HomeMy WebLinkAbout2011 02-22 CC CDC AGENDA PKTAGENDA OF A SPECIAL MEETING
CITY COUNCIL OF THE CITY OF NATIONAL CITY AND
THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
Council Chambers
Civic Center
1243 National City Boulevard
National City, California
Special Meeting - Tuesday, February 22, 2011 — 6:00 p.m.
OPEN TO THE PUBLIC
ROLL CALL
PUBLIC ORAL COMMUNICATIONS (Three -Minute Time Limit)
CITY COUNCIL
1. A Resolution of the City Council of the City of National City approving issuance of bonds in an
amount not to exceed $45,000,000 by the Community Development Commission of the City of
National City with respect to the National City Redevelopment Project. (Redevelopment)
COMMUNITY DEVELOPMENT COMMISSION
2. A Resolution of the Community Development Commission of the City of National City authorizing
the issuance of not to exceed $45,000,000 principal amount of 2011 Tax Allocation Bonds with
respect to the National City Redevelopment Project; approving, authorizing and directing execution
of a third supplement to indenture of trust relating thereto; authorizing sale of such bonds;
approving official statement; and providing other matters properly relating thereto.
(Redevelopment)
ADJOURNMENT
Next Regular City Council/CDC Meeting —Tuesday, March 1, 2011, 6:00 p.m., Council Chambers, Civic
Center.
Council Requests That All Cell Phones
And Pagers Be Turned Off During City Council Meetings
COPIES OF THE CITY COUNCIL OR COMMUNITY DEVELOPMENT COMMISSION MEETING AGENDAS AND MINUTES
MAY BE OBTAINED THROUGH OUR WEBSITE AT www,nationalcitvca.gov
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NOTICE OF SPECIAL MEETING
CITY COUNCIL OF THE CITY OF NATIONAL CITY AND
THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
COUNCIL CHAMBERS
CIVIC CENTER
1243 NATIONAL CITY BOULEVARD
NATIONAL CITY, CALIFORNIA
TUESDAY, FEBRUARY 22, 2011 - 6:00 P.M.
NOTICE IS HEREBY GIVEN, that the City Council of the City of National City
will hold a special meeting on Tuesday, February 22, 2011, at 6:00 p.m., or as soon
thereafter as the matter may be considered, in the Council Chambers at the Civic
Center, 1243 National City Boulevard, National City, California, 91950. The business to
be transacted at said meeting will be for the City Council to consider the following:
OPEN SESSION
1. A Resolution of the City Council of the City of National City approving issuance of
bonds in an amount not to exceed $45,000,000 by the Community Development
Commission of the City of National City with respect to the National City
Redevelopment Project. (Redevelopment)
2. A Resolution of the Community Development Commission of the City of National
City authorizing the issuance of not to exceed $45,000,000 principal amount of
2011 Tax Allocation Bonds with respect to the National City Redevelopment
Project; approving, authorizing and directing execution of a third supplement to
indenture of trust relating thereto; authorizing sale of such bonds; approving official
statement; and providing other matters properly relating thereto. (Redevelopment)
Dated: February 17, 2011
RON MORRISON, Mayor
CITY OF NATIONAL CITY, CALIFORNIA
CITY COUNCIL AGENDA STATEMENT
MEETING DATE: February 22, 2011
AGENDA ITEM NO.11
ITEM TITLE:
IA resolution of the City Council of the City of National City approving issuance of bonds in an amount
not to exceed $45,000,000 by the Community Development Commission of the City of National City
with respect to the National City Redevelopment Project!;
PREPARED BY: Patricia Beard DEPARTMENT: Red lopment
PHONE: 4255 APPROVED BY
EXPLANATION:
In accordance with the purposes of the Redevelopment Plan for the National City Redevelopment
Project, the CDC has previously issued bonds to finance revitalization and affordable housing projects,
including:
1. 2004 Tax Allocation Bonds - $5,860,000;
2. 2005 Tax Allocation Bonds - $27,940,000; and
3. 2005A Tax Allocation Bonds - $9,840,000.
The Redevelopment Project has remaining financial capacity to issue bonds to finance additional
planned projects and proposes to issue bonds in the very near term to secure funding for future
redevelopment efforts. City Council approval is needed prior to the CDC issuing the bonds.
Please see attached Background Report 1
FINANCIAL STATEMENT: APPROVED: % l ' Finance
ACCOUNT NO. This resolution would authorize the CDC to issue Tax Allocation Bonds to raise up to
$45 million to be repaid through future tax increment collections in the Redevelopment
Project area.
ENVIRONMENTAL REVIEW: Not applicable,
ORDINANCE: INTRODUCTION:
FINAL ADOPTION:
STAFF RECOMMENDATION: Adopt the resolution.
BOARD 1 COMMISSION RECOMMENDATION:
ATTACHMENTS: 1. Background Report
BACKGROUND REPORT
SUMMARY
At the January 11, 2011 Commission Board meeting, staff presented, and the
Commission Board approved, a proposal to issue Tax Allocation Bonds to finance
several capital projects as well as low/moderate housing obligations of the
Commission. As discussed during the meeting, staff informed the Board of its
intent to return to the Board and present the necessary documents to secure bond
financing for such improvements.
Proceeds for the bond issue will be allocated towards the design and construction
of public improvements including the following:
1. Infrastructure Improvements Through the Redevelopment Project Area
2. Low / Moderate Income Housing Obligations
BACKGROUND
The proposed 2011 Bonds will consist of one tax-exempt bond issue. The bonds
will be issued in the approximate principal amount of $45 Million with a term of 21
years. The final interest rate structure will be determined when the 2011 Bonds
are priced and sold, which is expected to occur by the fourth week of February.
The bond closing and distribution of net proceeds is expected to occur by the first
week of March.
The estimated net proceeds from the 2011 Bonds consists of approximately $21
million in non -housing proceeds and approximately $15 million in housing
proceeds, after funding a debt service reserve account, underwriter's discount,
and paying all costs of issuance.
The 2011 Bonds will be issued on a parity basis with the Commission's
outstanding 2004 & 2005 Bonds, such that the issue will have an equal right to net
tax increment of the Commission, for purposes of security of debt service
payments.
DISCUSSION
Structure of the Tax Allocation Bonds
The Commission will issue fixed rate bonds that will amortize over 21 years. The
interest rate on the bonds will be fixed at approximately 7.5%. The Bonds will be
secured by current and future tax increment revenues. Our expectation is that the
bonds would bear a rating of "A-".
Amount of Tax Allocation Bonds issued
The Commission intends to issue the Bonds to finance the public improvements
within the project areas and low/moderate income housing obligations. Based on
current estimates, up to about $45 million of bonds would need to be issued to
finance these improvements. An estimate of this amount is summarized below:
Documents to Be Approved
Approval of the Resolution approving, authorizing and directing execution of certain tax
allocation documents, authorizing and directing the sale of Tax Allocation Bonds,
approving a Preliminary Official Statement, and authorizing and directing certain actions
with respect thereto will authorize the execution of the following documents which are not
included with the document due to their length, but are available for review in the City
Clerks Office:
• City Resolution. A Resolution of the City Council of the City of National City
approving the issuance by the National City Community Development Commission
of its National City Redevelopment Project Area 2011 Tax Allocation Bonds
relating to the National City Redevelopment Project Area.
• National City Community Development Commission Resolution. A Resolution
of the National City Community Development Commission authorizing the
issuance and sale of 2011 Tax Allocation Bonds relating to the National City
Redevelopment Project Area, and approving related documents and authorizing
official.
o Indenture of Trust. This document contains the terms of the Bonds,
including payment and redemption provisions, definition and pledge of Tax
Revenues to pay the Bonds, Rights and Duties of the Trustee, remedies
upon a default in the payment of the Bonds, and final discharge of the
Bonds and other related matters.
o Preliminary Official Statement. This is the Commission's document
pursuant to which the Bonds will be offered for purchase by the public. This
document must contain all facts material to the Bonds and the Commission
(with certain permitted exceptions to be completed in the final Official
Statement) and must not omit any such material facts.
o Bond Purchase Contract. This document contains the obligation of the
underwriter to accept and pay for the Bonds, provided that all of the
covenants and representations of the Commission and Authority are met
and certain other conditions excusing performance by the underwriter do
not exist.
• Joint Powers Financing Authority Resolution of Purchase and Sale. This
Resolution approves the Purchase Contract providing for purchase of the Bonds by
the Authority for concurrent sale to the underwriter, subject to certain parameters
and the provision of funds for such purpose by the underwriter.
REPAYMENT AND COSTS
Based on current interest rates, the average annual debt service on the bonds will be
approximately $4,000,000 with a minor maturity of 2032. This amount will be allocated
from the Commission's current Tax Increment and future revenues.
All costs associated with the issuance including legal counsel, fiscal and financial
consultant, and underwriter fees will be paid from Bond proceeds
PUBLIC NOTICE PROCESS
The item has been noticed through the regular Agenda notification process.
RESOLUTION 2011 —
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY
APPROVING ISSUANCE OF BONDS BY THE COMMUNITY
DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY
IN AN AMOUNT NOT TO EXCEED $45,000,000 WITH RESPECT
TO THE NATIONAL CITY REDEVELOPMENT PROJECT
WHEREAS, the Community Development Commission of the City of National
City ("CDC") is a redevelopment agency and 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 California Health and Safety Code (the "Law"), including the power to issue bonds for
any of its corporate purposes; and
WHEREAS, a Redevelopment Plan for the redevelopment project designated the
"National City Redevelopment Project" in the City of National City, California (the
"Redevelopment Project"), has been adopted in compliance with all requirements of the Law;
and
WHEREAS, the CDC has previously issued its (i) $5,860,000 initial principal
amount of Community Development Commission of the City of National City National City
Redevelopment Project 2004 Tax Allocation Bonds, Series A (the "2004 Bonds") for the purpose
of raising funds to provide financing of redevelopment projects of benefit to the Redevelopment
Project; and (ii) $27,940,000 initial principal amount of Community Development Commission of
the City of National City National City Redevelopment Project 2005 Tax Allocation Refunding
Bonds, Series A, and $9,840,000 initial principal amount of 2005 Tax Allocation Refunding
Bonds, Series B for the purpose of refunding taxable and tax-exempt bonds issued by the CDC
in 2001; and
WHEREAS, for the purpose of financing additional redevelopment activities,
including for the purpose of financing low and moderate income housing, of benefit to the
Redevelopment Project, the CDC proposes to issue its $45,000,000 aggregate principal amount
of CDC National City Redevelopment Project 2011 Tax Allocation Bonds (the "Bonds"); and
WHEREAS, Section 33640 of the Law requires the CDC to obtain the approval of
the City Council prior to issuance of the Bonds; and
WHEREAS, the City Council desires to approve the issuance of the Bonds as
being in the public interests of the City of National City and of the CDC.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
National City as follows:
Section 1. Approval of Issuance of Bonds. The City Council approves the issuance
of the Bonds by the CDC in the aggregate principal amount of not to exceed $45,000,000, as
hereinabove described, and finds the issuance of the Bonds as being in the public interests of
the City of National City and of the CDC.
Resolution No. 2011 —
Page 2
Section 2. Subordination. Any obligation of the CDC to repay any loans, advances
or indebtedness to the City or to make payments to the City pursuant to California Health and
Safety Code Section 33607.5 or Section 33607.7 from tax increment revenues allocated to the
Redevelopment Project shall be subordinate to the obligation of the CDC to use such tax
increment revenues to pay debt service on the Bonds and any obligations issued on a parity
with the Bonds.
Section 3. Effective Date. This Resolution shall take effect from and after its
adoption.
PASSED, APPROVED and ADOPTED this 22nd day of February, 2011.
Ron Morrison, Mayor
ATTEST:
Michael R. Dalla, City Clerk
APPROVED AS TO FORM:
Claudia G. Silva
City Attorney
CITY OF NATIONAL CITY, CALIFORNIA
COMMUNITY DEVELOPMENT COMMISSION AGENDA STATEMENT
ACCOUNT NO.
MEETING DATE: February 22, 2011
AGENDA ITEM NO.
ITEM TITLE:
lA resolution of the Community Development Commission of the City of National City authorizing the
issuance of not to exceed $45,000,000 principal amount of 2011 Tax Allocation Bonds with respect to
the National City Redevelopment Project; approving, authorizing and directing execution of a third
supplement to indenture of trust relating thereto; authorizing sale of such bonds; approving official
statement; and providing other matters properly relating thereto!
PREPARED BY: Patricia Beard DEPARTMENT:
PHONE: 4255 APPROVED BY:
EXPLANATION:
In accordance with the purposes of the Redevelopment Plan for the National City Redevelopment
Project, the CDC has previously issued bonds to finance revitalization and affordable housing projects,
including:
1. 2004 Tax Allocation Bonds - $5,860,000;
2. 2005 Tax Allocation Bonds - $27,940,000; and
3. 2005A Tax Allocation Bonds - $9,840,000.
The Redevelopment Project has remaining financial capacity to issue bonds to finance additional
planned projects and proposes to issue bonds in the very near term to secure funding for future
redevelopment efforts.
Please see attached Background Report
FINANCIAL STATEMENT: APPROVED:/, h\------
I
This resolution would authorize the entire process of issuing ax Allocation Bonds to
raise up to $41 million to be repaid annually at $ 4 million per year through future tax
increment collections in the Redevelopment Project area until 2032.
ENVIRONMENTAL REVIEW: Not applicable,
ORDINANCE: INTRODUCTION:
FINAL ADOPTION:
Finance
STAFF RECOMMENDATION: Adopt the resolution.
BOARD / COMMISSION RECOMMENDATION:
ATTACHMENTS: 1. Background Report
2. Third Supplemental Indenture
3. Preliminary Official Statement
4. Bond Purchase Contract
BACKGROUND REPORT
SUMMARY
At the January 11, 2011 Commission Board meeting, staff presented, and the
Commission Board approved, a proposal to issue Tax Allocation Bonds to finance
several capital projects as well as low/moderate housing obligations of the
Commission. As discussed during the meeting, staff informed the Board of its
intent to return to the Board and present the necessary documents to secure bond
financing for such improvements.
Proceeds for the bond issue will be allocated towards the design and construction
of public improvements including the following:
1. Infrastructure Improvements Through the Redevelopment Project Area
2. Low / Moderate Income Housing Obligations
BACKGROUND
The proposed 2011 Bonds will consist of one tax-exempt bond issue. The bonds
will be issued in the approximate principal amount of $45 Million with a term of 21
years. The final interest rate structure will be determined when the 2011 Bonds
are priced and sold, which is expected to occur by the fourth week of February.
The bond closing and distribution of net proceeds is expected to occur by the first
week of March.
The estimated net proceeds from the 2011 Bonds consists of approximately $21
million in non -housing proceeds and approximately $15 million in housing
proceeds, after funding a debt service reserve account, underwriter's discount,
and paying all costs of issuance.
The 2011 Bonds will be issued on a parity basis with the Commission's
outstanding 2004 & 2005 Bonds, such that the issue will have an equal right to net
tax increment of the Commission, for purposes of security of debt service
payments.
DISCUSSION
Structure of the Tax Allocation Bonds
The Commission will issue fixed rate bonds that will amortize over 21 years. The
interest rate on the bonds will be fixed at approximately 7.5%. The Bonds will be
secured by current and future tax increment revenues. Our expectation is that the
bonds would bear a rating of "A-".
Amount of Tax Allocation Bonds Issued
The Commission intends to issue the Bonds to finance the public improvements
within the project areas and low/moderate income housing obligations. Based on
current estimates, up to about $45 million of bonds would need to be issued to
finance these improvements. An estimate of this amount is summarized below:
Documents to Be Approved
Approval of the Resolution approving, authorizing and directing execution of certain tax
allocation documents, authorizing and directing the sale of Tax Allocation Bonds,
approving a Preliminary Official Statement, and authorizing and directing certain actions
with respect thereto will authorize the execution of the following documents which are not
included with the document due to their length, but are available for review in the City
Clerks Office:
• City Resolution. A Resolution of the City Council of the City of National City
approving the issuance by the National City Community Development Commission
of its National City Redevelopment Project Area 2011 Tax Allocation Bonds
relating to the National City Redevelopment Project Area.
• National City Community Development Commission Resolution. A Resolution
of the National City Community Development Commission authorizing the
issuance and sale of 2011 Tax Allocation Bonds relating to the National City
Redevelopment Project Area, and approving related documents and authorizing
official.
o Indenture of Trust. This document contains the terms of the Bonds,
including payment and redemption provisions, definition and pledge of Tax
Revenues to pay the Bonds, Rights and Duties of the Trustee, remedies
upon a default in the payment of the Bonds, and final discharge of the
Bonds and other related matters.
o Preliminary Official Statement. This is the Commission's document
pursuant to which the Bonds will be offered for purchase by the public. This
document must contain all facts material to the Bonds and the Commission
(with certain permitted exceptions to be completed in the final Official
Statement) and must not omit any such material facts.
o Bond Purchase Contract. This document contains the obligation of the
underwriter to accept and pay for the Bonds, provided that all of the
covenants and representations of the Commission and Authority are met
and certain other conditions excusing performance by the underwriter do
not exist.
• Joint Powers Financing Authority Resolution of Purchase and Sale. This
Resolution approves the Purchase Contract providing for purchase of the Bonds by
the Authority for concurrent sale to the underwriter, subject to certain parameters
and the provision of funds for such purpose by the underwriter.
REPAYMENT AND COSTS
Based on current interest rates, the average annual debt service on the bonds will be
approximately $4,000,000 with a minor maturity of 2032. This amount will be allocated
from the Commission's current Tax Increment and future revenues.
All costs associated with the issuance including legal counsel, fiscal and financial
consultant, and underwriter fees will be paid from Bond proceeds
PUBLIC NOTICE PROCESS
The item has been noticed through the regular Agenda notification process.
Jones Hall Draft 2/11/11
THIRD SUPPLEMENTAL INDENTURE OF TRUST
by and between the
COMMUNITY DEVELOPMENT COMMISSION
OF THE
CITY OF NATIONAL CITY
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
Dated as of March 1,2011
Relating to:
$
Community Development Commission of the City of National City
(National City Redevelopment Project)
2011 Tax Allocation Bonds
TABLE OF CONTENTS
Page
SECTION 1. Supplement to Indenture 2
ARTICLE XII: 2011 BONDS; ISSUANCE ON PARITY WITH 2004 BONDS AND
2005 BONDS, TERMS AND APPLICATION OF PROCEEDS 2
Section 12.01. Definitions 2
Section 12.02. Authorization and Purpose of the 2011 Bonds 3
Section 12.03. Terms of the 2011 Bonds 4
Section 12.04. Redemption of the 2011 Bonds 5
Section 12.05. Form of 2011 Bonds; Authentication and Delivery; CUSIP
Numbers 6
Section 12.06. Transfer of 2011 Bonds 6
Section 12.07. Exchange of 2011 Bonds 7
Section 12.08. Registration Books 7
Section 12.09. Temporary Bonds 7
Section 12.10. 2011 Bonds Mutilated, Lost, Destroyed or Stolen 7
Section 12.11. Application of Proceeds of Sale of 2011
Bonds 8
Section 12.12. 2011 Costs of Issuance Fund 8
Section 12.13. Deposit and Investment of Moneys in Funds 8
Section 12.14. Security for 2011 Bonds 9
Section 12.15. Continuing Disclosure 9
Section 12.16. Benefits Limited to Parties 9
Section 12.17. Effect of this Article XII 10
Section 12.18. Further Assurances 10
SECTION 2. Amendment of the Indenture 10
SECTION 3. Partial Invalidity 10
SECTION 4. Execution in Counterparts 10
SECTION 5. Governing Law 11
EXHIBIT A FORM OF 2011 BONDS
THIRD SUPPLEMENTAL INDENTURE OF TRUST
THIS THIRD SUPPLEMENTAL INDENTURE OF TRUST (this "Third Supplement")
made and entered into as of March 1, 2011, is by and between the COMMUNITY
DEVELOPMENTCOMMISSION OF THE CITY OF NATIONAL CITY, a public body, corporate
and politic, duly organized and existing under the laws of the State of California (the
"Commission"), and DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee (the
"Trustee") under an Indenture of Trust, dated as of June 1, 2004, as amended by a First
Supplemental Indenture of Trust dated as of January 1, 2005 and a Second Supplemental
Indenture of Trust dated as of January 1, 2005 (collectively, the "Indenture") by and between the
Trustee and the Commission.
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, being Part 1 of Division 24 (commencing with Section
33000) of the Health and Safety Code of the State of California (the "Law"), including the power
to issue bonds for any of its corporate purposes; and
WHEREAS, a redevelopment plan for the Commission's National City Redevelopment
Project (the "Redevelopment Project") has been adopted under the Law pursuant to all
applicable requirements of the Law; and
WHEREAS, pursuant to Section 33640 et seq. of the Law, the Commission is authorized
to issue bonds for any redevelopment purpose;
WHEREAS, the Commission has issued its $5,860,000 initial principal amount of
Community Development Commission of the City of National City National City Redevelopment
Project 2004 Tax Allocation Bonds, Series A (the"2004 Bonds") for the purpose of raising funds
to provide financing for the Redevelopment Project; and
WHEREAS, the Commission has also issued its $27,940,000 initial principal amount of
Community Development Commission of the City of National City National City Redevelopment
Project 2005 Taxable Tax Allocation Refunding Bonds, Series A (the"2005A Bonds") and
$9,840,000 initial principal amount of 2005 Tax Allocation Refunding Bonds, Series B (the
"2005B Bonds" and together with the 2004 Bonds, the "2005 Bonds") for the purpose of
refunding taxable and tax-exempt bonds issued by the Commission in 2001; and
WHEREAS, Section 3.05 of the Indenture authorizes the issuance by supplemental
indenture of Parity Debt (as defined in the Indenture) secured under the Indenture by Tax
Revenues (as redefined in the First Supplemental Indenture) on parity with the 2004 Bonds and
2005 Bonds; and
WHEREAS, for the purpose of financing redevelopment activities with respect to the
Redevelopment Project, the Commission proposes to issue its $ aggregate
principal amount of Community Development Commission of the City of National City National
City Redevelopment Project 2011 Tax Allocation Bonds (the "2011 Bonds");
WHEREAS, this Third Supplement is entered into pursuant to and in accordance with
the provisions of Section 3.05 and Section 7.01(c) of the Indenture for the purpose of
prescribing the terms and conditions applicable to the issuance of the 2011 Bonds as Parity
Debt under the Indenture, and for the purposes of amending and supplementing the Indenture
with respect thereto and the Commission and the Trustee desire to enter into this Third
Supplement pursuant thereto to provide for the issuance of the 2011 Bonds; and
WHEREAS, the Commission has certified that all acts and proceedings required by law
necessary to make the 2011 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 Third Supplement a valid and binding agreement for the
uses and purposes herein set forth in accordance with its terms, have been done and taken,
and the execution and delivery of the Third Supplement have been in all respects duly
authorized.
WHEREAS, this Third Supplement is a "Supplemental Indenture" within the meaning of
the Indenture and the 2011 Bonds are "Parity Debt" within the meaning of the Indenture and
secured under the Indenture on parity with the 2004 Bonds and 2005 Bonds; and
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, and for other consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
SECTION 1. Supplement to Indenture. In accordance with the provisions of Section
7.01(c) of the Indenture, the Indenture is hereby amended by adding a supplement thereto
consisting of a new article to be designated as Article XII. Such Article XII shall read in its entity
as -follows:
ARTICLE XII
2011 BONDS; ISSUANCE ON PARITY WITH 2004 BONDS AND 2005 BONDS, TERMS AND
APPLICATION OF PROCEEDS
Section 12.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section 12.01 shall for all purposes of this Article XII but not for any other purposes of this
Indenture, have the respective meanings specified in this Section 12.01. All terms defined in
Section 1.01 of this Indenture and not otherwise defined in this Section 12.01 shall, when used
in this Article XII, have the respective meanings given to such terms in Section 1.01 of the
Indenture.
"Article XII" means this Article XII which has been incorporated in and made a part of this
Indenture pursuant to this Third Supplemental Indenture of Trust, dated as of March 1,2011,
by and between the Commission and the Trustee, together with all amendments of and
supplements to this Article XII entered into pursuant to the provisions of Section 7.01.
"Bond Counsef' means, with respect to the 2011 Bonds, (a) Jones Hall, a Professional
Law Corporation, or (b) any attorney or firm of attorneys 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 appointed by, and acceptable to, the Commission.
2
"Closing Date" or "Date o/Delivery" means, with respect to the 2011 Bonds, the date
upon which there is a physical delivery of the 2011 Bonds in exchange for the amount
representing the purchase price of the 2011 Bonds by the Original Purchaser of the 2011
Bonds.
"Continuing Disclosure Agreement" means, with respect to the 2011 Bonds, that certain
Continuing Disclosure Agreement of the Commission and the Trustee dated as of the Closing
Date of the 2011 Bonds, as originally executed and as it may be amended from time to time in
accordance with the terms thereof.
"Interest Payment Date" means August 1, 2011, and each February 1 and August 1 in
each year thereafter so long as any of the 2011 Bonds remain Outstanding.
"Original Purchaser" means, with respect to the 2011 Bonds, De La Rosa & Co., Inc.
and Stone & Youngberg LLC .
"Resolution" means Resolution No. adopted by the Commission on
, 2011.
"2011 Reserve Subaccount" means the fund by that name established and held by the
Trustee pursuant to Section 12.12(b).
"Third Supplement" means this Third Supplement to Indenture of Trust, dated as of
March 1, 2011, by and between the Commission and the Trustee, as the same may be
amended from time to time in accordance with the terms of the Indenture.
"2011 Bonds" means the Commission's Community Development Commission of the
City of National City National City Redevelopment Project 2011 Tax Allocation Bonds authorized
by and at any time Outstanding pursuant to this Indenture.
"2011 Bonds 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 2011 Bonds and the refunding of the 201 Bonds, including but not limited to: printing
expenses; Rating Agency fees; 2011 Bonds Insurance Policy premium; Surety Bond premium;
filing and recording fees; initial fees, expenses and charges of the Trustee, the Escrow Bank
and their respective counsel, including the Trustee's 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 2011 Bonds;
and any other cost, charge or fee in connection with the original issuance of the 2011 Bonds
and the refunding of the 2011 Bonds.
"2011 Bonds Costs of Issuance Fund" means the fund by that name established and
held by the Trustee pursuant to Section 12.12(a).
Section 12.02. Authorization and Purpose of the 2011 Bonds. The 2011 Bonds have
been authorized to be issued by the Commission pursuant to the Resolution. The 2011 Bonds
are issued as Parity Debt in the aggregate principal amount of
Dollars ($ ) under and subject to the terms of this Indenture, the Resolution
and the Law, for the purpose of providing funds to refinance redevelopment activities with
respect to the Redevelopment Project. This Indenture constitutes a continuing agreement with
the Owners of all of the 2011 Bonds issued hereunder and at any time Outstanding to secure
3
the full and final payment of principal of and premium, if any, and interest on all 2011 Bonds
which may from time to time be executed and delivered hereunder, subject to the covenants,
agreements, provisions and conditions herein contained. The 2011 Bonds shall be designated
the "Community Development Commission of the City of National City (National City
Redevelopment Project) 2011 Tax Allocation Bonds". Upon the execution and delivery of this
Third Supplement, the Commission shall execute and deliver the 2011 Bonds described above
to the Trustee and the Trustee shall authenticate and deliver the 2011 Bonds to the Original
Purchaser upon receipt of a request of the Commission therefor.
Section 12.03. Terms of the 2011 Bonds. The 2011 Bonds shall be issued in fully
registered form without coupons in denominations of $5,000 or any integral multiple thereof, so
long as no 2011 Bond shall have more than one maturity date. The 2011 Bonds shall be dated
the Date of Delivery of the 2011 Bonds, and shall mature and become payable on August 1 in
the following years and shall bear interest at the following interest rates (based on a 360-day
year comprised of twelve 30-day months):
Maturity Schedule
Year Principal Interest Rate
August 1 Amount Per Annum
Interest on the 2011 Bonds shall be payable on each Interest Payment Date
commencing on August 1, 2011, and semi-annually thereafter on each February 1 and August
1. Each 2011 Bond shall bear interest from the Interest Payment Date next preceding the date
of authentication thereof, unless: (a) it 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; or (b) it is authenticated on or before the first Record
Date, in which event interest thereon shall be payable from the Date of Delivery of the 2011
Bonds; or (c) if, as of the date of authentication of any 2011 Bond, interest thereon is in default
such bond shall bear interest from the date to which interest has previously been paid or made
available for payment thereon.
Subject to the provisions of Section 2.04, the principal of and premium, if any, on the
2011 Bonds shall be payable upon presentation and surrender of such bonds at maturity or
earlier redemption at the Office of the Trustee. The principal of, premium (if any) and interest on
the 2011 Bonds shall be payable in lawful money of the United States of America. Payment of
the interest on any 2011 Bond shall be made to the person whose name appears on the bond
registration books of the Trustee as the Owner thereof as of the close of business on the
Record Date immediately prior to such Interest Payment Date by check mailed by first class
4
mail to the Owner at his address as it appears on such registration books, or by wire transfer to
Owners of $1,000,000 or more in aggregate principal amount of 2011 Bonds at such wire
transfer address in the Untied States as such Owner shall specify in a written notice requesting
payment by wire transfer delivered to the Trustee prior to the Record Date.
Any interest not paid when due or duly provided for shall forthwith cease to be payable
to the registered Owner as of the Record Date immediately preceding the applicable Interest
Payment Date and shall be paid to the person in whose name the 2011 Bond is registered as of
the close of business on a special record date for the payment of such defaulted interest to be
fixed by the Trustee. The Trustee shall give notice of such special record date to the Owner not
less than 10 days prior thereto.
Section 12.04. Redemption of the 2011 Bonds. The 2011 Bonds shall be redeemed as
provided in this Section 12.04.
(a) Optional Redemption. The 2011 Bonds maturing on or before August 1, ,
shall not be subject to redemption prior to the respective stated maturities. The 2011 Bonds
maturing on or after August 1, , shall be subject to redemption at the option of the
Commission on any date on or after August 1, , in whole or in part among maturities
designated by the Commission and by lot within a maturity, from any available source of funds,
at a redemption price (expressed as a percentage of the principal amount of the 2011 Bonds or
portions thereof to be called for redemption), as set forth below, together with accrued interest
thereon to the date fixed for redemption:
August 1,
August 1,
August 1,
Redemption Dates
, through July 31,
, through July 31,
, and thereafter
Redemption
Prices
The Commission shall be required to give the Trustee written notice of its intention to
redeem 2011 Bonds under this subsection (a), and the maturities thereof of such 2011 Bonds to
be redeemed, at least forty-five (45) days prior to the date fixed for such redemption, or such
later date as may be acceptable to the Trustee.
(b) Special Mandatory Redemption. The Bonds maturing on or after August 1,
shall also be subject to mandatory redemption on any date commencing on August 1, , in
inverse order of maturity, in whole or in part, from and to the extent of any Tax Revenues paid to
the Trustee for deposit in the Special Fund pursuant to Section 5.02 of the Indenture at a
prepayment price equal to the principal amount thereof to be redeemed, together with accrued
interest thereon to the date fixed for redemption, without premium.
(c) Sinking Account Redemption. The Bonds with a scheduled maturity of August 1,
shall also be subject to mandatory sinking fund redemption in whole or in part on
August 1 in the years set forth below 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 date fixed for redemption, without
premium, or in lieu thereof shall be purchased in whole or in part pursuant to the last paragraph
of Section 2.03(c) of the Indenture, in the aggregate respective principal amounts and on the
respective dates as set forth in the following table:
5
Sinking Fund
Redemption Date
(August 1)
Principal Amount
to be Redeemed
(d) Redemption Procedures. Except as provided in this Section 12.04 to the
contrary, the redemption procedures and other provisions of Section 2.03 shall apply to the
redemption of the 2011 Bonds.
Section 12.05. Form of 2011 Bonds; Authentication and Delivery; CUSIP Numbers. The
2011 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 2011 Bonds shall be executed on behalf of the Commission by the signature of its
Executive Director 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 2011 Bond ceases to be such officer before the Closing Date of the 2011 Bonds, such
signature shall nevertheless be as effective as if the officer had remained in office until the
Closing Date of the 2011 Bonds, Any 2011 Bond may be signed and attested on behalf of the
Commission by such persons as at the actual date of the execution of such 2011 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 2011 Bond any such person shall not have been
such officer of the Commission.
Only such of the 2011 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 2011 Bonds have been duly authenticated and
delivered hereunder and are entitled to the benefits of this Indenture.
The Trustee and the Commission shall not be liable for any omission, defect or
inaccuracy in the CUSIP number that appears on any 2011 Bond or in any redemption notice.
The Trustee may, in its discretion, include in any redemption notice a statement to the effect
that the CUSIP numbers on the 2011 Bonds have been assigned by an independent service
and are included in such notice solely for the convenience of the Owners and that neither the
Trustee nor the Commission shall be liable for any inaccuracies in such numbers.
Section 12.06. Transfer of 2011 Bonds. Any 2011 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
2011 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 2011 Bonds pursuant to this
'Section 12.06. Whenever any 2011 Bond or Bonds shall be surrendered for transfer, the
6
Commission shall execute and the Trustee shall authenticate and .deliver to the transferee a
new 2011 Bond or Bonds of like maturity and aggregate principal amount.
Section 12.07. Exchange of 2011 Bonds. The 2011 Bonds may be exchanged at the
Office of the Trustee for a like aggregate principal amoilllt of 2011 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 2011 Bonds pursuant to this Section 12.07.
Section 12.08. 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 2011 Bonds, which
shall at all times during normal business hours, and upon reasonable notice, be open to
inspection by the Commission and the 2011 Bond Insurer; 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 for the 2011 Bonds,
as hereinbefore provided.
Section 12.09. Temporary Bonds. The 2011 Bonds may be initially issued in temporary
form exchangeable for definitive 2011 Bonds when ready for delivery. The temporary 2011
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 2011 Bond shall be executed by the
Commission upon the same conditions and in substantially the same manner as the definitive
2011 Bonds. If the Commission issues temporary 2011 Bonds it will execute and furnish
definitive 2011 Bonds without delay, and thereupon the temporary 2011 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 2011 Bonds an equal aggregate principal amount
of definitive 2011 Bonds of authorized denominations. Until so exchanged, the temporary 2011
Bonds shall be entitled to the same benefits pursuant to this Indenture as definitive 2011 Bonds
authenticated and delivered hereunder.
Section 12.10. 2011 Bonds Mutilated, Lost, Destroyed or Stolen. If any 2011 Bond shall
become mutilated, the Commission, at the expense of the Owner of such 2011 Bond, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new 2011 Bond of like
tenor in exchange and substitution for the 2011 Bond so mutilated, but only upon surrender to
the Trustee of the 2011 Bond so mutilated. Every mutilated 2011 Bond so surrendered to the
Trustee shall be canceled by it and delivered to, or upon the order of, the Commission. If any
2011 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 for the Trustee and
the Commission 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 2011
Bond of like tenor in lieu of and in substitution for the 2011 Bond so lost, destroyed or stolen.
The Trustee may require payment of a sum not exceeding the actual cost of preparing each
new 2011 Bond issued under this Section and of the expenses which may be incurred by the
Trustee in connection therewith. Any 2011 Bond issued under the provisions of this Section in
lieu of any 2°95 Series A 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 2011 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 2011 Bonds
issued pursuant to this Indenture.
Notwithstanding any other provision of this Section 12.10, in lieu of delivering a new
7
Bond for which principal has 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 upon
receipt of the above -mentioned indemnity.
Section 12.11. Application of Proceeds of Sale of 2011 Bonds . On the Closing Date of
the 2011 Bonds, the proceeds of sale of the 2011 Bonds (less the amount transferred by the
Original Purchaser, on behalf of the Trustee, for the payment of the municipal bond insurance
premium and less the amounts transferred by the Original Purchaser to the Escrow Bank to be
applied to the refunding of the 2011 Bonds) shall be paid to the Trustee and deposited by the
Trustee as follows:
(I) The Trustee shall transfer the amount of $ to the
Commission to be deposited by the Commission in a segregated account of the
Redevelopment Fund to be applied as provided in Section 3.04.
(ii) The Trustee shall deposit in the 2011 Bonds Costs of Issuance Fund the
amount of $
(iii) The Trustee shall deposit in the 2011 Reserve Subaccount the amount of
The Trustee may, in its discretion, establish a temporary fund or account in its books and
records to facilitate transfers required under this Section 12.11.
Section 12.12. 2011 Costs of Issuance Fund .
(a) . There is hereby established a separate fund to be known as the "2011 Costs of
Issuance Fund", which shall be held by the Trustee in trust. The moneys in the 2011 Costs of
Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the 2011
Costs of Issuance upon submission of a Written Request of the Commission stating (i) the
person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the
obligation was incurred, (iv) that such payment is a proper charge against the 2011 Costs of
Issuance Fund, and (v) that such amounts have not been the subject of a prior Written Request
of the Commission; in each case together with a statement or invoice for each amount
requested thereunder. On the earlier of (x) the date which is six (6) months following the Closing
Date of the 2011 Bonds, or (y) the date of receipt by the Trustee of a Written Request of the
Commission therefor, all amounts (if any) remaining in the 2011 Costs of Issuance Fund shall
be withdrawn therefrom by the Trustee and transferred to the Interest Account for use for
purposes of the Interest Account and the 2011 Costs of Issuance Fund shall be closed.
(b) The Trustee shall establish a 2011 Reserve Subaccount as a subaccount of the
Reserve Account described in the Indenture. The amount in the 2011 Reserve Subaccount
shall be disbursed, on a parity basis with the reserves established for the 2004 Bonds and
2005 Bonds, for the purposed described in Section 4.03(d) of the 2000 Bonds Indenture.
Section 12.13. Deposit and Investment of Moneys in Funds. Moneys in the funds and
accounts held by the Trustee under this Article XII shall be invested by the Trustee in Permitted
Investments directed in the written request of the Commission filed with the Trustee at least two
(2) Business Days in of the making of such investments. In the absence of any such directions
from the Commission, the Trustee shall invest such moneys in Permitted Investments described
8
in clause (f) of the definition thereof. Moneys in the funds and accounts held by the Commission
under Article III or this Article XII may be invested by the Commission in any obligations in which
the Commission is legally authorized to invest its funds. Obligations purchased as an
investment of moneys in any fund shall be deemed to be part of such fund or account. All
interest or gain derived from the investment of amounts in . any of the funds or accounts
established hereunder shall be deposited in the respective funds and accounts from which such
investment shall have been made. For purposes of acquiring any investments hereunder, the
Trustee may commingle funds held by it hereunder. The Trustee may act as principal or agent
in the acquisition of any investment. The Trustee shall incur no liability for losses arising from
any investments made pursuant to this Section.
Section 12.14. Security for 2011 Bonds. (a) The 2011 Bonds shall be Parity Debt within
the meaning of such term in Section 1.02 and shall be secured in the manner and to the extent
set forth in Article IV, this Article XII and any other applicable provisions of the Indenture. As
provided in Section 4.01, the 2011 Bonds shall be secured on a parity with all other Bonds
issued under this Indenture, including the 2004 Bonds and the 2005 Bonds, by a first pledge of
and lien on all of the Tax Revenues in the Special Fund, including the Reserve Account.
(b) The Trustee shall establish a 2011 Reserve Subaccount as a subaccount of the
Reserve Account described in the Indenture. The amount in the 2011 Reserve Subaccount
shall be disbursed, on a parity basis with the reserves established for the 2004 Bonds and 2005
Bonds, for the purposed described in Section 4.03(d) of the Indenture.
Section 12.15. Continuing Disclosure. The Trustee hereby covenants and agrees that it
will perform its duties under the Continuing Disclosure Agreement. The Commission hereby
covenants and agrees that it will comply with and carry out all of the provisions of the Continuing
Disclosure Agreement. Notwithstanding any other provision of this Indenture,• failure of the
Commission to comply with the Continuing Disclosure Agreement shall not be considered an
Event of Default however, the Trustee may (and at the written request of the Owners of at least
25% aggregate principal amount of Outstanding 2011 Bonds) shall, but only to the extent
identified from any liability, cost or expense, including, but not limited to fees and expenses of its
attorneys and additional fees and expenses of the Trustee, or any Owner may, take such
actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Commission to comply with its obligations under this
Section.
Section 12.16. Benefits Limited to Parties. Nothing in this Article XII, expressed or
implied, is intended to give to any person other than the Commission, the Trustee, the Insurer
and the Owners of the 2011 Bonds, any right, remedy, claim under or by reason of this Article
XII. Any covenants, stipulations, promises or agreements in this Article XII contained by and on
behalf of the Commission shall be for the sole and exclusive benefit of the Trustee and the
Owners of the 2011 Bonds.
Section 12.17. Effect of this Article XII . Except as in this Article XII expressly provided or
except to the extent inconsistent with any provision of this Article XII, the 2011 Bonds shall be
deemed to be `Bonds" under and within the meaning of Section 1.02, and every term and
condition contained in the foregoing provisions of this Indenture shall apply to the 2011 Bonds
with full force and effect, with such omissions, variations and modifications thereof as may be
appropriate to make the same conform to this Article XII.
9
Section 12.18. 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 of the 2011 Bonds and the rights
and benefits provided in this Indenture.
SECTION 2. Amendment of the Indenture. The Indenture is hereby further amended as
set forth in this Section 2:
(a) Section 1.02 of the Indenture is hereby amended by adding thereto the following
new defined terms to read in their entirety as follows:
"2011 Bonds" means the Community Development Commission of the City of National
City (National City Redevelopment Project) 2011 Tax Allocation Bonds issued by the
Commission in the aggregate principal amount of $ under Article XII.
"Parity Debt" means any bonds, notes, loans, advances or other indebtedness issued or
incurred by the Commission and secured on parity with the 2004 Bonds, 2005 Bonds and the
2011 Bonds pursuant to Section 3.05.
(b) Section 1.02 of the Indenture is hereby further amended in the case of the
following defined terms which are currently contained in Section 1:02, by deleting therefrom in
their entirety the existing definitions of the following terms and substituting instead the following
definitions to read in their entirety as follows:
(c) The provisions of Section 5.11 ("Tax Covenants Relating to 2004 Bonds") and
Section 5.12 ("Rebate of Excess Investment Earnings to United States") and any other
provisions of the Indenture required to maintain the tax-exempt status of Parity Debt shall be
applicable to the 2011 Bonds and any other Parity Debt which is issued with an opinion of Bond
Counsel to the effect that interest income on such Parity Debt is exempt from federal income
taxes.
SECTION 3. Attachment of Exhibit D. The Indenture is also hereby further amended by
attaching thereto and incorporating therein an Exhibit D setting forth the form of the 2011
Bonds, which shall read substantially as set forth in Appendix A which is attached hereto and by
this reference incorporated herein.
SECTION 4. Partial Invalidity. If any section, paragraph, sentence, clause or phrase of
this Third Supplement shall for any reason be held illegal, invalid or unenforceable, such holding
shall not affect the validity of the remaining portions- of this Third Supplement The Commission
hereby declares that it would have entered into this Third Supplement and each and every other
Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the 2011
Bonds pursuant thereto irrespective of the fact that anyone or more Sections, paragraphs,
sentences, clauses, or phrases of this Third Supplement may be held illegal, invalid or
unenforceable.
SECTION 5. Execution in Counterparts. This Third Supplement 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.
10
SECTION 6. Governing Law. This Third Supplement shall be construed and governed .
in accordance with the laws of the State of California applicable to contracts made and
performed in such state.
IN WITNESS WHEREOF, the COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF NATIONAL CITY has caused this Third Supplemental Indenture of Trust to be signed
in its name by its Chairman and attested to by its Secretary, and DEUTSCHE BANK NATIONAL
TRUST COMPANY, in token of its acceptance of the trusts created hereunder, has caused this
Third Supplemental Indenture of Trust to be signed in its corporate name by its officer thereunto
duly authorized, all as of the day and year first above written.
ATTEST:
By:
Secretary
COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF
NATIONAL CITY
By
Chairman
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee
By
Authorized Officer
11
EXHIBIT D TO INDENTURE OF TRUST
(EXHIBIT A TO THIRD SUPPLEMENTAL INDENTURE OF TRUST)
FORM OF 2011 BOND
No. $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(NATIONAL CITY REDEVELOPMENT PROJECT)
2011 Tax Allocation Bonds
RATE OF INTEREST MATURITY DATE DATE OF DELIVERY CUSIP
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a
public body, corporate and politic, duly organized and existing under the laws of the State of
California (the "Commission"), for value received, hereby promises to pay (but only out of the
Tax Revenues and other moneys hereafter referred to) to the Registered Owner identified
above or registered assigns (the "Registered Owner"), on the Maturity Date identified above, the
Principal Amount identified above in lawful money of the United States of America; and to pay
interest thereon at the Rate of Interest identified above in like lawful money from the date
hereof, which date shall be the Interest Payment Date (as hereinafter defined) next preceding
the date of authentication of this Bond (unless this Bond is authenticated on or before an
Interest Payment Date and after the first calendar day of the month in which such Interest
Payment Date occurs (a "Record Date"), in which event it shall bear interest from such Interest
Payment Date, or unless this Bond is authenticated on or prior to July 15, 2011, in which event it
shall bear interest from the Date of Delivery of the 2011 Bonds identified above; provided,
however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this
Bond shall bear interest from the Interest Payment Date to which interest hereon has previously
been paid or made available for payment), payable semiannually on February 1 and August 1 in
each year, commencing August 1, 2011 (the "Interest Payment Dates") until payment of such
Principal Amount in full. The Principal Amount hereof is payable upon. presentation hereof at
the principal corporate office of Deutsche Bank National Trust Company, as trustee (the
"Trustee"), in Los Angeles, California, or such other office as the Trustee may hereafter
designate. Interest hereon is payable by check or draft of the Trustee mailed by first class mail
on each Interest Payment Date to the Registered Owner hereof at the address of such
Registered Owner as it appears on the registration books of the Trustee as of the preceding
Record Date; provided that at the written request of the owner of at least $1,000,000 aggregate
principal amount of Bonds which written request is on file with the Trustee as of any Record
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Date, interest on such Bonds shall be paid on the succeeding Interest Payment Date by wire
transfer to such account as shall be specified in such written request.
This Bond is one of a duly authorized issue of bonds of the Commission designated as
the "Community Development Commission of the City of National City (National City
Redevelopment Project) 2011 Tax Allocation Bonds" (the "Bonds") of an aggregate principal
amount of Dollars ($ ), all of like tenor and date
(except for such variation, if any, as may be required to designate varying numbers, maturities,
interest rates or redemption provisions) and all issued pursuant to the provisions of the
Community Redevelopment Law, constituting Part 1 of Division 24 of the Health and Safety
Code of the State of California, and the acts amendatory thereof and supplemental thereto,
commencing with Section 33000 of said Code (the "Redevelopment Law") and pursuant to an
Indenture of Trust, dated as of June I, 2004, by and between the Commission and the Trustee
as amended by a First Supplemental Indenture of Trust dated as of January 1, 2005, a Second
Supplemental Indenture of Trust dated as of January 1, 2005 and a Third Supplemental
Indenture of Trust dated as of March 1, 2011 (collectively, the "Indenture").
The Bonds are issued and secured on parity with the Commission's $5,860,000 initial
principal amount of National City Redevelopment Project 2004 Tax Allocation Bonds, Series A,
$27,940,000 initial principal amount of National City Redevelopment Project 2005 Taxable Tax
Allocation Refunding Bonds, Series A, and $9,840,000 initial principal amount of 2005 Tax
Allocation Refunding Bonds, Series B. The Commission may issue or incur additional
obligations on a parity with the Bonds, the prior bonds and the 2011 Bonds, but only subject to
the terms of the Indenture. Reference is hereby made to the Indenture (a copy of which is on
file at the office of the Trustee) and all supplements thereto and to the Redevelopment Law for a
description of the terms on which the Bonds are issued, the provisions with regard to the nature
and extent of the Tax Revenues, as that term is defined in the Indenture, and the rights
thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and
the rights and obligations of the Commission thereunder, to all of the provisions of which the
Registered Owner of this Bond, by acceptance hereof, assents and agrees.
This Bond and the interest hereon and all other parity obligations and the interest
thereon (to the extent set forth in the Indenture) are payable from, and are secured by a charge
and lien on the Tax Revenues derived by the Commission from the Redevelopment Project, as
defined in the Indenture, on parity with the 2004 Series A Bonds, the 2005 Series A and Series
B Bonds, the other 2011 Bonds and any other Parity Debt (as defined in the Indenture) to be
issued by the Commission under and in accordance with the Indenture. As and to the extent set
forth in the Indenture, all of the Tax Revenues are irrevocably pledged in accordance with the
terms hereof and the provisions of the Indenture and the Redevelopment Law, to the payment
of the principal of and interest and premium (if any) on the Bonds, the 2004 Series A Bonds, the
2005 Series A and Series B Bonds and any other Parity Debt. Notwithstanding the foregoing,
certain amounts out of Tax Revenues may be applied for other purposes as provided in the
Indenture.
This Bond is not a debt of the City of National City, the State of California, or any of its
political subdivisions (except the Commission), and neither said City nor said State or any of its
political subdivisions (except the Commission) is liable hereon, nor in any event shall this Bond
be payable out of any funds or properties other than the Tax Revenues and amounts held in
certain funds and accounts under the Indenture.
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The rights and obligations of the Commission and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided in
the Indenture, but no such modification or amendment shall permit a change in the terms of
redemption or maturity of the principal of any outstanding Bond or of any installment of interest
thereon or a reduction in the principal amount or the redemption price thereof or in the rate of
interest thereon without the consent of the owner of such Bond, or shall reduce the percentages
of the owners required to effect any such modification or amendment.
The Bonds maturing on or before August 1, are subject to redemption at the
option of the Commission on any date on or after August 1, , in whole or in part
among maturities designated by the Commission and by lot within a maturity, from any available
source of funds, at a redemption price (expressed as a percentage of the principal amount of
the 2011 Bonds or portions thereof to be called for redemption), as set forth below, together with
accrued interest thereon to the date fixed for redemption:
Redemption Dates
August 1, , through July 31,
August 1, , through July 31,
August 1, , and thereafter
Redemption
Prices
he Bonds maturing on or after August 1, , are also be subject to mandatory
redemption on any date commencing on August 1, , in inverse order of maturity, in whole
or in part, from and to the extent of any Tax Revenues paid to the Trustee for deposit in the
Special Fund pursuant to Section 5.02 of the Indenture at a prepayment price equal to the
principal amount thereof to be redeemed, together with accrued interest thereon to the date
fixed for redemption, without premium.
The Bonds with a scheduled maturity of August 1, are also be subject to
mandatory sinking fund redemption in whole or in part on August 1 in the years set forth below
from Sinking Account payments made by the Commission at a redemption price equal to the
principal amount thereof to be redeemed, together with accrued interest thereon to the date
fixed for redemption, without premium, in the aggregate respective principal amounts and on the
respective dates as set forth in the following table:
Sinking Fund
Redemption Date
jAuqust 1)
Principal Amount
to be Redeemed
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
shall be declared due and payable upon the conditions, in the manner and with the effect
provided in the Indenture, but such declaration and its consequences may be rescinded and
annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at said office of the Trustee in Los Angeles, California, but only in the
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manner, subject to the limitations and upon payment of the charges provided in the Indenture,
and upon surrender and cancellation of this Bond. Upon registration of such transfer a new
Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal
amount and of the same maturity will be issued to the transferee in exchange herefor.
The Commission and the Trustee may treat the Registered Owner hereof as the
absolute owner hereof for all purposes, and the Commission and the Trustee shall not be
affected by any notice to the contrary.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist,
have happened or have been performed in due and regular time, form and manner as required
by the Redevelopment Law and the laws of the State of California and that the amount of this
Bond, together with all other indebtedness of the Commission, does not exceed any limit
prescribed by the Redevelopment Law or any laws of the State of California, and is not in
excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have
been manually signed by the Trustee.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company to the Trustee for registration of transfer, exchange or payment, and any bond issued
is registered in the name of Cede & Co., or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.
IN WITNESS WHEREOF, the Community Development Commission of the City of
National City has caused this Bond to be executed in its name and on its behalf with the
facsimile signature of its Chairman and its seal to be reproduced hereon and attested to by the
facsimile signature of its Secretary, all as of the Original Issue Date specified above.
[SEAL]
Attest:
Secretary
COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF
NATIONAL CITY
Chairman
A-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within -mentioned Indenture.
Dated: , 2011
DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee
By
Authorized Signatory
ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es) hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the registration books of the Trustee with full power of
substitution in the premises.
Dated:
Signature Guarantee:
NOTICE: Signature(s) must be guaranteed by an
eligible guarantor institution (banks, stock brokers,
savings and loan associations and credit unions
with membership in an approved signature
guarantee medallion program) pursuant to
Securities and Exchange Commission Rule 17 Ad-
15.
NOTICE: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Certificate in every
particular, without alteration or enlargement or
any change whatsoever.
A-5
A.5
PRELIMINARY OFFICIAL STATEMENT DATED , 2011
o'1
TWO NEW ISSUES —BOOK-ENTRYONLY RATINGS: Standard & Poor's:" "
a(See "MISCELLANEOUS —Ratings^ herein)
.o In the opinion of Jones Hall. Bond Counsel to the Commission, based upon an analysis of existing laws. regulations. rulings and court decisions. and
E assuming, among other matters. the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for
,C m federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the fitrther
$ opinion of Bond Counsel. interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. although
Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel
vexpresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on. the Bonds_ _ See "LAX
MATTERS"herein.
m
.c
m
S °c COMMUNITY DEVELOPMENT COMMISSION
OF THE
T— CITY OF NATIONAL CITY
." (National City Redevelopment Project)
o � 2011 Tax Allocation Bonds
O 0'�
m o— This cover page contains certain infonnation for general reference only. It is not a summary of the issue nor is it intended to be a summary of all factors
5 relating to an investment in the Bonds. Potential investors must review the entire Official Statement before making any investment decision. Investment in the securities
5.
, described in this document involves risks which may not he appropriate for some investors. See "RISK FACTORS" for a discussion of special risk factors that should be
>+ o o considered in evaluating thc quality of these securities.
g3
" Bonds. The Community Development Commission ( the "Commission") of the City of National City (the "City") is issuing its 2011 Tax Allocation Donds
u (the"Bonds").
in8e ri Authority Jbr issuance. The Bonds are being issued pursuant to that certain Indenture of Trust (the "Indenture of Trust") dated as of June 1, 2004, as
u supplemented and amended by a First Supplemental Indenture of Trust (the "First Supplement"), dated as of January 1, 2005, the Second Supplemental Indenture of
o Trust (the "Second Supplement") dated as of January 1, 2005, and the Third Supplemental Indenture of Trust (the "Third Supplement") dated as of March 1, 2011,
providing for the issuance of the Bonds (collectively, the "Indenture"), each between the Commission and Deutsche Bank National Trust Company, as Trustee, the
•
Redevelopment Law (as defined herein) and a resolution of the Commission adopted on February 22, 2011.
TA'o Parity with Outstanding Dept. The Bonds are being issued on a parity with the Commission's $5,860,000 National City Redevelopment Project, 2004 Tax
6 o.A Allocation Bonds, Series A (the "2004 Series A Bonds"), currently outstanding in the principal amount of $4,345,000, the $27,940,000 National City Redevelopment
5.r Project, 2005 Taxable Tax Allocation Refunding Bonds, Series A (the "2005 Series A Bonds") and $9,840,000 2005 Tax Allocation Refunding Bonds, Series B,
o y.R currently outstanding in the principal amount of $26,620,000 (the "Series 2005 B Bonds," and together with the "2005 Series A Bonds," the "2005 Bonds"). The
c 5 etm Comission may, in the future, issue further obligations on parity with the 2004 Series A Bonds, the 2005 Bonds, and the Bonds. See "SECURITY FOR THE BONDS —
•
Lao Outstanding Debt; - Issuance of Parity Debt", herein.
Gad
H a'O Use of Proceeds. The Bonds will be issued by the Commission to (i) fund redevelopment projects and low- and moderate -income housing within the Project
6 Area; (ii) pay certain costs of issuance; and On) provide for a reserve fund. See "FINANCING PLAN —The Projects" herein.
o O.ti
u
,v'. Security for the Bonds. The Bonds are special obligations of the Commission and are secured, on a parity with thc Commission's 2004 Series A Bonds and
2005 Bonds by a first lien and pledge of Tax Revenues (as defined herein) to be derived from the Project Area (as defined herein) and from amounts on deposit in certain
6," o funds and accounts established pursuant to the Indenture. See "Security for the Bonds" herei❑. Housing Set -Aside Revenues will constitute % of the security with
c respect to the Bonds. See "INTRODUCTION — Sources of a ment for the Bonds," herein.
�� PY
Bond Terms: Book -Ent Onl Interest on the Bonds is initial) able on August 1, 2011 and semiannually on each February I and August 1 (each, an
ry_ J,, }' Tray'
`Interest Payment Date") thereafter until maturity or prior redemption as described herein. The Bonds will be delivered as fully registered bonds, registered in the name
of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to ultimate purchasers ("Beneficial Owners") in
5 .0 -0 denominations of $5,000 or any integral multiple thereof, under the book -entry system maintained by DTC. Beneficial Owners will not be entitled to receive delivery of
• u bonds representing their ownership interest in the Bonds. The Bonds will be payable by the Trustee to DTC for subsequent disbursement to DTC participants so long as
0 g o DTC or its nominee remains the registered owner of the Bonds. See "THE BONDS Book -Entry Only System" herein.
«
9 g Purchase and resale of Bonds. The Bonds are being issued for sale to the National City Joint Powers Financing Authority (the "Authority"). The Authority
uvi II resell the Bonds to the Underwriter concurrently upon its purchase.
� o •
Redemption. The Bonds are subject to optional, special mandatory and sinking account redemption prior to their stated maturity, as described herein. See
., 5 "THE BONDS — Redemption of the Bonds," herein.
NEITHER TIIE BONDS NOR TILE COMMISSION'S OBLIGATIONS UNDER THE INDENTURE ARE A DEBT OF THE CITY, THE STATE,
OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE COMNIISSION) AND NEITHER THE CITY, THE STATE NOR ANY POLITICAL.
SUBDIVISION THEREOF (OTHER THAN TILE COMMISSION) IS LIABLE FOR THE BONDS. THE BONDS DO NOT CONSTITUTE AN
^ o INDEBTEDNESS WITHIN 'ME MEANING OF THE CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE
MEMBERS OF THE CITY, THE AUTHORITY, THE COMMISSION NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY ON
THE BONDS BY REASON OF THEIR ISSUANCE. THE COMMISSION HAS NO TAXING POWER.
A.5'
• 3 Maturity Schedule
O (See inside Cover Page)
'0 • o The Bonds are offered. when. as and iffissued and accepted by the Underwriter, subject to the approval as to their legality of Jones Hall, San Francisco. California, as
E . Bond Counsel and subject to certain other conditions. Certain legal matters will be passed upon by Best Rest & Krieger LLP, San Diego. California, as Disclosure
wi; pp+ Counsel. Certain legal matters will be passed upon by Claudia G. Silva, Esq.. National City. California, as counsel to the Commission and the Authority. It is anticipated
E tl that the Bands will he available far delivery to MC or its authorized designee in New York-. New York on or about March 7, 2011.
:?
Fv, n
[UNDERWRITER]
• Preliminary subject to change.
09960.00000\5842387.4
COMMUNITY DEVELOPMENT COMMISSION
OF THE
CITY OF NATIONAL CITY
(National City Redevelopment Project)
2011 Tax Allocation Bonds
MATURITY SCHEDULE
(Base CUSIP': )
Maturity Principal Interest Maturity Principal Interest
(August 1) Amount Rate Yield CUSIP' (August 1) Amount Rate Yield CUSIP'
* Preliminary, subject to change.
Copyright 2011, American Bankers Association. CUSIP data herein are provided by Standard & Poor's CUSIP Service
Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the
Agency nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data. Neither the Commission,
Authority, nor the Underwriter assumes any responsibility for the accuracy of the CUSIP data.
09960.00000\5842387 4
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
CITY COUNCIL/COMMISSION BOARD OF DIRECTORS
Ron Morrison, Mayor/Chairman
Alejandra Sotelo-Solis, Vice Mayor/Vice Chair
Luis Natividad, Council Member/Member
Mona Rios, Council Member/Member
Rosalie Zarate, Council Member/Member
CITY/COMMISSION STAFF
Chris Zapata, City Manager/Commission Executive Director
Leslie Deese, Assistant City Manager
Brad Raulston, Community Development Director/Commission Secretary
Claudia G. Silva, City Attorney/Commission General Counsel
Jeanette H. Ladrido, CPA, Director of Finance/Commission Director of Finance
SPECIAL SERVICES
Financial Advisor and Redevelopment Fiscal Consultant
Urban Futures, Inc.
Orange. California
Trustee
Deutsche Bank National Trust Company
San Francisco, California
Bond Counsel
Jones Hall
San Francisco, California
Disclosure Counsel
Best Best & Krieger LLP
San Diego, California
09960.00000\5842387.4
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering may be made except by this Official Statement. No dealer, broker, salesperson or other person has been
authorized by the Commission to give any information or to make any representations in connection with the offer or sale of the Bonds
other than those contained herein and if given or made, such other information or representation must not be relied upon as having been
authorized by the Commission or the Underwriter.
No unlawful offers or solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any offer or sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such
an offer, solicitation or sale. Neither the delivery of this Official Statement nor the sale of any of the Bonds implies that the information
herein is correct as of any time subsequent to the date hereof.
Information Provided by Commission, Effective Date and Disclaimer. The information set forth herein has been furnished by
the Commission and includes information which has been obtained from other sources which are believed to be reliable. The information
and expressions of opinion contained herein arc subject to change without notice and neither the 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 since the date hereof.
Disclosure Counsel has relied upon Certificates provided by the Commission as to factual information contained in this Official
Statement and has not conducted diligence beyond review of information contained in such Certificates and discussions with the
Commission and its representatives. Disclosure Counsel expressly disclaims any duty or obligation express or implied of, to, for or on
behalf of the purchasers of the securities offered by this Official Statement including any evaluation of the merits of this offering and
purchasers of these securities, by their purchase thereof, expressly acknowledge, consent and agree to this disclaimer and their non -
reliance on Disclosure Counsel and reliance on their own financial advisors as to purchasing the Bonds.
Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds referred to
herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a
contract with the purchasers of the Bonds.
Special Notice Regarding Forward Looking Statements, Estimates and Forecasts. This Official Statement contains forward
looking statements by the Commission concerning future conditions affecting the Commission, the City, the State and the United States
which may relate to their respective operations and financial condition. The Official Statement contains the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" or variations of those
terms to identify "forward looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 Section
2I E of the U.S. Securities and Exchange Act of 1934, as amended, and Section 27A of the U.S. Securities and Exchange Act of 1933, as
amended. As an investor, you should not rely on these forward -looking statements which speak only as to the Commission's expectations
as of the date of this Official Statement. Such statements arc subject to risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward -looking statements. Any forecast is subject to such uncertainties. Inevitably, some
assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there
are likely to be differences between forecasts and actual results, and those differences may be material. Such forward -looking statements
include, but are not limited to, certain statements contained in the information under the caption "THE PROJECT AREA."
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD -
LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH
MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT
FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -
LOOKING STATEMENTS. THE COMMISSION DOES NOT PLAN AND EXPRESSLY DISCLAIMS AND DUTY TO ISSUE ANY
UPDATES OR REVISIONS TO THOSE FORWARD -LOOKING STATEMENT'S IF OR WHEN ITS EXPECTATIONS, OR
EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.
Involvement of Underwriter. The Underwriter has submitted the following statement for inclusion in this Official Statetent:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to
investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter dots not
guarantee the accuracy or completeness of such infornation and such information is not to be construed as a representation by the
Underwriter.
Document references and summaries. All summaries of the documents referred to in this Official Statement 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.
Bonds are exempt from Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as
amended, in reliance upon an exceptions for the issuance and sale of municipal securities from the registration requirements contained in
Section 3(a)(2) of such act and Section 3(a)( 12) of the Securities Exchange Act of 1934. The Bonds have not been registered or qualified
under the securities laws of any state. The indenture has not been qualified under the Trust indenture Act of 1939, as amended, in
reliance upon an exemption contained in such act.
Stabilization of Prices. IN CONNECTION WITH THiS OFFERING, THE UNDERWRITER MAY OVER -ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TiME.
THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND OTHERS AT
PRICES LOWER THAN THE PUBLIC OFFERING PRICES SET FORTH ON THE COVER PAGE HEREOF AND SAID
PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TiME BY THE UNDERWRITER.
09960.00000\58423874
TABLE OF CONTENTS
INTRODUCTION
Purpose
Purchase and Resale of Bonds by Authority
Authority for Issuance
Parity with Prior Bond Issuance
Security 2
Tax Allocation Financing 2
Sources of Payment for the Bonds 2
The Bonds 3
Governor's Proposal Regarding Redevelopment 4
Certain Risks to Bondholders 4
Offering and Delivery of the Bonds 4
The Project Area 4
The Conunission 4
Continuing Disclosure 4
Tax Matters 5
Professionals Involved In The Offering 5
Other Information 5
FINANCING PLAN 6
General 6
Estimated Sources and Uses of Funds 6
THE BONDS 7
Authority for Issuance 7
Description of the Bonds 7
Redemption of Bonds 7
Purchase of the Bonds in Lieu of Redemption 9
BOOK -ENTRY ONLY SYSTEM 10
DTC and its Participants 10
Book -Entry Only System 11
Discontinuance of Book -Entry System 12
Transfer and Exchange 13
SECURITY FOR THE BONDS 13
Tax Allocation Financing 13
Allocation of Taxes 13
Tax Revenues 14
Outstanding Debt 14
Issuance of Parity Debt 15
Reserve Account 16
THE COMMISSION 18
Commission and Personnel 18
Commission StatT 18
Commission Powers 18
Commmission Administration 19
Budgetary Policies 19
THE CITY 20
THE AUTHORITY 20
THE PROJECT AREA 21
Background 21
Redevelopment Plan Limitations '3
Compliance with Plan Limitations 25
Tax Sharing Agreements 25
Statutory Tax Sharing Payments '6
Allocation of Taxes 26
Historic Assessed Value and Tax Revenues 27
Major Taxable Property Owners 30
Appeals of Assessed Values 30
Foreclosures 31
Statement of Direct and Overlapping Debt 32
Projected Tax Revenues 35
Projected Debt Service Coverage 36
RISK FACTORS 37
Reduction in Tax Base/Taxable Value-- Economic
Factors, Property Damage and Appeals of
Assessed Value 37
Real Estate and General Economic Risks 38
Assessment Appeals 38
09960.00000 \5842 3 8 7. 4
Levy and Collection of Taxes, Tax Delinquencies,
and Foreclosures 39
Estimates, Assumptions and Projections of Tax
Revenues 40
Additional Obligations -Bonds 40
Restored Value (Article XIIIA Litigation) 40
Unsecured Value 41
Bankruptcy Risks 41
Limited Obligations Represented by The Bonds 41
Concentration of Ownership 41
Tax Increment Limitation 41
Educational Revenue Augmentation Fund; State
Budget 42
Risk of Earthquake and Other Natural Disasters 46
Hazardous Substances 46
Secondary Market 46
Loss of Tax Exemption 47
PROPERTY TAXES: LEGISLATION, LIMITATIONS
AND PRACTICES 47
Property Tax Limitations - Article XIIIA of State
Constitution 47
Legislation Implementing Article XIIIA 48
Property Tax Collection Procedures 48
No Power to Tax 49
Appropriations Limitations - Article XIIIB of the
State Constitution 49
Exclusion of Tax Revenues for General Obligation
Bonds Debt Service 50
Low and Moderate -Income Housing 50
Statement of Indebtedness 50
Redevelopment Plan Time Limits 50
Proposition 218 51
Future Initiatives and Changes in Law 51
LITIGATION 52
RATINGS 53
TAX MATTERS 53
CERTAIN LEGAL MATTERS 54
UNDERWRITING 54
LEGALITY FOR INVESTMENT AND TO SECURE
DEPOSITS IN CALIFORNIA 55
CONTINUING DISCLOSURE 55
ADDITIONAL INFORMATION 55
EXECUTION AND DELIVERY 56
APPENDIX A - AUDITED FINANCIAL STATEMENTS OF THE
COMMISSION FOR FISCAL YEAR ENDED JUNE
30,2010 A -I
APPENDIX B - CITY OF NATIONAL CITY AND COUNTY
OF SAN DIEGO GENERAL INFORMATION B-1
APPENDIX C - SUMMARY OF CERTAIN PROVISIONS
OF THE INDENTURE C-I
APPENDIX D - FORM OF CONTINUING DISCLOSURE
AGREEMENT D-1
APPENDIX E - FORM OF BOND COUNSEL OPINION E -1
APPENDIX F - BOOK -ENTRY ONLY SYSTEM F-1
[REGIONAL MAP]
09960.00000\5842387 4
OFFICIAL STATEMENT
COMMUNITY DEVELOPMENT COMMISSION
OF THE
CITY OF NATIONAL CITY
(National City Redevelopment Project)
2011 Tax Allocation Bonds
INTRODUCTION
This Official Statement, including the cover page and attached appendices provides information
regarding the issuance by the Community Development Commission (the "Commission") of the City of
National City (the "City") of its 2011 Tax Allocation Bonds in the original principal amount of $ * (the
"Bonds"). This Introduction contains a brief summary of certain information contained in this Official
Statement. It is not intended to be complete and is qualified by the more detailed information contained
elsewhere in this Official Statement. Definitions of certain terms used in this Official Statement are set forth in
"APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Purpose
The proceeds of the Bonds will be used to
(i) fund redevelopment projects of the Commission within the Redevelopment Project;
(ii) pay costs of issuance of the Bonds; and
(iii) fund a reserve fund.
The Bonds will be payable from and secured by Tax Revenues (as defined herein) allocated to the
Project Area. See "Security For The Bonds" herein.
Purchase and Resale of Bonds by Authority
The Bonds will be issued for sale to the National City Joint Powers Financing Authority (the
"Authority"). The Authority will resell the Bonds to the Underwriter.
Authority for Issuance
The Commission is a community development commission existing under the Community
Redevelopment Law of the State of Califomia (the "State"), constituting Part 1 of Division 24 (commencing
with Section 33000) of the California Health and Safety Code, as amended (the "Redevelopment Law"). The
Bonds arc being issued under the Redevelopment Law, a resolution of the Commission and an Indenture of
Trust (the "Indenture of Trust") dated as of June 1, 2004, as amended and supplemented by a First Supplemental
Indenture of Trust (the "First Supplement"), dated as of January 1 2005, a Second Supplemental Indenture of
Trust (the "Second Supplement") dated as of January 1, 2005, and a Third Supplemental indenture of Trust (the
"Third Supplement) dated as of March 1, 2011, providing for the issuance of the Bonds (the "Indenture of
Trust," the "First Supplement," the "Second Supplement," and the "Third Supplement" are collectively referred
*Preliminary, subject to change.
09960.00000\5842387.4
to herein as the "Indenture"), each by and between the Commission and Deutsche Bank National Trust
Company, San Francisco, California, as trustee (the "Trustee").
Parity with Prior Bond Issuance
The Bonds are being issued on a parity with the Commission's $5,860,000 National City
Redevelopment Project, 2004 Tax Allocation Bonds, Series A (the "2004 Series A Bonds"), currently
outstanding in the principal amount of $4,345,000, the $27,940,000 2005 Tax Allocation Refunding Bonds,
Series A (the "2005 Series A Bonds"), currently outstanding in the principal amount of $16,780,000, and the
2005 Tax Allocation Refunding Bonds, Series B, currently outstanding in the principal amount of $9,840,000
(the "2005 Series A Bonds," and together with the "Series 2005 B Bonds," are referred to herein as the "2005
Bonds"). See "SECURITY FOR THE BONDS — Outstanding Debt; — Issuance of Parity Debt", herein.
On June 3, 1999 the Commission issued its 1999 Tax Allocation Housing Bonds (the "1999 Bonds")
currently outstanding in the aggregate principal amount of $3,965,000 which are payable exclusively from
Housing Set -Aside Revenues. The 1999 Bonds have a claim on Housing Set -Aside Revenues that is senior to the
lien of the Bonds and the 2005 Series A Bonds.
Security
The Bonds are limited obligations of the Commission secured by a pledge of, security interest in and
lien on certain Tax Revenues (as described herein) to be derived from the Project Area (as defined herein) and
from amounts on deposit in certain funds and accounts established pursuant to the Indenture. The Indenture
permits, upon satisfaction of certain conditions, the issuance of additional indebtedness ("Parity Debt") payable
from Tax Revenues and secured by Tax Revenues equal to the pledge, security interest and lien securing the
Bonds. See "FINANCING PLAN" and "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE."
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of taxes collected within a designated redevelopment project area. The redevelopment agency
establishes the taxable valuation of a redevelopment project area as last equalized before the adoption of the
redevelopment plan, or base roll, is established and, except for any period during which the taxable valuation
drops below the base year level, the taxing agencies thereafter receive the taxes produced by the levy of the
then -current tax rate upon the base roll (except for any period during which the taxable valuation drops below
such base year level). Taxes collected upon any increase in taxable valuation over the base roll (exclusive of the
20% Housing -Set Aside requirement and the 1% plus overrides) are allocated to a redevelopment agency and
may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or
refinancing redevelopment activities.
No less than 20% of taxes allocated to a redevelopment agency (i.e, the Housing Set -Aside) must be set
aside in a separate fund to develop and maintain low- and moderate -income housing in the City.
Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the
allocation of taxes as indicated above.
Sources of Payment for the Bonds
Tax Revenues. The Bonds are secured by a pledge of Tax Revenues. "Tax Revenues" means all taxes
annually allocated to the Commission pursuant to the Redevelopment Law and as provided in the
Redevelopment Plan, including all other subventions and reimbursements (if any) to the commission specifically
attributable to ad valorem taxes lost be reason of tax exceptions and tax limitations. Tax Revenues do not
include (a) amounts payable to the Commission by the State of California under Section 16112.7 of the
California Government Code; (b) amounts payable by the Commission under the Tax Sharing Agreements, to
the extent not subordinated to the payment of principal of and interest on the Bonds; and (c) Housing Set -Aside
09960.00000\5842387.4 2
Revenues, except to the extent that Housing Set -Aside Revenues are permitted under the Redevelopment Law to
be applied to the payment of the principal of and interest and premium (if any) on the Bonds and any other
Parity Debt. Tax Revenues are more fully described under the caption "SECURITY FOR THE BONDS — Tax
Revenues." "Housing Set -Aside Revenues" means all Tax Revenues required to be deposited into the Low and
Moderate Income Housing Fund of the Commission in any Fiscal Year under Section 33334.3 of the
Redevelopment Law. See APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE;" "SECURITY FOR THE BONDS — Outstanding Senior Debt — Issuance of Parity Debt" herein.
Approximately 38% of the Bond proceeds will be used to fund low and moderate income housing
projects within the Project Area. Approximately 18% of the 2005 Bonds were likewise used to fund low and
moderate income housing. In 1999, the Commission issued the 1999 Bonds, which are payable exclusively from
Housing Set -Aside Revenues. The 1999 Bonds have a claim on the Housing Set -Aside Revenues that is senior
to the claim of the 2005 Series A Bonds and the Bonds. See "SECURITY FOR THE BONDS — Outstanding
Debt" herein.
Any future decrease in the taxable valuation in the Project Area or in the applicable tax rates could
reduce the Tax Revenues allocated to the Commission and, correspondingly, could have an adverse impact on
the ability of the Commission to pay debt service on the Bonds. See "RISK FACTORS" herein.
NEITHER THE BONDS NOR THE COMMISSION'S OBLIGATIONS UNDER THE INDENTURE
ARE A DEBT OF THE CITY, THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF
(OTHER THAN THE COMMISSION) AND NEITHER TIIE CITY, THE STATE NOR ANY
POLITICAL SUBDIVISION THEREOF (OTHER THAN THE COMMISSION) IS LIABLE FOR THE
BONDS. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF
THE CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER
THE MEMBERS OF THE CITY, THE AUTHORITY, TIIE COMMISSION NOR ANY PERSONS
EXECUTING THE BONDS ARE LIABLE PERSONALLY ON TIIE BONDS BY REASON OF THEIR
ISSUANCE. THE COMMISSION HAS NO TAXING POWER. See "SECURITY FOR THE BONDS"
herein.
The Bonds
Denominations. The Bonds will he issued in fully registered from without coupons in denominations of
$5,000 or any integral multiple of $5,000.
Registration. The Bonds will be issued as fully registered Bonds without coupons for each maturity and
series and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"). DTC will act as securities depository of the Bonds.
Payments of Principal and Interest. Interest on the Bonds will be initially payable on August 1, 2011
and semiannually thereafter on February 1 and August 1 in each year (each, an "Interest Payment Date") by
check of the Trustee mailed to the registered Owners thereof. Principal of the Bonds payable on August 1, 2011
is payable upon surrender at the principal corporate trust office of the Trustee or such other place as the Trustee
shall specify. See "THE BONDS Descriptions of the Bonds" herein.
Optional Redemption. The Bonds maturing on or after August 1, 20_ are subject to redemption at the
option of the Commission on any date on or after August 1, 20 . See THE BONDS — Redemption — Optional
Redemption of the Bonds" herein.
Special Mandatory Redemption. The Bonds maturing on or after August 1, are subject to
mandatory redemption on any date commencing on August 1, 20 . See "THE BONDS — Redemption — Special
Mandatory Redemption" herein.
09960.0000015842387.4 3
Mandatory Sinking Account Redemption. The Bonds with a scheduled maturity of August 1, 20 are
subject to mandatory sinking fund redemption in whole or in part by lot on August 1 in the years and amounts as
set forth under "THE BONDS — Redemption of Bonds — Mandatory Sinking Account Redemption" herein.
Governor's Proposal Regarding Redevelopment
On January 10, 2011, the Governor released his proposed budget for Fiscal Year 2011-12 ("Proposed
Budget"). Among other things, the Proposed Budget proposes elimination of the current funding mechanism for
redevelopment agencies (the "RDA Provisions"), although only limited details are provided for such a far-
reaching proposal. See "BONDOWNERS' RISKS — Educational Revenue Augmentation Fund; State Budget"
for a discussion of the RDA Provisions.
Certain Risks to Bondholders
Investment in the Bonds involves risk. For a discussion of certain considerations relevant to an
investment in the Bonds, see "RISK FACTORS" herein.
Offering and Delivery of the Bonds
The Bonds are offered when, as and if issued, subject to approval by Bond Counsel. It is anticipated that
the Bonds in book -entry form will be available for delivery in New York, New York on the date set forth on the
inside Cover Page.
The Project Area
The Project Area is designated as the "National City Redevelopment Project Area," and encompasses
approximately 2,400 acres, and is comprised of a mixture of commercial, industrial and residential development.
There is only nominal acreage for new development within the Project Area. According to Urban Futures, Inc.,
the Commission's Redevelopment Fiscal Consultant, the assessed value of the Project Area for fiscal year
ending June 30, 2011 is $1,733,182,560 (secured and unsecured assessed value). See "THE PROJECT AREA"
herein, for additional information on land use, property ownership and assessed valuations within the Project
Area.
The Commission
The Commission was established pursuant to the Redevelopment Law on April 11, 1967, and was
reconstituted as a community development commission by Ordinance No. 1484 of the City Council of the City
adopted on October 14, 1975. At that time, the City Council declared itself to be the governing board of the
Commission. The Commission is also vested with the rights, powers and duties of the City's housing authority.
The Commission was created to undertake and carry out the redevelopment of certain areas within the City
which the Commission has determined to be blighted areas by encouraging development of residential,
commercial, industrial, recreational, and public facilities and to assist neighborhood redevelopment through
residential property improvement loans and housing assistance payments to low and moderate income earners.
As a result of a 1995 merger, the Project Area is the sole redevelopment project area of the Commission.
Continuing Disclosure
The Commission will enter a written agreement constituting an undertaking to provide ongoing annual
disclosure about the Commission for the benefit of the Owners of the Bonds as required by Section (b)(5)(I) of
Rule 15c2-12 of the Securities and Exchange Commission. The specific nature of the information to be
contained in such ongoing disclosure or the notices of material events by the Commission, is set forth in
"APPENDIX E —FORM OF CONTINUING DISCLOSURE AGREEMENT' herein. The annual information
and material events will be filed by or on behalf of the Commission with Municipal Securities Rulemaking
Board's Electronic Municipal Market Access System for municipal securities disclosures, maintained on the
Internet at http://emma.msrb.org/ ("EMMA"). The Commission is entering into the Continuing Disclosure
09960.00000'5842387.4 4
Agreement in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and
Exchange Commission. The Commission has represented that it has complied, as applicable, in all material
respects with all previous undertakings pursuant to the Rule to provide annual reports or notices of material
events. See "CONTINUING DISCLOSURE" herein.
Tax Matters
In the opinion of Jones Hall, Bond Counsel, under existing law and assuming compliance with certain
covenants in the documents pertaining to the Bonds and requirements of the Internal Revenue Code of 1986, as
amended, as described in this Official Statement, interest on the Bonds is not includable in the gross income of
the owners of the Bonds for federal income tax purposes.
In the further opinion of Bond Counsel, interest on the Bonds is not treated as an item of tax preference
in calculating the federal alternative minimum taxable income of individuals and corporations. Interest on the
Bonds, however, is included as an adjustment in the calculation of federal corporate alternative minimum
taxable income and may therefore affect a corporation's alternative minimum tax liability.
In the further opinion of Bond Counsel, interest on the Bonds and the Bonds is exempt from personal
income taxes imposed by the State of California. See "TAX MATTERS" herein.
Professionals Involved In The Offering
Urban Futures, Inc., is acting as financial advisor and fiscal consultant to the Commission and has
prepared an analysis of taxable values and tax increment revenue with respect to the Redevelopment Project.
See "THE PROJECT AREA" herein.
All proceedings in connection with the issuance of the Bonds are subject to the approval as to their
legality of Jones Hall, as Bond Counsel to the Commission. Certain legal matters will be passed upon by Best
Best & Krieger LLP, San Diego, California, as Disclosure Counsel. Certain legal matters will be passed upon
Claudia G. Silva, Esq., National City, California, as counsel to the Commission.
Bond Counsel, Disclosure Counsel, Financial Advisor, and the Trustee will receive compensation from
the Commission contingent upon the issuance of the Bonds.
Other Information
This Official Statement contains brief descriptions of the Bonds, the Commission, the Authority, the
City, Tax Revenues, the Project Area, security for the Bonds, risk factors and limitations on Tax Revenues 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 the Indenture and all references to the Bonds are further qualified by
reference to the definitive Bonds and to the terms thereof which are contained in the Indenture. All capitalized
terms used but not otherwise defined herein have the meanings assigned to them in the Indenture.
This Official Statement speaks only as of its date, and the information contained herein is subject to
change. Copies of documents referred to and information concerning the Bonds are available at the offices of the
Commission, 1243 National City Boulevard, National City, CA 91950-4301; telephone: (619) 336-4250 or at
http://emma.msrb.org/. The Commission may impose a charge for copying, mailing and handling.
09960.00000\5842387.4 5
FINANCING PLAN
General
The Bonds are being issued to redevelopment projects within the Project Area. Included among the
many projects anticipated to be funded through bond proceeds are implementation of the Downtown Specific
Plan through mixed use development, the improvement of 8th Street from Interstate 5 to J Avenue including
streetscape and public art, infrastructure improvements on State Highway 54, National City Boulevard, D and F
Avenues to improve the economic viability of the National City Swap meet and Harbor Drive In sites,
enhancement and improvements for Paradise Creek from Highland Avenue to Wilson Avenue, expansion of
Paradise Creek Education Park, construction of a new community center within the Westside Specific Plan area,
an award -winning 201 unit affordable Transit Oriented Development on the current site of the National City
Public Works Center, and the complete refurbishment of Morgan and Kimball Towers senior housing project
and construction of a third senior housing tower for the project.
Estimated Sources and Uses of Funds
The anticipated sources and uses of funds relating to the Bonds are as follows:
SOURCES
Par Amount of the Bonds $
Less/Plus: Original Issue Discount/Premium $
Total Sources
USES
Deposit to the Redevelopment Fund $
Deposit to 2011 Reserve Subaccount $
Deposit to the Costs of Issuance Fund" $
Total Uses $
to
Moneys in the Cost of Issuance Fund will be used to pay the costs of the Trustee, Financial
Advisor and Fiscal Consultant, Bond Counsel and Disclosure Counsel, printing costs, rating
agency fees and other costs related to the issuance of the Bonds.
09960.00000\5842387.4 6
THE BONDS
Authority for Issuance
1'he Bonds are being issued and sold pursuant to the Constitution and laws of the State, including the
Redevelopment Law and Sections 53580 et seq. of the California Government Code (together, the
"Redevelopment Law"). The Bonds are secured under the Indenture and authorized by a Resolution of the
Commission adopted on February 22, 2011 .
Description of the Bonds
The Bonds will be issued as fully registered Bonds without coupons for each maturity and series and,
when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities
depository of the Bonds. Individual purchases may be made in book -entry form only, in denominations of
$5,000 and integral multiple thereof. Purchasers will not receive certificates representing their interest in the
Bonds purchased. Principal, premium, if any, and interest are payable by the Trustee to DTC, which is obligated
to remit such principal, premium, if any, and interest to its participants for subsequent disbursement to the
beneficial owners of the Bonds as described herein. See "BOOK -ENTRY ONLY SYSTEM."
The Bonds will be issued in the aggregate principal amount of $ * and will mature on August 1,
in the amounts and years set forth on the inside cover page hereof The Bonds will be dated as of the date of
their delivery and bear interest as shown on the inside front cover page hereof. Interest on the Bonds will be
payable on February 1 and August 1 of each year, commencing on August 1, 2011 (each, an "Interest Payment
Date") until maturity or prior redemption as provided herein. Each Bond shall bear interest from the Interest
Payment Date next preceding the date of authentication thereof unless it is authenticated after a Record Date
(described below) and on or before the following Interest Payment Date, in which event it shall bear interest
from such following Interest Payment Date, or unless it is authenticated on or prior to the first Record Date, in
which event it shall bear interest from the Date of Delivery. Interest with respect to the Bonds will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Redemption of Bonds
Optional Redemption. The 2011 Bonds maturing on or before August 1, , shall not be subject
to redemption prior to the respective stated maturities. The 2011 Bonds maturing on or after August 1,
, shall be subject to redemption at the option of the Commission on any date on or after August 1,
, in whole or in part among maturities designated by the Commission and by lot within a maturity,
from any available source of funds, at a redemption price (expressed as a percentage of the principal amount of
the 2011 Bonds or portions thereof to be called for redemption).
The Commission shall be required to give the Trustee written notice of its intention to redeem 2011
Bonds under this subsection (a), and the maturities thereof of such 2011 Bonds to be redeemed, at least forty-
five (45) days prior to the date fixed for such redemption, or such later date as may be acceptable to the Trustee.
Special Mandatory Redemption. The Bonds maturing on or after August 1, , shall also be
subject to mandatory redemption on any date commencing on August 1, , in inverse order of maturity, in
whole or in part, from and to the extent of any Tax Revenues paid to the Trustee for deposit in the Special Fund
pursuant to the Indenture at a prepayment price equal to the principal amount thereof to be redeemed, together
with accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Account Redemption. The Bonds with a scheduled maturity of August 1,
shall also be subject to mandatory sinking fund redemption in whole or in part on August 1 in the
years set forth below from Sinking Account payments made by the Commission pursuant to the Indenture at a
redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to
* Preliminary, subject to change.
09960.00000\5842387.4 7
the date fixed for redemption, without premium, or in lieu thereof shall be purchased in whole or in part
pursuant to the Indenture, in the aggregate respective principal amounts and on the respective dates as set forth
in the following table:
Sinking Fund
Redemption Date
(August 1)
Principal Amount
to be Redeemed
Manner of Redemption. Whenever any Bonds, f less than all of the Bonds, are selected for redemption,
the Commission (except in the case of a special mandatory redemption described above) under certain
circumstances has the discretion to determine the maturities to be redeemed and will give the Trustee notice and
the Trustee will select the Bonds within a maturity to be redeemed by lot in any manner as the Trustee, in its
sole discretion, deems appropriate. All Bonds redeemed or purchased pursuant to the Indenture shall be
canceled.
Partial Redemption of Bonds. Upon surrender by the Owner of a Bond to be redeemed in part only, the
Commission will execute and the Trustee will deliver to the registered Owner thereof, at the expense of the
Commission, a new Bond, which will be of authorized denominations equal in aggregate principal amount to the
unredeemed portion of the Bond surrendered and representing the same interest rate and maturity.
Bonds Not Presented. If the Owner of any Bond selected for redemption will fail to present such Bond
to the Trustee for payment (and, if applicable, exchange as described above), such Bond will, nevertheless,
become due and payable on the date fixed for redemption to the extent of the principal amount called for
redemption (and to that extent only).
Notice of Redemption. The Trustee will give to the Owners notice of any redemption of the Bonds. Such
notice will state the redemption date and the redemption price, shall designate the CUSIP numbers of the Bonds
to be redeemed, shall state the individual amount of each Bond to be redeemed or state that all Bonds of a Series
between two stated numbers (to be inclusive) that all Bonds of a Series Outstanding of one or more maturities
are to be redeemed, and shall require that such 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 Bonds to be redeemed will
not accrue from and after the date fixed for redemption.
Notice of such redemption will be mailed by first class mail, postage paid, to each of the Securities
Depositories and to one or more Informational Services (as defined in the Indenture) and the respective Owners
of any Bonds designated for redemption at their addresses appearing on the Bond registration books, at least
thirty (30) days but not more than sixty (60) days prior to the redemption date; provided that neither failure to
receive such notice nor any defect in any notice so mailed will effect the validity of the proceedings for the
redemption of such Bonds or the cessation of accrual of interest thereon from and after the redemption date.
The Commission has the right to rescind any optional redemption. Any notice of optional redemption
shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for
redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not
constitute an Event f Default under the Indenture. The Commission and Trustee shall have not liability to the
Owners of the Bonds or any other party related to or arising from such rescission of redemption. The Trustee
shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was
sent.
So long as DTC is acting as securities depository for the Bonds, notice of redemption will be made to
DTC or its designee and not to the beneficiary of the Bonds (See `BOOK -ENTRY ONLY SYSTEM" below.)
09960.00000\5842387.4 8
Purchase of the Bonds in Lieu of Redemption
In lieu of redemption as described above, moneys deposited with the Trustee for purpose of redemption
may be withdrawn and used by the Trustee for purchase of Outstanding Bonds, upon the filing with the Trustee
of a Certificate of the Commission requesting such purchase, at public or private sale as and when, and at such
prices (including brokerage and other charges) as such Certificate of the Commission may provide.
09960.00000\5842387.4 9
BOOK -ENTRY ONLY SYSTEM
The following description of the Depository Trust Company ("DTC'), the procedures and record
keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other
payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial
ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and
the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be
made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the
foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC
Participants, as the case may be.
Neither the Commission nor the Trustee appointed with respect to the Bonds nor their respective
counsel assumes any responsibility for the accuracy of the information contained in this section.
The Commission and the Trustee cannot and do not give assurances that DTC, DTC Direct Participants
or DTC Indirect Participants will distribute to the Beneficial Owners (0 payments of principal, premium, if any,
and interest on the Bonds; (ii) certificates representing an ownership interest in or other confirmation of
ownership interests in the Bonds; or (iii) redemption or other notices sent to DTC or Cede & Co., its nominee,
as registered owner of the Bonds; or (iv) redemption or other notices sent to DTC or Cede & Co., its nominee,
as the registered owner of the Bonds or that they will do so on a timely basis or that DTC, DTC Direct
Participants or DTC Indirect Participants will service and act in the manner described in this section of the
Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange
Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file
with DTC.
DTC and its Participants
DTC is located in New York, NY and will act as securities depository for the Bonds. The Bonds will be
issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such
other name as may be requested by an authorized representative of DTC. One fully -registered security certificate
will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will
be deposited with DTC.
DTC, the world's largest depository, is a limited -purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity
issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's
participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among
Direct Participants of sales and other securities transactions in deposited securities, through electronic
computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need
for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a
wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). D"I'CC, in turn, is owned
by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation,
Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing
Corporation, (respectively, "NSCC," "GSCC," "MBSCC," and "EMCC," also subsidiaries of DTCC), as well as
by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has
Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
09960.00000\5842387.4 10
Book -Entry Only System
Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which
will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each
Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however,
expected to receive written confirmations providing details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books
of Direct and Indirect 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.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in
the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or
such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants
to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect
from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to
them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and
proposed amendments to the Security documents. For example, Beneficial Owners of the Bonds may wish to
ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to
Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the
registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the
Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the Commission as soon as possible after the record date. 1'he
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal, of premium, if any, and interest on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit
Direct Participants' accounts upon DTC's receipt of funds and corresponding detail inforrrtation from the
Commission or the Trustee, on payable date in accordance with their respective holdings shown on DTC's
records. Payments by Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the
Commission or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal of, premium, if any, and interest evidenced by the Bonds to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the responsibility of the
Commission or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
09960.0000015842387.4 1 1
The Commission and the Trustee cannot and do not give assurances that DTC, DTC Direct Participants
or DTC Indirect Participants will distribute to the Beneficial Owners (i) payments of principal, premium, if any,
and interest on the Bonds, (ii) certificates representing an ownership interest in or other confirmation of
ownership interests in the Bonds or that they will do so on a timely basis or that DTC, DTC Direct Participants
or DTC Indirect Participants will service and act in the manner described in this section of the Official
Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and
the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.
The Commission and the Trustee shall be entitled to treat the person in whose name any Bond is
registered as the Bond Owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding
any notice to the contrary received by the Trustee, the Commission, or the Authority; and the Commission and
the Trustee shall have no responsibility for transmitting payments to, communications with, notifying, or
otherwise dealing with any Beneficial Owners of the Bonds. Neither the Commission, the Commission nor the
Trustee will have any responsibility or obligations, legal or otherwise, to the Beneficial Owners or to any other
party including DTC or its successor (or substitute depository or its successor), except for the registered owner
of any Bond.
THE TRUSTEE, AS LONG AS A BOOK -ENTRY ONLY SYSTEM IS USED FOR TIIE BONDS,
WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC.
ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANTS TO
NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT
AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE
REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION
PREMISED ON SUCH NOTICE.
Discontinuance of Book -Entry System
DTC may discontinue providing its services with respect to the Bonds at any time by giving reasonable
notice to the Commission or the Trustee and discharging its responsibilities with respect thereto under
applicable law or, the Commission may terminate its participation in the system of book -entry transfers through
DTC or any other securities depository at any time. Under such circumstances, in the event that a successor
securities depository is not obtained, Bonds are required to be printed and delivered. In the event that the book -
entry system is discontinued, the Commission will execute, and the Trustee will authenticate and make available
for delivery, replacement Bonds in the form of registered certificates.
In the event that (a) DTC determines not to continue to act as securities depository for the Bonds, or (b)
the Commission determines that DTC will no longer so act and delivers a written certificate to the Trustee to
that effect, then the Commission will discontinue the Book -Entry Only System with DTC for the Bonds. If the
Commission determines to replace DTC with another qualified securities depository, the Commission will
prepare or direct the preparation of a new single separate, fully registered Bond for each maturity of the Bonds
registered in the name of such successor or substitute securities depository as are not inconsistent with the terms
of the Indenture executed in connection with the Bonds. If the Commission fails to identify another qualified
securities depository to replace the incumbent securities depository for the Bonds, then the Bonds will no longer
be restricted to being registered in the Bond registration books in the name of the incumbent securities
depository or its nominee, but will be registered in whatever name or names the incumbent securities depository
or its nominee transferring or exchanging the Bonds designates.
If the Book -Entry Only System is discontinued, the following provisions would also apply: the principal
of, and redemption premiums, if any, on the Bonds will be payable upon surrender thereof at the corporate trust
office of the Trustee, and interest on the Bonds will be payable by check mailed by first class mail on each
Interest Payment Date to the registered owners thereof as shown on the registration books of the Trustee as of
the close of business on or, upon the written request of any owner of $1,000,000 or more in aggregate principal
amount of Bonds received by the Trustee on or prior to the fifteenth day of the calendar month immediately
preceding the applicable Interest Payment Date by wire transfer to an account with a financial institution within
the continental United States of America designated by such owner and the Bonds will be transferable and
09960.0000015842387.4 12
exchangeable on the terns and conditions provided in the Indenture executed in connection with the Bonds. For
every transfer and exchange of the Bonds, Beneficial Owners will be charged a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto.
Transfer and Exchange
Any Bond may, in accordance with its terms, be transferred or exchanged at the Trust Office of the
Trustee, for a like aggregate principal amount of Bonds of authorized denominations of like maturity. The
Trustee will require the payment of any tax or other governmental charge by the Bond owner requesting
exchange or transfer. No transfer or exchange of Bonds is required to be made during a period established by the
Trustee for selection of such Bonds for redemption, or with respect to a Bond after such Bond has been selected
for redemption.
SECURITY FOR THE BONDS
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an
allocation of taxes collected within a redevelopment project area. The taxable valuation of a redevelopment
project area last equalized prior to adoption of a redevelopment plan, or base roll, is established and, except for
any period during which the taxable valuation drops below the base year level, the taxing agencies thereafter
receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any
increase in taxable valuation over the base roll (exclusive of the 20% Housing -Set Aside requirement and the
1% plus overrides) are allocated to a redevelopment agency and may be pledged by a redevelopment agency to
the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment
agencies themselves have no authority to levy property taxes and must look specifically to the allocation of
taxes produced as above indicated.
Allocation of Taxes
As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment
Law (commencing with Section 33670 of the California Health and Safety Code) and Section 16 of Article XVI
of the Constitution of the State of California, taxes levied upon taxable property in the Project Area each year by
or for the benefit of the State of California and any city, county, city and county, district or other public
corporation (herein collectively referred to as "taxing agencies") for each Fiscal Year beginning after the
effective dates of the respective ordinances approving redevelopment plans for the constituent project areas and
the additions of territories thereto comprising the merged Project Area, as amended are divided as follows:
1. To taxing agencies: That portion of the taxes which would be produced by the rate
upon which the tax is levied each year by or for each of said taxing agencies upon the total sum of the
assessed value of the taxable property in the Project Area, as shown upon the assessment roll used in
connection with the taxation of such property by such taxing agency, last equalized prior to the effective
date of the ordinance adopting the Redevelopment Plan, shall be allocated to, and when collected shall
be paid to, the respective taxing agencies as taxes by or for the taxing agencies on all other property are
paid.
2. To the Commission: Except as provided in subparagraphs 3, 4 and 5 below, the portion
of the levied taxes each year in excess of the amount described in subparagraph 1, above, shall be
allocated to, and when collected shall be paid into, a special fund of the Agency to pay the principal of
and interest on the Bonds and Parity Bonds, loans, monies advanced to, or other indebtedness incurred
by the Commission to finance or refinance, in whole or in part, the Redevelopment Project.
3. To taxing agencies: That portion of the taxes in excess of the amount identified in
subparagraph 1, above, which are attributable to a tax rate levied on or after January 1, 1989 by a taxing
agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the
09960.00000\5842387.4 13
principal of, and the interest on, and bonded indebtedness for the acquisition or improvement of real
property shall be allocated to, and when collected shall be paid into, the fund of that taxing agency.
4. 7o County administrative fee: Legislation originally enacted in 1990, Senate Bill 2557
(Stats. 1990, chapter 466, §4, which amended Revenue and Taxation Code Section 97), and additional
legislation enacted in 1992, Senate Bill 1559 (Stats. 1992, chapter 697, §13, which amended Revenue
and Taxation Code Section 97.5), authorized county auditors to determine property tax administrative
costs proportionately attributable to local jurisdictions and, commencing in the 1992-93 Fiscal Year, the
amounts due as local agencies' contributions to cover county administrative costs are to be allocated to
the county as part of the overall system for the redistribution of property taxes (as opposed to being paid
pursuant to invoices). In 1994, Assembly Bill 3347 (Stats. 1994, chapter 1167) was enacted, which, in
pertinent part, clarified and reorganized California's property tax statutes. That legislation added
Revenue and Taxation Code Sections 95.2 and 95.3, which now set forth the statutory authorization for
the county auditor's recovery of property tax administrative costs. Section 95.3 expressly includes
redevelopment agencies as jurisdictions that are to be charged for property tax administrative costs,
commencing in the 1992-93 fiscal year. The charge resulting from this legislation is estimated at 1.05%
of Tax Revenues based on past administrative charges. The Commission excludes the County
administrative fee from the definition of Tax Revenues and those fees are not considered Tax Revenues
for purposes of the housing set -aside discussed below or for the determination of compliance with tax
increment limitations.
5. To Taxing Agencies: That portion of the taxes reserved to taxing entities which adopted
resolutions under former Health and Safety Code Section 33676 shall be paid to such taxing entities.
The City, the San Diego County Water Authority and the Metropolitan Water District of Southern
California adopted such resolutions with respect to the Project Area. The City has suspended its
resolution for the life of the 1999 Bonds, eh 2005 Bonds, and any Parity Bonds (including the Bonds) so
that amounts otherwise reserved to the City under its resolution will be available to the Commission as
Tax Revenues.
When all bond, loans, advances, and indebtedness, if any, and interest thereon, have been paid, all
moneys thereafter received from taxes upon the taxable property in the Project Area shall be paid into the funds
of the respective taxing agencies as taxes on all other property are paid. See "Tax Revenues," below.
Tax Revenues
The Bonds and all Outstanding Parity Debt will be secured by a parity of, and security interest in and
lien on all Tax Revenues (See "RISK FACTORS") and by a first and exclusive pledge of, security interest in,
and on all of the moneys in the Special Fund, the Interest Account, the Principal Account, the Sinking Account,
the Reserve Account and the Redemption Account. See "APPENDIX C — SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE."
As defined in the Indenture (SEE "APPENDIX C — SUMMARY of Certain Provisions of the
Indenture"), the term "Tax Revenues" means all taxes annually allocated to the Commission with respect to the
Project Area following the Closing Date, under 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 of California and as provided
in the Redevelopment Plan, including all other 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. Tax Revenues do not include (a) amounts payable to the Commission by the State of California
under Section 16112.7 of the California Government Code; (b) amounts payable by the Commission under the
'fax Sharing Agreements, to the extent not subordinated to the payment of principal of and interest on the
Bonds; and (c) Housing Set -Aside Revenues, except to the extent that Housing Set -Aside Revenues are
permitted under the Redevelopment Law to be applied to the payment of the principal of and interest and
premium (if any) on the Bonds and any other Parity Debt. See "THE PROJECT," "TAX SHARING
AGREEMENTS," and "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
09960.00000\58423 8 7.4
14
A portion of each payment of the principal and interest on the Bonds, the 2005 Series A Bonds, and the
1999 Bonds is secured by Housing Set -Aside Revenues. As a result, a portion of each payment of the principal
of and interest on the Bonds, the 2005 Series A Bonds and the 1999 Bonds (in the aggregate, %) is payable
from Low and Moderate Income Housing funds ("Housing Set -Aside Revenues") of the Commission. See
"SECURITY FOR THE BONDS — Outstanding Debt — Low and Moderate Income Housing" herein.
The Commission has no power to levy and collect property taxes, and any property tax limitation,
legislative measure, voter initiative or provisions of additional sources of income to taxing agencies having the
effect of reducing the property tax rate, could reduce the amount of Tax Revenues that would otherwise be
available to pay the principal of, and interest on, the Bonds. Likewise, broadened property tax exemptions could
have a similar effect. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES AND POSSIBLE
SPENDING LIMITATIONS" herein.
NEITHER THE BONDS NOR TIIE COMMISSION'S OBLIGATIONS UNDER THE
INDENTURE ARE A DEBT OF THE CITY, THE STATE, OR ANY POLITICAL SUBDIVISION
THEREOF (OTHER THAN THE COMMISSION) AND NEITHER THE CITY, THE STATE NOR
ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE COMMISSION) IS LIABLE FOR
THE BONDS. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING
OF THE CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER
THE MEMBERS OF THE CITY, THE AUTHORITY, THE COMMISSION NOR ANY PERSONS
EXECLJTING TIIE BONDS ARE LIABLE PERSONALLY ON TIIE BONDS BY REASON OF THEIR
ISSUANCE. THE COMMISSION HAS NO TAXING POWER.
Outstanding Debt
Outstanding Senior Debt. On June 3, 1999 the Commission issued its 1999 Bonds currently outstanding
in the aggregate principal amount of $3,965,000 which are payable exclusively from Housing Set -Aside
Revenues. The 1999 Bonds have a claim on Housing Set -Aside Revenues that is senior to the lien of the Bonds
and the 2005 Series A Bonds. Approximately % of each payment of the principal and interest on the Bonds
will he payable from Housing Set -Aside Revenues and approximately 18% of each payment of the principal and
interest of 2005 Series A Bonds is payable from Housing Set -Aside Revenues.
Outstanding Parity Debt. The Bonds are being issued on a parity with the Commission's 2004 Series A
Bonds, currently outstanding in the principal amount of $4,345,000, the 2005 Series A Bonds, currently
outstanding in the principal amount of $16,780,000, and the 2005 Series B Bonds currently outstanding in the
principal amount of $9,840,000. The Indenture permits the Commission to issue debt on a parity with the Bonds,
subject to certain specified conditions. See "Issuance of Parity Debt" below.
Subordinate Debt. Pursuant to Resolution No. 91-26, adopted by the Commission on June 11, 1991, the
Commission has agreed to make an annual payment to the City in amount of $320,000 for purposes of paying
capital improvement projects of the City within the downtown portion of the Project Area. The obligation of the
Commission to make such annual payment to the City is subordinate to all obligations of the Commission,
including the Bonds, payable from pledged tax increment revenues of the Commission.
Pursuant to Resolution No. 2010-148, adopted by the Commission on June 22, 2010, the City borrowed
$1,500,00 through an interim loan from the City's Sewer Fund for the purpose of funding ongoing street
resurfacing within the Project Area. The Commission agreed to pay the City $771,250 from tax increment funds
to be applied toward the $1,500,000 interim loan of the project. Interest on the loan shall be paid back from tax
increment funds, TransNet (Proposition A) funds, and Proposition 1B funds, at a rate of 0.75% per annum on the
unpaid balance of $40,102.64, pursuant to a graduated payment schedule as follows: (i) June 30, 2011 — $11,250
in tax increment funds; (ii) June 30, 2012 — $340,000 in tax increment funds; (iii) June 30, 2013 — $420,000; (iv)
June 30, 2014 — $350,000 TransNet funds; June 30, 2015 — $418,852.64 TransNet Funds.
09960.00000\5842387.4 15
Issuance of Parity Debt
In addition to the 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 the Indenture; and no
Event of Default (or any event with respect to which notice has been given and which, once all notice of grace
periods have passed, would constitute an Event of Default) has occurred and is then continuing, unless otherwise
permitted by the Insurer.
(b) The Tax Revenues for the then current Fiscal Year and for each subsequent Fiscal Year to and
including the Fiscal "Year of the final maturity of the Bonds based on assessed valuation of property in the
Project Area as evidenced in a written document from an appropriate official of the County, plus at the option of
the Commission the Additional Revenues, are at least equal to 125% of Maximum Annual Debt Service (taking
into account all Parity Debt which will be Outstanding following the issuance of such Parity Debt). For purposes
of the calculation required herein, (i) Tax Revenues shall be calculated based on the general levy rate of one
percent (1.00%) and shall not take into account any override tax rate, and (ii) payments pursuant to Tax Sharing
Agreements and statutory tax sharing payments shall be calculated at the percentage rate applicable in each
Fiscal Year. For purposes of calculating debt service on any Parity Debt which bears a variable interest rate,
such Parity Debt shall be assumed to bear interest at the lesser of that interest rate applicable pursuant to an
interest rate cap purchased by the Commission or the maximum interest rate applicable under the law.
(c) The Supplemental Indenture or other document providing for the issuance of such Parity Debt
shall provide that (i) the principal of such Parity Debt is payable on August 1 in any year in which principal is
payable; and (ii) money is deposited in the Reserve Account (or a subaccount of the Reserve Account) from the
proceeds of the sale of such Parity Debt or provision of a Qualified Reserve Account Credit Instrument (which
may be a Reserve Account Surety Bond) in an amount required to cause the balance in the Reserve Account
(including all subaccounts therein) to equal Maximum Annual Debt Service, or such lesser amount as is
permitted under the Tax Code.
(d) The Supplemental Indenture or other document providing for the issuance of such Parity Debt
may provide for the establishment of separate funds, accounts or subaccounts.
(e) The aggregate amount of the principal of and interest on all Outstanding Bonds, Parity Debt and
Subordinate Debt corning due and payable following the issuance of such Parity Debt may not exceed the
maximum amount of Tax Revenues permitted under the Plan Limitations to be allocated and paid to the
Commission following the issuance of such Parity Debt.
(t) The Commission must deliver to the Trustee a Certificate of the Commission certifying that the
conditions precedent to the issuance of such Parity Debt set forth in the Indenture have been satisfied.
The Commission may only issue Parity Debt bearing interest at a variable rate upon the written consent
of the Insurer.
Reserve Account
In connection with the issuance of the 2004 Bonds, a Reserve Account was established for the payment
of the 2004 Bonds and any Parity Debt and the Commission covenanted to maintain the amount therein at the
"Reserve Requirement," which is defined in the Indenture to be, as of the date of any calculation, the lesser of
(a) Maximum Annual Debt Service, or (b) on such Bonds (including any Parity Debt), (c) 10% of the
Outstanding principal amount of the Bonds and any Parity Debt, or (d) 125% of average Annual Debt Service
on the Bonds and any Parity Debt. Upon issuance of the 2005 Bonds, the amount in the Reserve Account was
increased to reflect the issuance of the 2005 Bonds as Parity Debt. Likewise, upon issuance of the Bonds, the
09960.0000015842387.4 16
amount in the Reserve Account will increased from proceeds of the Bonds to reflect the issuance of the Bonds
as additional Parity Debt.
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 he
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 before 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 second (2nd) 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 Account Credit Instrument approved in writing by
the Insurer, and (2) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance
of such Qualified Reserve Account 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 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 free and clear of the lien of the Indenture. The Trustee shall
comply with all documentation relating to a Qualified Reserve Account Credit instrument as shall be required to
maintain such Qualified Reserve Account 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 the Indenture.
At least fifteen days prior to the expiration of any Qualified Reserve Account Credit Instrument, the
Commission shall be obligated either (i) to replace such Qualified Reserve Account Credit Instrument with a
new Qualified Reserve Account Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an
amount of funds such that the amount on deposit in the Reserve Account is equal to the Reserve Requirement
(without taking into account such expiring Qualified Reserve Account Credit Instrument). In the event that the
Commission shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Trustee shall,
prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit
the proceeds of such draw in the Reserve Account.
If the Reserve Requirement is at any time maintained in the Reserve Account in the form of a
combination of cash and one or more Qualified Reserve Account Credit Instruments, the Trustee must apply the
amount of such cash to make any payment required to be made from the Reserve Account before the Trustee
may draw any moneys under any such Qualified Reserve Account Credit Instrument for such purpose. In the
event that the Trustee shall at any time draw funds under a Qualified Reserve Account Credit Instrument to
make any payment then required to be made from the Reserve Account, the Tax Revenues thereafter received by
the Trustee, to the extent remaining after making the other deposits (if any) then required to be made pursuant to
the Indenture shall be used to reinstate the Qualified Reserve Account Credit instrument.
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 each series of Commission bonds and
the Commission shall establish with the Trustee such sub -accounts in conformity with applicable provisions of
the Tax Code. See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE").
09960.0000015842387.4 17
THE COMMISSION
Commission and Personnel
The Commission was established pursuant to the Redevelopment Law and was activated as a
redevelopment agency by the City Council of the City on April 11, 1967, and was reconstituted as a community
development commission by Ordinance No. 1484 of the City adopted on October 14, 1975. At that time the City
Council declared itself to be the governing board of the Commission and since that time members of the City
Council have served as Commission members.
Members of the Commission and their terms of office are shown below:
Member
Ron Morrison
Alejandra Sotelo-Solis
Luis Natividad
Mona Rios
Rosalie Zarate
Commission Staff
Term Expires
December 2014
December 2012
December 2014
December 2014
December 2012
Following are brief biographies of key Commission staff.
Chris Zapata is the City Manager and Executive Director of the Commission. The City Council
unanimously appointed him in February 2004. Mr. Zapata previously worked in the Arizona communities of
Glendale, Superior, Eloy, Phoenix, Goodyear, and Flagstaff over a 25-year period. During the 1990's he served
as City Manager of Eloy and Superior. Prior to National City, Mr. Zapata was a Deputy City Manager of the
City of Glendale, Arizona.
Leslie Deese is the Assistant City Manager for the City. She was appointed in 2007. Prior to that
appointment, Ms. Deese was the City's Community Services Director. Ms. Deese earned her Masters Degree in
Business Administration from National University.
Brad Raulston is the Secretary of the Conunission. Previous to assuming these duties in 2006, Mr.
Raulston worked exclusively in the private sector for several large land use and development companies in the
San Diego region. Mr. Raulston earned a degree in Economics from the University of California at Berkeley.
Claudia G. Silva, Esq., is the appointed City Attorney for the City of National City and the appointed
General Counsel for the Community Development Commission of the City of National City. Ms. Silva was
appointed in July of 2010. Prior to that appointment, Ms. Silva served as a Senior Assistant City Attorney. Ms.
Silva has been in practice for over 17 years. Her career has been in municipal law serving public entities.
Jeanette H. Ladrido is the Director of Finance for the City and the Commission. She is a certified
public accountant and has been with the Commission for over 8 years. Ms. Ladrido was previously employed
by the County of San Diego for over 10 years. She is a graduate of San Diego State University.
Commission Powers
The Commission is charged with the responsibility of eliminating blight within its redevelopment
project areas through the process of redevelopment. Generally, this process culminates when the Commission
disposes of land for development by the private sector. Before this can he accomplished, the Commission must
complete the process of acquiring and assembling the necessary sites, relocating residents and businesses,
demolishing the deteriorated improvements, grading and preparing the sites for purchase by developers and
providing for ancillary off -site improvements.
09960.00000\5842387.4 18
All powers of the Commission are vested in its five members. The Commission exercises all of the
governmental functions authorized under the Redevelopment Law in carrying out projects and has sufficient
broad authority to acquire, develop, administer and sell or lease property, including the right of eminent domain
and the right to issue bonds, notes and other debt instruments and expend their proceeds. The Commission can
clear buildings and other improvements and 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.
Redevelopment in the State may be carried out pursuant to the Redevelopment Law. Section 33020 of
the Redevelopment Law defines redevelopment as the planning, development, re -planning, redesign, clearance,
reconstruction or rehabilitation, or any combination of these, of all or a part of a survey area and the provision of
such residential, commercial, industrial, public or other structures or spaces as may be appropriate or necessary
in the interest of general welfare, including recreational and other facilities incidental or appurtenant to them.
The Commission may, out of funds available to it for such purposes, pay for all or part of the value of
land and the cost of buildings, facilities, structures or other improvements to be publicly owned, within or
outside of the project area, so long as improvements are of benefit to the relevant project area and no other
reasonable means of financing is available. The Commission must sell or lease remaining property within a
project area for redevelopment by others in strict conformity with the redevelopment plan, and may specify a
period when such redevelopment must begin and be completed.
Commission Administration
The Commission each year adopts an administrative budget. A portion of salaries and benefits of certain
City staff members are budgeted and paid for by the Commission. Such reimbursement is subordinate to any
outstanding bonded indebtedness of the Commission.
The Redevelopment Law requires redevelopment agencies to have an independent financial audit
conducted each year. The financial audit is also required to include an opinion of the Commission's compliance
with laws, regulations, and administrative requirements governing activities of the Commission. The firm of
Mayer Hoffman McCann, Certified Public Accountants, Irvine, California (the "Auditor"), prepared financial
statements for the Commission for the fiscal year ended June 30, 2010. The Auditor's examination was made in
accordance with generally accepted auditing standards. The Commission follows fund accounting principles
reflecting the modified accrual basis of accounting in which revenue is recognized when earned or otherwise
becomes available, and expenditures are recognized when incurred. The Auditor reported after its examination
that., in its opinion, the financial statements present fairly, in all material respects, the respective financial
position of the governmental activities, the business -type activities, and each major fund financial fo the
Commission at June 30, 2010, and the respective financial position and cash flows of its proprietary fund types
for the Fiscal Year ending June 30, 2010 in conformance with generally accepted accounting principles. See
"APPENDIX A - AUDITED FINANCIAL STATEMENTS OF THE COMMISSION FOR FISCAL YEAR
ENDED JUNE 30, 2010." The Audited Financial Statements of the Commission are public documents and are
included within this Official Statement without the prior approval of the Auditor. Accordingly, the Auditor has
not performed any post -audit of the financial condition of the Commission.
Budgetary Policies
The Commission each year approves a budget submitted by the Executive Director prior to the
beginning of the new Fiscal Year. Public hearings are conducted prior to its adoption. The budget is
subsequently adopted through the passage of a resolution. Budgets for all three fund types utilized by the
Commission are adopted on a basis consistent with generally accepted accounting principles.
09960.00000`5842387.4 19
THE CITY
The City is the second oldest city in San Diego County, with a history that dates to 1868 when the
original community was Laid out by the California missionaries. The City is a general law city and was
incorporated in 1887. The City encompasses an area of approximately nine (9) square miles and enjoys a fairly
constant population of approximately 57,799. The City is bordered by the City of San Diego on the north and
east, the City of Chula Vista on the south and San Diego Bay on the west. The City is substantially developed,
with approximately .01 % of the Project Area categorized as vacant land.
THE AUTHORITY
The National City Joint Powers Public Financing Authority was created by a Joint Exercise of Powers
Agreement, dated as of April 1, 1991 (the "Joint Powers Agreement") by and between the Commission and the
City. The Joint Powers Agreement was entered into pursuant to the provisions of Articles 1, 2 and 4
(commencing with Section 6500 ) of Chapter 5, Division 7, of Title I of the Government Code of the State
California (the "JPA Law"). The governing body of the Authority consists of the same individuals who
compromise the City Council of the City and the governing body of the Commission. The Authority was created
for the purpose of providing financing for public capital improvements for the City and within the
Commission's project area. Under the JPA Law, the Authority has the power to purchase bonds issued by a local
agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or
negotiated sale. The Bonds are being issued for sale to the Authority and will be resold by the Authority to the
Underwriter.
09960.00000\5842387.4 20
THE PROJECT AREA
Background
General. Between 1969 and 1978, the City Council of the City of National City (the "City Council")
adopted four redevelopment projects. On December I, 1981 the City Council merged these four project areas
into one and added additional territory to form the National City Downtown Redevelopment Project (the
"NCDRP" or "Project Area"). The NCDRP consisted of approximately 2,080 acres. On April 16, 1985 the City
Council added three acres to the NCDRP, thus, bringing the size to approximately 2,083 acres.
The City Council made no other additions to the NCDRP until July 18, 1995. In July 1995, the City
Council amended and restated the redevelopment plan for the Project Area adding approximately 317 acres to
bring the NCDRP to its present size of approximately 2,400 acres. At that time, the City changed the name of
the NCDRP to the National City Redevelopment Project which contained the existing approximate 2,400 acres
in seven (7) subareas that comprise the project area currently (the "Project Area"). Gross and/or Tax Revenue in
the Project Area is derived from individually calculated component values of the seven (7) sub -areas comprising
the Project Area. Gross and/or Tax Revenues are not based on aggregated Project Area values. Entitlement to
tax increment revenues will diminish with respect to the component sub -areas beginning in 2020 and thereafter.
See Table 3 herein.
below:
As described above, the Project Area is comprised of seven (7) separate component sub -areas as listed
(1) E.J. Christman Business and Industrial Park Redevelopment Project ("Christman 1");
(2) South Bay Town and County Redevelopment Project ("South Bay");
(3) Center City Redevelopment Project ("Center City");
(4) E.J. Christman Business and Industrial Park Redevelopment Project, Amendment No. 2
(" Christman 2");
(5)
(6)
(7)
Downtown Redevelopment ("Downtown");
Downtown Amendment; and
Harbor District Area.
While the Commission expects businesses to add additional space which will enhance assessed values in
the Project Area, other than those discussed above, the Commission has not reflected that financial effect in the
Tax Revenue projections.
Recent Redevelopment Projects. Redevelopment project activity is ongoing within the Project Area. For
example, the City and the San Diego Unified Port District (the "Port") have been working jointly to develop
portions of the Bayfront in the Harbor District Area. Accomplishrnents resulting from the City and Port working
together include the 246-slip marina, restoration of Railcar Plaza and Santa Fe Historic Depot, remediation of
Marina Gateway Hotel site and restaurant sites, extension of Marina Way, and streetscapc improvements. State
and federal grants in this area have assisted with environmental remediation and restoration of Paradise Marsh.
Over $65 million of improvements have been completed or are in process in the Bayfront/Marina Gateway
Area.
In addition, significant infrastructure projects have been completed including National City Boulevard
improvements from 7th — 18th Streets including Morgan Square pocket park, streetscapc and landscape, Bay
Marina Drive widening and streetscape Harrison Avenue to Interstate 5. Affordable housing projects such as
Habitat for Humanity's 1820 G and 1441 Harding (a LEED Platinum project) have been constructed. Also the
09960.00000`5842387.4 21
award -winning two block Education Village was completed on National City Boulevard between 8th Street,
Plaza Boulevard, and Roosevelt Street.
The Commission believes its projects have created approximately $598,373,935 during the period 2003
— current.
Proposed Redevelopment Projects and Low and Moderate Income Housing Projects. Included among
the many projects anticipated to be funded through bond proceeds are implementation of the Downtown
Specific Plan through mixed use development, the improvement of 8th Street from Interstate 5 to J Avenue
including streetscape and public art, infrastructure improvements on State Highway 54, National City
Boulevard, D and F Avenues to improve the economic viability of the National City Swap meet and Harbor
Drive In sites, enhancement and improvements for Paradise Creek from Highland Avenue to Wilson Avenue,
expansion of Paradise Creek Education Park, construction of a new community center within the Westside
Specific Plan area, an award -winning 201 unit affordable Transit Oriented Development on the current site of
the National City Public Works Center, and the complete refurbishment of Morgan and Kimball Towers senior
housing project and construction of a third senior housing tower for the project.
Many of the blighted conditions in the Project Area have begun to be alleviated by the acquisition,
demolition, renovation and construction of property in the Project Area. The Commission believes their overall
goals are being met. Lastly, within the City, specific structural blight is being addressed through the use of code
enforcement, enforcement of zoning regulations, with new private sector financial infusion and increased
security. However, these improvements in the Project Area have not eliminated blight completely.
The following table summarizes certain facts relating to the component sub -areas of the Project Area.
TABLE 1
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Project Area Composition
Date Ordinance Base
Project Area Adopted Number Year
Christman 1 11/18/69 1233 1969-1970
South Bay 06/24/75 1471 1974-1975
Center City 04/13/76 1505 1975-1976
Christman 2 12/13/77 1610 1977-1978
Downtown Original 12/01/81 1762 1981-1982
Downtown 1985 Amendment 04/16/85 1851 1984-1985
Harbor District Area 07/18/95 95-2095 1994-1995
Source: National City Community Development Commission and Urban Futures, Inc.
09960.00000`5842387.4 22
Land Use
The majority of land in the Project Area is used for residential purposes. The following table shows land
use categories in the Project Area, as reported by the County Assessor's tax roll for Fiscal Year 2010-11.
TABLE 2
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Assessed Valuation and Parcels by Land Use
Land Use
Commercial
Single Family Residential
Multi -Family Residential
Industrial
Recreational
Institutional
Vacant
Total Secured
No. Parcels
680
3,451
1,168
378
37
41
202
5,957
2010-11 Assessed Valuation
$ 545,961,494
437,844,622
356,239,002
256,373,904
9,750,832
4,307,479
185,682
$1,610,663,014
% of Total A.V!1)
33.90%
27.18
22.12
15.92
0.61
0.27
0.01
100.00%
Source: Urban Futures, Inc.
(I) Based on Fiscal Year 2010-11 secured assessed valuation of $1,610,663,014.
Redevelopment Plan Limitations
AB 1290. In 1993, the California Legislature made significant changes in the Redevelopment Law by
the adoption of AB 1290, Chapter 942, statutes of 1993 ("AB 1290"). Among the changes to the
Redevelopment Law accomplished by the enactment of AB 1290 was a provision which limits the period of
time for incurring and repaying loans, advanced and indebtedness which are payable from tax increment
revenues. AB 1290 further required that any redevelopment plan that either did not contain the appropriate
limitation or that contained limitations longer than permitted by AB 1290 must be amended by the applicable
legislative body. The Commission's Plan was amended to comply with AB 1290. For a complete discussion of
SB 1290, see "PROPERTY TAXES: LEGISLATION, LIMITATIONS AND PRACTICES — Redevelopment
Plan Time Limits."
SB 211. The California Legislature enacted SB 211, Chapter 741, Statutes 2001, effective January 1,
2002 ("SB 211"). SB 211 provides, among other things, that the limitation on incurring indebtedness contained
in a redevelopment plan adopted prior to January 1, 1994, may he deleted by ordinance of the legislative body.
For a complete discussion of SB 211, see "PROPERTY TAXES: LEGISLATION, LIMITATIONS AND
PRACTICES — Redevelopment Plan Time Limits."
SB 1045. The California Legislature enacted Senate Bill 1045, Chapter 260, Statutes 2003, effective
September 1, 2003 ("SB 1045"). SB 1045 provides, among other things, that Redevelopment Plans may be
amended to add one year to the effectiveness of the Redevelopment Plans and one year to the period for
collection of tax increment revenues and the repayment of debt.
All of the component sub -areas except the Harbor District Area were adopted before 1994. On
November 22, 1994, the City Council adopted Ordinance No. 94-2086 which amended the Redevelopment Plan
as it existed to conform to Chapter 942. The Harbor District Area was adopted with such limitations as were
required by the Redevelopment Law at the time that the amendment was adopted. On January 6, 2004, the City
Council adopted Ordinance No. 2004-237. This ordinance amended the Redevelopment Plan so as to eliminate
the January 1, 2004 deadline for incurrence of new indebtedness for all component sub -areas except Harbor
District Area as authorized by SB 211. In addition this ordinance extended by one year the termination date for
Project Area activities and the termination date for repayment of indebtedness from tax increment revenue for
09960.00000\5842387.4 23
all component sub -areas. The extensions and the process for implementing these amendments were authorized
by SB 1045. See "PROPERTY TAXES: LEGISLATION, LIMITATION AND PRACTICES" herein.
SB 1096. The Legislature adopted Senate Bill 1096, Chapter 211, Statutes of 2004, ("SB 1096"),
authorizing extension of the effectiveness of redevelopment plans for an additional two years for those
redevelopment plans with 20 years or less remaining.
Table 3 summarizes the various limitations established by the Redevelopment Plan currently governing
the component sub -areas of the Project Area with respect to tax increment and bonded indebtedness:
Adoption Date
Debt Incurrence
Plan Effectiveness
Last Date to Receive Tax
Increment
Tax Increment Limit
Maximum Oustanding
Bonded Indebtedness
TABLE 3
COMMUNITY DEVELOPMENT COMMISSION
OF TIIE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Redevelopment Plan Limits
Christman 1 South Bav
11/18/1969 6/24/1975
Eliminated Eliminated
11/18/2010 6/24/2016
11/18/2020 6/24/2026
Source: Urban Futures, Inc.
Center City Christman 2
4/13/1976 12/13/1977
Eliminated Eliminated
4/13/2017 12/13/2018
4/13/2027 12/13/2028
$390,000,000 Combined
$100,000,000 Combined
Downtown
Downtown Amendment Harbor
12/1/1981 4/16/1985 7/18/1995
Eliminated Eliminated 7/18/2015
12/1/2022 4/16/2026 7/18/2026
12/1/2032 4/16/2036 7/18/2041
No Limit
No Limit
In addition, the Redevelopment Plan, as amended in 1995, established an outstanding bonded
indebtedness limit for the Project Area of $100 million and a cumulative limit on the gross revenue that may be
allocated to the Project Area of $300 million (adjusted annually for inflation by the San Diego Consumer Price
Index for all Consumers) that are applicable to all portions of the Project Area other than the Harbor District
Added Area. According to the records of the Commission, it has received a total of $69,120,281 in gross tax
increment revenue from fiscal year 2005-06 through the end of fiscal year 2009-10. This amount is exclusive of
revenues that have been derived from the Harbor District portion of the Project Area. This sub -area has been
omitted because it was adopted after January 1, 1994 and is not, therefore, subject to a tax increment limit.
Based on the assumptions used for the projection, the portions of the Project Area that are subject to a limitation
on receipt of tax increment revenue will not approach the amount of the tax increment limit during the lifetime
of the Project Area.
The Commission believes that such tax increment limit will not impair its ability to pay debt service on
the Bonds. Further, the Commission has covenanted in the Indenture not to issue or incur any Parity Debt or
subordinate debt payable from Tax Revenues, if such issuance or incurrence would cause the Commission to
exceed such tax increment limit and has further covenanted to take certain measures if it reaches 90% of the
plan limit.
On February 2, 2010, the Commission initiated steps to amend the Redevelopment Plan for the Project
Area (the "Amendment"). The Commission anticipates the amendment to be adopted on July 5, 2011 and
effective 30 days thereafter. The Amendment, if adopted, will accomplish the following changes in the existing
Project Area: (i) increase the annual tax increment limit from $300 million to $475 million; (ii) increase the
amount of bonded indebtedness from $100 million to $150 million; (iii) increase by ten (10) years the timeframe
to receive tax increment and the effectiveness of redevelopment plan; (iv) increase by ten (10) years the
effectiveness of the redevelopment plan; (v) modify the duration of affordability for residential projects
affordable to low- to moderate -income households; (vi) reinstate the time frame to commence eminent domain
on certain properties within the existing Project Area for non-residential properties for twelve (12) years from
09960.00000\5842387.4 24
the date of adoption of the ordinance approving the Amendment; and (vii) modify the exhibit to the
Redevelopment Plan which delineates properties subject to eminent domain. The limits in Table 3 above do not
reflect the impacts of the proposed Amendment.
Compliance with Plan Limitations
Because debt service on the Bonds is to be paid from Tax Revenues attributable to the Project Area, the
Commission has covenanted to retain certain amounts with respect to the application of Plan Limitations. If the
aggregate amount of debt service remaining to be paid on all Outstanding Bonds, any Parity Debt, and any other
obligations of the Commission to which 'fax Revenues have been pledged, plus the aggregate amount remaining
to be paid under the Payment Agreement (See "APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF
THE INDENTURE") between the Authority and the Commission until maturity of the Bonds and any Parity
Debt, plus the aggregate administration expenses of the Commission remaining to paid until maturity of the
Bonds and any Parity Debt, plus the cumulative amount of Gross Revenues with respect to the Project Area
received through the date of the calculation, excluding those Gross Revenues attributable to the Harbor District
sub -area, at any time equals or exceeds ninety percent (90%) of the cumulative amount of Gross Revenues
which the Commission is permitted to receive under the Plan Limitations applicable to the Project Area, THEN
the Commission shall thereafter transfer to the Trustee all Tax Revenues with respect to the Project Area,
excluding those Tax Revenues attributable to the Harbor District sub -area, not needed to pay (a) the current debt
service due on the Bonds, any Parity Debt, and any other obligations to which Tax Revenues have been pledged,
(b) the current amount required to be paid under the Payment Agreement between the Authority and the
Commission and (c) the current amount required to pay the administration expenses of the Commission. The
transferred amount shall be deposited by the Trustee in the Special Fund to be applied pursuant to the Indenture,
notwithstanding anything therein to the contrary.
Tax Sharing Agreements
San Diego Office of Education. The Commission entered into a tax sharing agreement with the San
Diego County Office of Education, dated June 12, 1991. The terms of this agreement included all portions of the
Project Area except for the Harbor District Area. The Commission is required to deposit 100% of the County
Office of Education's 2.12% share of tax increment revenues into a special capital improvement fund each year,
for the life of the Project Area. The Commission's obligation to deposit tax increment pursuant to the provisions
of the tax sharing agreement is senior to the Commission's obligation to pay debt service on the Bonds.
Southwestern Community College District. The Commission entered into a tax sharing agreement with
the Southwestern Community College District, dated August 6, 1991. The terms of the agreement affect the
entire Project Area, except the Harbor District Added Area. The Southwestern Community College District will
receive 42% of its 4.75% share of tax increment revenues commencing in fiscal year 1991-92 through the
duration of the Redevelopment Plan. The Commission's obligation to deposit tax increment pursuant to the
provisions of the tax sharing agreement is senior to the Commission's obligation to pay debt service on the
Bonds.
County of San Diego. The Commission entered into a tax sharing agreement (the "San Diego PTA")
with the County, dated May 12, 1992. The terms of this agreement affect the entire Project Area by amending a
previous agreement between the Commission and the County, dated April 16, 1985.
The San Diego PTA applies to all component sub -areas. In regard to all component sub -areas except
Ilarbor District, this agreement requires the Commission to make payments of a fixed amount to the County
annually through fiscal year 2009-10. These fixed amounts are detennined by the agreement to be subordinate to
payment of debt service on bonded indebtedness by the Commission. In addition, the agreement requires that
through fiscal year 2014-15 the Commission pay to the County its share (24.87%) of general levy tax increment
revenue derived from annual assessed value growth above a level of value that is calculated from 6%
compounded annual growth in assessed value above the Project Area's 1997-98 assessed value, excluding
Harbor District.
09960.00000 %5 8 423 8 7.4
25
The Project Area's assessed values have not exceeded this compounded assessed value growth in prior
years and will not exceed this amount based on the projections. By the terms of the agreement, beginning in
fiscal year 2015-16 the County will receive its share of general levy tax increment revenue from all component
sub -areas other than Harbor District.
Chapter 942 of the Statutes of 1994 required that for redevelopment projects adopted after January 1,
1994, tax sharing payments shall be made in accordance with a formula outlined in the statute and that
negotiated tax sharing agreements were no longer allowed. Notwithstanding the provisions of Chapter 942, on
December 3, 1996 and after negotiations with the County Chief Administrative Office, the Commission
requested that the County agree to an amendment of the agreement outlined above that is intended to mandate
tax sharing payments from revenues of the Harbor District sub -area. This amendment requires the Commission
to pay to the County 65% of its share of the Harbor District sub -area's general levy tax increment revenue on
annual assessed value growth of 5% or less. The agreement further requires that the Commission pay to the
County 100% of its share of general levy tax increment derived from annual assessed value growth that is above
5%. Beginning in fiscal year 2017-18, the Commission is required to pay the County 100% of its share of
general levy tax increment revenue.
Statutory Tax Sharing Payments
With the adoption of Ordinance 2004-237 and by eliminating the time limit on incurring indebtedness
for all component projects except the Harbor District, the Commission will be required to make statutory tax
sharing payments to those taxing entities that have not entered into tax sharing agreements. Within all
component project sub -areas excluding the Harbor District, tax sharing payments will be made to all taxing
entities in accordance with the three -tiered formulas for statutory tax sharing payments required of those project
areas adopted after January 1, 1994. According to the Law, these statutory tax sharing payments will continue
until the termination date of each component sub -area. As a result, for the final ten years that each component
sub -area is permitted to repay indebtedness with tax revenue, there will be no statutory tax sharing payment
requirement.
Beginning in 2004-05 and using each component sub -area's 2003-04 assessed values as a base value but
excluding the Harbor District, the Commission was obligated to pay the combined taxing entities 25% of the
revenue generated by the component Project Area's annual incremental value net of the Housing Set -Aside
requirement. Beginning in 2014-15 and using the Project Area's 2013-14 assessed values as a base value for the
second tier of statutory tax sharing payments, the Commission will additionally be obligated to pay the
combined taxing entities 21% of the revenue generated by the component Project Area's annual second tier of
incremental value net of the Housing Set -Aside requirement. The third tier of statutory tax sharing payments is
not initiated before the termination of the redevelopment plan.
Within the Harbor District, these statutory tax sharing payments began in 2001-02, the first year that the
sub -areas received tax increment revenue. The Commission is obligated to pay all taxing entities on a prorated
basis 25% of the revenue generated by the component Project Area's annual incremental value net of the
Housing Set -Aside requirement. Beginning in 2011-012 and using the Project Area's 2010-11 assessed values as
a base value for the second tier of statutory tax sharing payments, the Commission is additionally obligated to
pay the taxing entities 21% of the revenue generated by the Ilarbor District's annual second tier of incremental
value net of the Housing Set -Aside requirement. The third tier of statutory tax sharing payments is initiated in
Fiscal Year 2031-32 and using the sub -area's 2030-31 assessed values as a base value, the Commission will
additionally be obligated to pay the taxing entities 14% of the revenue generated by the Harbor District's annual
third tier of incremental value net of the Housing Set -Aside requirement.
Allocation of Taxes
The County Auditor -Controller is responsible for the aggregation of the taxable values assigned by the
Assessor as of the January 1 lien date for property within the boundaries of the Project Area. This results in the
reported total current year Project Area taxable value and becomes the basis of determining tax increment
revenues due to the Commission. Although adjustments to taxable values for property within the Project Area
09960.00000\5842387.4 26
may occur throughout the fiscal year to reflect escaped assessments, roll corrections, etc., such adjustments are
not assumed on the tax increment projection. The Commission is allocated most of its revenue in the months of
January and May, with additional smaller payments occurring in other months.
The Commission has covenanted in the Indenture to comply with all requirements of law to insure the
allocation and payment to it of the Tax Revenues, including without limitation, the timely tiling of any
necessary statements of indebtedness with appropriate officials of the County.
Historic Assessed Value and Tax Revenues
Total property tax increment revenue receipts with respect to the Project Area during fiscal year 2009-
10 were $13,980,361 based on the records of the Auditor -Controller. This total does not include the 20%
Housing -Set Aside requirement, and the 1% plus overrides in addition to the supplemental assessment roll,
assessment roll corrections, and prior year delinquencies and penalties. See "APPENDIX A — AUDTI'ED
FINANCIAL STATEMENTS OF THE COMMISSION FOR FISCAL YEAR ENDED JUNE 30, 2010." Tax
revenues arc allocated by the Auditor Controller based on collected tax receipts and the revenue listed above are
reflective of a collection rate on Fiscal Year 2009-10 revenues of %.
09960.00000\58423 87.4 27
Set forth in the following table is a detailed summary of Project Area historical assessed values for
fiscal years 2005-2006 through 2009-10.
TABLE 4
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Historic Assessed Values
From Fiscal Year 2006-2007 to 2010-2011
2006-07 2007-08 2008-09 2009-10 2010-11
Christman 1:
Land $ 21,766,554 $ 22,136,867 $ 24,846,126 $ 27,897,019 $ 27,987,348
Improvements 51,606,631 52,321,783 54,879,002 55,923,725 55,801,997
Personal Property 10,074,019 10,258,647 9,847,410 10,053,346 6,171,151
Exemptions -79 998 -12 091 -61 086 -71,777 -77,097
Total $ 83 367,206 $ 84,705,206 $ 89,511,452 $ 93,802,313 $ 89,883,399
City Center:
Land $ 26,838,820 $ 28,538,657 $ 28,835,692 $ 28,496,474 $ 24,979,966
Improvements 26,844,636 28,458,202 28,930,953 28,568,457 28,736,921
Personal Property 342,988 113,573 153,650 319,943 182,884
Exemptions -7 570,615 -8,322,834 -8,527 736-10,617,662 -10,542,229
Total $ 46,455,829 $ 48,787,598 $ 49,392,559 $ 46,767,212 $ 43,357,542
South Bay Sweetwater:
Land $ 9,942,005 $ 10,140,833 $ 10,343,634 $ 10,550,492 $ 10,525,473
Improvements 19,121,324 20,450,338 20,798,053 21,410,134 21,375,693
Personal Property 1,803,160 1,895,754 2,117,503 2,132,525 1,741,353
Exemptions -2,117,214 -3,145,257 -3 608,161 -3,870,323 -3 881 149
Total $ 28,749,275 $ 29,341,668 $ 29,651,029 $ 30,222,828 $ 29,761,370
Christman 2:
Land $ 22,184,165 $ 22,899,240 $ 24,075,566 $ 25,724,578 $ 23,862,710
Improvements 19,024,787 19,928,931 21,050,941 21,827,545 21,572,848
Personal Property 1,968,127 1,999,022 2,205,888 2,357,599 1,834,158
Exemptions -210 462 -257,430 -273 296 -271 041 -10,808
Total $ 42,966,617 $ 44,569,763 $ 47,059,099 $ 49,638,681 $ 47,258,908
Downtown:
Land S 585,214,017 5 657,357,790 $ 689,360,664 $ 639,900,558 $ 621,874,407
Improvements 691,001,505 735,211,343 764,300,985 713,896,967 707,619,454
Personal Property 43,668,114 55,491,433 51,010,561 47,951,232 46,534,449
Exemptions -36 504,475 -37,461,094 -43 717,485 -48,646,747 -53,113 689
Total $1,283,379,161 $1,410,599,472 $1,460,954,725 $1,353,102,010 $1,322,914,621
Downtown Amendment:
Land $ 3,330,700 $ 3,397,314 $ 3,465,259 $ 3,534,563 $ 3,526,185
Improvements 7,824,780 8,123,397 8,270,675 8,531,350 8,489,415
Personal Property 560,125 420,738 440,629 405,094 416,737
Exemptions -18 401 -14 809 -18 131 -19 237 -22 745
Total $ 11,697,204 $ 11,926,640 $ 12,158,432 $ 12,451,770 $ 12,409,592
Harbor District:
Land $ 85,008,431 S 80,469,719 S 85,851,225 $ 93,217,456 $ 69,282,611
Improvements 64,321,387 70,023,278 74,539,153 79,991,652 86,560,179
Personal Property 24,714,813 24,859,207 31,987,251 36,192,490 32,466,266
Exemptions-682913-678,187-696616-717,170 -711,928
Total $ 173,361,718 $ 174,674,017 $ 191,681,013 $ 208,684,428 $ 187,597,128
Total Project Area Assessed Value $1,669,977,010 $1,804,604,364 $1,880,408,309 $1,794,669,242 $1,733,182,560
Less: Base Year Assessed Value 413,540,831 413 540 831 413 540,831 413,540,831 413 540 831
Project Area Incremental Assessed Value $1,256,436,179 $1.391,063,533 $1,466,867,478 $1,381,128,411 $1,319,641,729
Source: Urban Futures, Inc.
09960.0000015842387.4
28
Set forth in the following table is a summary of Project Area historic taxable assessed valuations for
fiscal years 2005-06 through 2009-10.
Christman 1
City Center
South Bay/Sweetwater
Christman 2
Downtown
Downtown Amendment
Harbor District
Total
TABLE 5
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(National City Redevelopment Project)
historic Taxable Assessed Valuations
2006-07
$ 83,367,206
46,455.829
28,749,275
42,966,617
1,283,379,161
11,697,204
173.361 718
$1,669,977,010
2007-08
$ 84,705,206
48,787,598
29,341,668
44,569,763
1,410,599,472
11,926,640
174,674 017
$1,804,604,364
2008-09
$ 89,511,452
49,392,559
29,651,029
47,059,099
1,460,954,725
12,158,432
191,681,013
$1,880,408,309
2009-10
$ 93,802,313
46,767,212
30,222,828
49,638,681
1,353,102,010
12,451,770
208,684,428
$1,794,669,242
2010-11
$ 89.883,399
43,357,542
29,761,370
47,258,908
1,322,914,621
12,409,592
187,597,128
$1,733,182,560
Source: Urban Futures, Inc.
09960 00000 \58423 87.4
29
Major Taxable Property Owners
A review of the top ten taxpayers in the Project Area for fiscal year 2010-11 was conducted and broken
down by secured value. Within the Project Area, the aggregate total assessed taxable value for the ten largest
taxpayers totaled $187,882,111. This amount is 11.66% of the Project Area secured assessed value and 14.24%
of the $1,733,182,560 Project Area incremental value. The top taxpayer in the Project Area is Pacific Castle Bay
Plaza LLC, which controls 3 secured parcels with a combined secured value of $26,467,321. The value of the 3
parcels is 2.01% of the Project Area's total incremental value and 1.64% of the total 2010-11 value. The second
largest taxpayer in the Project Area is Sweetwater Associates LP that controls a total of $22,836,038 in secured
assessed value on 22 parcels. This amount is 1.73% of the Project Area's aggregated incremental value and
1.42% of the Project Area's aggregated total secured 2010-11 value. The table below illustrates the percentage
of incremental value for the top ten taxpayers in the Project Area and their relative importance to the Project
Area's incremental value.
TABLE 6
COMMUNITY DEVELOPMENT COMMISSION
OF TIIE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Major Taxable Property Owners
Property Owner
1. Pacific Castle Bay Plaza LLC
2. Sweetwater Associates LP
3. Dexter Street limited Partnership
4. Dixieline Lumber Company
5. Broadway Sweetwater Square LLC
6. Wal-Mart Real Estate Business
7. Marina Gateway Development LLC
8. C I P Venture
9. Harbor View Acquisition LLC
10. Lgi Delaware LLC
Primary Land Use
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Commercial
Industrial
Multi -family residential
Industrial
2010-11
Assessed of Project
Valuation Area Value of
$ 26,467,321 1.64%
22,836,038 1.42
22,150,000 1.38
19,803,682 1.23
18,378,303 1.14
17,953,860 1.11
16,962,889 1.05
16,556,072 1.03
13,894,753 0.86
12 879,193 0.80
of Incremental
Value 42'
2.01 "/o
1-73
1.68
1.50
1.39
1.36
1.29
1.25
1.05
0.98
Totals $187,882,111 11.66% 14.24%
Source: Urban Futures, Inc.
o) Based on Fiscal Year 2010-1 I seamed assessed valuation of $1,610,663,014.
U' Based on Fiscal Year2010-11 incremental assessed valuation of $1,319,641,729.
Appeals of Assessed Values
Pursuant to California law, property owners may apply for a reduction of their property tax assessment
by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate
county board of equalization or assessment appeals board.
After the applicant and the assessor have presented their arguments, the Appeals Board makes a final
decision on the proper assessed value. The Appeals Board may rule in the assessor's favor, in the applicant's
favor, or the Board may set their own opinion of the proper assessed value, which may be more or less than
either the assessor's opinion or the applicant's opinion.
Any reduction in the assessment ultimately granted applies to the year for which the application is made
and may also affect the values in subsequent years. Refunds for taxpayer overpayment of property taxes may
include refunds for overpayment of taxes in years after that which was appealed. Current year values may also
be adjusted as a result of a successful appeal of prior ycar values. Any taxpayer payment of property taxes that is
based on a value that is subsequently adjusted downward will require a refund for overpayment.
09960.0000015842387.4 30
Appeals for reduction in the "base year" value of an assessment, if successful, reduce the assessment for
the year in which the appeal is taken and prospectively thereafter. The base year is determined by the
completion date of new construction or the date of change of ownership. Any base year appeal must be made
within four years of the change of ownership or new construction date.
Appeals may also be filed under Section 51 of the Revenue and Taxation Code, which requires that for
each lien date the value of real property shall be the lesser of its base year value annually adjusted by the
inflation factor pursuant to Article XIII of the State Constitution or its full cash value, taking into account
reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors
causing a decline in value. Historically, significant reductions have taken place in some counties due to
declining real estate values. Reductions made under this code section may be initiated by the County Assessor or
requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on
an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in
further reductions or in value increases. Such increases must be in accordance with the full cash value of the
property and it may exceed the maximum annual inflationary growth rate allowed on other properties under
Article XI11A of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it
once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. See
"LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS" below.
There are approximately 18 appeals to the County Assessor's office pending in the Project Area.
However, none of the Project Area's top ten taxpayers have pending appeals of their assessed value.
There are 132 outstanding appeals as indicated in the table below.
Number
Roll Year of Appeals
Appealed Outstanding
2007 1
2008 3
2009 13
2010 115
'totals 132
TABLE 7
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Outstanding Assessment Appeals
Assessed Value
of Property
$ 21,466
34,805,462
71,800,316
172,381 032
$279,008,276
Owner's Opinion
of Value
$ 7,959
27,070,000
46,656,014
135 115 441
$208,849,414
Number of
Appeals
Potential Loss of Projected
Assessed Value to Succeed
$ 13,507
7,735,462
25,144,302
37 265 591
S70,158,862 54
Historic
Success
Reduction
Rate
21.78%
21.78
21.78
21.78
21.78%
Reduction Allowed
(based on
Itistorical Successl
$ 2,942
1,684,923
5,476,881
8 117 116
$15,281,861
Source: Urban Futures, Inc.
Foreclosures
Foreclosures could impact the payment of property taxes and have an adverse effect on the
Commission's ability to make timely debt service payments on the Bonds. From January 1, 2010 through
December 4, 2010, there were 104 foreclosures throughout the City. Forty-nine of these foreclosures are within
the Project Area. Forty-six of the 49 foreclosures in the Project Area come from the Downtown Project Area.
The remaining 55 foreclosures are within the City limits but are not in the Project Area. The 104 foreclosed
properties represent less than 1% of the City's 10,730 parcels.
09960.00000\51142387.4 31
The following table sets forth information with respect to foreclosures in the Project Area between
January 1, 2010 and December 31, 2010.
TABLE 8
COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY
Foreclosure Analysis
January 1, 2010-December 14, 2010
Assessed Market Value
Affected Parcels Value (AV) (MV) MV-AV
Notice of Default
EJ Christman No. 1
EJ Christman No. 2 1 701,911 475,928 (225,983)
Center City 2 787,552 423,610 (363,942)
Sweetwater - - -
Downtown 42 10,184,071 10,938,787 754,716
Downtown Amendment - - -
Harbor
Total — All Project Areas 45 $1 1,673,534 $1 1,838,325 $ 164,791
Remainder of City
Total Notices of Default
Notice of Trustee Sale
EJ Christman No. 1
EJ Christman No. 2
Center City
Sweetwater
Downtown
Downtown Amendment
Harbor
Total — All Project Areas
Remainder of City
Total Notices of Trustee Sale
64 12 750 362 15,467,418 2 717 056
109 $24,423,896 $27,305,743 $2,881,847
3
6
9
529,087 754,515 225,428
$ 529,087
1,168,136
$ 1,697,223
$ 754,515 $ 225,428
1,624,551 456,415
$2,379,066 $ 681,843
Foreclosures
EJ Christman No. I 1 2,329,465 1,823,507 (505,958)
EJ Christman No. 2
Center City 2 298,000 449,248 151,248
Sweetwater -
Downtown 46 8,647,156 9,701,690 1,054,534
Downtown Amendment -
Ilarbor -
Total — All Project Areas 49 $11,274,621 $11,974,445 $ 699,824
Remainder of City 55 11,910,260 16 098 278 4,188,018
Total Foreclosures 104 $23,184,881 $28,072,723 $ 4,887,842
Source: DataQuick and Urban Futures Inc.
For additional information on foreclosures, see "RISK FACTORS — Levy and Collection of Taxes, fax
Delinquencies, and Foreclosure" herein.
Statement of Direct and Overlapping Debt
Numerous agencies providing public services overlap the Project Area. These agencies may have
outstanding certificates of participation and bonds in the form of general obligations, special assessment, special
tax and lease revenue bonds.
09960_00000\5842387 4 32
Direct debt is directly issued on behalf of the Commission while overlapping debt constitutes that
portion issued by the City or other agencies within the same tax code areas. The Direct and Overlapping Tax and
Assessment Debt and Overlapping General Fund Obligation Debt of the Project Area as of March 1, 2011
(except as noted in the footnotes to the Statement), as prepared by California Municipal Statistics, Inc., are
shown below. The Commission has not independently verified this information and makes no representation as
to its accuracy or completeness.
09960 0000015842387.4 33
TABLE 9
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY
(National City Merged Redevelopment Project)
Statement of Direct and Overlapping Debt
2010-11 Assessed Valuation: $1,733,182,560
Base Year Valuation: 413,540,831
Incremental Valuation: $1,319,641,729
DIRECT DEBT:
1999 Downtown Tax Allocation Housing Bonds
2004 Tax Allocation Bonds, Series A
2005 Refunding Tax Allocation Bonds, Series A
2005 Refunding Tax Allocation Bonds, Series B
TOTAL DIRECT DEBT
Ratio to Incremental Valuation: 2.65%
OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District
Southwestern Community College District
Sweetwater Union High School District
City of National City
Sweetwater Union High School District Community Facilities District No. 100.291
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
% Applicable
100. %
100.
100.
100.
OVERLAPPING GENERAL FUND DEBT:
San Diego County General Fund Obligations
San Diego County Pension Obligations
San Diego County Superintendent of Schools Certificates of Participation
Southwestern Community College District General Fund Obligations
Sweetwater Union High School District Certificates of Participation
City of National City General Fund Obligations
TOTAL OVERLAPPING GENERAL FUND DEBT
COMBINED TOTAL DIRECT AND OVERLAPPING DEBT
(1)
(2 )
0.023%
4.182
4.946
57.890
0.121%
0.121
0.121
1.095
1.319
24.699
Debt 3/1/11
$ 3,965,000
4,345,000
16,780,000
9,840,000
$ 34,930,000(1)
$ 52,364
7,445,590
16,735,009
2,963,968
34,025
$ 27,230,956
$ 470,091
992,549
24,191
32,357
138,231
724,916
$ 2,382,335
$64,543,291 (2)
Excludes tax allocation bonds to be sold.
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds
and non -bonded capital lease obligations
Ratios to 2010-11 Assessed Valuation:
Combined Direct and Overlapping Debt 3.72%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/10: $0
Source: California Municipal Statistics, Inc.
09960.00000,5842387.4 34
Projected Tax Revenues
The tax increment revenue projections for the Project Area are summarized below. All of the
projections commence with the reported values for Fiscal Year 2010-11 through 2040-41.
TABLE 10
COMMUNITY DEVELOPMENT COMMISSION
OF TIIE CITY OF NATIONAL CITY
(National City Redevelopment Project)
Projected Tax Revenues for
Fiscal Years 20- through 20_-_
(Amounts in $000's)
Assessed Incremental Gross Tax Negotiated Statutory Low/Moderate County Pledged
Fiscal Valuation Assessed Increment Unitary Pass Through Pass Through Income Housing Admin. Tax
Year Growth Valuation trr Revenues PI Revenues Payments Payments r3r Fund r'r Fees'5) Revenues
10-11 $1,733,182,560 SI.319,641,729 $13,196,417 $169,562 $702,493 $834,297 $2,639,283 5197,791 58,992,114
11-12 1,746,233,425 1,332,692,594 13,326,926 169,562 710,424 731,731 2,665,385 199,724 9,189,223
12-13 1,763,695,759 1,350,154,928 13,501,549 169,562 722,195 754,179 2,700,310 202,311 9,292,116
13-14 1,798,969,674' 1,385,428,843 13,854,288 169,562 743,653 799,722 2,770,858 207,537 9,502,081
14-15 1,834,949,068 1,421,408,237 14.214,082 169,562 765,540 886,379 2,842,816 212,867 9,676,042
15-16 1,871,648,049 1,458,107,218 14,581,072 169,562 4,147,917 974,769 2,916,214 218,304 6,493,429
16-17 1,909,081,010 1,495,540,179 14,955,4(12 169,562 4,253,791 1,038,321 2,991,080 223,85(3 6,617,922
17-18 1,947,262,630 1,533,721,799 15,337,218 169,562 4,463,587 1,121,279 3,067,444 229,506 6,624,965
18-19 1,986,207,883 1,572,667,052 15,726,671 169,562 4,577,404 1,210,949 3,145,334 235,276 6,727,271
19-20 2,025,932,040 1,612,391,209 16,123,912 169,562 4,693,497 1,266,593 3,224,782 241,161 6,867,442
20-21 1,959,283,891 1,548,229,036 15,482,290 156,306 4,507,883 1,357,107 3,096,458 226,377 6,450,771
21-22 1,998,469,569 1,587,414,714 15,874,147 156,306 4,622,432 1,449,432 3,174,829 232,074 6,551,686
22-23 2,038,438,961 1,627,384,106 16,273,841 156,306 4,739,271 1,543,603 3,254,768 237,885 6,654,620
23-24 2,079,207,740 1,668,152,885 16,681,529 156,306 4,858,447 264,255 3,336,306 243,812 8,135,015
24-25 2,120,791,895 1,709,737,040 17,097,370 156,306 4,980,006 278,109 3,419,474 249,858 8,326,229
25-26 2,163,207,732 1,752,152,877 17,521,529 156,306 5,103,997 292,240 3,504,306 256,025 8,521,267
26-27 2,108,294,496 1,707,371,377 17,073,714 140,498 4,972,399 287,371 3,414,743 232,627 8,307,073
27-28 2,150,460,386 1,749,537,267 17,495,373 140,498 5,095,608 301,303 3,499,075 238,382 8,501,502
28-29 2,127,451,073 1,733,416,954 17,334,170 135,873 5,048,114 315,515 3,466,834 226,620 8,412,961
29-30 2,170,000,095 1,775,965,976 17,759,660 135,873 5,172,410 330,010 3,551,932 232,214 8,608,966
30-31 2,213,40(1,096 1,819,365,977 18,193,660 135,873 5,299,192 344,796 3,638,732 237,920 8)808,892
31-32 2,257,668,098 1,863,633,979 18,636,340 135,873 5,428,511 359,877 3,727,268 243,741 9,012,817
32-33 302,431,750 S207,757,013 2,077,570 2,702 534,860 375,260 415,514 49,271 705,367
33-34 308,480,386 $213,805,649 2,138,056 2,702 550,285 390,950 427,611 50,613 721,298
34-35 314,649,993 $219,975,256 2,199,753 2,702 566,019 411,825 439,951 51,982 732,678
35-36 301,029,804 $207,327,712 2,073,277 2,047 515,138 433,118 414,655 37,672 674,741
36-37 307,050,400 $213,348,308 2,133,483 2,047 530,097 454,836 426,697 38,766 685,134
37-38 313,191,408 $219,489,316 2,194,893 2,047 545,355 476,989 438,979 39,882 695,735
38-39 319,455,236 $225,753,144 2,257,531 2,047 560,919 499,585 451,506 41,020 706,548
39-40 325,844,341 $232,142,249 2,321,422 2,047 576,793 522,633 464,284 42,181 717,577
40-41 332,361,228 $238,659,136 2,386,591 2,047 592,985 546,142 477,318 43,365 728,827
Source: The Underwriter
Note: Assessed Valuation emwth factor for Fiscal Year 2011-12 is .753% per State of California Board of Equalization (CCPI) California Consumer
Price Index announcement dated 12/16/2010. A growth factor of 1.00% is assumed for 2012-13 and a 2% annual growth factor thereafter_
(0 Incremental valuation over Base Year valuation ($413,540,831) based on actual FY 10-11 AV.
rar Gross Tax Increment based on a tax rate of 1.00%.
(31 Section 33607.5 Pass Through Payments.
Based on 20% of Gross Tax Increment Revenues.
(51 Estimated based on 2009-10 fees of 1.51 % of Gross Tax Increment Revenues.
09960.00000/5842387.4
35
Projected Debt Service Coverage
The following table shows the debt service coverage on the Bonds, the 1999 Bonds, the 2004 Series A
Bonds, the Series 2005 A Bonds, and the Series 2005 B Bonds based on estimated growth in Tax Revenues.
TABLE 11
COMMUNITY DEVELOPMENT COMMISSION OF TIIE CITY OF NATIONAL CITY
(National City Redevelopment Project) Projected Debt Service Coverage —
Fiscal Years through
[TO COME]
09960.00000,5842387.4 36
RISK FACTORS
The following information and factors, together with the information set forth elsewhere in this Official
Statement, should be considered by prospective investors in evaluating the Bonds. However, the following do
not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in
the Bonds, and the order in which the following information presented is not intended to reflect the relative
importance of any such risks. Other factors which could result in reduction of Tax Revenues available to the
Commission and a corresponding reduction in Tax Revenues received by the Commission are discussed herein
under the caption "LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS"
herein.
To estimate the tax revenues available to pay debt service on the Bonds, the Commission has made
certain assumptions with regard to the assessed valuation in the Project Area, future tax rates and percentage of
taxes collected. The Commission believes these assumptions to be reasonable, but to the extent that the assessed
valuation, the tax rates or the percentage of taxes collected are less than the Commission's assumptions, the Tax
Revenues available to pay debt service on the Bonds will, in all likelihood, be less than those projected.
Reduction in Tax Base/Taxable Value — Economic Factors, Property Damage and Appeals of Assessed
Value
Tax increment revenues allocated to the Commission (which constitute the primary security and source
of payment of principal and interest on the Bonds as discussed herein) are determined by the amount of the
incremental assessed value of property in the Project Area, the current rate or rates at which property in the
Project Arca is taxed and the percentage of taxes collected in the Project Area. The Commission does not have
any taxing power, nor does the Commission have the power to affect the rate at which the property is taxed.
Several types of events beyond the control of the Commission could occur and could cause a reduction
in available Tax Revenues that secure the Bonds including, among others, (a) a reduction of taxable values of
property in one or more of the redevelopment projects in the Project Area caused by local or regional economic
factors; (b) a relocation out of one or more of the redevelopment projects in the Project Area by one or more
major property owner; (c) successful appeals by property owners for a reduction in a property's assessed values
(See "THE PROJECT AREA — Appeals of Assessed Values" herein); (d) a reduction of the general inflationary
rate; (e) the State electorate or Legislature could adopt further limitations with the effect of reducing the Tax
Revenues; or (f) the destruction of property caused by natural or other disasters. These events are further
discussed below. In such event, substantial delinquencies in the payment of property taxes to the County or
assessment appeals of such property taxes by the owners of taxable property within the Project Area could have
an adverse effect on the ability of the commission to make payments of principal and/or interest on the Bonds
when due. See "THE PROJECT AREA — Appeals of Assessed Value" herein and "— Assessment Appeals"
below.
These risks may be greater where a project area has a high concentration of major taxpayers. Based on
the Fiscal Year 2009-10 tax roll, the ten largest secured taxpayers in the Project Area accounted for
approximately 11.66% of the total assessed value of the Project Area. Additionally, the risk of a relocation out
of one or more of the redevelopment projects in the Project Area by one or more major property owners
increases in proportion to the percent of total assessed value attributable to any single assessment in any Project
Area. For information regarding the largest assessees of the Project Area, see the section entitled "THE
PROJECT AREA — Major Taxable Property Owners" in this Official Statement.
As noted above, the State electorate or Legislature could adopt further limitations with the effect of
reducing the Tax Revenues. Such limitation already exists under Article XIIIA of the California Constitution,
which was adopted pursuant to the initiative process. The State electorate could adopt additional similar
limitations with the effect of reducing Tax Revenues. "See "-- Proposed 2011-12 Budget and Redevelopment
Agencies" below.
09960.0000015842387.4 37
The County's current policy is to allocate Project Area tax increment revenues to the Commission based
on the amount of property taxes collected within the project areas as adjusted for taxpayer delinquencies, taxable
value adjustments, refunds due to successful assessment appeals or tax roll corrections. Substantial
delinquencies in the payment of property taxes, substantial property tax refunds, significant reductions in taxable
value or significant tax roll corrections could impair the timely receipt by the Commission of Tax Revenues.
Real Estate and General Economic Risks
The Commission's ability to make payments on the Bonds will depend upon the economic strength of
the Project Area. The general economy of the Project Area will be subject to all the risks generally associated
with real estate and real estate development. Projected redevelopment of real property within the Project Area
by the Commission as well as private development in the Project Area, may be adversely affected by changes in
general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in
development costs and by other similar factors. Further, real estate development within the Project Area could
be adversely affected by future governmental policies, including governmental policies to restrict or control
certain kinds of development. If development and redevelopment activities in the Project Area encounter
significant obstacles of the kind described herein or other impediments, the economy of the Project Area could
be adversely affected, causing reduction of the Tax Revenues available to repay the Bonds. In addition, if there
is a decline in the general economy of the region, the City or the Project Area, the owners of property within the
Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or
stoppage of Tax Revenues received by the Commission from the Project Area.
As a result of the downturn in the housing market, several counties in California (including the County)
have reduced the assessed values of homes acquired in the peak of the real estate market in 2004 and 2005. See
"THE PROJECT AREA — Appeals of Assessed Value" herein and "— Assessment Appeals" below. The Agency
is aware that the County Assessor has made reductions in Fiscal Year 2009-10 assessed values in the Project
Area and in the City generally. The Commission cannot predict whether the County will further reduce assessed
values in the Project Area in future years. In Fiscal Year 2010-11, assessed values in the Project Area dropped
approximately 3.43%. The Commission does not believe that such reductions will have a material adverse
impact on Tax Revenues or the Commission's ability to pay debt service on the Bonds. However, reductions in
assessed value due to current or future economic conditions in the Project Area could impact the receipt of Tax
Revenues as projected by the Fiscal Consultant. See "PROJECT AREA — Projected Tax Revenues — Appeals of
Assessed Values — Projected Tax Revenues — Annual Debt Service" herein.
The vast majority of currently pending and closed appeals of assessed valuations are Proposition 8
appeals, which apply only to a single year. See the caption "— Assessment Appeals" below for further
information with respect to Proposition 8 appeals.
Assessment Appeals
There are two basic types of assessment appeals provided for under State law. The first type of appeal,
commonly referred to as a base year assessment appeal, involves a dispute on the valuation assigned by the
county assessor immediately subsequent to a change in ownership or completion of new construction. If the
base year value assigned by the county assessor is reduced, the valuation of the property cannot increase in
subsequent years more than two percent annually unless and until another change in ownership and/or additional
new construction activity occurs. The second type of appeal, commonly referred to as a Proposition 8 appeal,
can result if factors occur causing a decline in the market value of the property to a level below the property's
then current taxable value. Proposition 8 appeals apply only to a single tax year.
Pursuant to State law, a property owner may apply for a Proposition 8 reduction of the property tax
assessment for such owner's property by filing a written application, in the form prescribed by the State Board
of Equalization, with the appropriate county board of equalization or assessment appeals board. Any reduction
in the assessment ultimately granted applies only to the year for which application is made and during which the
written application is filed. The assessed value increases to its pre -reduction level (escalated to the inflation rate
of no more than 2%) following the year for which the reduction application is filed. However, the county
09960.00000\5842387 4 38
assessor has the power to grant a reduction not only for the year for which application was originally made, but
also for the then current year and any intervening years as well. In practice, such a reduced assessment may and
often does remain in effect beyond the year in which it is granted.
An appeal may result in a reduction to the assessor's original taxable value and a tax refund to the
applicant property owner. A reduction in present or future taxable values within the Project Area, which may
arise out of successful appeals by property owners, will affect the amount of present or future tax increment
received by the Commission.
Assessors have the ability to use Proposition 8 criteria to apply blanket reductions in valuation to classes
of properties affected by particular negative economic conditions, and the County Assessor's office did so for
many residential properties on the Fiscal Year 2008-09 and Fiscal Year 2009-10 tax roll, as described in greater
detail below. Such reductions in assessed values are incorporated in the Tables 4, 5, and 6 under the caption
"THE PROJECT AREA."
The County has experienced a high level of assessment appeals in the late 2000s, and significant appeals
to assessed values in the Project Area may be filed from time to time in the future. The Agency cannot predict
the extent of these appeals or their likelihood of success. The vast majority of currently pending and closed
appeals are Proposition 8 appeals.
For Fiscal Years 2006-07 through February 3, 2011, 396 assessment appeals were filed in the Project
Area, 162 of which resulted in a cumulative reduction of $40,814,580 in the assessed value of the Project Area.
There are currently 132 unresolved appeals in the Project Area requesting a cumulative reduction in assessed
value of approximately $70,158,862. Of these, there will be a historical reduction rate of 21.78% applied based
on historical reduction rates in the Project Area. This will bring the allowed reduction amount to $15,281,861.
The Fiscal consultant has not made any adjustment to its projections as a result of these pending appeals. The
Commission does not believe that such reduction would have a material adverse impact on the Commission's
ability to pay debt service on the Bonds. See Tables: Assessment Appeals and Projected Revenues.
The cumulative reduction in the Project Area assessed values resulted from actions by the County
Assessor's office to reduce assessed valuations for Fiscal Years 2008-09 and 2009-10 for residential properties
in the Project Area in response to the effects of the downturn in the financial and housing markets as well as the
impact of the national and local recession. In establishing the assessed valuations for the Fiscal Year 2008-09
and Fiscal Year 2009-10 equalized tax roll, the County Assessor's office undertook a comprehensive review of
all projects that were developed and sold between 2003 and 2008 and lowered the assessed value of many of the
homes in such projects. Assessed valuations in the Fiscal Year 2010-1011 equalized tax roll reflect property
values as of January 1, 2010, but do not reflect any changes in property values that have occurred since then.
Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2%
limitation times: for 1993/94, 1%; for 1995/96, 1.19%; for 1996/97, L 11 %; for 1999/00, 1.853%; [ANY
OTHERS?]. The Commission is unable to predict if any adjustments to the full cash value base of real property
within the Project Area, whether an increase or a reduction, will be realized in the future.
Levy and Collection of Taxes, Tax Delinquencies, and Foreclosures
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
Revenues. Such event could have an adverse impact on the ability of the Commission to repay the Bonds.
Similarly, delinquencies in the Commission's receipt of property tax payments and the impact of bankruptcy
proceedings or other delaying circumstances could have an adverse effect on the Commission's ability to make
timely debt service payments. Conversely, the Commission will benefit from Tax Revenue generated by
penalties and interest charged on delinquent property taxes. For Fiscal Year 2009-10, the delinquency rate in
the County was 2.8%.
09960.00000\5842387.4 39
In addition, foreclosures could impact the payment of property taxes and have an adverse effect on the
Commission's ability to make timely debt service payments on the Bonds. From January 1, 2010 through
December 4, 2010, there were 104 foreclosures throughout the City. Forty-nine of these foreclosures are within
the Project Area. Forty-six of the 49 foreclosures in the Project Area come from the Downtown Project Area.
The remaining 55 foreclosures are within the City limits but are not in the Project Area. The 104 foreclosed
properties represent less than 1% of the City's 10,730 parcels.
The Fiscal Consultant has determined that the foreclosure activity has had little to no effect on property
values. The market values of the foreclosed properties are actually greater than assessed values, which the Fiscal
Consultant has determined supports the findings that foreclosure activity has had a minimal impact on the City
and the Commission.
In addition to the foregoing, there are 109 properties that have received notices of default. Of the 109,
only 9 properties have received notices of trustee sale.
Estimates, Assumptions and Projections of Tax Revenues
To estimate the total Tax Revenues available to pay debt service on the Bonds, the Commission's Fiscal
Consultant has made certain assumptions with regard to the assessed valuation in the Project Area, future tax
rates, the percentage of taxes collected, and the likelihood of appeals. See "LIMITATION ON TAX
REVENUES" herein.
Additional Obligations -Bonds
As described in "SECURITY FOR THE BONDS — Issuance of Parity Debt," the Commission may issue
or incur obligations payable from Tax Revenues on a parity with its pledge of Tax Revenues to payment of debt
service on the Bonds. The existence of and the potential for such obligations increases the risks associated with
the Commission's payment of debt service on the Bonds in the event of a decrease in the Commission's
collection of `fax Revenues.
Restored Value (Article XIIIA Litigation)
Properties that have been subject to downward valuation by the county assessors as a result of natural
disasters, economic downturns or other factors, have often had that value restored by the assessors (up to the
pre- decline value of the property) at rates higher than 2% per annum depending on the success of repairs
following a disaster or the speed of a rebound from an economic downturn. All fifty-eight county assessors have
followed this procedure, which is codified in Section 51 of the California Revenue and Taxation Code. In
Minute Order issued on November 2, 2001 in County of Orange v. Orange County Assessment Appeals Board
No. 3, case no. 00CC03385, the Orange County Superior Court held that where a home's taxable value did not
increase for two years, due to a flat real estate market, the Orange County assessor violated the two percent
inflation adjustment provision of Article XIIIA, when the assessor tried to "recapture" the tax value of the
property by increasing its assessed value by 4% in a single year. The assessors in all California counties,
including San Diego County, use a similar methodology in raising the taxable values of property beyond 2% in a
single year. The State Board of Equalization has approved this methodology for increasing assessed values.
The Superior Court ruling was appealed by the Orange County Assessor and oral arguments before
Division 3 of the 4th District Court of Appeals in Santa Ana were heard on January 7, 2004. On March 26,
2004, the Fourth Appellate District of the of the Court of Appeal of the State of California ruled that under
Proposition 13 the base year of real property on which the inflation factor is figured remains the original
purchase price or assessment at the time of new construction even though the taxable value may be reduced by
general deflation or natural disaster. On May 5, 2004, the respondent filed a petition to the California Supreme
Court for review of the decision published by the Court of Appeal. On July 21, 2004, the California Supreme
Court denied the petition to review the decision by the Court of Appeal. This action concluded the legal review
of this case.
09960.00000,5842387.4 40
Unsecured Value
Because of the difficulty in precisely allocating the value of unsecured property such as cable TV lines
to individual parcels, the County Assessor has historically aggregated the value of unsecured property in a
particular area and placed that aggregate value on one or more specific parcels. If the Assessor were to pick a
parcel outside of the Project Area to aggregate such unsecured value, the Tax Revenues for the Project Area
would be significantly reduced. The Commission believes that the Assessor is obligated by law to attribute the
fair value of unsecured property in a project area to that project area.
Bankruptcy Risks
The enforceability of the rights and remedies of the owners of the Bonds and the obligations of the
Commission may become subject to the following: the federal bankruptcy code and applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors'
rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement
under state law of certain remedies; the exercise by the United States of America of the powers delegated to it
by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the
police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of
servicing a significant and legitimate public purpose.
Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could
subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or
otherwise and consequently may entail risks of delay, limitation, or modification of their rights.
Limited Obligations Represented by The Bonds
The Bonds are not a debt of the City of National City, the State of California or any of its political
subdivisions (other than the Commission to the extent set forth herein). The Bonds are special obligations of the
Commission payable, as to interest and principal thereof and premiums, if any, upon redemption thereof,
excluding from the Tax Revenues and are initially secured by a pledge therein. None of the Bonds constitute an
indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and neither the
members of the Commission or any persons executing the Bonds shall be personally liable by reason of their
issuance.
Concentration of Ownership
The Project Area consists of approximately 2,400 [CONFIRM] acres and the top ten assessee account
for 11.6% of the total assessed value of the Project Area. See Table 6 — Major Taxable Property Owners herein.
The failure of one or more of the top tax assessee to timely pay the taxes on their property or substantial damage
or destruction to their property may have a material effect on the Commission's ability to make payments on the
Bonds.
Tax Increment Liinitation
The Commission has a limit on the amount of tax increment the Commission may receive with respect
to the Project Area of $300 million increased annually for inflation, currently $ for 2011. See "THE
PROJECT AREA - Redevelopment Plan Limitations." The Commission has received $13,980,361 attributable
to the Project Area through Fiscal Year ending June 30, 2010 (See "APPENDIX A — AUDITED FINANCIAL
STATEMENTS OF THE COMMISSION FOR FISCAL YEAR ENDED JUNE 30, 2010"). The amount
pledged on all outstanding indebtedness, including the Cormnission's obligations under the Bonds, (assuming
debt service paid as scheduled), is not expected to exceed the applicable tax increment limitation.
09960.00000\5842387 4 41
Educational Revenue Augmentation Fund; State Budget
ERAF. In connection with the approval of the State budget for State fiscal years 1992-93, 1993-94,
1994-95, 2002-03, 2003-04, 2004-05, 2005-06, 2008-09 and 2009-10, the State Legislature enacted legislation
which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a
portion of each agency's Tax Increment, net of amounts due to other taxing agencies, to school districts for such
Fiscal Years for deposit in the Educational Revenue Augmentation Fund ("ERAF"). The amount required to be
paid by each redevelopment agency under such legislation was apportioned among all of its redevelopment
project areas on a collective basis, and was not allocated separately to individual project areas.
Since Fiscal Year 2002-03, approximately $696,894 of Tax Increment has been shifted from the
Commission into ERAF and SERAF (as defined below under the caption "— Fiscal Year 2009-10 State
Budget"). In connection with the State budget for Fiscal Year 2010-11, an estimated $1,062,028 of Tax
Increment will be shifted from the Commission into SERAF in Fiscal Year 2010-11. The Commission plans to
pay this amount from existing funds on hand, and does not plan to borrow moneys from the Low and Moderate
Income Housing Fund. The Commission does not anticipate that the payment of this amount or the payment of
additional ERAF amounts in the future will affect the ability of the Commission to pay debt service on the
Bonds.
Fiscal Year 2008/09 State Budget. On September 24, 2008, the State Legislature adopted, and the
Governor of the State signed, a bill known as Assembly Bill 1389, Chapter 751, Statutes 2008 ("AB 1389").
Among other things, AB 1389 required redevelopment agencies to pay into ERAF prior to May 10, 2009 an
aggregate amount of $350 million, of which the Commission was to pay approximately $1,095,723. Such
payment obligations were to be subordinate to payments on bonds secured by Tax Increment. However, on
April 30, 2009, the Superior Court for the State of California, County of Sacramento, held in California
Redevelopment Association v. Genest (Case No. 34-2008-00028334) that such required payment into ERAF
violated the State Constitution and invalidated and enjoined the operation of the section in AB 1389 requiring
such payment. On September 23, 2009, the State filed an Abandonment of Appeal, abandoning its appeal of the
decision of the Superior Court.
Fiscal Year 2009/10 State Budget. In connection with legislation related to the State's fiscal year 2009-
10 budget, in late July 2009, the State Legislature adopted, and the Governor of the State signed, Chapter 21,
Statutes of 2009/10 Fourth Extraordinary Session (AB 26). Such legislation was subsequently amended in
November 2009 by Chapter 652, Statutes of 2009 (SB 68) (as amended, the "2009 SERAF Legislation").
The 2009 SERAF Legislation mandates that redevelopment agencies make deposits to the Supplemental
Educational Revenue Augmentation Fund ("SERAF") that is established in each county treasury the aggregate
amounts of $1.7 billion prior to May 10, 2010 and $350 mullion prior to May 10, 2011.
On May 10, 2010, the Commission deposited into SERAF the amount of $5,163,417 as its SERAF
payment for Fiscal Year 2009/10 (the "Commission 2010 SERAF Amount"). The Commission's required
Fiscal Year 2010-11 payment pursuant to the 2009 SERAF Legislation will be approximately $1,062,028 (the
"Commission 2011 SERAF Amount").
Pursuant to the 2009 SERAF Legislation, redevelopment agencies may make the required SERAF
deposits from any funds that are legally available and not legally obligated for other uses, including reserve
funds, proceeds of land sales, proceeds of bonds or other indebtedness, lease revenues, interest and other earned
income. The 2009 SERAF Legislation also provides that redevelopment agencies may borrow from the amounts
required to be allocated to their Low and Moderate Income Housing Funds to make the required SERAF
deposits for Fiscal Year 2009-10.
The Commission paid the Commission 2010 SERAF Amount from moneys on hand and not from
money borrowed from the available fund balance in the Commission's Low and Moderate Income Housing
Fund.
09960.00000\5842387.4 42
Potential sources of funds the Commission may use to pay the SERAF include Fiscal Year 2010-11 Tax
Increments and available moneys on deposit in Commission funds, including the Low and Moderate Income
Housing Fund. Additionally, the Commission could, in the future, access the bond market to fund the current or
any future tax shifts.
The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment
agencies to make the SERAF payments specified therein to certain indebtedness. Health and Safety Code §
33690(a)(3), which was added by the 2009 SERAF Legislation, states: "The obligation of any agency to make
the payments required pursuant to this subdivision shall be subordinate to the lien of any pledge of collateral
securing, directly or indirectly, the payment of the principal, or interest on any bonds of the agency including,
without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670" of the
California Health and Safety Code."
In addition, the 2009 SERAF Legislation imposes various restrictions on redevelopment agencies that
fail to timely make the required SERAF payments, including: (i) a prohibition on adding or expanding project
areas; (ii) a prohibition on the incurrence of additional debt; (iii) limitations on the encumbrance and
expenditure of funds, including funds for operation and administration expenses; and (iv) commencing with the
July 1 following the due date of a SERAF annual payment that is not timely made, the allocation of an
additional 5% of all taxes that are allocated to the redevelopment agency under the Law for low and moderate
income housing for the remainder of the time that the applicable redevelopment agency receives allocations of
Tax Increment under the Law. The 5% additional housing set -aside penalty provision referred to in the 2009
SERAF Legislation (the "Penalty Set -Aside Requirement") would be in addition to the 20% of such Tax
Increment already required to be deposited in the Low and Moderate Income Housing Fund. A redevelopment
agency that borrows from amounts required to be allocated to its Low and Moderate Income Housing Fund or
any moneys in such fund, or both, to make required SERAF payments, but does not timely repay the funds, may
also be subject to the Penalty Set -Aside Requirement.
As described above, the Commission has paid the Commission 2010 SERAF Amount and believes that
it will be able to timely pay the Commission 2011 SERAF Amount on or before May 10, 2011.
On May 4, 2010, the Superior Court for the State of California, County of Sacramento, upheld the 2009
SERAF Legislation from Constitutional challenge by redevelopment agencies in California Redevelopment
Association v. Michael C. Genest (Case No. 34-2009-80000359) (the "2009 SERAF Litigation"). The
challengers to the 2009 SERAF Legislation have appealed the Superior Court's decision. The Commission
cannot predict the outcome of the 2009 SERAF Litigation.
The 2009 SERAF Legislation provides that when a redevelopment agency has allocated the full amount
of a required SERAF payment, the legislative body may amend a redevelopment plan to extend by one year the
time limits on the effectiveness of the plan and the repayment of indebtedness (the "SERAF Extension"). Under
the Law, the SERAF Extension also has the effect of extending by one year the time limit to receive property
taxes.
On November 2, 2010, the voters of the State approved a ballot initiative known as Proposition 22,
pursuant to which the State is prohibited from shifting, taking, borrowing or restricting the use of tax revenues
dedicated by law to, among other things, funding redevelopment agencies and other local government services.
Although the passage of Proposition 22 will have no impact upon the Commission's obligation to pay the
Commission 2011 SERAF Amount, the State Legislative Analyst's Office (the "LAO") has stated that the
measure prohibits the State from enacting new laws that require redevelopment agencies to shift funds to
schools or other agencies. No assurance can be provided that Proposition 22 will be implemented as
contemplated by the LAO. In addition, Proposition 22 is subject to interpretation by the courts and there can be
no assurance that the measure will not be challenged by the State or other parties or repealed by the voters of the
State in the future.
Current Budget Issues. On December 6, 2010, Governor Schwarzenegger called an emergency session
of the Legislature into session to address the $6.1 billion projected deficit for fiscal year 2010-11. During budget
09960.00000\5842387.4 43
briefings held in December 2010, then Governor elect Jerry Brown announced that the likely deficit between
now and June 30, 2012 had likely grown from the $25.1 billion reported in the Fiscal Outlook Report to
approximately $28 billion. On January 3, 2011, Jerry Brown was sworn in as Governor.
On January 10, 2011, Governor Jerry Brown released his proposed budget for fiscal year 2011-12
("Proposed Budget"). The Proposed Budget is designed to address an estimated budget shortfall of $25.4 billion
in the fiscal year 2011-12 California State Budget. The budget shortfall consists of an $8.2 billion projected
deficit for fiscal year 2010-11 and a $17.2 billion gap between projected revenues and spending in fiscal year
2011-12. The Governor's proposal includes approximately $12.5 billion in budget cuts, $12 billion in tax
extensions and changes, and $1.9 billion in other solutions. The Governor is calling for a statewide special
election in June to extend for five more years tax measures currently set to expire.
The Proposed Budget proposes elimination of the current funding mechanism for redevelopment
agencies (the "RDA Provisions"), although only limited details are provided for such a far-reaching proposal.
The RDA Provisions, if adopted, would prohibit existing agencies from creating new contracts or
obligations effective upon enactment of urgency legislation. By July 1, existing agencies would be
disestablished and successor local agencies would be required to use the tax increment revenues that
redevelopment agencies would otherwise have received to retire redevelopment agency debts and contractual
obligations "in accordance with existing payment schedules." The RDA Provisions would divert an estimated
$1.7 billion in fiscal year 2011-12 to offset State General Fund costs for Medi-Cal and trial courts. An additional
estimated $210 million would be distributed on a one-time basis to cities, counties, and special districts
proportionate to their current share of the countywide property tax.
The RDA Provisions propose that, after fiscal year 2011-12, the money available after payment of the
redevelopment agency debt and contractual obligations would be distributed to schools, counties, cities, and
non -enterprise special districts for general uses.
As to Low and Moderate Income Housing Fund balances, the Proposed Budget provides that amounts in
the redevelopment agency's balances reserved for low -moderate income housing would be shifted to local
housing authorities for low and moderate income housing.
In lieu of redevelopment, the Proposed Budget proposes a new financing mechanism for economic
development. Specifically, the Proposed Budget proposes that the Constitution be amended to provide for 55%
voter approval for limited tax increases and bonding against local revenues for development projects such as are
currently done by redevelopment agencies. Voters in each affected jurisdiction would be required to approve use
of their tax revenues for these purposes. In a statement accompanying release of the Proposed Budget, State
Finance Director Ana Matosantos indicated that the new financing mechanism may be included in a proposal
following approval of the Proposed Budget, possibly in 2012.
Implementation of the Proposed Budget, including the RDA Provisions, will require implementing
legislation by the Legislature and perhaps voter approval as to certain material elements and may include terms
which are not yet proposed which are material to the Commission and the Bonds. The Commission cannot
predict the ultimate form of such legislation, if any is adopted. Elernents of the RDA Provisions, including the
economic development program authorization, contemplate voter approval through the initiative process. It is
possible that Proposition 22, which amended the State Constitution to prohibit state diversion of redevelopment
agency revenues generally, will affect the State's ability to implement the RDA Provisions. It is possible that the
Governor and the Legislature may seek voter approval of changes to the terms of Proposition 22 that are in
conflict with the Proposed Budget, including the RDA Provisions. The Commission cannot predict the timing,
terms or ultimate implementation of any such final legislation or voter initiative measures, or the impact on the
Commission or the 2011 Bonds of any proposed, interim or final legislative and constitutional changes which
may be adopted arising out of the Proposed Budget.
The LAO released its Overview of the Governor's Budget ("LAO Overview") on January 12, 2011. As
it relates to the RDA Provisions, the LAO Overview suggests the proposal has merit "but faces considerable
09960.00000 V 842387.4
44
implementation issues." The LAO Overview notes that "the administration's plan will require considerable work
by the Legislature to sort through many legal, financial and policy issues. Several voter- approved constitutional
measures, for example, constrain the State's authority to redirect redevelopment funds, use property tax
revenues to pay for State programs, or impose increased costs on local agencies. In addition, the
administration's plan does not address many related issues, such as clarifying the future financial responsibility
for low- and moderate- income housing (currently, a redevelopment program)." The LAO suggests that the
Proposed Budget may understate the debt of redevelopment agencies and therefore the availability of additional
revenues to assist with the State budget issues. Finally, the LAO Overview recommends that the Legislature
pass urgency legislation as soon as possible prohibiting redevelopment agencies, during the period of legislative
review, from taking actions that increase their debt in light of the considerable work that will be required of the
Legislature to develop the statutory measures to implement the RDA Provisions.
On February 3, 2011, the California Senate Budget and Finance Review Subcommittee conducted a
hearing on the RDA Provisions of the Proposed Budget. On February 7, 2011, the California Assembly Budget
Subcommittee conducted hearings on the RDA Provisions of the Proposed Budget. On February 9, 2011, the
California Senate Committee on Governance and Finance conducted hearings on the RDA Provisions of the
Proposed Budget.
There are a variety of ways in which the Proposed Budget and the RDA Provisions, if adopted, could
impact the Commission and the Bonds, although the Commission is not able to predict the full variety or extent
of these impacts, and the impacts will vary greatly depending on the final terms of laws adopted to implement
the Proposed Budget and the RDA Provisions:
(i) The RDA Provisions, if adopted, could impact the Commission's activities and programs
generally and could reduce or eliminate its fund balances and staffing.
(ii) The RDA Provisions, if adopted, could affect the Commission's compliance with and
performance under existing contracts and obligations.
(iii) Subject to certain "contract clause" protections described below, the RDA Provisions could
affect the Commission's compliance with and performance under the terms of the Indenture and the Bonds.
These impacts could relate to the amount or availability of property tax revenue, Tax Increment revenues, Tax
Revenues or Housing Tax Revenues for the Bonds and other uses, the manner of application of Tax Revenues or
housing Tax Revenues to debt service, flow of funds, use of Bond proceeds to fund new projects, compliance
with Indenture covenants, continuing disclosure and other matters.
(iv) Pending final adoption of laws to implement the RDA Provisions, interim proposals could affect
the activities of the Commission and the value of the Bonds.
(v) The RDA Provisions if adopted and implemented, most significantly the elimination of
redevelopment agencies and the redeployment of tax increment revenues affecting redevelopment agencies,
would almost certainly raise legal and practical issues, some of which may be subject to litigation and ultimate
resolution in the courts, or subsequent legislative action. These issues could affect the Commission and its
compliance with the terms of the Indentures and the Bonds, and resolution of these issues could involve expense
and delay or modification of certain of the rights of Bondholders in ways that the Commission cannot predict.
Article I, section 10 of the United States Constitution provides that "No state shall ... pass any ... law
impairing the obligation of contracts." Article I, section 9 of the State Constitution provides that a "law
impairing the obligation of contracts may not be passed." Each of these provisions is generally referred to as a
"contracts clause." Federal courts have applied a fact -based three-part test to determine whether a state law
violates the federal contracts clause. In general, the test compares any impairment against the significant and
legitimate public purpose behind the state law; there is no absolute prohibition against impairment.
The Commission cannot predict the applicable scope of "contract clause" protections to the Bonds and
the RDA Provisions as they may ultimately be implemented. Protection of the rights of Bondholders and
09960.0000015842387.4 45
enforcement of the terms of the Indentures, if necessary, could involve expense and delay including with respect
to the determination of the applicable scope of the "contract clause" provisions. Should legislation be introduced
adversely impacting the Commission's receipt of tax increment revenues or the Commission's ability to issue
the Bonds or impose additional limitations or burdens on the Commission or the Authority by reason of the
issuance of the Bonds, the Commission has the right under the bond purchase agreement with the Underwriter to
not proceed in issuing the Bonds.
The Commission cannot predict what actions will be taken in the future by the voters of the State, the
State Legislature and the Governor to deal with changing State revenues and expenditures and the repercussions
they may have on the current tiscal year State Budget, the Proposed Budget and future State budgets, or their
impact on the Commission. These developments at the State level, whether related to the Proposed Budget or
not, may, in turn, affect local governments and agencies, including the Commission. Even if the proposals
affecting the Commission in the Proposed Budget are not adopted, the State Legislature may adopt other
legislation from time to time requiring redevelopment agencies to make other payments to ERAF or SERAF or
to make other payments. The impact that current and future State fiscal shortfalls will have on the Commission
is unknown at this time. In prior years, the State has experienced budgetary difficulties and as in the Proposed
Budget, balanced its budget by requiring local political subdivisions, such as the County, the Authority and the
Commission, to fund certain costs previously borne by the State.
Risk of Earthquake and Other Natural Disasters
Natural disasters, includes floods and earthquakes, could damage improvements and/or property in the
Project Area or impair the ability of landowners within the Project Area to develop their properties or to pay
property taxes.
Earthquakes. The State is subject to periodic earthquake activity. 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, thereby impairing ability of the Cormnission to make payments of principal of and/or interest on the
Bonds, when due. According to information in the City's General Plan, the most potentially harmful hazard in
the City and in the County is seismic activity. The Sweetwater fault runs through the far eastern edge of the City
but is considered to be inactive.
Floods. The property within the Project Area is generally not within any designated flood plain areas.
Hazardous Substances
The discovery of hazardous substances on the property in the Project Area is an additional
environmental condition that may result in the reduction in the assessed value of property would be the
discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project
Area. In general, the owners and operators of a property may be required by law to remedy conditions of the
property relating to releases or threatened releases of hazardous substances. The Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as CERCLA or the
Superfund Act, is the most well known and widely applicable of these laws and State laws with regard to
hazardous substances are also stringent and similar. Under many of these laws, the owner or operator may be
required to remedy a hazardous substance condition of property whether or not the owner or operator has
anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the
property within the Project Area be affected by a hazardous substance, could be to reduce the marketability and
value of the property by the costs of remedying the condition and/or other amounts.
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market
exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions
or because of adverse history or economic prospects connected with a particular issue, secondary marketing
09960.00000\5842387.4 46
practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for
which a market is being made will depend upon the then prevailing circumstances. Such prices could be
substantially different from the original purchase price.
Loss of Tax Exemption
As discussed under the caption "TAX MATTERS" herein, interest on the Bonds could become
includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued
as a result of future acts or omissions of the Commission in violation of its covenants contained in the Second
Supplemental Indenture of Trust. Should such an event of taxability occur, the Bonds are not subject to special
redemption or any increase in interest rate and may remain outstanding until maturity.
PROPERTY TAXES: LEGISLATION, LIMITATIONS AND PRACTICES
Property Tax Limitations - Article XIIIA of State Constitution
California voters, on June 6, 1978, approved an amendment (commonly known as both Proposition 13
and the Jarvis -Gann Initiative) to the California Constitution. This amendment, which added Article XIIIA to
the California Constitution, among other things, limits the amount of any ad valorem tax on real property to one
percent (1%) of the full cash value as described below. The amendment defines the full cash value of property to
mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under full cash value, or
thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership
has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a
rate not to exceed 2% per year, or any reduction in the consumer price index or comparable local data, or any
reduction in the event of declining property value caused by damage, destruction or other factors. As noted
above, the amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash
value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters
prior to July 1, 1978. In addition, an amendment to Article XIII was adopted in June 1986 by initiative which
exempts any bonded indebtedness approved by two-thirds of the votes cast by voters for the acquisition or
improvement of real property from the 1 percent limitation.
In the general elections of 1986, 1988, 1990 and 1996, the voters of the State approved various
measures which amended Article XIIIA as described below. One such amendment generally provides that the
purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000
of the full cash value of other real property between parents and children, do not constitute a -purchase" or
"change of ownership" triggering reassessment under Article XIIIA. Other amendments permitted the
Legislature to allow persons over 55 Who sell their residence and, on or after November 5, 1986, buy or build
another of equal or lesser value within two years in the same county, to transfer the old residence's assessed
value to the new residence, and permitted the Legislature to authorize each county under certain circumstances
to adopt an ordinance making such transfers or assessed value applicable to situations in which the replacement
dwelling purchased or constructed after November 8, 1988, is located within the county and the original
property is located in another county within the State.
In the October 1990 election, the voters approved additional amendments to Article XIIIA permitting
the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 to severely
disabled homeowners for replacement dwellings purchased or newly constructed on or after June 5, 1990, and to
exclude from the definition of "new construction" triggering reassessment improvements to certain dwellings
for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990
election, the voters approved the amendment of Article XIIIA to permit the State Legislature to exclude from the
definition of "new construction" seismic retrofitting improvements or improvements utilizing earthquake hazard
mitigation technologies constructed or installed in existing buildings after November 6, 1990.
In the March 1996 primary election, the voters approved a further amendment to Article XIIIA which
extended the above -described parent -child reassessment exemption to transfers from grandparents to
grandchildren under certain circumstances.
09960.00000 58423874 47
In addition, Proposition 1 was adopted by initiative in the November 1998 general election. Proposition
1 further amends Article XIIIA to allow the repair or replacement of environmentally contaminated property or
structures without increasing the tax valuation of the original or replacement property. The State's Legislative
Analyst estimated the passage of Proposition 1 would result in "property tax revenue losses probably less than
$1 million annually in the near term to schools, counties, cities, and special districts."
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 de -emphasis will 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 enacted by the California Legislature to implement Article XIIIA (Statutes of 1978, Chapter
292, as amended) provides that, notwithstanding any other law, local agencies may not levy any property tax,
except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and that each county
will levy the maximum tax permitted by Article XIIIA.
The apportionment of property taxes in fiscal years after 1978/79 has been revised pursuant to Statutes
of 1979, Chapter 282 which provides relief funds from State moneys beginning in fiscal year 1978/79 and is
designed to provide a permanent system for sharing State taxes and budget surplus funds with local agencies.
Under Chapter 282, cities and counties receive about one-third more of the remaining property tax revenues
collected under Proposition 13 instead of direct State aid. School districts receive a correspondingly reduced
amount of property taxes, but receive compensation directly from the State and are given additional relief.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership,
2% annual value growth) will be allocated on the basis of "situs" among the jurisdictions that serve the tax rate
area within which the growth occurs except for certain utility property assessed by the State Board of
Equalization which is allocated by a different method discussed herein.
Property Tax Collection Procedures
Classifications. In California, property which is subject to ad valorem taxes is classified as "secured" or
"unsecured." Secured and unsecured property are entered on separate parts of the assessment roll maintained by
the county assessor. The secured classification includes property on which any property tax levied by the
County becomes a lien on that property sufficient, in the opinion of the county assessor, to secure payment of
the taxes. Every tax which becomes a lien on secured property has priority over all other liens on the secured
property, regardless of the time of the creation of other liens. A tax levied on unsecured property does not
become a lien against unsecured property, but may become a lien on certain other property owned by the
taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the two
classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the
absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the
office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the
taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien
on certain property of the taxpayer; and (4) seizure and sale of the personal property, improvements or
possessory interests belonging or assessed to the assessee.
Penalties. A 10% penalty is added to delinquent taxes which have been levied with respect to property
on the secured roll. In addition, property on the secured roll on which taxes are delinquent is declared in default
on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent
taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption and a
$15 Redemption Fee. If taxes are unpaid for a period of five years or more, the property is recorded in a "Power
to Sell" status and is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent
09960.00000\5842387.4 48
taxes on property on the unsecured roll, and further, an additional penalty of 1 1/2% per month accrues with
respect to such taxes beginning the first day of the third month following the delinquency date.
Delinquencies. The valuation of property is determined as of January 1 each year and equal installments
of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on
unsecured property are due January 1. Unsecured taxes enrolled by July 31, if unpaid, are delinquent August 31
at 5:00 p.m. and are subject to penalty; unsecured taxes added to roll after July 31, if unpaid, are delinquent on
the last day of the month succeeding the month of enrollment.
Supplemental Assessments. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), provides for
the supplemental assessment and taxation of property as of the occurrence of a change in ownership or
completion of new construction. The statute may provide increased revenue to redevelopment agencies to the
extent that supplemental assessments as a result of new construction or changes of ownership occur within the
boundaries of redevelopment projects subsequent to the lien date. To the extent such supplemental assessments
occur within the Project Area, Tax Revenues may increase.
Tax Collection Fees. SB 2557 (Chapter 466, Statutes of 1990) authorizes county auditors to determine
property tax administration costs proportionately attributable to local jurisdictions and to submit invoices to the
jurisdictions for such costs. Subsequent legislation specifically includes redevelopment agencies among the
entities which are subject to a property tax administration charge. For 1999-00, the amount of such costs was
$34,702 for the Project Area. In addition, the County charges a redevelopment service fee. For 1999-00 the
aggregate redevelopment fee for the Project Area was $36,117.14. Such costs and fees are deducted prior to a
determination of Tax Revenues which are pledged to repay the Bonds.
No Power to Tax
The Commission has no power to levy and collect property taxes, and any property tax limitation,
legislative measure, voter initiative or provisions of additional sources of income to taxing agencies having the
effect of reducing the property tax rate, could reduce the amount of Tax Revenues that would otherwise be
available to pay the principal of, and interest on, the Bonds. Likewise, broadened property tax exemptions could
have a similar effect.
The Bonds are not a debt of the City, the State of California or any of its political subdivisions other
than the Commission, and neither the City, State, nor any of its political subdivisions other than the Commission
is liable. The Bonds do not constitute indebtedness within the meaning of any constitutional or statutory debt
limit or restriction on the amount of debt.
Appropriations Limitations - Article XIIIB of the State Constitution
On November 6, 1979, the voters approved Proposition 4, known as the Gann Initiative, which added
Article XIIIB to the California Constitution. Under Article XIIIB, state and local government entities have an
annual "appropriations limit" which limits the ability to spend certain moneys which are called "appropriations
subject to limitation" (consisting of tax revenues and certain state subventions together called "proceeds of
taxes" and certain other funds) in an amount higher than the "appropriations limit." Article XIIIB does not affect
the appropriation of moneys which are excluded from the definition of "appropriations limit," including debt
service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently
approved by two-thirds of the voters.
In general terms, the "appropriations limit" is to be based on certain Fiscal Year 1978-79 expenditures,
and is to be adjusted annually to reflect changes in the consumer price index, population and services provided
by these entities. Among other provisions of Article XIIIB, if the revenues of such entities in any year exceed
the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules
over the subsequent two years. To the extent of any such revision in tax rates or fee schedules over the
subsequent two years, Pledged Tax may be affected since tax allocations to the Commission are a product of the
combination of tax rates levied by certain taxing agencies having jurisdiction within the Project Area.
09960.000105842387.4 49
Statutes of 1980, Chapter 13.2 (Senate Bill 1972), enacted by the California Legislature and effective as
an urgency measure of November 30, 1980, added Section 33678 to the Redevelopment Law. Section 33678
provides that the allocation and payment of taxes to the Commission for the purpose of paying the principal of
or interest on loans, advances or indebtedness incurred for redevelopment activities, as defined therein, shall not
be deemed the receipt by the Commission of proceeds of taxes levied by or on behalf of the Commission within
the meaning or for the purposes of Article XIIIB of the California 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 public body
within the meaning or for the purposes of Article XIIIB or any statutory provision enacted in implementation of
Article XIIIB.
The California Court of Appeals, Fourth Appellate District, in Brown v. Community Agency of the City
of Santa Ana, 168 Cal. App. 3d 101 (1985), and the California Court of Appeals, Second Appellate District, in
Bell Community Redevelopment Agency v. Woolsey, 169 Cal. App. 3d 24 (1985), have determined that the
appropriation of tax increment revenues by a redevelopment agency is not subject to the limitations of Article
XIIIB The California Supreme Court denied a petition for hearing in the Brown case. No petition for review
was filed in the Bell case. On the basis of these decisions, the Commission has not adopted an appropriations
limit.
Exclusion of Tax Revenues for General Obligation Bonds Debt Service
An initiative to amend the California Constitution entitled "Property Tax Revenues Redevelopment
Agencies" was approved by California voters at the November 8, 1988 general election. Under prior law, a
redevelopment agency using tax increment revenue received additional property tax revenue whenever a local
government increased its property tax rate to pay off its general obligation bonds. This initiative amended the
California Constitution to allow the California Legislature to prohibit redevelopment agencies from receiving
any of the property tax revenues raised by increased property tax rates imposed by local governments to make
payments on their bonded indebtedness.
The initiative only applies to tax rates levied to finance general obligation bonds approved by the voters
on or after January 1, 1989. Any revenue reduction to redevelopment agencies would depend on the number and
value of the general obligation bonds approved by voters in prior years, which tax rate will reduce due to
increased valuation subject to the tax or the retirement of the indebtedness. The Commission did not experience
a revenue loss as a result of the initiative.
Low and Moderate -Income Housing
Under Section 33334.2 of the Redevelopment Law, redevelopment agencies in California are generally
required, unless certain annual findings are made, to set aside at least 20 percent of all tax increment allocation
annually (the "Housing Set -Aside Revenues") in a low and moderate income housing fund to be used within the
jurisdiction of the Commission to increase and improve the supply of low -and moderate -income housing (the
"20% Set Aside Requirement"). A portion of the Housing Set -Aside Revenues in the Project Area are pledged to
the repayment of other bonds and the Commission has otherwise complied with applicable law relating to the
20% Set Aside Requirement.
Statement of Indebtedness
Under the Law, the Commission must file with the Auditor -Controller a statement of indebtedness for
the Project Area by October 1 of each year. The statement of indebtedness controls the amount of tax increment
revenue that will be paid to the Commission in each Fiscal Year.
Redevelopment Plan Time Limits
AB 1290. 1n 1993, the California Legislature enacted Assembly Bill 1290 ("AB 1290") which contained
several significant changes in the Redevelopment Law_ Among the changes made by AB 1290 was a provision
which limits the period of time for incurring and repaying of loans, advances and indebtedness which are
09960.0000015842387.4 50
payable from tax increment revenues. In general, a redevelopment plan may terminate not more than 40 years
following the date of original adoption, and loans, advances and indebtedness may be repaid during a period
extending not more than 10 years following the date of termination of the redevelopment plan. The
Commission's Plan was amended to comply with AB 1290. See "THE PROJECT AREA - Redevelopment Plan
Limitations."
Senate Bill 211. Senate Bill 211 was signed into law as Chapter 741, Statutes of 2001 ("SB 211"). SB
211 has two main impacts on the limits contained on the City's redevelopment plan. First, a redevelopment
agency may pass an ordinance and eliminate the time limit to establish indebtedness in its redevelopment project
areas established before January 1, 1994. When a redevelopment plan is so amended, existing tax sharing
agreements will continue unaffected and certain statutory tax sharing requirements for governmental entities
without tax sharing agreements will begin in the fiscal year following the fiscal year when the time limit is ends.
Additionally, SB 211 allows a redevelopment agency to extend the termination date of their redevelopment
plans and the deadline for the receipt of tax increment for the repayment of debt by 10 years for the project areas
established before January 1, 1994. To extend the termination of the redevelopment plans the Commission must
make certain findings of blight in the applicable project areas. In addition, if a redevelopment agency elects to
extend the time limits on the incurrence of debt, the termination of the redevelopment plans or the deadline for
the receipt of tax increment for repayment of debt, the redevelopment agency must make certain additional
statutory pass-throughs to other taxing agencies.
On January 6, 2004, the Commission adopted Ordinance No. 2004-237 which eliminated the limit on
incurrence of indebtedness for those component project areas (excluding the Harbor District Area) that were
formed before January 1, 1994. This amendment did not affect the Harbor District because it has no such limit.
Proposition 87
Under prior State law, if a taxing agency increased its tax rate to obtain revenues to repay voter
approved general obligation bonds, any redevelopment project area that included property affected by the tax
rate increase would realize a proportionate increase in tax increment.
Proposition 87, approved by voters of the State on November 9, 1993, requires that all revenues
produced by a tax rate increase (approved by the voters on or after January 1, 1989) go directly to the taxing
entity that increases the tax rate to repay the general obligation bonded indebtedness. As a result, redevelopment
agencies no longer receive an increase in tax increment when taxes on property in the project area are increased
to repay voter- approved general obligation debt. See "RISK FACTORS - State Budget and ERAF Shift" herein.
Proposition 218
On November 5, 1996, California voters approved Proposition 218-Voter Approval for Local
Government Taxes -Limitation on Fees, Assessments, and Charges -Initiative Constitutional Amendment.
Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote
requirements and other limitations on the imposition of new or increased taxes, assessments and property -related
fees and charges. Tax Revenues securing the Bonds are derived from property taxes which are outside the scope
of taxes, assessments and property- related fees and charges which were limited by Proposition 218.
Future Initiatives and Changes in Law
Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies were each
adopted as measures which qualified for the ballot pursuant to California's initiative process. From time to time
other initiative measures could be adopted, further affecting Commission revenues or the Commission's ability
to expend revenues.
There can be no assurance that the Legislature will not enact legislation that will amend the Law or
other laws or the Constitution of the State resulting in a reduction of revenues, as consequently have an adverse
effect on the Commission's ability to pay debt service on the Bonds.
09960.00000\5842387.4 51
LITIGATION
There is no litigation pending or, to the Commission's knowledge, threatened in any way to restrain or
enjoin the issuance, execution or delivery of the Bonds, to contest the validity of the Bonds, the Indenture or any
proceedings of the Commission with respect thereto. The Commission has three ongoing claims which are
described below.
ARE Holdings, LTC ("ARE") entered into a disposition and development agreement ("DDA") with the
Commission and the Parking Authority of the City of National City ("Parking Authority") in July, 2005 to
construct a redevelopment project known as "The Cove." The project was to be a residential, high rise
condominium project of up to 300 units, and was to occupy an entire city block. When the DDA was entered
into, ARE had already acquired some of the properties in the block. The DDA provided that if at some point
within a specified time after acquiring these properties ARE decided not to proceed with the project, it could
exercise an option to have the properties purchased by the Commission and the Parking Authority. Pursuant to
the DDA, the Commission and Parking Authority agreed to acquire by eminent domain any properties that had
not already been or could not be acquired by ARE for the project. Eventually, the Commission and the Parking
Authority commenced eminent domain actions to acquire two such properties.
Pursuant to the DDA, ARE was required to reimburse the Commission and the Parking Authority for
all acquisition costs incurred in the eminent domain actions. However, ARE fell seriously behind in its
reimbursement obligation, causing the Commission and Parking Authority to send a letter to ARE in December,
2007, placing ARE on notice that its delinquency in making reimbursement constituted a breach of the DDA,
and indicated ARE's intention to abandon the project. In January, 2008, ARE made a payment of $200,000 to
the Commission and the Parking Authority, disputing its liability for any further reimbursement, and informing
the Commission and the Parking Authority that it was terminating the DDA. At this time, ARE also informed
the Commission and the Parking Authority that it was exercising its option under the DDA to convey to the
Commission and the Parking Authority the properties that it had acquired prior to entering into the DDA, and
that in return ARE expected the Commission and the Parking Authority to reimburse it for its acquisition costs.
The Commission and Parking Authority determined that ARE was acting too late in attempting to exercise its
option, and denied any obligation to purchase the ARE properties. Based on ARE's announced intent to
terminate the DDA, the Commission and the Parking Authority were also compelled to abandon the eminent
domain actions, at significant cost to those entities.
On or about February 1, 2010, ARE filed a claim against the Commission and the Parking Authority,
claiming damages of approximately $2.6 Million. In its claim, ARE alleged the Commission and the Parking
Authority had an obligation to purchase the properties ARE had acquired for the project, and that the
Commission and Parking Authority's refusal to purchase those properties constituted a breach of contract. The
Commission and the Parking Authority determined that the claim was without merit, and denied the claim by
letter dated April 19, 2010.
On or about October 15, 2010, ARE filed a complaint in San Diego Superior Court, alleging causes of
action for breach of contract, breach of covenant of good faith and fair dealing, false promise, specific
performance, and unjust enrichment. In their complaint, ARE is seeking $5.3 million in damages. The City
Attorney's office moved the court to strike the cause of action for false promise, which motion was granted. The
has filed an answer to the complaint, denying the allegations raised therein, setting forth 31 affirmative defenses,
and seeking attorney's fees and costs. Concurrently with the filing of the answer, the City will be filing a cross -
complaint on behalf of the Commission and the Parking Authority, seeking damages of approximately $144,000
for breach of contract, a determination from the court that ARE was in default of its obligations under the DDA,
and attomey's fees and costs.
Although an unfavorable outcome is highly unlikely, the Commission cannot predict or guarantee the
outcome the resolution among the parties. The potential exposure to the District in this matter is estimated to be
between $$2 million and $2.5 milion.
09960.00000'6842387 4 52
On July 17, 2007, the City adopted a Redevelopment Plan Amendment. The purpose of this amendment
was to extend the eminent domain authority for twelve years. Petitioner Community Youth Athletic Center owns
a property within the plan area that is also within the area for which the use of eminent domain may be
exercised. Petitioner filed its action on September 25, 2007. Petitioner challenges the adoption of the
Redevelopment Plan Amendment blight findings, alleges it was denied an opportunity to be heard (due process),
and alleges violations of the public records act. Petitioner seeks to set aside the approval of the Plan
Amendment. If that were to occur, then the earlier Plan Amendments would still apply. The 2007 Plan
Amendment purpose was to extend the eminent domain authority time frame, thus, if the plan was invalidated,
then eminent domain authority for redevelopment would not be currently available. That would not affect any
pending projects.
Respondents City and the Commission contend the adoption was supported by evidence in the record,
provided petitioner ample opportunity to be heard as evidenced by petitioner's six binders of objections, and
provided all documents requested by petitioners. A subsequent demurrer was granted, appealed, and
subsequently returned to the trial court. Extensive discovery has occurred. The matter is now set for trial on
March 4, 2011.
The City and the Commission believe they acted in accordance with all statutory requirements in
adopting the Redevelopment Plan Amendment and in responding to the public records act request. Although an
unfavorable outcome is unlikely, the District cannot predict or guarantee the outcome the resolution among the
parties. The plaintiff in this matter is not seeking any damages; however, if petitioner prevails, the 2007 Plan
Amendment to extend eminent domain authority time frames will be void. The plan amendments approved
prior to the 2007 amendment would remain valid.
Except as otherwise described herein, in the opinion of the Commission and its counsel, there are no
lawsuits or claims pending against the Commission which will materially affect the Commission's finances so
as to impair the ability to pay principal of and interest on the Bonds when due.
RATINGS
Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P"), has
assigned its municipal bond rating of " " to the Bonds.
The ratings issued reflect only the view of such rating agency, and any explanation of the significance of
such ratings should be obtained from such rating agency. There is no assurance that such ratings will be retained
for any given period of time or that they will not be revised downward or withdrawn entirely by such rating
agency if, in the judgment of such rating agency, circumstances so warrant. Any such downward revision or
withdrawal of any rating obtained may have an adverse effect on the market price of the Bonds.
Bonds
TAX MATTERS
Certain United States Federal and California State Income Tax Consequences
In the opinion of Jones Ilall, 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 is not an item of tax preference for
purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however,
that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal
income tax purposes). such interest is taken into account in determining certain income and earnings.
09960.00000\5842387.4 53
The opinions described in the preceding paragraph are subject to the condition that the Agency comply
with all requirements of the Internal Revenue Code of 1986 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 Agency 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.
In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal
income taxes.
Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt
of interest on, the Bonds may have federal or state tax consequences other than as described above. Bond
Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds
other than as expressly described above.
CERTAIN LEGAL MATTERS
The legal opinion of Bond Counsel, approving the validity of the Bonds, in substantially the form
attached hereto as "APPENDIX E — Form of Bond Counsel Opinion," will be made available to purchasers at
the time of original delivery of the Bonds, and a copy thereof will be printed on each Bond.
Best Best & Krieger LLP, as Disclosure Counsel, will deliver a disclosure letter to the Commission and
the Underwriter regarding the contents of this Official Statement.
Certain matters will be passed upon for the Commission by the City of National City Attorney, as
Counsel to the Commission.
FINANCIAL ADVISOR AND FISCAL CONSULTANT
The Commission as retained the firm of Urban Futures, Inc. to act as the financial advisor, Orange,
California, (the "Financial Advisor") of the sale of the Bonds. The Financial Advisor is an independent advisory
firm and is not engaged in the business of underwriting, trading, or distributing municipal or other public
securities.
The Commission has also retained the firm of Urban Futures, Inc. to as the fiscal consultant (the "Fiscal
Consultant") with respect to the Project Area. As part of its duties, the Fiscal Consultant has prepared certain
data and financial information concerning the Commission and the Project Area, and current and anticipated
development activity therein. Such data and information has been incorporated into his Official statement.
FINANCIAL STATEMENTS
The audited financial statements of the Commission for Fiscal Year ending June 30, 2010, attached
hereto as Appendix A, including the footnotes thereto, should be reviewed in their entirety. The Auditor has not
consented to the inclusion of its report as Appendix A, and has not undertaken to update its report or to take any
action intended or likely to elicit information concerning the accuracy, completeness or fairness of the
statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event
subsequent to its report dated December 23, 2010.
UNDERWRITING
Purchase of Bonds. The Bonds are being purchased from the Authority for reoffering by De La Rosa &
Co., Inc., as senior manager, and Stone & Youngberg, as co -manager, (together, the "Underwriter"). Stone &
Youngberg has entered into an agreement (the "Distribution Agreement") with First Republic Securities
Company LLC, Member FINRA/SIPC, a subsidiary of First Republic Bank, for retail distribution of certain
municipal securities offerings, at the original issue prices. Pursuant to the Distribution Agreement, if applicable
09960.00000\5842387 4 54
to the Series 2011 Tax Allocation Bonds, Stone & Youngberg will share a portion of its underwriting
compensation with respect to the 2011 Tax Allocation Bonds with First Republic Securities Company LLC.
The Underwriter has entered into an agreement with the Authority and the Commission to purchase the
Bonds at a price of $ (representing the principal amount of the Bonds of $ , less a net
original issue discount of $ and less an Underwriter's discount of $ J, plus accrued
interest, if any.
The agreement pursuant to which the Underwriter will purchase the Bonds provides that the
Underwriter will purchase all of the Bonds if any of the Bonds are purchased.
Offering Prices. The Underwriter intends to reoffer the Bonds to the public initially at the yield set forth
on the cover page of this Official Statement, which yield may subsequently change without any requirement of
prior notice. The Underwriter reserves the right to join with dealers and other underwriters in reoffering the
Bonds to the public. The Underwriter may reoffer and sell Bonds to certain dealers (including dealers depositing
Bonds into investment trusts) at prices lower than the public offering prices, and such dealers may reallow any
such discounts on sales to other dealers.
LEGALITY FOR INVESTMENT AND TO SECURE DEPOSITS IN CALIFORNIA
State Law provides generally that the State and its municipal corporations, political subdivisions and
public bodies, as well as banks, trust companies, savings banks, insurance companies, and various other
financial institutions and fiduciaries within the State of California may legally invest funds within their control
in bonds or other obligations issues by joint powers authorities, including the Bonds. Such Bonds and other
obligations are also authorized security for public deposits within the State of California.
CONTINUING DISCLOSURE
The Commission will covenant in a Continuing Disclosure Agreement to provide certain financial
information and operating data relating to the Commission by not later than 1 in each year commencing
1, 2012, and to provide notices of the occurrence of certain enumerated events, if material. The Annual
Report and notices of material events will be filed with EMMA. The specific nature of the information to be
contained in the Annual Report or the notices of material events is set forth in Appendix D — "FORM OF
CONTINUING DISCLOSURE AGREEMENT" attached hereto. These covenants will be made in order to
assist the Underwriter in complying with the Rule. The commission is in compliance in all material respects
with its previous undertakings with regard to said Rule. [CONFIRM]
ADDEFIONAL INFORMATION
All summaries of the Indenture, applicable legislation, agreements and other documents are made
subject to the provisions of such documents and do not purport to he 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.
[This space intentionally left blank]
09960.00000\5842387.4 55
EXECUTION AND DELIVERY
All information contained in this Official Statement pertaining to the Commission and the City have
been furnished by the Commission and the City, and the execution and delivery of this Official Statement has
been duly authorized by the Conunission.
COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF NATIONAL CITY
By.
Chris Zapata, Executive Director
09960.00000\58423 87.4
56
APPENDIX A
AUDITED FINANCIAL STATEMENTS OF THE COMMISSION FOR
FISCAL YEAR ENDED JUNE 30, 2010
09960.00000158 42 3 87.4
A-1
APPENDIX B
CITY OF NATIONAL CITY AND COUNTY OF SAN DIEGO GENERAL INFORMATION
General Information
The City of National City (the "City") is situated in the southwestern coastal area of San Diego County,
facing the San Diego Bay. The City lies adjacent to the cities of San Diego and Chula Vista. The City's
boundaries encompass approximately eight square miles.
The County is the southern -most county in California, and is bordered by the Pacific Ocean to the west,
Orange and Riverside Counties to the north, Imperial County to the east, and the State of Baja California,
Mexico to the south. The County includes 70 miles of the Pacific Ocean coastline, the Anza-Borrego Desert,
which forms the eastern third of the county, the Laguna Mountains, the San Diego Bay, one of the world's
largest natural deep -water harbors, and the San Diego International Airport.
Population
The California Department of Finance has estimated that the population in the City was 57,799 on
January 1, 2010. The population estimates for the City, the County and the State are shown below.
TABLE 1
CITY OF NATIONAL CITY
Population Estimates
1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010
National City 55,863 56,063 56,320 56,730. 57,799
San Diego 3,065,312 3,096,975 3,141,700 3,185,462 3,224,432
State of California 36,087,005 37,463,609 37,871,509 38,255,508 38,648,090
Source: Department of Finance.
09960.00000\5842387.4 B-1
Industry
The City is included in the San Diego Metropolitan Statistical Area ("MSA"), which includes all of San
Diego County. Set forth below is data from calendar years 2006 to April 2010, reflecting the County's civilian
labor force, employment and unemployment. These figures are county -wide statistics and may not necessarily
accurately reflect employment trends in the City.
TABLE 2
SAN DIEGO METROPOLITAN STATISTICAL AREA
Employment by Industry Group
2006 2007 2008 2009 2010
Civilian Labor Force (1)(2/ 1,504,800 1,524,500 155,100 1,557,400 1,567,700
Civilian Employment 1,445, 100 1,455,400 1,462,300 1,406,100 1,402,00
Civilian Unemployment 59,600 69,100 92,900 151,300 165,700
Civilian Unemployment Rate % 4 4.5 6 9.7 10.6
Total Farm 10,900 10,900 10,500 9,700 8,400
Natural Resources and Mining 500 400 400 400 300
Construction 92,700 87,000 76,100 61,100 55,000
Manufacturing 103,900 102,500 102,800 95,400 90,600
Trade, Transportation and Utilities 222,000 222,300 215,900 198,300 200,800
Information 37,300 37,600 38,500 37,000 35,400
Financial Activities 83,700 80,300 75,200 70,300 68,600
Professional and Business Services 213,600 216,800 215,100 197,300 201,500
Educational and Health Services 125,100 129,500 137,300 143,000 148.400
Leisure and Hospitality 156,500 161,800 164,000 155,200 152,600
Other Service providing 1,104,500 1,119,000 1,119,500 1,072,700 1,078,700
Government 217,900 222,400 225,100 224,700 223,600
1bta1(1), All 1ndustries3) 1,312,500 1,319,700 1,309,300 1,239,300 1,233,500
Source: State Employment Development Department, Labor Market Information Division.
Totals may not add due to rounding.
(2) Civilian labor force data is the sum of civilian employment and civilian unemployment.
(3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
4j (reserved)
09960.00000\5842387.4 8-2
Construction
The table below summarizes building activity in the City from calendar years 2005 through 2009.
Permit Valuation
New Single -Family
New Multi -Family
Res. Alterations/Additions
Total Residential
TABLE 3
CITY OF NATIONAL CITY
Total Building Permit Valuations
(Valuation in Thousands)
2005 2006 2007 2008 2009
$23,276.0
696.3
8 641.2
$32,613.5
New Commercial $1,498.7
New Industrial New Other 3,622.3
Coin. Alterations/Additions 8,322.7
Total Nonresidential $13,443.7
$18,194.9
8,513.9
5 384.2
$32,093.0
$4,892.8
1,757.7
7,266.9
$13,917.4
New Dwelling Units
Single Family 151 101
Multiple Family 4 97
Total 155 198
Source: Construction Industry Research Board, Building Pennit Summary.
Permit Valuation
New Single -Family
New Multi -Family
Res. Alterations/Additions
Total Residential
New Commercial
New Industrial
New Other
Com. Alterations/Additions
Total Nonresidential
$15,3375
0.0
9 414.3
$24,751.8
$ 4,526.4
339.4
12,237.1
$17,102.9
68
0
County of San Diego
Total Building Permit Valuations
(Valuation in Thousands)
$ 5,806.6
45,640.1
2,237.4
$53,684.1
$ 1,080.1
0.0
6,366.2
13,817.8
$21,264.1
$1,974.1
0.0
591.9
$2,566.0
$344.0
0.0
62.1
2 232.9
82,639.0
29 9
433 0
68 462 9
2005 2006 2007 2008 2009
$2,217,257.3 $1,373,554.8 $1,052,192.7 $ 754,716.8 $550,409.3
926,287.2 736,965.1 485,049.3 319,304.3 132,230.1
419,157.8 360 168.1 315,137.1 265,223.7 196,061.6
$3,562,702.3 $2.470,688.0 $1,852,379.1 $1,339,244.8 $878,701.0
$ 525,647.2 $ 668,762.5 $ 596,981.4 $ 338,667.4 $ 91,590.6
170,256.9 153,474.4 118,401.6 57,119.9 25,699.0
213,869.4 252,359.3 191,114.0 165,385.3 123,633.3
472,018.3 547,014.1 510 327.4 500 628.1 343 041.2
$1,381,791.8 $1,621,610.3 $1,416,824.4 $1,061,800.7 $583,964.1
New Dwelling Units
Single Family 7,904 4,753 3,503 2,352 1,786
Multiple Family 7,354 6,024 3 942 2,802 1 204
Fotal 15,258 10,777 7,445 5,154 2,990
Source: Construction Industry Research Board, Building Permit Summary.
09960.00000 \ 58423 87.4
B-3
Commercial Activity
2009.
The following table shows the taxable retail sales that were reported in the City from 2005 through
TABLE 4
CITY OF NATIONAL CITY
Taxable Retail Sales ($000's)
2005 2006 2007 2008 2009
Retail Stores
Apparel stores $85,141 $82,985 $82,295 $97,152 $-
Clothing and Clothing Accessories 123,333
General merchandise stores 183,587 177,644 174,238 169,061 144,263
Food stores 21,709 22,807 24,792 26,774 -
Food and Beverage Stores 31,989
Eating and drinking places 98,352 101,416 104,393 111,643 -
Food services and drinking places 111,066
Home furnishings and appliances 31,927 33,929 27,537 22,113 13,222
Bldg. material and farm implements # to 4 # - -
Building materials 47,600
Bldg Matrl. & Garden Equip./supplies 13,004
Auto dealers and auto supplies 621,655 591,158 548,430 402,056 -
Motor vehicles and parts 322,808
Service stations 70,892 80,356 82,010 86,419 -
Gasoline stations 66,538
Other retail stores 297,308 240,041 184,916 85 338 66 402
Retail and Food Services Totals $1,410,571 $1,330,336 $1,228,611 $1,048,157 $ 892,625
All Other Outlets 175,793 179 870 165,990 184,340 161,633
Totals All Outlets $1.586,364 $1,510,206 $1,394,601 $1,232,496 $1,054,258
Source: State Board of Equalization.
t`) Sales omitted because their publication would result in the disclosure of confidential information, these are
included with "Total Outlets, Taxable Transactions."
09960.00000\5842387.4 B-4
'1' rans portation
Surface, sea and air transportation facilities serve County residents and businesses. Interstate 5 parallels
the coast from Mexico to the Los Angeles area and points north. Interstate 15 runs inland, leading the Riverside -
San Bernardino, Las Vegas, and Salt Lake City. Interstate 8 runs eastward through the southern United States.
San Diego's International Airport (Lindbergh Field) is located approximately one mile west of the
downtown area at the edge of San Diego Bay. The facilities are owned and maintained by the San Diego
Regional Airport Authority and are leased to commercial airlines and other tenants. The airport is California's
third most active commercial airport, served by 20 major airlines. In addition to San Diego International Airport,
there are several general aviation airports located in the County.
Public transit in the metropolitan area is provided by the Metropolitan Transit Development Board. The
San Diego Trolley, developed by the Metropolitan Transit Development Board beginning in 1979, has been
expanded. The trolley system operates over 53.5 miles on three routes.
San Diego is the terminus of the Santa Fe Railway's main line from Los Angeles. Amtrak passenger
service is available at San Diego, with stops at Del Mar and Oceanside in the North County. In addition to
Amtrak passenger service, the San Diego Coast Express Rail, or Coaster, is a commuter rail service that operates
in the central and northern coastal regions of the County
San Diego's harbor is one of the world's largest natural harbors. The Port of San Diego is administered
by the San Diego Unified Port District, which includes the cities of San Diego, National City, Chula Vista,
Imperial Beach and Coronado.
09960.00000'5842387.4 B-5
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF TIIE INDENTURE
09960.0000015 S42 3 S 7.4
C-1
APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
COMMUNITY DEVELOPMENT COMMISSION OF TILE CITY OF
NATIONAL CITY
(NATIONAL CITY REDEVELOPMENT PROJECT)
2011 TAX ALLOCATION BONDS
This CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") is executed and
delivered by the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY (the
"Commission") in connection with the execution and delivery of the above -referenced bonds (the "Bonds").
The Bonds are being issued pursuant to that certain Indenture of Trust (the "Indenture of Trust") dated as of
June 1, 2004, as supplemented and amended by a First Supplemental Indenture of Trust (the "First
Supplement"), dated as of January 1, 2005, the Second Supplemental Indenture of Trust (the "Second
Supplement") dated as of January 1, 2005, and the Third Supplemental Indenture of Trust (the "Third
Supplement") dated as of March 1, 2011, providing for the issuance of the Bonds (collectively, the
"Indenture"), each between the Commission and Deutsche Bank National Tnist Company, as Trustee, the
Redevelopment Law (as defined herein) and a resolution of the Commission adopted on February 22, 2011. The
Commission covenants and agrees as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Commission for the benefit of the Owners and Beneficial Owners of the Bonds and in order
to assist the Participating Underwriter in complying with the Rule.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any
capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following
capitalized terms shall have the following meanings:
Annual Report. The tenn "Annual Report" means any Annual Report provided by the
Commission pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
Beneficial Owner. The term "Beneficial Owner" means any person which: (a) has the power,
directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including
persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of
any Bonds for federal income tax purposes.
Disclosure Representative. The term "Disclosure Representative" means the Executive Director
or the Director of Finance of the Commission, or their designee, or such other officer or employee as the
Commission shall designate in writing to the Dissemination Agent from time to time.
Dissemination Agent. "Dissemination Agent" means, initially, Urban Futures, Inc., or any
successor Dissemination Agent designated in writing by the Commission which has tiled with the then -current
Dissemination Agent a written acceptance of such designation.
EMMA. The teen "EMMA" means the Municipal Securities Rulemaking Board's Electronic
Municipal Market Access System for municipal securities disclosures, maintained on the Internet at
http://emma.msrb.org/.
Fiscal Year. The term "Fiscal Year" means the one-year period ending on the last day of June
of each year.
09960.00000\58423 8 7.4
D-1
Listed Events. The term "Listed Events" means any of the events listed in Sections 5(a) or (b)
of this Disclosure Agreement.
Official Statement. The term "Official Statement" means the final Official Statement, dated
March , 2011, relating to the Bonds.
Participating Underwriter. The term "Participating Underwriter" means the original underwriter
of the Bonds required to comply with the Rule in connection with the offering of the Bonds.
Rule. The term "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The Commission shall, or shall cause the Dissemination Agent by written direction to
such Dissemination Agent to, not later than nine months after the end of the Commission's Fiscal Year,
provide to EMMA an Annual Report which is consistent with the requirements of Section 4 of this
Disclosure Agreement; provided, however, that the first Annual Report shall be due not later than
March 31, 2012. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4 of this
Disclosure Agreement; provided, however, that the audited financial statements of the Commission may
be submitted separately from and later than the balance of the Annual Report if they are not available by
the date required above for the filing of the Annual Report.
An Annual Report shall be provided at least annually notwithstanding any Fiscal Year longer than 12
calendar months. The Commission's Fiscal Year is currently effective from July 1 to the immediately
succeeding June 30 of the following year. The Commission will promptly notify EMMA, the Dissemination
Agent and the Participating Underwriter of a change in the Commission's Fiscal Year dates.
(b) So long as the Dissemination Agent is an entity other than the Commission, then the
provisions of this Section 3(b) shall apply. Not later than fifteen (15) Business Days prior to the date
specified in subsection (a) for providing the Annual Report to EMMA and the Participating
Underwriter, the Commission shall provide the Annual Report to the Dissemination Agent. If by fifteen
(15) Business Days prior to such date the Dissemination Agent has not received a copy of the Annual
Report, the Dissemination Agent shall contact the Commission to determine if the Commission will be
filing the Annual Report in compliance with subsection (a). The Commission shall provide a written
certification with each Annual Report furnished to the Dissemination Agent to the effect that such
Annual Report constitutes the Annual Report required to be furnished by it hereunder. If the
Dissemination Agent is an entity other than the Commission, it may conclusively rely upon such
certification of the Commission and shall have no duty or obligation to review such Annual Report.
(c) If the Commission is the Dissemination Agent and the Commission is unable to provide
to EMMA and the Participating Underwriter an Annual Report by the date required in subsection (a),
the Commission shall send a notice to EMMA, the Participating Underwriter and the Dissemination
Agent in the manner prescribed by the Municipal Securities Rulemaking Board. If the Dissemination
Agent is other than the Conunission and if the Dissemination Agent is unable to verify that an Annual
Report has been provided to EMMA and the Participating Underwriter by the date required in
subsection (a), the Dissemination Agent shall send a notice to EMMA and the Participating
Underwriter, in the form prescribed by the Municipal Securities Rulemaking Board.
(d) The Dissemination Agent, if other than the Commission, shall promptly after receipt of
the Annual Report, file a report with the Commission (if the Dissemination Agent is other than the
Commission) certifying that the Annual Report has been provided pursuant to this Disclosure
Agreement and stating the date it was provided.
09960.00000\5842387.4 D-2
Section 4. Content of Annual Reports. The Annual Report shall contain or include by reference
the following:
(a) Financial Statements. The audited financial statements of the Commission, if any have
been prepared, for the most recent Fiscal Year of the Commission then ended. If the audited financial
statements are being prepared and are not available by the time that the Annual Report is required to be
filed pursuant to Section 3(a), the Annual Report shall contain any unaudited financial statements in a
format similar to the audited financial statements contained in the final Official Statement, and the
audited financial statements shall be filed in the same manner as the Annual Report when they become
available. Audited financial statements, if any, of the Commission shall be audited by such auditor as
shall then be required or permitted by State law or the Indenture. Audited financial statements, if
prepared by the Commission, shall be prepared in accordance with generally accepted accounting
principles as prescribed for governmental units by the Governmental Accounting Standards Board;
provided, however, that the Commission may from time to time, if required by federal or state legal
requirements, modify the basis upon which its financial statements are prepared. In the event that the
Commission shall modify the basis upon which its financial statements are prepared, the Commission
shall provide a notice of such modification to EMMA, including a reference to the specific federal or
state law or regulation specifically describing the legal requirements for the change in accounting basis.
(b) Financial and Operating Data.
(1) the principal amount of the Bonds and any Parity Debt outstanding;
(2) the balance in each fund under the Indentures and the Bonds Reserve
Requirement;
(3)
Ten largest property taxpayers in the Project Area, including name, secured
value and percent of total value in substantially the form set forth in the Official
Statement under the caption "THE PROJECT AREA— Major Taxable Property
Owners;"
(4) Updates of the information set forth in the tables under the following captions
in the Official Statement:
(5)
(A) "THE PROJECT AREA — Historic Assessed Value and "fax
Revenues;" and
(B) "THE PROJECT AREA — Projected Tax Revenues;"
Updates of the information set forth in the tables under the following caption in
the Official Statement, provided that such information shall be updated only for
the most recently ended Fiscal Year and no projections shall be updated:
(A) "THE PROJECT AREA —Projected Debt Service Coverage."
Any or all of the items listed above may be included by specific reference to other documents, including
official statements of debt issues of the Commission or related public entities, which have been submitted to
EMMA or the Securities and Exchange Commission. If the document included by reference is a final official
statement, it must be available from the Municipal Securities Rulemaking Board. The Commission shall clearly
identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Commission shall give, or if the
Dissemination Agent is other than the Commission, promptly instruct the Dissemination Agent in
09960-00000\5842387 4 D-3
writing to file a notice with EMMA of the occurrence of any of the following events with respect to the
Bonds in a timely manner not more than ten (10) business days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
5. issuance by the Internal Revenue Service of proposed or final determination of
taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB);
6. tender offers;
7. defeasances;
8. ratings changes; and
9. bankruptcy, insolvency, receivership or similar proceedings.
Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated
person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in
which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business
of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and
officials or officers in possession but subject to the supervision and orders of a court or governmental authority,
or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or business of the
obligated person.
(b) Pursuant to the provisions of this Section 5, the Commission shall give, or cause to be
given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
(1) unless described in Section 5(a)(5), adverse tax opinions or other material
notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or
other material events affecting the tax status of the Bonds;
(2) modifications to the rights of Bondholders;
(3) optional, unscheduled or contingent Bond calls;
(4) release, substitution or sale of property securing repayment of the Bonds;
(5) non-payment related defaults;
(6) the consumrnation of a merger, consolidation, or acquisition involving the
Commission or the sale of all or substantially all of the assets of the Commission, other than in the
ordinary course of business, the entry into a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to its terns;
(7) with respect to any assessee in the Project Area whose total assessed value is in
excess of 15% of the total assessed value in the Project Area, to the extent known to the Commission,
information regarding bankruptcy, insolvency, receivership or similar proceedings undertaken with
09960.00000\5842387.4 D-4
respect to such assesses, or information relating to a closure of a material portion of such assesses
facilities in the Project Area; and
appointment of a successor or additional trustee or the change of the name of a
trustee.
(c) If the Commission determines that knowledge of the occurrence of a Listed Event under
subsection (b) would he material under applicable federal securities laws, and if the Dissemination
Agent is other than the Commission, the Commission shall promptly notify the Dissemination Agent in
writing. Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with
EMMA in a timely manner not more than ten (10) Business Days after the event.
(d) If the Commission determines that the Listed Event under subsection (b) would not be
material under applicable federal securities laws and if the Dissemination Agent is other than the
Commission, the Commission shall so notify the Dissemination Agent in writing and instruct the
Dissemination Agent not to report the occurrence.
(e) The Commission hereby agrees that the undertaking set forth in this Disclosure
Agreement is the responsibility of the Commission and, if the Dissemination Agent is other than the
Commission, the Dissemination Agent shall not be responsible for determining whether the
Commission's instructions to the Dissemination Agent under this Section 5 comply with the
requirements of the Rule.
Section 6. Termination of Reporting Obligation. The obligations of the Commission and the
Dissemination Agreement under this Disclosure Agreement shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the
Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under
Section 5 hereof.
Section 7. Dissemination Agent. The Commission may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may
discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The
Dissemination Agent appointed by the Commission may resign by providing thirty (30) days written notice to
the Commission, and upon appointment of a new Dissemination Agent hereunder.
Section 8. Amendment.
(a) This Disclosure Agreement may be amended, by written agreement of the parties,
without the consent of the Owners if all of the following conditions are satisfied: (1) such amendment is
made in connection with a change in circumstances that arises from a change in legal (including
regulatory) requirements, a change in law, or a change in the identity, nature or status of the
Commission or the type of business conducted thereby; (2) this Disclosure Agreement as so amended
would have complied with the requirements of the Rule as of the date of this Disclosure Agreement,
after taking into account any amendments or interpretations of the Rule, as well as any change in
circumstances; (3) the Commission shall have delivered to the Dissemination Agent an opinion of a
nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the
Commission, to the same effect as set forth in clause (2) above; (4) the Commission shall have delivered
to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in
federal securities laws, addressed to the Commission, to the effect that the amendment does not
materially impair the interests of the Owners or Beneficial Owners, and (5) the Commission shall have
delivered copies of such opinion and amendment to the Participating Underwriter.
(b) This Disclosure Agreement also may be amended by written agreement of the parties
upon obtaining consent of the Owners in the same manner as provided in the Indenture for amendments
09960.0000015842387.4 D-5
to the Indenture with the consent of the Owners of the Bonds; provided that the conditions set forth in
Section 8(a)(1), (2), (3) and (5) have been satisfied.
(c) To the extent that any amendment to this Disclosure Agreement results in a change in
the type of financial information or operating data provided pursuant to this Disclosure Agreement, the
first Annual Report provided thereafter shall include a narrative explanation of the reasons for the
amendment and the impact of the change in the type of operating data or financial information being
provided.
(d) If an amendment is made to the basis on which financial statements are prepared, the
Annual Report for the year in which the change is made shall present a comparison between the
financial statements or information prepared on the basis of the new accounting principles and those
prepared on the basis of the former accounting principles. Such comparison shall include a quantitative
and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting
principles and the impact of the change in the accounting principles on the presentation of the financial
information.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Commission from disseminating any other information, using the means of dissemination set forth in
this Disclosure Agreement or any other means of communication, or including any other information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure
Agreement. If the Commission chooses to include any information in any Annual Report or notice of occurrence
of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the
Commission shall have no obligation under this Disclosure Agreement to update such information or include it
in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Commission or the Dissemination Agent to
comply with any provision of this Disclosure Agreement, any Owner or Beneficial Owner of the Bonds may
take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by
court order, to cause the Commission and/or the Dissemination Agent to comply with their respective
obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an
Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any
failure of the Commission or the Dissemination Agent to comply with this Disclosure Agreement shall be an
action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Commission
agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents,
harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of their powers and duties hereunder, including the costs and expenses (including attorneys' fees)
of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence
or willful misconduct. Any Dissemination Agent other than the Commission shall he paid: (i) compensation by
the Conunission for its services provided hereunder in accordance with a schedule of fees to be mutually agreed
to; and (ii) all expenses, legal fees and advances made or incurred by the Dissemination Agent in the
performance of its duties hereunder. The obligations of the Commission under this Section shall survive
resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Commission, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from
time to time of the Bonds, and shall create no rights in any other person or entity.
09960.00000\5842387.4 D-6
to:
Section 13. Notices. Notices with respect to this Disclosure Agreement should be sent in writing
If to the Commission:
If to the Dissemination Agent:
If to the Participating Underwriter:
Community Development Commission of the
City of National City
1243 National City Blvd.
National City, California 91950-4301
Attention: Executive Director
Urban Futures, Inc.
311 N. Tustin Avenue, Suite 230
Orange, California 992865
Attention:
De La Rosa & Co.
456 Montgomery Street, 19th Floor
San Francisco, California 94104
IN WITNESS WHEREOF, the parties have caused their duly authorized officer to execute and deliver
this Disclosure Agreement on the date first written above.
COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF NATIONAL CITY
By:
Name:
Title:
ACCEPTANCE OF DISSEMINATION AGENT:
The undersigned hereby accepts the designation of
Dissemination Agent and agrees to the duties set forth in
Section 3(c) of the foregoing Continuing Disclosure
Certificate
By:
Title:
Authorized Signatory
09960.00000\5842387 4 D-7
ATTACHMENT A
NOTICE TO REPOSITORIES
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Community Development Commission of the City of National City
Name of Bond Issue:
Community Development Commission of the City of National City
(National City Redevelopment Project)
2011 Tax Allocation Bonds
Date of Issuance: , 2011
NOTICE IS HEREBY GIVEN that the Community Development Commission of the City of National
City has not provided an Annual Report with respect to the above -referenced Bonds as required by the Indenture
of Trust dated as of March 1, 2011 between the Commission and Deutsche Bank National Trust Company, as
Trustee. The Commission anticipates that the Annual Report will be filed by
Dated:
Behalf of the Issuer
, as Dissemination Agent on
By:
Authorized Signatory
09960.00000 5842387.4 D-8
APPENDIX E
FORM OF BOND COUNSEL OPINION
09960 00000\5842387 4
E-1
APPENDIX F
BOOK -ENTRY ONLY SYSTEM
09960.00000\5842387 4
F-1
COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF
NATIONAL CITY
(NATIONAL CITY REDEVELOPMENT PROJECT)
2011 TAX ALLOCATION BONDS
PURCHASE CONTRACT
, 2011
Community Development Commission of the City of National City
1243 National City Boulevard
National City, California 91950
National City Joint Powers Financing Authority
1243 National City Boulevard
National City, California 91950
Ladies and Gentlemen:
E. J. De La Rosa & Co., Inc., as senior manager, and Stone & Youngberg LLC, as co-
manager (collectively, the "Underwriter") offer to enter into this Purchase Contract with the
Community Development Commission of the City of National City (the "Commission") and the
National City Joint Powers Financing Authority (the "Authority") with regard to the purchase and
sale of the Bonds described herein which will be binding upon the Commission, the Authority and
the Underwriter upon the Commission's and the Authority's acceptance hereof. All capitalized
terms not otherwise defined herein shall have the meanings given them in the Indenture (defined
below).
1. Purchase and Sate. Upon the terms and conditions and upon the basis of the
representations herein set forth, (i) the Authority hereby agrees to purchase from the Commission,
but only to the extent the Underwriter is obligated hereunder to purchase from the Authority, for
offering to the Underwriter, and the Commission hereby agrees to sell to the Authority for such
purpose, and (ii) the Underwriter agrees to purchase from the Authority, and the Authority agrees
to sell to the Underwriter, all (but not less than all) of the Commission's $ aggregate
principal amount of Community Development Commission of the City of National City (National
City Redevelopment Project) 2011 Tax Allocation Bonds (the "Bonds"). The purchase price of
the Bonds shall be $ (being the principal amount of the Bonds, less an Underwriter's
discount in the amount of $ , and [less net original issue discount] [plus net original
issue premium] of $ ). The Bonds will have the maturities and bear interest at the rates
set forth on Exhibit A hereto. The Bonds will be subject to redemption as set forth in the
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applicable Official Statement herein described. The Bonds will be dated as described in the
applicable Official Statement. The Bonds will be issued in hook -entry fonn only.
2. Authorizing Instruments and Law. The Bonds shall be issued and secured under
the provisions of a resolution (the "Resolution") adopted by the Commission on February 22, 2011
authorizing the issuance of the Bonds, and the Indenture (defined below). The Bonds are issued
pursuant to the Community Redevelopment Law of the State of California (the "State")
constituting Part 1 of Division 24 of the Health and Safety Code (the "Law"), and an Indenture of
Trust, dated as of June 1, 2004, as amended by a First Supplemental Indenture of Trust, dated as of
January 1, 2005, as amended by a Second Supplemental Indenture of Trust, dated as of January 1,
2005 and as amended by a Third Supplemental Indenture of Trust, dated as of March 1, 2011
(collectively, the "Indenture"), between the Commission and Deutsche Bank National Trust
Company, as trustee (the "Trustee"). The Bonds shall be as described in the Indenture and the
Official Statement (defined below). The City of National City (the "City") approved the issuance
of the Bonds pursuant to a resolution (the "City Resolution") adopted by the City on February 22,
2011. The Bonds are payable exclusively from Tax Revenues and from amounts on deposit in the
2011 Reserve Account for the Bonds and other accounts pledged under the Indenture.
3. Offering the Bonds. The Underwriter agrees to offer all the Bonds to the public
initially at the prices (or yields) set forth on the inside cover page of the Official Statement of the
Commission pertaining to the Bonds, dated , 2011 (such Official Statement,
together with all appendices thereto, and with such changes therein and supplements thereto as are
consented to in writing by the Underwriter, are collectively called the "Official Statement").
Subsequent to the initial public offering of the Bonds, the Underwriter reserves the right to change
the public offering prices (or yields) as it deems necessary in connection with the marketing of the
Bonds. The Bonds may be offered and sold to certain dealers at prices lower than such initial
public offering prices. "Public Offering" shall include an offering to a representative number of
institutional investors or registered investment companies, regardless of the number of such
investors to which the Bonds are sold.
The Authority and the Commission acknowledge and agree that (i) the purchase and sale
of the Bonds pursuant to this Purchase Contract is an arm's-length commercial transaction
between the Authority, the Commission and the Underwriter, (ii) in connection with such
transaction the Underwriter has not assumed a fiduciary responsibility in favor of the Authority or
the Commission with respect to (x) the offering of the Bond or the process leading thereto
(whether or not the Underwriter has advised or is currently advising the Authority or the
Commission on other matters) or (y) any other obligation to the Authority or the Commmission
except the obligations expressly set forth in this Purchase Contract, and (iii) the Authority and the
Commission have consulted with its own legal and other professional advisors to the extent it
deemed appropriate in connection with the offering of the Bonds.
4. Delivery of Official Statement on the Date Hereof. The Commission shall
deliver to the Underwriter two (2) copies of the Official Statement manually executed on behalf of
the Commission an authorized officer of the Commission. The Commission shall also deliver a
sufficient number of copies of the Official Statement to enable the Underwriter to distribute a
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single copy of the Official Statement to any potential customer of the Underwriter requesting an
Official Statement during the time period beginning when the Official Statement become available
and ending on the End Date (defined below). The Commission shall deliver these copies to the
Underwriter within seven (7) business days after the execution of this Purchase Contract and in
sufficient time to accompany or precede any sales confirmation that requests payment from any
customer of the Underwriter. The Underwriter shall inform the Commission in writing of the End
Date, and covenants to file the Official Statement with the Municipal Securities Rulemaking
Board (the "MSRB") on a timely basis.
"End Date" as used herein is that date which is the earlier of:
(a) ninety (90) days after the end of the underwriting period, as defined in SEC
Rule 15c2-12 adopted by the Securities and Exchange Commission on June 28, 1989 ("Rule 15c2-
12"); or
(b) the time when the Official Statement becomes available from the MSRB, but
in no event less than twenty-five (25) days after the underwriting period (as defined in Rule 15c2-
12) ends.
Pursuant to the Resolution, the Commission has authorized the use of the Official
Statement in connection with the public offering of the Bonds. The Commission also has
consented to the use by the Underwriter prior to the date hereof of the Preliminary Official
Statement of the Commission, dated , 2011, in connection with the public offering of
the Bonds (which, together with all appendices thereto, are herein called the "Preliminary Official
Statement"). An authorized officer of the Commission has certified to the Underwriter on behalf
of the Commission that such Preliminary Official Statement were deemed to be final as of their
date for purposes of Rule 15c2-12, with the exception of certain final pricing and related
information referred to in Rule 15c2-12. The Underwriter has distributed a copy of the
Preliminary Official Statement to potential customers on request.
5. The Closing. At 9:00 A.M., California time, on , 2011, or at such
other time or on such earlier or later business day as shall have been mutually agreed upon by the
Commission and the Underwriter, the Commission, on behalf of the Authority, will deliver (i) the
Bonds in book -entry form through or otherwise in care of the facilities of The Depository Trust
Company ("DTC" ), and (ii) the closing documents hereinafter mentioned at the offices of Jones
Hall, San Francisco, California, or another place to he mutually agreed upon by the Commission
and the Underwriter. The Underwriter will pay the purchase price of the Bonds as set forth in
Section 1 hereof by wire transfer of immediately available funds to the Trustee. This payment and
delivery, together with the delivery of the aforementioned documents, is herein called the
"Closing."
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6. Authority Representations, Warranties and Covenants. The Authority
represents that:
(a) The Authority is a joint powers authority, duly organized and existing, and
authorized to transact business and exercise powers under and pursuant to the provisions of the
Constitution and the laws of the State of California and has, and at the Closing Date will have, full
legal right, power and authority to enter into this Purchase Contract, and to carry out and to
consummate the transactions on its part contemplated by this Purchase Contract.
(b) The Authority has complied, and will at the Closing be in compliance, in
all respects, with the Marks -Roos Local Bond Pooling Act of 1985, constituting Section 6584 et
seq. of the California Government Code (the "JPA Act") and any other applicable laws of the State
of California.
(c) By official action of the Authority prior to or concurrently with the
acceptance hereof, the Authority has duly authorized and approved the execution and delivery of,
and the performance by the Authority of the obligations on its part contained in this Purchase
Contract.
(d) The execution and delivery of this Purchase Contract, and compliance
with the provisions of thereof, will not conflict with or constitute a breach of or default under any
law, administrative regulation, judgment, decree, loan agreement, note, resolution, agreement or
other instrument to which the Authority is a party or is otherwise subject.
(e) All approvals, consents and orders of any governmental authority, board,
agency or commission having jurisdiction which would constitute a condition precedent to
execution and delivery by the Authority of this Purchase Contract and the purchase from the
Commission and sale to the Underwriter of the Bonds have been obtained or will be obtained prior
to the Closing Date (provided the Authority shall not be responsible for state blue sky filings).
(f) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, public board or body, pending or, to the knowledge of the
Authority, threatened against the Authority, affecting the existence of the Authority or the titles of
its members or officers, or seeking to enjoin the purchase and sale of the Bonds by the Authority,
or in any way contesting or affecting the validity or enforceability of the Bonds or this Purchase
Contract or contesting in any way the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or contesting the power or authority of the Authority to
purchase and sell the Bonds, or to execute and deliver this Purchase Contract, nor is there any
basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect
the validity or enforceability of the Bonds or this Purchase Contract.
(g) Any certificate signed by an authorized officer of the Authority and
delivered to the Underwriter in connection with the issuance of the Bonds shall be deemed a
representation and warranty of the Authority to the Underwriter as to the statements made therein.
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7. Commission Representations, Warranties and Covenants. The Commission
represents, warrants and covenants to the Authority and the Underwriter that:
(a) Due Organization, Existence and Authority. The Commission is a public body
corporate and politic, organized and existing under the Constitution and laws of the State,
including the Law, with full right, power and authority to adopt the Resolution, to issue the Bonds,
and to execute, deliver and perform its obligations under the Bonds, this Purchase Contract, the
Indenture, the Continuing Disclosure Agreement, the Official Statement and the Resolution (the
Bonds, the Purchase Contract, the Indenture, the Official Statement, the Continuing Disclosure
Agreement and the Resolution are collectively referred to herein as the "Commission
Documents").
(b) Due Authorization and Approval. By all necessary official action of the
Commission, the Commission has duly authorized and approved the adoption or execution and
delivery of, and the performance by the Commission of the obligations on its part contained in, the
Commission Documents, and has approved the use by the Underwriter of the Preliminary Official
Statement and the Official Statement and, as of the date hereof, such authorizations and approvals
are in full force and effect and have not been amended, modified or rescinded. When executed
and delivered by the parties thereto the Commission Documents will constitute the legally valid
and binding obligations of the Commission enforceable upon the Commission in accordance with
their respective terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors
rights generally. The Commission has complied, and will at the Closing be in compliance in all
respects, with the terms of the Commission Documents.
(c) Official Statement Accurate. The Official Statement is, and at all times
subsequent to the date of the Official Statement up to and including the Closing will be, true and
correct in all material respects, and the Official Statement contains, and up to and including the
Closing will contain, no misstatement of any material fact and does not, and up to and including
the Closing will not, omit any statement necessary to make the statements contained therein, in the
light of the circumstances in which such statements were made, not misleading.
(d) Underwriter's Consent to Amendments and Supplements to Official
Statement. The Commission will advise the Underwriter promptly of any proposal to amend or
supplement to the Official Statement from the date of delivery of the Official Statement to the End
Date, and will not effect or consent to any such amendment or supplement without the consent of
the Underwriter, which consent will not be unreasonably withheld. The Commission will advise
the Underwriter promptly of the institution of any proceedings known to it by any governmental
agency prohibiting or otherwise affecting the use of the Official Statement in connection with the
offering, sale or distribution of the Bonds.
(e) Commission Agreement to Amend or Supplement Official Statement. For a
period beginning on the date hereof and continuing until the End Date, (a) the Commission will
not adopt any amendment of, or supplement to, the Official Statement to which the Underwriter
shall object in writing and (b) if any event relating to or affecting the Project Area or the
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Commission shall occur as a result of which it is necessary, in the opinion of Disclosure Counsel
or the Underwriter, to amend or supplement the Official Statement in order to make the Official
Statement not misleading in the light of the circumstances existing at the time they are delivered to
a purchaser of the Bonds, the Commission will forthwith prepare and furnish to the Underwriter a
reasonable number of copies of an amendment of, or supplement to, the Official Statement (in
form and substance satisfactory to Disclosure Counsel and the Underwriter) which will amend or
supplement the Official Statement so that it will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Official Statement is delivered to a purchaser of the Bonds,
not misleading.
(f) No Material Change in Finances; Tax Sharing Agreements. At the time of the
Closing, there shall not have been any material adverse change in the financial condition of the
Commission or any material adverse change in the valuation of taxable property in the Project
Area (as described in the Official Statement) since June 30, 2010. Except as disclosed in the
Official Statement, the Commission has not entered into any tax sharing agreements with regards
to tax increment generated within the Project Area, and the Commission is not subject to any
resolution of taxing entities adopted pursuant to former Section 33676 of the Law pursuant to
which Tax Revenues or Housing Tax Revenues attributable to growth in assessed value as a result
of lawful inflationary adjustments are captured by such taxing entity.
(g) No Breach or Default. As of the time of acceptance hereof and as of the
Closing, except as otherwise disclosed in the Official Statement, the Commission is not and will
not be in breach of or in default under any applicable constitutional provision, law or
administrative rule or regulation of the State or the United States, or any applicable judgment or
decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or
other instrument to which the Commission is a party or is otherwise subject, and no event has
occurred and is continuing which, with the passage of time or the giving of notice, or both, would
constitute a default or event of default under any such instrument which breach, default or event
could have an adverse effect on the Commission's ability to perform its obligations under the
Commission Documents; and, as of such times, except as disclosed in the Official Statement, the
authorization, execution and delivery of the Commission Documents and compliance by the
Commission with the provisions of each of such agreements or instruments do not and will not
conflict with or constitute a breach of or default under any applicable constitutional provision, law
or administrative rule or regulation of the State or the United States, or any applicable judgment,
decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance,
agreement or other instrument to which the Commission (or any of its officers in their respective
capacities as such) is subject, or by which it or any of its properties is bound, nor will any such
authorization, execution, delivery or compliance result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or
properties or under the terms of any such law, regulation or instrument, except as may be provided
by the Commission Documents.
(h) No Litigation. As of the time of acceptance hereof and as of the Closing,
except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or
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investigation, at law or in equity, before or by any court, government agency, public board or body,
pending or to the best knowledge of the Commission threatened against the Commission:
(i) in any way questioning the corporate existence of the Commission or
the titles of the officers of the Commission to their respective offices;
(ii) affecting, contesting or seeking to prohibit, restrain or enjoin the
issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or
to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or
affecting the validity of the Commission Documents or the consummation of the transactions on
the part of the Commission contemplated thereby, or contesting the exclusion of the interest on the
Bonds from taxation or contesting the powers of the Commission;
(iii) which may result in any material adverse change relating to the
financial condition of the Commission; or
(iv) contesting the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or any supplement or amendment thereto or asserting that the
Preliminary Official Statement or the Official Statement contained any untrue statement of a
material fact or omitted to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading.
(i) Prior Liens on Tax Revenues. As of the time of acceptance hereof and as of
the Closing the Commission does not and will not have outstanding any indebtedness which is
secured by a lien on the Tax Revenues superior to or on a parity with the lien of the Bonds on such
Tax Revenues, except as disclosed in the applicable Official Statement.
(j) Further Cooperation; Blue Sky. The Commission will furnish such
information, execute such instruments and take such other action in cooperation with the
Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer
and sale under the Blue Sky or other securities laws and regulations of such states and other
jurisdictions of the United States as the Underwriter may designate and (ii) to determine the
eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and
will use its best efforts to continue such qualifications in effect so long as required for the
distribution of the Bonds; provided, however, that the Commission will not be required to execute
a special or general consent to service of process or qualify as a foreign corporation in connection
with any such qualification in any jurisdiction.
(k) Bonds Issued Per Indenture; Pledge. The Bonds, when issued, executed and
delivered in accordance with the Indenture and sold to the Underwriter as provided herein, will be
legally valid and binding limited obligations of the Commission, entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating
to or limiting creditors rights generally, and upon execution and delivery of the Bonds, the
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Indenture will provide, for the benefit of the owners from time to time of the Bonds, a legally valid
and binding pledge of and lien on Tax Revenues and on the funds and accounts pledged to such
Bonds under the Indenture as provided in and contemplated by the Indenture.
(1) Consents and Approvals. All authorizations, approvals, licenses, permits,
consents and orders of or filings with any governmental authority, legislative body, board, agency
or commission having jurisdiction in the matters which are required for the due authorization of,
which would constitute a condition precedent to or the absence of which would adversely affect
the due performance by the Commission of, its obligations in connection with the Commission
Documents have been duly obtained or made.
(m) No Other Bonds; Compliance with Redevelopment Plan Limits. Between the
date of this Purchase Contract and the date of Closing, the Commission will not, without the prior
written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue
any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct
or contingent, secured by tax increment generated in the Project Area. The total obligations of the
Commission heretofore incurred and all payments thereon over the life of the Redevelopment Plan
have been computed by the Commission and will not exceed any applicable limit on tax increment
revenues received by the Commission over the life of the Redevelopment Plan or any constituent
component as set forth therein, (b) the total bonded indebtedness of the Commission outstanding
and secured by the Tax Revenues as of the date hereof does not exceed any applicable limit
thereon set forth in the Redevelopment Plan, and (c) except as disclosed in the Official Statement,
the Commission is entitled to receive Tax Revenues under the Redevelopment Plan for a term
longer than the final maturity of the Bonds.
(n) Certificates. Any certificate signed by any authorized officer of the
Commission and delivered to the Underwriter in connection with the issuance of the Bonds shall
be deemed to be a representation and warranty by the Commission to the Underwriter as to the
statements made therein.
(o) Law and Moderate Income Housing Fund. The Commission has not made any
findings, as permitted by the Law, which would allow it to deposit less than 20% of incremental
tax revenues into the Commission's Low and Moderate Income Housing Fund, and currently has
no intention of making such findings. The Low and Moderate Income Housing Fund does not, on
the date hereof, contain any "excess surplus" (as that term is defined in Section 33334.12 of the
Act) that would cause the Commission to be subject to the prohibitions contained in Section
33334.12(e) of the Act.
(p) Compliance With the Redevelopment Law. As of the time of acceptance
hereof and as of the date of the Closing, except as otherwise disclosed in the Official Statement,
the Commission has complied with all material provisions of the Law, including, without
limitation, use of the Tax Revenues and the filing requirements of Sections 33080, 33080.6 and
33334.6 of the Law as applicable to the Commission and the Project Area. As of the date hereof
the Commission does not have "major violations" (within the meaning of Section 33090.8(i) of the
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Law) so as to be or become subject to a court order prohibiting the activities set forth in Section
33090.8(e) of the Law.
(q) Compliance With Continuing Disclosure. Except as described in the Official
Statement, the Commission has not defaulted under any prior continuing disclosure undertaking
pursuant to Rule 15c2-12 over the past five years.
S. Closing Conditions. The Underwriter has entered into this Purchase Contract in
reliance upon the representations, warranties and covenants herein and the performance by the
Commission and the Authority of their respective obligations hereunder, both as of the date hereof
and as of the date of the Closing. The Underwriter's obligations under this Purchase Contract are
and shall be subject to the following additional conditions:
(a) Bring -Down Representation. The representations, warranties and covenants of
the Commission and the Authority, respectively, contained herein shall be true and correct at the
date hereof and at the time of the Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder. At the time of the
Closing:
(i) the Commission Documents shall be in full force and effect, and shall
not have been amended, modified or supplemented except with the consent of the Underwriter;
(ii) there shall be in full force and effect such resolutions (the "Authorizing
Resolutions") as, in the opinion of Jones Hall ("Bond Counsel"), shall be necessary in connection
with the transactions on the part of the Commission contemplated by this Purchase Contract, the
Official Statement, and the other Commission Documents;
(iii) the Commission shall perform or have performed its obligations
required or specified in the Commission Documents to be performed at or prior to Closing; and
(iv) the Official Statement shall not have been supplemented or amended,
except pursuant to Paragraph 7(e) or as otherwise may have been agreed to in writing by the
Underwriter.
(c) No Default. At the time of the Closing, no default shall have occurred or be
existing under this Purchase Contract, the Resolution, or the other Commission Documents and
the Commission shall not be in default in the payment of principal or interest on any of its bonded
indebtedness which default shall adversely impact the ability of the Commission to make
payments on the Bonds.
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(d) Termination Events. The Underwriter shall have the right to terminate this
Purchase Contract, without liability therefor, by written notification to the Commission and the
Authority if at any time at or prior to the Closing:
(i) any event shall occur which causes any statement contained in the
Official Statement to be materially misleading or results in a failure of the Official Statement to
state a material fact necessary to make the statements in the Official Statement, in the light of the
circumstances under which they were made, not misleading; or
(ii) the marketability of the Bonds or the market price thereof, in the
opinion of the Underwriter, has been materially adversely affected by an amendment to the
Constitution of the United States or by any legislation in or by the Congress of the United States or
by the State, or the amendment of legislation pending as of the date of this Purchase Contract in
the Congress of the United States, or the recommendation to Congress or endorsement for passage
(by press release, other form of notice or otherwise) of legislation by the President of the United
States, the Treasury Department of the United States, the Internal Revenue Service or the
Chairman or ranking minority member of the Committee on Finance of the United States Senate or
the Committee on Ways and Means of the United States House of Representatives, or the proposal
for consideration of legislation by either such Committee, or the presentment of legislation for
consideration as an option by either such Committee, or by the staff of the Joint Committee on
Taxation of the Congress of the United States, or the favorable reporting for passage of legislation
to either House of the Congress of the United States by a Committee of such House to which such
legislation has been referred for consideration, or any decision of any Federal or state court or any
ruling or regulation (final, temporary or proposed) or official statement on behalf of the United
States Treasury Department, the Internal Revenue Service or other Federal or State authority
materially adversely affecting the Federal or State tax status of the Commission, or the interest on
bonds or notes or obligations of the general character of the Bonds; or
(iii) any legislation, ordinance, rule or regulation shall be introduced in, or
be enacted by any governmental body, department or agency of the State or a decision by any court
of competent jurisdiction within the State or any court of the United States shall be rendered
which, in the reasonable opinion of the Underwriter, materially adversely affects the market price
of the Bonds; or
(iv) legislation shall be enacted by the Congress of the United States, or a
decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or
official statement by, or on behalf of, the Securities and Exchange Commission or any other
governmental Commission having jurisdiction of the subject matter shall be issued or made to the
effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the
issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated
hereby or by the Official Statement, is in violation or would be in violation of, or that obligations
of the general character of the Bonds, or the Bonds, are not exempt from registration under, any
provision of the federal securities laws, including the Securities Act of 1933, as amended and as
then in effect, or that the Indenture need to be qualified under the Trust Indenture Act of 1939, as
amended and as then in effect; or
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(v) additional material restrictions not in force as of the date hereof shall
have been imposed upon trading in securities generally by any governmental authority or by any
national securities exchange which restrictions materially adversely affect the Underwriter's ability
to market the Bonds; or
(vi) a general banking moratorium shall have been established by federal
or State authorities; or
(vii) the United States has become engaged in hostilities which have
resulted in a declaration of war or a national emergency or there has occurred any other outbreak
of hostilities or a national or international calamity or crisis, financial or otherwise, the effect of
such outbreak, calamity or crisis on the financial markets of the United States, being such as, in the
reasonable opinion of the Underwriter, would affect materially and adversely the ability of the
Underwriter to market the Bonds; or
(viii) the commencement of any action, suit or proceeding described in
Paragraph 7(h) hereof which, in the judgment of the Underwriter, materially adversely affects the
market price of the Bonds; or
(ix) there shall be in force a general suspension of trading on the New
York Stock Exchange; or
(x) as a result of actions by the Commission or the State of California the
market for the Bonds or the market prices of the Bonds or the ability of the Underwriter to enforce
contracts for the sale of the Bonds shall have been materially and adversely affected, in the
reasonable professional judgment of the Underwriter; or
(xi) an event described in paragraph (e) of Section 7 hereof shall have
occurred which, in the reasonable professional judgment of the Underwriter, requires the
preparation and publication of a supplement or amendment to the Official Statement; or
(xii) any rating or credit outlook of the Bonds or other obligations of the
Commission by a national rating Commission shall have been withdrawn or downgraded.
(e) Closing Documents. At or prior to the Closing, the Underwriter shall receive
with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. The approving opinion of Bond Counsel dated the date
of the Closing and substantially in the form included as APPENDIX E to the Official Statement,
together with a letter from such counsel, dated the date of the Closing and addressed to the
Underwriter, to the effect that the foregoing opinion may be relied upon by the Underwriter to the
same extent as if such opinion were addressed to them.
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(2) Supplemental Opinion. A supplemental opinion or opinions of Bond
Counsel addressed to the Underwriter, substantially to the following effect:
(a) the statements and information contained in the Official
Statement on the cover page and under the captions "INTRODUCTION," "THE
BONDS" (except for the information under the captions "Book Entry System"),
"SECURITY FOR THE BONDS" and "TAX MATTERS," and in APPENDICES
C and E, excluding any material that may be treated as included under such
captions and appendices by cross-reference, are accurate insofar as such statements
expressly summarize certain provisions of the Bonds, the Indenture and the form
and content of the opinion of Bond Counsel;
(b) the Bonds are exempt from registration under the Securities
Act of 1933, as amended (the "1933 Act"), and the Indenture are each exempt from
qualification as an indenture pursuant to the Trust Indenture Act of 1939, as
amended; and
(c) the Purchase Contract has been duly authorized, executed
and delivered by the Commission and constitutes a valid and binding agreement of
the Commission (subject to customary exceptions).
(3) Commission Counsel Opinion. An opinion of general counsel to the
Commission, dated as of the Closing and addressed to the Underwriter, in form and substance
acceptable to Bond Counsel and the Underwriter, to the following effect:
(i) The Commission is a public body, corporate and politic, duly
organized and validly existing under the laws of the State;
(ii) The Commission Documents have been duly authorized,
executed and delivered by the Commission and, assuming due authorization, execution and
delivery by the other parties thereto, constitute the valid, legal and binding obligations of the
Commission enforceable in accordance with their respective terms;
(iii) The Resolution has been duly adopted at a meeting of the
governing body of the Commission which was called and held pursuant to law and with all public
notice required by law and at which a quorum was present and acting throughout, and the
Resolution is in full force and effect and has not been modified, amended or rescinded;
(iv) To the best of such counsel's current actual knowledge, the
execution and delivery of the Commission Documents and the Official Statement and compliance
with the provisions of the Commission Documents, under the circumstances contemplated thereby,
does not and will not in any material respect conflict with or constitute on the part of the
Commission a breach of or default (with due notice or the passage of time or both) under (a) any
material agreement or other instrument to which the Commission is a party or by which it is
bound, (b) any applicable California or federal statutory law or administrative rule or regulation
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known to such counsel, or (c) any applicable court order or consent decree to which the
Commission is subject;
(v) The Official Statement has been duly approved by the
governing body of the Commission and executed on its behalf by an authorized officer of the
Commission;
(vi) To the best of such counsel's actual knowledge, no additional
authorization, approval, consent, waiver or any other action by any person, board or body, public
or private, not previously obtained is required as of the date of the Closing for the Commission to
enter into the Commission Documents or to perform its obligations under the Commission
Documents except as have been obtained or made and as are in full force and effect;
(vii) Except as otherwise disclosed in the Official Statement, to the
best of such counsel's knowledge, there is no litigation, proceeding, action, suit, or investigation at
law or in equity before or by any court, governmental agency or body, pending against the
Commission, challenging the creation, organization or existence of the Commission, or the
validity of the Bonds or the Commission Documents or seeking to restrain or enjoin the repayment
of the Bonds or in any way contesting or affecting the validity of the Bonds or the Commission
Documents or any of the transactions referred to therein or contemplated thereby or contesting the
authority of the Commission to enter into or perform its obligations under any of the Bonds or the
Commission Documents, or which, in any manner, questions the right of the Commission to issue
the Bonds or to use the Tax Revenues for repayment of the Bonds or affects in any manner the
right or ability of the Commission to enter into the Bonds or to collect or pledge the Tax Revenues
for repayment of the Bonds, which, if determined adversely to the Commission, would have a
material and adverse effect upon the consummation of the transactions contemplated by or the
validity of the Bonds, the Official Statement or the Commission Documents (in rendering such
opinion counsel may rely solely upon the representations made to us in the Officer's Certificates
and on information provided by the Commission as to the existence or non-existence of any
pending or threatened litigation, proceeding, action, suit, or investigation, which it has no reason to
believe are incorrect); and
(viii) Based upon the information made available to such counsel
in the course of its participation in the preparation of the Official Statement, and without having
undertaken to determine independently or assuming any responsibility for the accuracy,
completeness or fairness of the statements contained in the Official Statement, nothing has come
to the attention of such counsel in connection with the issuance of the Bonds that would lead such
counsel to believe that the statements and information contained in the Official Statement relating
to the Commission and the Project Area (excluding therefrom: (a) the financial statements or
information (including pro forma information), or any financial, statistical, economic, engineering
or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections,
assumptions or expressions of opinion contained in the Official Statement; and (b) any statements
and information relating to The Depository Trust Company and Appendices, as to which we
express no opinion) as of the date of the Official Statement or as of the date hereof, contained or
contains any untrue statement of a material fact or omitted or omits to state a material fact
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necessary in order to make the statements made, in the light of the circumstances under which they
were made, not misleading.
(4) Trustee Counsel Opinion. The opinion of counsel to the Trustee, dated
the date of the Closing, addressed to the Commission and the Underwriter, in form and substance
acceptable to the Underwriter substantially to the following effect:
(i) The Trustee is a national banking association duly organized
and validly existing under the laws of the United States.
(ii) The Trustee has duly authorized the execution and delivery of
the Indenture and the Continuing Disclosure Agreement.
(iii) The Indenture and the Continuing Disclosure Agreement have
been duly entered into and delivered by the Trustee and assuming due, valid and binding
authorization, execution and delivery by the other parties thereto, constitute the legal, valid and
binding obligations of the Trustee enforceable against the Trustee in accordance with their
respective terms, except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights generally, or by
general principles of equity.
(5) Disclosure Counsel Opinion. An opinion, dated the date of the Closing
addressed to the Commission and the Underwriter, of Best Best & Krieger LLP, disclosure
counsel, to the effect that based upon their participation in the preparation of the Official
Statement as Disclosure Counsel to the Commission and without having undertaken to determine
independently the accuracy or completeness of the contents in the Official Statement, such counsel
has no reason to believe that the Official Statement, as of its date and as of the Closing Date
(except for the financial statements and the other financial and statistical data included therein and
the information included therein relating to The Depository Trust Company and the book -entry
system (as such terms are defined in the Official Statement), and in the Appendices thereto as to
all of which no opinion or belief need be expressed) contained or contains any untrue statement of
a material fact or omitted or omits to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.
(6) Commission Certificate. A certificate of the Commission, dated the
date of the Closing, signed on behalf of the Commission by a duly authorized officer of the
Commission to the effect that:
(i) The representations, warranties and covenants of the
Commission contained herein and in the Commission Documents are true and correct in all
material respects on and as of the date of the Closing as if made on the date of the Closing and the
Commission has complied with all of the terms and conditions of this Purchase Contract required
to be complied with by the Commission at or prior to the date of the Closing;
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(ii) No event affecting the Commission has occurred since the date
of the Official Statement which has not been disclosed therein or in any supplement or amendment
thereto which event should be disclosed in the Official Statement in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading; and
(iii) No further consent is required to be obtained for the inclusion
of the Commission's audited financial statements, including the accompanying accountant's letter,
for Fiscal Year 2009/10 in the Official Statement.
(7) Trustee's Certificate. A Certificate of the Trustee, dated the date of
Closing, addressed to the Commission and the Underwriter, in form and substance acceptable to
Bond Counsel and the Underwriter to the following effect:
(i) The Trustee is duly organized and existing as a national banking
association in good standing under the laws of the United States, having the full power and
authority to accept and perform its duties under the Indenture and the Continuing Disclosure
Agreement;
(ii) Subject to the provisions of the Indenture, the Trustee will
apply the proceeds from the Bonds to the purposes specified in the Indenture; and
(iii) The Trustee has duly authorized and executed the Indenture
and the Continuing Disclosure Agreement.
(8) Transcripts. Two transcripts of all proceedings relating to the
authorization and issuance of the Bonds.
(9) Official Statement. The Official Statement and each supplement or
amendment, if any, thereto, executed on behalf of the Commission by a duly authorized officer of
the Commission.
(10) Documents. An original executed copy of each of the Commission
Documents.
(11) Commission Resolution. A copy, certified by the Secretary or
Assistant Secretary of the Commission, of the Resolution.
(12) City Resolution. A copy, certified by the City Clerk or Deputy City
Clerk, of the resolution of the City approving the issuance of the Bonds.
(13) Authority Resolution. A copy, certified by the Secretary or Assistant
Secretary of the Authority, of the resolution of the Authority approving the purchase and sale of
the Bonds ("Authority Resolution").
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(14) IRS Form 8038-G. Evidence that the federal tax information form
8038-G for the Bonds has been prepared for filing.
(15) Tax Certificate. A tax certificate in form satisfactory to Bond
Counsel.
(16) Ratings. Evidence from Standard and Poor's Corporation (Standard
& Poor's") that the Bonds have been rated " and that such rating continues in effect
as of the Closing.
(17) CDIAC Statement. A copy of the Notices of Sale required to be
delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583
of the Government Code and Section 8855(g) of the Government Code.
(18) Opinion of Authority Counsel. An opinion of general counsel to the
Authority, dated the date of the Closing and addressed to the Commission and the Underwriter, in
form and substance acceptable to the Underwriter substantially to the following effect:
(i) The Authority is a joint powers authority, duly created and
lawfully existing under the JPA Act and the Constitution of the State;
(ii) The Authority has full legal power and lawful authority to enter
into this Purchase Contract;
(iii) The Authority Resolution has been duly adopted at a meeting
of the governing board of the Authority which was called and held pursuant to the law and with all
public notice required by law and at which a quorum was present and acting throughout and the
Authority Resolution is in full force and effect and has not been modified, amended or rescinded;
(iv) This Purchase Contract has been duly authorized, executed and
delivered by the Authority and constitutes the valid, legal and binding obligation of the Authority
enforceable in accordance with its terms, except as enforcement thereof may he limited by
bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the
application of equitable principles if equitable remedies arc sought; and
(v) Except as otherwise disclosed in the Official Statement, to the
best of such counsel's knowledge, there is no litigation, action, suit, proceeding or investigation at
law or in equity before or by any court, governmental agency or body, pending or threatened
against the Authority, challenging the creation, organization or existence of the Authority, or the
validity of this Purchase Contract or seeking to restrain or enjoin any of the transactions referred to
herein or contemplated hereby or contesting the authority of the Authority to enter into or perform
its obligations under this Purchase Contract, or which, in any manner, questions the right of the
Authority to purchase and sell the Bonds.
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(19) Closing Certificate of Authority. A certificate of the Authority, dated
the date of the Closing, signed on behalf of the Authority by a duly authorized officer of the
Authority to the effect that (a) the representations, warranties and covenants of the Authority
contained herein are true and correct in all material respects on and as of the date of the Closing as
if made on the date of the Closing and the Authority has complied with all of the terms and
conditions of this Purchase Contract required to he complied with by the Authority at or prior to
the date of Closing; and (b) no event affecting the Authority has occurred since the date of the
Official Statement which has not been disclosed therein or in any supplement or amendment
thereto which event should be disclosed in the Official Statement in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(20) Closing Certificate of Fiscal Consultant. A certificate of Urban
Futures, Inc., dated the Closing, certifying that as of the date of the Official Statement and as of the
Closing Date, the statements contained in the Official Statement insofar as such statements purport
to summarize or reflect the financial and statistical information provided by the Fiscal Consultant
to be used in the Official Statement are true and correct in all material respects, and did not and do
not contain any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading.
(21) Additional Documents. Such additional certificates, instruments and
other documents as the Underwriter may reasonably deem necessary.
If the Commission or the Authority shall be unable to satisfy the conditions contained in
this Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason
permitted by this Purchase Contract, this Purchase Contract may be terminated by the Underwriter
by written notice to the Commission and the Authority, and none of the Underwriter, the Authority
or the Commission shall be under further obligation hereunder.
9. Expenses. The Underwriter shall be under no obligation to pay, and the
Commission shall pay or cause to be paid, the expenses incident to the performance of the
obligations of the Commission and the Authority hereunder including but not limited to:
(a) the costs of the preparation and printing, or other reproduction (for distribution
on or prior to the date hereof) of the Commission Documents and the cost of preparing, printing,
issuing and delivering the Bonds;
(b) the fees and disbursements of any counsel, financial advisors, accountants or
other experts or consultants retained by the Commission;
(c) the fees and disbursements of Bond Counsel and Disclosure Counsel;
(d) the cost of preparation and printing the Preliminary Official Statement and any
supplements and amendments thereto and the cost of preparation and printing of the Official
Statement, including a reasonable number of copies thereof for distribution by the Underwriter;
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(e) charges of rating agencies for the rating of the Bonds;
(f) the cost of preparation of this Purchase Contract; and
(g) any out-of-pocket disbursements of the Commission incurred in connection
with the public offering and distribution of the Bonds.
Whether or not the Bonds are delivered to the Underwriter as set forth herein, the
Commission shall be under no obligation to pay, and the Underwriter shall pay, all expenses
incurred by the Underwriter in connection with its public offering and distribution of the Bonds
(except those specifically enumerated in paragraphs (a) through (g) above), including the fees and
disbursements of its counsel and any advertising expenses.
10. Notice. Any notice or other communication to be given to the Underwriter may
be given by delivering the same to E. J. De La Rosa & Co., Inc., 456 Montgomery Street, 19th
Floor, San Francisco, CA 94104, Attention: Holly Vocal. Any notice or other communication to
be given to the Authority or the Commission pursuant to this Purchase Contract may be given by
delivering the same in writing to such entity, at the addresses set forth on the cover page hereof;
provided, however, that all such notices, requests or other communications may be made by
telephone and promptly confirmed by writing. The Commission, the Authority and Underwriter
may, by notice given as aforesaid, specify a different address for any such notices, requests or
other communications.
11. Entire Agreement. This Purchase Contract, when accepted by the Commission
and the Authority, shall constitute the entire agreement among the Commission, the Authority and
the Underwriter and is made solely for the benefit of the Commission, the Authority and the
Underwriter (including the successors or assigns of any Underwriter, subject to Section 15 below).
No other person shall acquire or have any right hereunder by virtue hereof, except as provided
herein. All the Commission's and the Authority's representations, warranties and agreements in
this Purchase Contract shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter, until the earlier of (a) delivery of and
payment for the Bonds hereunder, and (b) any termination of this Purchase Contract.
12. Counterparts. This Purchase Contract may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same instrument.
13. Severability. In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
14. State of California Law Governs. The validity, interpretation and performance
of this Purchase Contract shall be governed by the laws of the State applicable to contracts made
and performed in the State.
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15. No Assignment. The rights and obligations created by this Purchase Contract
shall not be subject to assignment by the Underwriter, the Authority or the Commission without
the prior written consent of the other parties hereto.
E. J. DE LA ROSA & CO., INC., as Underwriter, on
behalf of itself, as senior manager, and Stone & Youngberg
LLC, as co -manager
By:
Title:
Accepted as of the date first stated above:
COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF NATIONAL CITY
By:
Executive Director
NATIONAL CITY JOINT POWERS FINANCING
AUTHORITY
By:
Executive Director
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EXHIBIT A
BONDS
Maturity Date Principal Interest Price or
(August 1 of) Amount Rate Yield
OHS Wcst:261091427.2
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RESOLUTION 2011 —
RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF NATIONAL CITY AUTHORIZING THE ISSUANCE OF
NOT TO EXCEED $45,000,000 PRINCIPAL AMOUNT OF 2011 TAX
ALLOCATION BONDS WITH RESPECT TO THE NATIONAL CITY
REDEVELOPMENT PROJECT; APPROVING, AUTHORIZING, AND
DIRECTING EXECUTION OF A THIRD SUPPLEMENT TO INDENTURE
OF TRUST RELATING THERETO; AUTHORIZING SALE OF SUCH
BONDS; APPROVING OFFICIAL STATEMENT; AND PROVIDING
OTHER MATTERS PROPERLY RELATING THERETO
WHEREAS, the Community Development Commission of the City of National
City ("CDC") is a redevelopment agency and 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 California Health and Safety Code (the "Law"), including the power to issue bonds for
any of its corporate purposes; and
WHEREAS, a Redevelopment Plan for the redevelopment project designated the
"National City Redevelopment Project" in the City of National City, California (the
`Redevelopment Project"), has been adopted in compliance with all requirements of the Law;
and
WHEREAS, the CDC has previously issued its (i) $5,860,000 initial principal
amount of Community Development Commission of the City of National City National City
Redevelopment Project 2004 Tax Allocation Bonds, Series A (the "2004 Bonds") for the purpose
of raising funds to provide financing of redevelopment projects of benefit to the Redevelopment
Project; and (ii) $27,940,000 initial principal amount of Community Development Commission of
the City of National City National City Redevelopment Project 2005 Tax Allocation Refunding
Bonds, Series A (the "2005A Bonds"), and $9,840,000 initial principal amount of 2005 Tax
Allocation Refunding Bonds, Series B (the "2005B Bonds", and together with the 2004 Bonds,
the "2005 Bonds") for the purpose of refunding taxable and tax-exempt bonds issued by the
CDC in 2001; and
WHEREAS, the 2004 Bonds and 2005 Bonds were issued pursuant to the Law
and an Indenture of Trust, dated as of June 1, 2004, as amended by a First Supplemental
Indenture of Trust dated as of January 1, 2005, and a Second Supplemental Indenture of Trust
dated as of January 1, 2005 (collectively, the "Indenture"), by and between Deutsche Bank
National Trust Company, as trustee, and the CDC; and
WHEREAS, the Indenture permits the issuance of Parity Debt (as defined in the
Indenture) payable from Tax Revenues (as defined in the Indenture) secured on parity with the
2004 Bonds and 2005 Bonds, subject to certain terms and conditions; and
WHEREAS, for the purpose of financing additional redevelopment activities,
including for the purpose of financing low and moderate income housing, of benefit to the
Redevelopment Project, the CDC proposed to issue its $45,000,000 aggregate principal amount
of CDC National City Redevelopment Project 2011 Tax Allocation Bonds (the "Bonds") pursuant
to a Third Supplemental Indenture (the "Third Supplement") to the Indenture; and
Resolution No. 2011 —
Page 2
WHEREAS, the Third Supplement is entered into pursuant to and in accordance
with the provisions of Sections 3.05 and 7.01(c) of the Indenture for the purpose of prescribing
the terms and conditions applicable to the issuance of the Bonds as Parity Debt under the
Indenture, and for the purposes of amending and supplementing the Indenture with respect
thereto; and
WHEREAS, the CDC proposes to sell the Bonds to the National City Joint
Powers Financing Authority (the "Authority"), which will concurrently sell the Bonds to De La
Rosa & Company and Stone & Youngberg, LLC, as purchaser of the Bonds (together, the
"Underwriter"), all on the terms and conditions herein set forth, and as provided in the form of a
Purchase Contract (the "Purchase Contract") on file with the Secretary; and
WHEREAS, the CDC has caused to be prepared an Official Statement
describing the Bonds, the preliminary form of which is on file with the Secretary (the "Official
Statement"); and
WHEREAS, the CDC, with the aid of its staff, has reviewed the Third
Supplement, the Purchase Contract, and the Official Statement, and wishes to approve and
confirm the foregoing, as well as the other matters set forth below, in the public interests of, and
for significant public benefits to, the CDC.
NOW, THEREFORE, BE IT RESOLVED by the Community Development
Commission of the City of National City as follows:
Section 1. Issuance of the Bonds: Approval of Third Supplement. The CDC hereby
authorizes the issuance of the Bonds under and pursuant to the Law and the Indenture, in the
aggregate principal amount of not to exceed $45,000,000. The CDC hereby approves the Third
Supplement in substantially the form thereof on file with the Secretary together with any
additions thereto or changes therein deemed necessary or advisable by the Executive Director
or Secretary of the CDC or Director of Finance of the City of National City (each a "Designated
Officer"), upon advice of the CDC's bond counsel, including, without limitation, the addition to
the Third Supplement of the final interest rates payable with respect to the Bonds, and the final
principal amount and annual maturities of the Bonds, as contained in the Purchase Contract,
hereinafter approved. Execution of the Third Supplement shall be deemed conclusive evidence
of the CDC's approval of such additions or changes, which may include the approval of the
issuance of taxable Bonds and Bonds payable from the housing set -aside revenues. Each
Designated Officer acting alone, is hereby authorized and directed to execute, and the
Secretary of the CDC is hereby authorized to attest and/or affix the seal of the CDC to the Third
Supplement for and in the name and on behalf of the CDC. The CDC hereby authorizes the
delivery and performance of the Third Supplement.
Section 2. Sale of the Bonds. The form of the Bond Purchase Contract relating to
the Bonds, be and is hereby approved in the form thereof, with such changes as may be
approved by a Designated Officer; said Designated Officer's execution thereof to constitute
conclusive evidence of said Officer's approval of such changes. Any Designated Officer is
hereby authorized to execute and deliver the Purchase Contract, and to insert in the Third
Supplemental Indenture the dollar amount which reflects the provisions of the Purchase
Resolution No. 2011 —
Page 3
Contract; provided, however, that the aggregate principal amount of the Bonds shall not exceed
$45,000,000, and the true interest cost of the Bonds is not more than 9.0%, with an initial
underwriter's discount of no more than $7.00 per bond, and a net original issue discount of no
more than 7.0% of the par amount thereof.
Section 3. Approval of the Official Notices of Sale and the Preliminary Official
Statement. The Preliminary Official Statement relating to the Bonds is approved for distribution
by the Underwriter to members of the general public who may be interested in purchasing the
Bonds. The Preliminary Official Statement shall be revised, from time to time, pending such
distribution as shall be required to cause the Preliminary Official Statement to contain any
further information necessary to accurately describe the CDC and the Bonds. With respect to
the distribution of the Preliminary Official Statement, any Designated Officer is authorized and
directed, on behalf of the CDC, to deem the Preliminary Official Statement "final" pursuant to
Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule").
Section 4. Approval of Final Official Statement. The final Official Statement, which
shall include such changes and additions thereto deemed advisable by any Designated Officer,
and such information permitted to be excluded from the Preliminary Official Statement pursuant
to the Rule, is hereby approved for delivery to the purchasers of the Bonds, and any Designated
Officer is authorized and directed to execute the final Official Statement for and on behalf of the
CDC and any Designated Officer is authorized and directed to deliver to the purchaser of the
Bonds (i) a certificate as to the accuracy and completeness of the information set forth therein,
and (ii) a Continuing Disclosure Agreement substantially in the form appended to the final
Official Statement.
Section 5. Official Action. All actions heretofore taken by the officers and agents of
the CDC with respect to the issuance of the Bonds are hereby approved, confirmed and ratified.
Any Designated Officer, the CDC General Counsel, and any other appropriate officer of the
CDC are hereby authorized and directed, for and in the name and on behalf of the CDC, to do
any and all things, and take any and all actions, including payment from the proceeds of the
Bonds costs of issuance of the Bonds, and execution and delivery of any and all assignments,
certificates, requisitions (including requisitions for payments of costs of issuance of the Bonds),
agreements, notices, consents, instruments of conveyance, warrants, and other documents,
which such officers deem necessary or advisable in order to consummate the sale, issuance
and delivery of the Bonds pursuant to the Purchase Contract and the Indenture. Whenever in
this Resolution any officer of the CDC, including any Designated Officer, 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 other officer of the CDC designated by
such officer to act on his or her behalf in the case such officer shall be absent or unavailable.
Section 6. Effective Date. This Resolution shall take effect from and after its
adoption.
--- Signature Page to Follow ---
Resolution No. 2011 —
Page 4
PASSED, APPROVED and ADOPTED this 22nd day of February, 2011.
Ron Morrison, Chairman
ATTEST:
Brad Raulston, Secretary
APPROVED AS TO FORM:
Claudia G. Silva
CDC General Counsel