Loading...
HomeMy WebLinkAboutCC Reso No 1989-41RESOLUTION NO. 89-41 RESOLIITION OF Tf~ CITY COUNCIL OF THE CITY OF LARE EISINORE, RIVERSIDE, COUNTY, CALIFORNIA, PROVIDING FOR THE ISSUANCE OF BONDS UNDER THE IMPROVEMENT BOND ACT OF 1915; DESIGNATING FISCAI, AGENT; AND MARING OTHER DETERMINATIONS i (ASSESSMENT DISTf2ICT NO. 89-1) WHEREAS, the City Council has heretofore completed proceedings pursuant to the Municipal Improvement Act of 1913, being Division 12 (commencing with Section 10000) of the Streets and Highways Code, for acquisition of certain improvements for the benefit of lands within an assessment district designated as ASSESSMENT DISTRICT NO. 89-1 WIiEREAS, the City Council is authorized to issue bonds in the amount of the assessment remaining unpaid, pursuant to the Improvement Bond Act of 1915, being Division 10 of the Streets and Highways Code: NOW, THEREFORE, the City Council of the City of Lake Elsinore does hereby RESOLVE, DETERMINE AND ORDER as follows: ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION SECTION 1.01. Definitions. The following terms will have the meanings indicated below unless the context clearly requires otherwise: "1913 Act" means the Municipal Improvement Act of 1913, beina Division 12 of the Streets and Highways Code. "1915 Act" means the Municipal Improvement Act of 1915, being Division 10 of the Streets and Highways Code. "Assessment District" means the captioned Assessment District. "BOnd Counsel" means counsel whose opinion is acceptable by underwriters in the marketing of tax-exempt obligations of public entities and political subdivisions. "Bondowner" or "Owner" means the person in whose name any Bond is registered upon the Bond Register maintained by the Fiscal Agent. "Bond Register" means the books for registration to be maintained by the Fiscal Agent, pursuant to Section 4.01. "Bonds'~ means improvement bonds issued under the 1915 Act. "Bond Year" means the twelve month period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that the first Bond Year shall begin on the Closing Date. "City" means the .City of Lake Elsinore. "City Council" means the City Council of City. "City Clerk" means the City Clerk of City. "Closing Date" means the date upon which there is an exchange of the Bonds for the proceeds representing the purchase of the Bonds by the Underwriter. "Code" means the Internal Revenue Code of 1986, as amended. °Debt Service" means the scheduled payment of principal and interest on the Bonds. °Excess Income" means the amount by which all income earned from the investment of Invested Funds in Non-Purpose Investments exceeds the amount which would have been earned if the Invested Funds had been invested at the Yield plus any income attribut- able toisuch excess. °Excess Investment Earnings" means an amount equal to the sum of: (a~ The excess of (i) The aggregate amount earned from the Closing Date on all Non-purpose Obligations in which Gross Proceeds of the Bonds are invested (other than amounts attributable to an excess described in this clause (a)), over (ii) The amount that would have been earned if the Yield on such Non-purpose Obligations (other than amounts attributable to an excess described in this clause (a)) had been equal to the Yield of the Bonds, plus (b) Any income attributable to the excess described in clause (a) above. "Excess Investment Earnings Fund" means the fund designated by the name of the Bonds established under Section 10.02 and held by the Fiscal Agent. "Fiscal Agent" means the Fiscal Agent appointed by the City with the duties and powers herein provided and i~s successors and _ assigns. "Fiscal Year" means July 1 of each year through the next succeeding June 30. "Gross Proceeds" means the sum of the following amounts: (a) original Proceeds, namely, net amounts received by or ~ for the District as a result of the sale of the Bonds; (b) Investment proceeds, namely, amounts received at any time by or for the District, such as interest and dividends, resulting from the investment of any Original Proceeds (as referenced in clause (a) above) or investment proceeds (as referenced in this clause (b)) in Non-purpose Obligations, increased by any profits and decreased (if necessary, below zero) by any losses on such investments; (c) Amounts in the Reserve Fund and in any other fund established as a reasonably required reserve or replacement fund; (d) Investment Property pledqed as security to make principal or interest payments on the Bonds; (e) Aruounts, otYter than as specified in this definition, used to make principal or interest payments on the Bonds; and (f) Amounts received as a result of investing amounts described in this definition. "Improvement Fund" means the fund designated by the name of the Bonds established under Section 7.01 and held by Treasurer. "Interest Payment Date" means March 2 and September 2 of each year commencing March 2, 1990. 2 "Invested Eunds" mean that portion of the Original Proceeds invested in Non-Purpose Investments. "Investment Earnings Fund" means the fund designated by the name of the Bonds established under Section 10.01 and held by the Fiscal Agent. "Investment Property" means any security (as defined in section 165(g)(2)(A) or (B) of the Code), obligation, annuity contract or investment-type property, excluding, however, obligations the interest on which is excluded from gross income, under section 103 of the Code, for federal income tax purposes. "Net Proceeds" when used with reference to the Bonds, means the face aYnount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any, and less proceeds deposited in the Reserve Fund. "Non-PUrpose Investments" means any Investment Property which: (a) Is acquired with the Gross Proceeds of the issue; and (b) Is not acquired in order to carry out the governmental purpose of the issue. "~riginal Proceeds" means the proceeds from the sale of the Bonds. "Original Purchaser" means the first purchaser of the Bonds upon their delivery by the District. "Outstanding" when used with reference to the Bonds and as of any particular date means all Bonds theretofore delivered except: (a) Any Bond cancelled by the Auditor on nr before said date; and (b) Any Bond in lieu of or in substitution for which another Bond shall have been delivered pursuant to the Section 3.12. "Permitted Investments" mean any investments authorized pursuant to Article 1, Chapter 4, Part 1, Division 2 of Title 5 of the Government Code of the State of California, as amended from time to time. "Private Business Use" means use directly,or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a governmental unit and use as a member of the general public. "Purchase Agreement" or "Purchase Contract" means the agreement by and between the Original Purchaser and City for the purchase of the Bonds. "PUrchase Price" for the purpose of computation of the Yield of the Bonds, has the same meaning as the term "issue "' price" in sections 1273(b) and 1274 of the Code, and, in general, means the initial offering price of the Bonds to the public (not _, including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term "Purchase Price", for the purpose of computation of the Yield of Non-Purpose Obligations, means the fair market value of the Non-Purpose Obliqations on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date that Investment Property constituting a Non-PUrpose Obligation becomes a Non-Purpose Obligation of the Bonds. 3 "Redemption Fund" means the fund designated by the name of the Bonds established under Section 6.01 and held by the Fiscal Agent. "Record Date" means the close of business on the fifteenth (15th) day of the month preceding each Interest Payment Date whether such fifteenth (15th) day is a Business Day. "Regulations" means temporary or permanent regulations promulg~ted under the Code. "Reserve Fund" means the fund designated by the name of the Bonds established under Section 5.01 and held by the Fiscal Agent. ~'Reserve Requirement" means an amount not to exceed ten percent (l0~) of the par value of the Bonds. "Resolution of Intention" means Resolution No. 89-29. "Superintendent of Streets" means the Superintendent of Streets of the District. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Non-PUrpose Obligations which require payments in a form not characterized as principal and interest) on a Non-Purpose Obligation or of the Bonds produces an amount equal to the Purchase Price of such Non-PUrpose Obligation or the Bonds, all computed as prescribed in applicable Regulations. ARTICLE II ASSESSMENTS SECTION 2.01. Assessment. The assessment in the aqgregate amount of $ 1,889,266 is shown on Report on file in the office of the Superintendent of Streets and by reference made a part hereof. SECTION 2.02. Parcel Describtions. For a description of the lots or parcels of land bearing the respective reassessment numbers and upon which the Reassessment has been levied, reference is hereby made to the reassessment and d~.agram recorded in the Office of the Superintendent of Streets. ARTICLE III BONDS SECTION 3.01. Issuance of Bonds. Bonds shall be issued in the aggregate principal amount of $ 1,899,266 pursuant to the 1915 Act. SECTION 3.02. Registration• Denomination. The Bonds shall be issued as fully registered Bonds in the denomination of $5,000, or any inteqral multiple thereof; except that, if the ;__. amount by which the total issue exceeds the maximum integral multiple of $5,000, then one Bond in such amount shall be issued to mature in the first year of maturity. SECTION 3.03. Date. The Bonds shall be dated September 28, 1989 and interest shall accrue thereon from such date, unless otherwise provided by the Purchase Contract. $ 4 SECTION 3.04. Maturitv. The Bonds shall be issued in serial form with annual maturities on September 2nd of each year succeeding the first twelve (12) months after their date, until the whole is paid. The last installment of Bonds shall mature on September 2, 2014 he amount maturing each year shall be such as to result in approximately equal annual debt service during the term of the issue, as provided by the Purchase Contract. ' SECTION 3.05. Interest. Each Bond shall be of a single maturity and shall bear interest at'the rate to be determined on the sale thereof on March 2 or September 2 commencing March 2, 1990 next preceding the date on which it is authenticated and registered, unless: (a) The Bond is authenticated and registered as of an Interest Payment Date, in which case it shall bear interest from such Interest Payment Date; or (b) The Bond is authenticated and registered prior to the first Interest Payment Date, in which case it shall bear interest from its date; ' until payment of its principal sum has been discharged. SECTION 3.06. Form of Bonds. The Bonds shall be substantially in the form set forth in Section 8652 of the Streets and Highways Code. SECTION 3.07. Medium of Pavment. The Bonds shall be ,- payable in lawful money of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 3.08. Payment of Principal and Interest. The principal on the Bonds shall be payable in lawful money of the United States of America at the Principal Office of the Fiscal Agent. Interest on the Bonds shall be paid by the Fiscal Agent by check mailed on the Interest Payment Date to the registered Owner of each Bond as his name and address appear on the Bond Register kept by the Fiscal Aqent at the close of business on the Record Date. SECTION 3.09. Failure to Pav Interest. Each Bond shall. continue to bear interest after maturity at the rate stated thereon, provided it is presented at maturity and payment thereof is refused on the sole ground that there is not sufficient money in the Redemption Fund with which to pay same. If a Bond is not presented at maturity, interest thereon shall run only until maturity. SECTION 3.10. Execution. The Bonds shall be executed in facsimile by the Treasurer and City Clerk. The seal of the City shall be imprinted in facsimile on the Bonds. The Bonds shall then be delivered to the Fiscal Agent for authentication and registration. In case an officer who shall have siqned or attested to any of the Bonds by facsimile or otherwise shall cease to be such officer before the authentication, delivery and issuance of the Bonds, the Bonds nevertheless may be authenticated, delivered and issued, and thereupon shall be as binding as though those who signed and attested the same had remained in office. SECTION 3.11. Authentication. Only those Bonds which bear a certificate of authentication manually executed by the Fiscal Agent shall be valid or obligatory for any purpose or entitled 5 to the benefits of this Resolution. The certificate of the Fiscal Agent shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder, and are entitled to the benefits of this Resolution. SECTION 3.12. Bonds Mutilated Destroved, Stolen or Lost. In case any Bond shall become mutilated or be destroyed, stolen or lost, the City shall execute and the Fiscal Agent shall authenticate and deliver a new bond of like maturity and principal amount as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such a mutilated Bond, upon surrender and cancellation of the mutilated Bond or in lieu of and in substitution for a destroyed, stolen or lost Bond, upon filing with the City and the Fiscal Agent evidence satisfactory to the City and the Fiscal Agent that the bond has been destroyed, stolen or lost and proof of ownership thereof, and upon furnishing the City and the Paying Agent with indemnity satisfactory to each, complying with such other reasonable regulations as the City and the Fiscal Agent may incur. All mutilated Bonds so surrendered shall be cancelled by the Fiscal Aqent. SECTION 3.13. Temporarv Bonds. Until the definitive Bonds are prepared, the City may execute and the Fiscal Agent may authenticate and deliver, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds, except as to exchangeability for Bonds, one or more temporary Bonds (which shall be registered as to principal and interest), substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued and with such omissions or insertions of and variations from the terms and conditions thereof as may be appropriate to temporary Bonds. The City at its expense shall prepare and execute and the Fiscal Agent upon the surrender of such temporary Bonds for exchange and the cancellation of such surrendered temporary Bonds, without charge to the owner thereof, shall authenticate and deliver in exchange therefor, at the Principal Office of the Fiscal Agent, definitive Bonds of the same aggregate principal amount and maturity. The temporary Bonds shall in all respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this Resolution. All temporary Bonds surrendered in exchange for a definitive Bond or Bonds shall be forthwith cancelled by the Fiscal Agent. SECTION 3.14. Order to Print and Authenticate Bonds. The Treasurer is instructed to cause the Bonds, in such form as shall be approved by the City and its Bond Counsel, to be printed, and to proceed to cause the Bonds to be authenticated and delivered to an authorized representative of the Underwriter, upon payment of the purchase price as set forth in the accepted Purchase Agreement for the sale of Bonds. ARTICLE IV REGISTRATION• TRANSFER• EXCHANGE; CANCELLATION SECTION 4.01. Bond Reaister. All of the Bonds issued under this Resolution shall be subject to the provisions for registration and transfer contained in this Resolution and in the Bonds. So long as any of the Bonds shall remain outstanding, the Fiscal Agent shall maintain and keep, at its principal Office, the Bond Register, and, upon presentation of a Bond for registration or transfer at the Principal Office, the Fiscal Agent shall register or cause to be registered therein, and permit to be transferred thereon, under such reasonable regulations as the District or the Fiscal Agent may prescribe, any Bond entitled to registration or transfer. 6 So long as any of the Bonds'remain outstanding, the City shall make all necessary provisions to permit the exchange of Bonds at the Principal Office of the Fiscal Agent. SECTION 4.02. Transfer of Bonds. Each Bond shall be transferable only upon the Bond Register by the Owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof, together with a written instrument of transfer satisfactory to the Fiscal Agent duly executed by the Owner or his duly authorized attorney., Upon the transfer of any Bond, the Fiscal Agent shall issue in the name of the transferee a new Bond or Bonds of a like aggregate principal amount of the same series, interest rate and maturity as the surrendered Bond or Bonds. SECTION 4.03. Exchanae of Bonds. Any Bond or Bonds may be exchanged at the Principal Office of the Fiscal Agent, upon surrender thereof, by the Owner in person or by his attorney duly authorized in writing. Upon exchange of such Bond or Bonds, the Fiscal Agent shall issue in the name of the Owner thereof a new Bond or Bonds for a like aggregate principal amount of the same series, interest rate and maturity as the surrendered Bond or Bonds. SECTION 4.04. Reaulations W1LII tCESAC.'CL Lv nxc:uauWeo aaiu Transfers. In all cases in which the privilege of exchanging or transferring Bonds is exercised, the City shall execute and the Fiscal Agent shall authenticate and deliver Bonds in accordance with the provisions of this Resolution. All Bonds surrendered in any such exchanqes or transfers shall forthwith be cancelled by the Fiscal Agent and delivered to the City. For every such exchange or transfer of Bonds, whether temporary or definitive,the City or the Fiscal Agent may impose a charge sufficient to reimburse them for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer (other than such as may have been imposed by the City), which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. SECTION 4.05. No Exchanae or Transfer. No exchange or transfer of Bonds shall be made during the period from any Record Date to the next succeedinq Interest Payment Date. SECTION 4.06. Cancellation. All Bonds paid or redeemed, either at or before maturity, shall be cancelled upon payment or redemption of such Bonds, and upon delivery of such Bonds to the Fiscal Agent when such payment or redemption is made. All Bonds cancelled under any of the provisions of this Resolution shall be sent by certified or registered mail to the City which shall retain such Bonds for the statutory period of one year, after which such Bonds may be destroyed upon execution of a certificate describing the Bonds so destroyed. The City shall retain the executed certificate in its permanent files for the issue. ARTICLE V RESERVE FUND SECTION 5.01. Reserve Fund. A fund is hereby created and designated Reserve Fund Assessment District No. 89-1 to be held and administered by the Fiscal Agent. SECTION 5.02. Disposition of Proceeds. an amount of $132,250 shall be transferred to the Reserve Fund. 7 Bond proceeds in SECTION 5.03. A~plication. shall be applied as follows: The moneys in the Reserve Fund (a) Except as provided in Section 5.06, moneys in the Reserve Fund shall be transferred to the Redemption Fund for the Bonds if, as a result of delinquencies in the payment of assessments, there are insuf£icient moneys in the Redemption Fund to pay principal of and interest on the Bonds. Amounts so transferred shall be repaid to the Reserve Fund from proceeds from the redemption of Bonds or foreclosure of property with respect to which such transfer was required and from payments of the delinquent assessments; and ` (b) Whenever moneys in the Reserve Fund are sufficient to retire all of the Bonds outstanding, plus accrued interest thereon, such money shall be transferred to the Redemption Fund and collection of the remaining unpaid assessments shall cease. SECTION 5.04. Investment. The moneys in the Reserve Fund may be invested and reinvested in Permitted Investments, without regard to yield limitations under the Code. SECTION 5.06. Transfer of Investment Earninas. All interest earnings and profits on amounts in the Reserve Fund shall be transferred to the Investment Earnings Fund upon receipt thereof. ARTICLE VI REDEMPTION FUND SECTION 6.01. Redemption Fund. A fund is hereby created and designated Redemption Fund Assessment District No. 89-1 to be held and administered by the Fiscal Agent. SECTION 6.02. Disbosition of Proceeds. Bond proceeds in the amount of $137,916 representing not to exceed one year's interest on the Bonds shall be deposited in the Redemption Fund upon sale and delivery of the Bonds. SECTION 6.03. Accrued Interest. Accrued interest paid by the Original Purchaser, if any, shall be deposited in the Redemption Fund upon sale and delivery of the Bonds and used for payment of interest due on the first Interest Payment Dates. SECTION 6.04. Application. All sums received from the collection of assessments and interest thereon together with penalties, if any, shall be deposited in the Redemption Fund. Except as provided in Section 6.06, moneys in the Redemption Fund shall be disbursed to by the Fiscal Agent for payment of principal, interest and penalties on the Bonds to the registered Owners thereof. The moneys in the Redemption Fund shall be used_exclusively for the purposes stated herein. SECTION 6.05. Investment. The moneys in the Redemption Fund may be invested and reinvested in Permitted Investments, without regard to yield limitations under Code. SECTION 6.06. Transfer of Investment Earninas. All interest earnings and profits on amounts in the Redemption Fund shall be retained in the Redemption Fund if such earnings and profits in any Bond Year are less than $100,000. If the aggregate earnings and profits equal or exceed $100,000 in any Bond Year, then all such earnings and profits shall be transferred by the Fiscal Agent to the Investment Earninqs Fund within five (5) days following the last day of the Bond Year. ARTICLE VII IMPROVEMENT FUND S~ETION 7.01. Imvrovement Fund. A fund is hereby created and designated Improvement Fund Assessment Distirct No. 89-1 to be held and administered bp the Treasurer. SECTION 7.02. Cash Pavment Account. Within the Improvement Fund, an account is hereby created and designated Cash Payment Account Improvement Fund Assessment District No. 89-1 to be held by and administered by the Treasurer. SECTION 7.03. Disposition of Cash Pavments. All payments made by the owners of property within the Assessment District, pursuant to Section 10603 of the Streets and Highways Code, shall be deposited in the Cash Payment Account. SECTION 7.04. Investment of Cash Pavments. The moneys in the Cash Payment Account may be invested and reinvested in Permitted Investments, without regard to yield limitations or rebate requirements under the Code and shall be retained in the Cash Payment Account for the purpose specified in Section 7.07. SECTION 7.05. Disposition of Bond Proceeds. After deposit of the required amounts in the Reserve Fund and Redemption Fund, the remaining proceeds frorn the sale of Bonds shall be deposited in the Improvement Fund. SECTION 7.06. Investment of Bond Proceeds. The moneys in the Improvement Fund, exclusive of the moneys in the Cash Payment Account, may be invested and reinvested in Permitted Investments, without regard to yield limitations under the Code and shall be retained in the Improvement Fund for the purpose specified in Section 7.07. SECTION 7.07. Abplication. The moneys in the Improvement Fund and Cash Payment Account therein shall be used exclusively for the payment of the costs of the Improvements described in the Resolution of Intention, as now or hereafter amended by appropriate change and modification proceedings. SECTION 7.08. Surplus Funds. Any surplus in the Improvement Fund after payment of the Improvments shall remain in the Improvement Fund for a period not less than two (2) years from the date of receipt of Bond proceeds and thereafter shall be utilized or distributed pursuant to Section 10427.1 of the Streets and Highways Code. ARTICLE VIII -- DEFICIENCIES IN REDEMPTION FUND SECTION 8.01. No Obliaation to Advance Funds. The District shall not be obligated to advance any lawfully available funds to cure any deficiency which may occur in the Redemption Fund; provided that this determination shall not prevent the District, in its sole discretion, from so advancing such funds. SECTION 8.02. Title of Bonds. The determination not to advance lawfully available funds to cure deficiencies in the Redemption Fund shall be clearly stated in the title of any Bonds issued representing unpaid assessments, pursuant to Section 8769 of Streets and Highway Code. 9 "ARTICLE IX REDEMPTION SECTION 9.01 Redemption. The outstanding Bonds may be redeemed and paid in advance of maturity upon the 2nd of March or 2nd of September in any year by giving the notice provided by law and by paying principal and accrued interest together with a premium equal to One Hundred and Three Percent (103~) of the principal thereof. SECTION 9.02. Notice of Redemption. The notice shall specify the maturities of the Bonds to be redeemed, the redemption date and place or places where amounts due upon such redemption will be payable and, if less than all of the Bonds of any like maturity are to be redeemed, the letter and numbers or other distinguishing marks of such Bonds to be redeemed, and, in the case of a Bond to be redeemed in part only, such notice shall also specify the protion of the principal amount thereof to be redeemed. SECTION 9.03. Redemption of Less than Entire Bond. If there shall be called for redemption less than all of a Bond, the City shall execute and the Fiscal Agent shall authenticate and deliver, upon the surrender of such Bond to the Fiscal Agent, without charge to the owner thereof, for the unredeemed balance of the principal amount of the Bond surrendered, a bond or bonds of the same maturity and any authorized denomination. ARTICLE X _ REBATE SECTION 10.01. Investment Earnings Fund. A fund is hereby " created and designated Investment Earnings Fund Assessment District No. 89-1 to be held and administered by the Fiscal Agent. SECTION 10.02. Excess Investment Earninas Fund. A fund is hereby created and designated Excess Investment Earnings Fund Assessment District No. 89-1 to be held and administered by the Fiscal Agent. SECTION 10.03. Transfers to Investment Earninas Fund. All interest earnings and profits on amounts in all funds and accounts established hereunder, other than: (a) Interest earnings and profits on the Redemption Fund if such earnings in any Bond Year are less than $100,000; - (b) Interest earnings and profits on the Improvement Fund; shall be deposited in the Investment Earnings Fund by the Fiscal Agent within five (5) days following the last day of each Bond Year. On the date of said deposits into the Investment Earnings Fund, the Fiscal Agent shall provide written notice to the Treasurer and to such persons as the Treasurer shall designate, which notice shall (i) set forth the amounts deposited in the Investment Earnings Fund and the fund or accounts from which such amounts were transferred for said deposit, and (ii) describe, by attachment of investment reports or otherwise, all transactions relating to investment of Gross 10 Proceeds by the Fiscal Agent~during the preceding Bond Year. Interest earnings and profits from investment of amounts in the Investment Earnings Fund shall be retained therein to be used for the purposes of such Fund. SECTION 10'.04. Transfers to Excess lnvesLmenz ~arniriUs Fund. Annually, within twenty (20) days following the end of each Bond Year and within:fifty (50) days following retirement of the Bonds, the Treasurer shall calculate or cause to be calculated Excess Investment Earnings during the preceding Bond Year or such other period as may be appropriate under applicable Regulations and shall provide written notice to the Fiscal Agent of the amount thereof. Upon receipt of such notice, the Fiscal Agent shall withdraw from the Investment Earnings Fund an amount equal to Excess Investment Earnings as so calculated, shall deposit such amount in the Excess Investment Earnings Fund and shall deposit in the Reserve Fund all amounts remaining in the Investment Earnings Account until the Reserve Requirement is reached and thereafter to the Redemption Fund. In the event that the amount on deposit in the Investment Earnings Account is less than the amount of Excess Investment Earnings, the Fiscal Agent shall provide written notice directing the City to pay to the Fiscal Agent for deposit in the Excess Investments Earnings Fund, an amount which, together with amounts in said Fund will equal Excess; Investment Earnings as so calculated. Within five (5) days following receipt of such notice, the Treasuxer shall pay to the Fiscal Agent for deposit in the Excess Investment Earnings Fund, the amount set forth in such notice from any legally available source of funds of the City, including but not limited to amounts on deposit in the Improvement Fund. Interest earnings and profits from investment of amounts in the Excess Investment Earnings Fund, shall be retained therein to be used for the purposes of such Fund. SECTION 10.05. Duties of Treasurer in General. The Treasurer shall calculate Excess Investment Earninqs in accordance with Section 10.06 and shall assure payment of an amount equal to Excess Investment Earnings to the United States in accordance with Sections 10.07 and 10.08. SECTION 10.06. CalCUlation OT ~XCess lnvescmenz aariiiiius. Excess Investment EArnings shall be calculated or caused to be calculated by the Treasurer in accordance with the following: (a) Except as provided in (b), in determining the amount described in clause (a)(i) of the definition of Excess Investment Earnings, the aggregate amount earned on Non-purpose Obligations shall include: (i) All income realized under federal income tax accounting principles (whether or not the person earning such income is subject to federal income tax) with respect to such Non-purpose Obligations and with respect to the reinvestment of investment receipts from such Non-purpose Obligations (without regard to the transaction costs incurred in acquiring, carrying, selling oY redeeming such Non-purpose Obligations), -- including, but not limited to, gain or loss realized on the disposition of such Non-purpose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to taxable year of inclusion of gross income), and income under section 1273 of the Code (relating to original issue discount); and 11 (ii) Any unrealized gain or loss as of the date of payment o£ the Bonds in full in the event that any Non-Purpose Obligation is retained after such date. (Ti) In determining the amount described in clause (a)(i) of the definition of Excess Investment Earnings, Investment Property shall be treated as acquired for its fair market value at the time it becomes a Non-purpose Obligation, so that gain or loss on the disposition of such Investment Property shall be computed with reference to such fair market value as its adjusted basis. (c) In determining the amount described in clause (a)(ii) of the definition of Excess Investment Earnings, the Yield of the Bonds shall be determined based on the actual Yield of the Bonds during the period between the Closing Date and the date the computation is made (with adjustments for original issue discount or premium). (d) In determining the amount described in clause (b) of the definition of Excess Investment Earnings, all income attributable to the excess described in clause (a) of this definition must be taken into account, whether or not that income exceeds the Yield of the Bonds, and no amount may be treated as "negative arbitrage". (e) In determining the amount of Excess Investment Earnings, there shall be excluded any amount earned on any fund or account which is used primarily to achieve a proper matching of revenues and Debt Service within each Bond Year and which is depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on such fund or account or one-twelfth of annual Debt Service as well as amounts earned on such earnings if the gross earnings on such fund or account for the Bond Year is less than $100,000. SECTION 10.07. Pavment to the United States. The Fiscal Agent shall pay from the Excess Investment Earnings Fund an amount equal to Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth (5th) Bond Year and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The Fiscal Agent shall assure that each such installment is in an amount equal to at least ninety percent (90~) of the Excess Investment Earnings with respect to the Gross Proceeds as of the close of the computation period. Not later than sixty (60) days after the payment of the Bonds in full, the Fiscal Agent shall pay from the Excess Investment Earnings Fund to the United States one hundred percent (100~) of the theretofore unpaid Excess Investment Earnings. In the event that there are any amounts remaining in the Excess Investment Earnings Fund following the payment required by the preceding sentence, the Fiscal Agent shall pay such amounts to the City to be used for any lawful purpose of the City. The Fiscal Agent shall remit payments to the United States at the address prescribed by the Regulations as the same may be from time to time in effect, with such reports and statements as may be prescribed by such Regulations. In the event that, for any reason, amounts in the Excess Investment Earninqs Fund are insufficient to make the payments to the United States which are requir.ed by this Section, the Fiscal Agent shall notify the City of such fact and the City shall assure that such payments are made to the United States, on a timely basis, from any fudns lawfully available therefor. SECTION 10.08. Further Obliaation of Fiscal Aaent. The Fiscal Agent shall assure that Excess Investment Earnings are not paid or disbursed except as required in this Article. To that end, the Fiscal Agent shall assure that investment transactions are on an arm's length basis and that Non-purpose Obligations are acquired at their fair market value. 12 In the event that Non-purpose Obligations consist of certificates of deposit or investment contracts, investment in such Non-purpose Obligations shall be made in accordance with the procedures described in applicable Requlations as from time to time in effect. SECTION 10.09. Maintenance of Records. The Treasurer shall keep, and retain for a period of six (6) years following the payment of the Bonds in full, records of the determinations made pursuant to this Article. SECTION 10.10. Independent Consultants. In order to provide for the administration of this Article, the Treasurer and Fiscal Agent may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Treasurer may deem appropriate. ARTICLE XI FISCAL AGENT SECTION 11.01. Appointment. The City Council hereby appoints SECURITY PACIFIC NATIONAL BANK as fiscal agent, authenticating agent, transfer agent and registrar for the Bonds. SECTION 11.02. Approval of Administrative Charaes. The Fiscal Agent is authorized and directed to collect administrative charges to defray expenses incurred in performing the services specified herein as raay be authorized by law. ARTICLE XII TAX COVENANTS SECTION 12.01. Intention of Covenants. It is the intention of the District that the interest paid on the Bonds be exempt from federal income taxation to the extent permitted under the Code and from personal income taxation imposed by the State of California and therefore the City agrees to the covenants contained in this Article. SECTION 12.02. Cbmpliance with Code and Reaulations. The City covenants and agrees to take no action which,in the opinion of Bond Counsel, would result in interest on the Bonds becoming taxable under federal income tax law, in order to preserve the exemption from federal income taxes of interest on the Bonds. The City represents and covenants, for the benefit of the Bond Owners, that it will comply with all applicable requirements of the Code together with any amendments thereto and Regulations promulgated thereunder necessary to preserve the tax exempt status of interest on the Bonds. SECTION 12.03. General. The City represents and covenants that: (a) The City is a governmental unit of general taxing powers. (b) The Original Proceeds will be used to acquire Improvements and to pay costs and expenses incident thereto. SECTION 12.04. Private Activity Bond Prohibition. The City represents and covenants that the Original Proceeds will not be used in a manner that would cause the Bonds to become "private activity bonds" within the meaning of Section 141 of the Code, including: 13 (a) No part of the Orig~nal Proceeds will be used for any private business use within the meaning of Section 141 of the Code. (b) None of the payment of the principal of or the interest on the Bonds is directly or indirectly secured by any interest in: _ (i) Property used or to be used for a private business use; or (ii) Payments in respect to such property, or to be derived from such payments'(whether or not made to the City) in respect of property, or borrowed money, used or to be used for a private business use, all within the meaning of Section 141 of the Code. (c) None of the Original Proceeds will be used directly, or indirectly, to make or finance loans to persons other than governmental units, within the meaning of Section 141 of the Code. SECTION 12.05. Substantial Expenditure. The City represents and covenants that substantially all of the Original Proceeds and investment earnings thereon will be expended on or before September 1, 1992 SECTION 12.06. Investment of Proceeds. The City represents and covenants that: (a) The Original Proceeds will not exceed the amount necessary to achieve the purposes stated herein and no portion of the Bonds is issued solely for the purpose of investing such -- portion at a materially higher yield (taking into account the disc~unt) than the Yield on the Bonds. (b) The Redemption Fund has been established primarily to achieve a matching of revenues and payments due with respect to the Bonds in each year. Amounts deposited in the Redemption Fund will be depleted at least once a year except for a reasonable carry-over amount not to exceed one year's earnings on such Fund and all moneys deposited in such Fund will be expended within a thirteen (13) month period beginning on the date of deposit. The amount in the Redemption Fund will be invested without regard to yield; provided that if the aggregate earnings exceed $100,000 in any Bond Year, then all amounts earned on the Redemption Fund shall be subject to Article X. (c) A portion of the Original Proceeds in an amount not to exceed l0~ of the Original Proceeds will be deposited into a reasonably required Reserve Fund. At no time will the amounts deposited to the Reserve Fund be in excess of 10~ of the Original Proceeds. Amounts held in the Reserve Fund will be invested without regard to yield. Amounts earned on the Reserve Fund will be subject to Article X. (d) No funds held by the City and pledged to the payment - of the Debt Service on the Bonds shall be invested so as to produce a yield in the excess of the Yield on the Bonds. (e) Notwithstanding the foregoing, any Original Proceeds and other amounts held in any Fund described above may be invested in obligations earning interest which is exempt from federal taxation under Section 103 of the Code, and any amounts earned from so investing shall not be subject to Article X. 14 SECTION 12.07. Private Loan Use Limitation. The City represents and covenants to assure that not in excess of the lesser of $5,000,000 or five percent (5~) of the Net Proceeds of the Bonds is used, directly or indirectly, to make or finance a loan (other than loans constituting Non-purchase Obligations) to persons other than state or local government units. ~ SECTION 12.08. Federal Guarantee Prohibition. The City represents and covenants that: (a) Neither the principal of nor the interest on the Bonds is directly or indirectly guaranteed in whole or in part by the United States or any agency or instrumentality of the United States so as to cause the Debt Service or the Bonds to be Pederally guaranteed within the meaning of Section 149(b) of the Code or any Regulations. (b) No significant portion of the Original Proceeds will be used to make any loan, the payment of principal or interest of which is to be guaranteed (in whole or in part) by the United States or any agency or instrumentality of the United States so as to cause the Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code or any Regulations. SECTION 12.09. Prohibition eaainsL erLirice or uevlc;C. The District represents and covenants that the Bonds are not and will not be part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code or any Regulations: (a) Enabling the City to e~cploit the difference between tax-exempt and taxable interest rates to gain material financial advantage; and (b) Increasing the burden on the market fo•r tax-exempt obligations. SECTION 12.10. Pledaed Revenues. The City represents and covenants that no revenues or amounts in other accounts or funds of the City are reserved or pledged for Debt Service or the Bonds. SECTION 12.11. No Arbitraae. The City represents and covenants that the City shall not take, or permit or suffer to be taken, any action with respect to the Gross Proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Bonds to be an "arbitrage bond" within the meaning of Section 148(a) of the Code or any Regulations. SECTION 12.12. Registration. The City represents and covenants to cause the Bonds to be delivered (and transferred if requested) in fully registered Porm. SECTION 12.13. Amendment. The City represents and covenants to amend this Resolution and the assessment proceedings to make such additions, deletions or modifications as may be necessary to assure compliance with Section 148(f) of the Code relating to required rebate of Excess Investment Earnings to the United States or otfierwise as may be necessary to assure exemption from federal income taxation of the interest on the Bonds. ARTICLE XIII GENERAL PROVISIONS SECTION 13.01. Covenant to Foreclosure. The City covenants that upon default of any assessment payment due, it will commence and diligently prosecute to completion a foreclosure acton on the land securing such delinquent installments, together with any penalties accruing thereto, pursuant to Part 14 of the 1915 Act, within one hundered fifty (150) days of such default. Furhtermore, the City covenants to bid the minimum of any delinquent amount at foreclosure sale. and any SECTION 13.02. Assessments as Trust Fund. The assessments levied by the City, together with the interest thereon, shall reamin and constitute a trust fund for the redemption and payment of the Bonds and of the interest which may be due thereon. An inetallment of each assessment shall be payable in each year preceding the date of maturity of each of the several series of Bonds which have been issued, sufficient to pay the bonds when due. SECTION 13.03. Incontestabilitv. After the sale and delivery of the Bonds by the City, the Bonds shall be incontestable by the City. SECTION 13.04. Contract with Bondowners. The provisions of this Resolution and of any other resolution supplementing or amending this Resolution shall constitute a contract between the City and the Bondowners and such provisions shall be enforceable by any Bondowner for the equal benefit and protection of all Bondowners similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. This contract is made under and is to be construed in accordance with the laws of the State of California. No remedy conferred hereby upon any Bondowner is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other reme~y conferred by law. No waiver of any default or breach of duty or contract or shall impair any right or remedies on said subsequent default or breach. No delay or omission.of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any default or acquiescence therein. Every substantive right and every remedy conferred upon the Bondowners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brouqht or taken and should said suit, action or proceeding be abandoned, or be determined adversely to the Bondowners, then, in every such case, the City and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. SECTION 13.05. Cessation of Aareements. When all of the Bonds and all interest to accrue thereon have been fully paid and discharged, the agreements in this Resolution shall cease and terminate, and the City shall be under no further obligation to do or perform any of the covenants, conditions or agreements in this Resolution. SECTION 13.06. Partial Invaliditv. If any section, subsection, sentence, clause or phrase of this Resolution shall be for any reason held by a court of competent jurisdiction to be unconstitutional, invalid or unenforceable, such holding shall not affect the validity of the remaining portions hereof. The City Council hereby declares that it would have passed this Resolution and each section, subsection, sentence, clause or phrase hereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared to be unconstitutional, invalid or unenforceable, such holding shall not affect the validity of the remaining portions hereof. 16 SECTION 13.07. Liberal Construction. This Resolution shall be liberally construed to the end that its purpose may be effected. No error, irregularity or informality and no neglect or omission herein or in any proceeding had pursuant hereto which does not directly affect the jurisdiction of the City Council shall void or invalidate this Resolution or such proceeding or any part thereof, or any act or determination made pursuant thereto. SECTION 13.08. Authorization to Authenticate. The Fiscal Agent is hereby authorized and directed to authenticate and deliver the Bonds to the Underwriter upon payment of the purchase price thereof. SECTION 13.09. Authorization of Officers The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the issuance, sale and delivery of the Bonds, and otherwise to effectuate the purposes of this Resolution, and such actions previously taken by such officers are hereby ratified and confirmed. SECTION 14.10. Effective Date. This Resolution shall become effective upon adoption. PASSED, APPROVED AND ADOPTED this 22nd day of Auaust , 1989, by the following vote: AYES: COUNCILMEMBERS: BUCK, DOMINGUEZ, STARKEY, WASHBURN, WINKLER NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: NONE Jim Winkler, ayor City of Lake Elsinore 17 ~ ATTESTo Vicki I,yn. Kasa~, City Clerk City of L ce El~inore _ APPROVED AS TO FORM & LEGALITY: ~V~ ~ John R. Harper, C t Attorney ,:,'.: ~ ~`; 18 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) SS: CITY OF LAKE ELSINORE ) I, Vicki Lynne Kasad, City Clerk of the City oP Lake Elsinore, DO HEREBY CERTIFY that the foregoing Resolution 3uly adopted by the City Council of the City of Lake Elsinore at a regular meeting of said Council on the 22nd day of August, 1989, and that it was so adopted by the following vote: AYES: COUNCILMEMBERS: BUCK, DOMINGUEZ, STARKEY WASHBURN, WINKLER NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ARSTAIN: COUNCILMEMBERS: NONE VICKI LYN IC~S D, CITY CLERK ~ITY OE`` Lta E ~LSiNORE (SEAL) STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) SS: CITY OF LAKE ELSINORE ) I, Vicki Lynne Kasad, City Clerk of the City of Lake Elsinore, DO HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of Resolution No. 89-41 of said Council, and that the same has not been amended or repealed. Dl1TED: Iaugus~ 23, 1989 V YN KAS D, CITY CLERK CITY OF E ELSINORE ( S EAL')