” under Section 103(b)(2) and 148 of the Code will be
verified by Ernst & Young, independent certified public accountants.
MISCELLANEOUS
All of the preceding summaries of the Bonds, the Indenture, other applicable legislation,
agreements and other documents are made subject to the provisions of the Bonds and such documents,
respectively, and do not purport to be complete statements of any or all of such provisions. Reference is
hereby made to such documents on file with the Commission for further information in connection
therewith.
Any statements made in this Official Statement involving matters of opinion or of estimates,
whether or not expressly stated, are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized.
The execution and delivery of this Official Statement by the Chairman of the Commission has
been duly author&d by the Commission. Concurrently with the delivery of the Bonds, the Commission
will furnish to the Underwriter a certificate of the Commission to the effect that this Official Statement, as
of the date of this Of5cial Statement and as of the date of delivery of the Bonds, does not contain any
untrue statement of a material fact or omit to state any material fact necessary to make the statements
herein, in the light of the circumstances under which they were made, not misleading.
CARLSBAD HOUSING REDEVELOPMENT COMMISSION
By: ISI
Chairperson
34
Pdiminq Official ShLmcnt Draft 06/24/m
APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
A-l
APPENDIX B
Pdlminay omdd Sbcrmmt thfk 06/u/93
.
COMMISSION AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30,1992
B-l
Prelimmary Offtchl Sbtemmt Draft 06/24/93
APPENDIX C
GENERAL INFORMATION REGARDING THE CITY OF CARLSBAD
The City of Carlsbad was established in 1952 as a general law city, with a five-member City
Council serving as the governing board of the City. The council members are elected to four-year terms,
and the mayor is elected by the voters every four years. The City has a staff of approximately 500
employees, including about 25 professional engineers and surveyors.
The City’s population at January 1, 1992 was approximately 65,661 as estimated by the State
Department of Finance. This is an increase of approximately 2.3% over the January 1, 1991 population
of approximately 64,173 and an increase of approximately 85% over the 1980 population of 35,490. The
City has exceeded the growth rate experienced by the balance of the County. The City and County
experienced substantial growth during the 1970’s and 1980’s. During that period, the City’s rate of growth
was nearly triple the rate for the County. Despite the lower growth rate experienced in the 1980’s, the
City managed to grow 77.9%, more than twice the rate of the balance of the County. There is no.
assurance that previous growth rates will be sustained in the future.
CITY OF CARLSBAD
COUNTY OF SAN DIEGO
Population Estimates
OGrowth %
1970 14,944 -- 1,357,854 --
1975 19,200 28.5 1,560,700 14.9
1980 35,490 84.8 1,861,846 19.3
1990 63,126 77.9 2,498,O 16 34.2
1991 64,173 1.7 2,546,755 2.0
1992 65,66 1 2.3 2,602,244 2.2
Source: State Department of Finance.
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RlimmayGfficialShhmmt Draft M/24/93
Agriculture 12.4 , 12.1 11.3 10.8 10.4
Mining 0.8 0.8 0.8 0.7 0.6 Construction 54.6 57.4 63.8 59.8 50.4 Manufacturing 124.3 130.1 135.4 137.8 134.7 Transportation, Public Utilities 33.7 35.1 35.8 37.2 36.8 Wholesale Trade 37.9 41.0 47.8 44.5 42.3 Retail Trade 169.1 181.9 190.8 194.1 188.5
Finance, Insurance, Real Estate 61.4 65.0 66.5 66.4 64.3
Services 229.0 242.5 259.5 274.7 277.3
Government 156.0 162.8 169.3 177.4 179.5
SAN DIEGO COUNTY
Estimated Number of Workers by Industry
1987-1991
ANNUAL AVERAGES
(In Thousands)
TOTAL(l) 879.2 928.7 975.9 1003.2 984.7
( 1 ) Totals may not add due to independent rounding.
Source: State Department of Employment Development.
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CITY OF CARLSBAD
PRINCIPAL EMPLOYERS
1993
Tri-City Medical Center
La Costa Resort
Plaza Camino Real
Mira Costa College
The Upper Deck
Hughes
Carlsbad Unified School District
Puritan BenneIl
North City Transit
Car Country Carlsbad
City of Carlsbad
Farmers Insurance Regional Office
San Diego Gas & Electric
Callaway Golf
Taylor Made Golf
Product
Hospital
Resort
Hotel
College
Baseball Cards Mfg.
Electronics Mfg.
Schools
Medical Equipment Mfg.
Bus Service
Auto Sales
City
Insurance
Electricity Service
Golf Club Mfg.
Golf Club Mfg.
3,000
1,300
1,000
1,000
800
630
610
550
537
500
500
450
400
350
300
Source: City of Carlsbad.
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San Diego Gas & Electric Co.
La Costa Hotel & Spa Corp.
Fieldstone/La Costa Assoc.
Hughes Aircraft Company
Aviara Land Associates Ltd.
Aviara Resort Associates Ltd.
Lyon/Copley Carlsbad Assoc.
Upland Industries Corp.
Kaiza Poinsettia Corp.
Plaza Camino Real
Preiimtnmy Official Sbmcnt Dnft 06f 24/93
CITY OF CARLSBALI
PRINCIPALTAXPAYERS
1991/92
Power Generation $3285 15,295 5.56%
Hotel & Health Spa 206,379,368 3.49
Land Developer 174,391,826 2.95 Manufacturer 97,847,626 1.66
Land Developer 67,728,052 1.14
Land Developer 44,775,200 .76
Land Developer 41,365,205 .70
Land Developer 39,958,075 .68
Land Developer 3 1,613,572 .53
Shopping Center 29.354.377 a2
$1.061.928.592 17.97%
(1) Net assessed valuation for 1991-1992 - $5,909,991,722.
Source: County of San Diego Offke of the Auditor and Controller.
Commercial Activity
The volume of taxable transactions by type of business for Carlsbad during the last five years
ended December 3 1, 1991 are shown below. Auto dealer sales dominated retail sales in 199 1 with a
3 1.4% share of total taxable transactions, primarily due to the Car Country Carlsbad Automall.
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Rcliminuy Official Sb*md hft 06/24/93
CITY OF CARLSBAD
TAXABLE TRANSACTIONS BY TYPE OF BUSINESS, 1988-1991
(In Thousands of Dollars)
Retail Stores:
Apparel
General Merchandise
Drug Stores
Food Stores
Packaged Liquor
Eating/Drinking Places
Home Furnishings and Appliances
Building Materials and
Farm Implements
Auto DlrsJSuppliers
Service Stations
Other Retail
Total Retail Stores
All Other Outlets
Total Ail Outlets
45,282 55,401 62,784 67,1439
98,286 99,527 96,606 89,655
7,611 8,060 9,396 10,615
28,338 35,623 39,024 46,708
43,979 49,348
9,559 9,186
39,037 45,802 39,585 31,116
246,288 293,263 297,457 246,735
28,76 I 29,268 28,659 27,381
56 637 56.24 1 80.289 72.78Q 603,778 691,719 706,963 654,982
99.352 116.540 142.321 130 394 703,130 808,259 849,284 785,376
53,163 53,263
9,580
. . . Source: State Board of Equalization, m
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Preliminary Official Statement Draft W/24/93
Building Activity
The following chart summarizes building permit valuations for Carlsbad for the four-year period
from 1988 through 1991.
CITY OF CAFUSBAD
BUILDING ACTMTY AND VALUATION, 1988-1991
(Valuation in Thousands of Dollars)
New Single Family
New Multifamily
Alterations/Additions Subtotal
New Commercial
New Industrial
Other
Alterations/Additions Subtotal
Total
No. of New Dwelling Units (1)
Single-Dwelling
Multi-Dwelling Total New Units
(1) Figures are not in thousands of dollars.
52,179 47,173
10,328 5,086
5.526 7.024 68,033 59,283
26,449 38,352
12,698 3,667
1,411 4,775
22.084 18.575 62,646 65,369
130,678 124,652
327 272
lQQ -23 427 350
40,748
23,888
24,320
10,278
1,447
2.843
38,887
109,846 69,373
273 141
264 0 539 141
Source: Economic Sciences Corporation and Security Pacific National Bank - California Construction Trends.
Utilities
Utility Services in the City are furnished by the following suppliers:
Water: City of Carlsbad
32,596
0
838
33,433
28,965
4,623
261
35,940
Sewer City of Carlsbad
Gas and Electric: San Diego Gas and Electric Company
Telephone: Telephone service is provided by Pacific Bell.
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Pdiminay Cfftcial Shbnwmt Draft 06/24/93
Transportation
Major road service is provided by Interstate 5-(north/south) and State Highway 78 (east/west). Mainline se with overnight delivery service to Arizona, Los Angeles, San Diego, San Francisco and intermediate
points. Local bus service is provided by North County Transit District; interurban and regional bus
service is provided by Greyhound and Trailways.
McLellan-Palomar Airport is located in the City and can accommodate private and light
commercial aircraft. Oceanside Municipal Airport is located 8 miles north in Oceanside, California.
Lindbergh Field (San Diego International Airport) is 30 miles south, and John Wayne Airport in Irvine,
California is 45 miles to the north.
Deepwater general cargo and bulk service is provided by the Port of San Diego, located 37 miles.
to the south.
Education
The City is supported by eleven public schools (elementary through high school) operated by the
Carlsbad Unified School District and five private schools. There are also eight public or private colleges
and universities in proximity to Carlsbad.
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Preliminary Oftkid Sbhmcnt Draft 06/24/?3
APPENDIX D
REPORT OF KEYSER MARSTON ASSOCIATES, INC.
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Pt’eliminay Official Sbbmmt Dn& 06/24/X3
APPENDIX E
FORM OF BOND COUNSEL OPINION
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Preliminmy Offkid Shkmmt Draft 06/24/B
APPENDIX F
FORM OF BOND INSURANCE POLICY
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