HomeMy WebLinkAbout22 - Underground Utility Assessment District No. 117TO:
FROM:
CITY OF
NEWPORT BEACH
City Council Staff Report
PREPARED BY:
TITLE:
ABSTRACT:
June 26, 2018
Agenda Item No. 22
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
David A. Webb, Public Works Director - 949-644-3311,
dawebb@newportbeachca.gov
Dan Matusiewicz, Finance Director — 949-644-3123,
danm (a)-newportbeachca. gov
Mike Sinacori, Assistant City Engineer — 949-644-3342,
msinacori(a)-newportbeachca.gov
Trevor Power, Senior Accountant — 949-644-3125,
tpower(a)-newportbeachca. gov
Underground Utility Assessment District No. 117 — Award of Contract
No. 7337-1 and Authorization of Limited Obligation Improvement
Bonds
Construction bids have been received for the Underground Utility Assessment District
No. 117 project. Staff requests City Council's approval to award the construction contract
to Asplundh Construction Corp. In addition, Staff requests City Council to authorize the
issuance of limited obligation improvement bonds and the execution and delivery of all
legal documents, substantially to form, necessary to issue limited obligation improvement
bonds to finance the remaining unpaid assessments in Assessment District No. 117.
RECOMMENDATION:
a) Find this project exempt from the California Environmental Quality Act (CEQA)
pursuant to Class 2 Section 15302 (d) (conversion of overhead electrical utility
distribution lines where the surface is restored to the condition existing prior to the
undergrounding) of the CEQA Guidelines, California Code of Regulations, Title 14,
Chapter 3, because it will not have an adverse effect on the environment;
b) Approve the project plans and specifications;
c) Award Contract No. 7337-1 to Asplundh Construction Corp. for the bid amount of
$2,167,875.00 for Underground Utility Assessment District No. 117, and authorize the
Mayor and City Clerk to execute the contract;
d) Establish a contingency of $325,000.00 (approximately 15% of total bid) to cover the
cost of unforeseen work not included in the original contract;
22-1
Underground Utility Assessment District No. 117 — Award of Contract No. 7337-1 and
Authorization of Limited Obligation Improvement Bonds
June 26, 2018
Page 2
e) Approve Professional Services Agreement with NV5 of Irvine, CA for a not -to -exceed
fee of $293,269.00 for Construction Administration and Residential Permit Support
Services; and
f) Adopt Resolution No. 2018-47, A Resolution of the City Council of the City of Newport
Beach, California, Authorizing and Providing for the Issuance of Bonds Pursuant to
the Provisions of the Improvement Bond Act of 1915 for City of Newport Beach
Assessment District No. 117 and Approving Certain Documents and Authorizing
Certain Actions In Connection Therewith.
FUNDING REQUIREMENTS:
There is sufficient funding for this project. The following funds will be expensed:
Account Description
AD 117 Construction
Account Number
65802-941029
Total:
Amount
$ 2,788,144.00
$ 2,788,144.00
Staff recommends establishing approximately a fifteen (15) percent contingency for
unforeseen conditions associated with construction.
Proposed fund uses are as follows
Vendor
Purpose
Amount
Asplundh Construction Corp.
Construction Contract
$
2,167,875.00
Asplundh Construction Corp.
Construction Contingency
$
325,000.00
NV5
Construction Administration &
$
293,269.00
Residential Permit Support Services
Various
Printing & Incidentals
$
2,000.00
$ 2,788,144.00
The costs associated with issuing limited obligation improvement bonds are funded by
the financing. Most of the financing team's fees are contingent upon the successful
closing of the transaction.
DISCUSSION:
Underground Utility Assessment District 117 is the area bounded by Bayside Drive,
Avocado Avenue, Coast Highway and Carnation Avenue. The City anticipated
construction for this district to start in the Fall of 2017 but bids received by Southern
California Edison were much higher than expected and higher than the property owners
had approved funding for. Ongoing negotiations with SCE and their contractor failed, as
costs were still over the amount of available funding.
In a further effort to reduce costs, the City requested bids for directly constructing the
work and managing efforts of the underground infrastructure.
At 10 a.m. on May 2, 2018, the City Clerk opened and read the following bids for this
project:
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Underground Utility Assessment District No. 117 — Award of Contract No. 7337-1 and
Authorization of Limited Obligation Improvement Bonds
June 26, 2018
Page 3
The apparent low bidder for this project, Asplundh Construction Corp., submitted a bid
27.7% percent less than the Engineer's Estimate of $3,000,000. Asplundh submitted all
the necessary forms and possesses a Classification "A" California State Contractors
License as required by the project specifications. A check of the contractor's references
indicates satisfactory completion of similar projects for other public agencies.
Work necessary to complete this contract consists of trenching, installing conduit, vaults,
handholes, and pull boxes, repaving and all other incidental items of work to complete
work in place. The contractor will have 220 working days to complete the work once given
the notice to proceed. Construction will be scheduled in multiple phases to minimize
impacts to residents. For example, the contractor will be allowed to close alternating
alleys to complete the work in a timely manner. The anticipated construction start date is
July 9, 2018, and anticipated to take 9 months to complete.
In an effort to support the successful implementation of the City's first management of
civil construction for undergrounding, the Public Works staff sent out a Request for
Proposals to five consulting firms for Construction Administration and Residential Permit
Support Services of this project. Of the five firms, only NV5 submitted a proposal. NV5
has assembled a team uniquely qualified to manage Underground Assessment District
No. 117, which we believe the other four firms realized. Project Manager Jeffrey Cooper
is the Assessment Engineer for this District; he prepared the Engineer's Report, and
participated in the formation process, which was completed in November 2015. He has
also continued communications with the property owners over the past year regarding
project schedule and property transactions, such as property sales. In addition, NV5 has
assembled a construction oversight team that includes Marcus Puglisi who worked for the
City of Newport Beach as an inspector and prior to his retirement last year, the
Construction Supervisor for the Public Works Department. NV5 has also employed
Senior Inspector Joe Chiquete who also recently retired from the City of Laguna Beach.
Mr. Chiquete was solely responsible for the City of Laguna Beach's underground utility
program for the past 20 years. Laguna Beach managed their own civil construction for
all 20B underground districts. Between Mr. Puglisi and Mr. Chiquete, their experience is
unmatched by any other firm.
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BIDDER
TOTAL BID AMOUNT
Low
Asplundh Construction Corp.
$
2,167,875.00
2nd
E.E. Electrical Contractors, Inc.
$
2,367,715.00
3rd
Outsource Utility Contractor
$
2,998,830.00
4th
Hot Line Construction, Inc.
$
3,018,872.00
5th
Team Fishel
$
3,016,261.87
6th
Arizona Pipeline Company
$
3,077,777.00
7th
Doty Bros. Equipment Com an
$
3,292,061.00
8th
International Line Builders Inc.
$
3,683,080.30
9th
W.A. Rasic Construction Company
$
3,825,000.00
10th
Herman Weissker, Inc.
$
4,659,303.00
11th
PAR Electrical Contractors, Inc.
$
4,918,034.83
12th
VCI Construction, LLC
$
4,987,333.00
13th
Henkels & McCoy, Inc.
$
5,906,194.16
The apparent low bidder for this project, Asplundh Construction Corp., submitted a bid
27.7% percent less than the Engineer's Estimate of $3,000,000. Asplundh submitted all
the necessary forms and possesses a Classification "A" California State Contractors
License as required by the project specifications. A check of the contractor's references
indicates satisfactory completion of similar projects for other public agencies.
Work necessary to complete this contract consists of trenching, installing conduit, vaults,
handholes, and pull boxes, repaving and all other incidental items of work to complete
work in place. The contractor will have 220 working days to complete the work once given
the notice to proceed. Construction will be scheduled in multiple phases to minimize
impacts to residents. For example, the contractor will be allowed to close alternating
alleys to complete the work in a timely manner. The anticipated construction start date is
July 9, 2018, and anticipated to take 9 months to complete.
In an effort to support the successful implementation of the City's first management of
civil construction for undergrounding, the Public Works staff sent out a Request for
Proposals to five consulting firms for Construction Administration and Residential Permit
Support Services of this project. Of the five firms, only NV5 submitted a proposal. NV5
has assembled a team uniquely qualified to manage Underground Assessment District
No. 117, which we believe the other four firms realized. Project Manager Jeffrey Cooper
is the Assessment Engineer for this District; he prepared the Engineer's Report, and
participated in the formation process, which was completed in November 2015. He has
also continued communications with the property owners over the past year regarding
project schedule and property transactions, such as property sales. In addition, NV5 has
assembled a construction oversight team that includes Marcus Puglisi who worked for the
City of Newport Beach as an inspector and prior to his retirement last year, the
Construction Supervisor for the Public Works Department. NV5 has also employed
Senior Inspector Joe Chiquete who also recently retired from the City of Laguna Beach.
Mr. Chiquete was solely responsible for the City of Laguna Beach's underground utility
program for the past 20 years. Laguna Beach managed their own civil construction for
all 20B underground districts. Between Mr. Puglisi and Mr. Chiquete, their experience is
unmatched by any other firm.
22-3
Underground Utility Assessment District No. 117 — Award of Contract No. 7337-1 and
Authorization of Limited Obligation Improvement Bonds
June 26, 2018
Page 4
Please note, one of the key components of a successful undergrounding project is the
individual property owner conversion from overhead to the newly built undergrounding
system. Keeping an organized approach with the almost 300 property owners is part of
the NV5's scope of work. The removal of the overhead power lines and utility poles
cannot be done until the last property is converted. It sometimes takes multiple attempts
to locate property owners and/or their contractors to get this accomplished and it requires
a tremendous amount of effort. Having an organized aggressive approach in managing
the permits will help bring this project to completion in a timely manner.
BOND SALE DISCUSSION
City Council has previously indicated its intention to issue limited obligation improvement
bonds pursuant to the provisions of the Improvement Bond Act of 1915 (Act) in a principal
amount not to exceed the unpaid assessments of Assessment District No. 117.
On November 24, 2015, a public hearing and vote was held, at which time it was
determined that a majority of the ballots received were in favor of forming Assessment
District No. 117. As such, Council adopted a resolution approving the Final Engineer's
report, approving and confirming a total assessment of $4,640,550 on the parcels
determined to be specially benefited by the undergrounding project as indicated in the
Final Engineer's Report, designating Assessment District No. 117 as an underground
utilities district, and declaring its intention to issue bonds.
In February 2016, a cash collection period was opened to afford property owners the
opportunity to prepay all or any portion of the assessments levied upon their parcel or
parcels at a 7.3% discount since certain prepaid financing costs could otherwise be
avoided if bond financing was not required as follows:
Bond Reserve 5.00%
Capitalized Interest 1.30%
Underwriter's Discount 1.00%
Total 7.30%
The cash collection period has since expired and an addendum to the Notice of
Assessment was recorded on June 13, 2018, in the official records of the County
Recorder of the County of Orange, discharging the liens on those parcels for which the
assessment had been fully paid as of May 4, 2018. Cash payments totaling $1,559,325
were received, representing 36% of the discounted value of the assessments. The sum
of the cash payments, together with the $121,472 assumed financing cost previously
included in the total assessment, brings the remaining amount of unpaid assessments to
$2,959,753 as depicted below.
Assessment levied — cost of improvement project and financing
$4,640,550
Less: City received — prepaid contributions from property owners
$1,559,325
Less: Exercised financing discount
($121,472)
Remaining unpaid assessment amount
$2,959,753
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Underground Utility Assessment District No. 117 — Award of Contract No. 7337-1 and
Authorization of Limited Obligation Improvement Bonds
June 26, 2018
Page 5
If Council wishes to proceed with financing the remaining unpaid assessments, City
Council should adopt a resolution, included with this report as Attachment B, to authorize
the issuance of bonds pursuant to the Act, designated the "City of Newport Beach
Assessment District No. 117," in a principal amount not to exceed $2,959,000, to
complete the funding for the Undergrounding Project, to fund a reserve fund and to pay
incidental costs of the Assessment District proceedings and the costs of issuance for the
Bonds.
This resolution would also authorize the form, execution and delivery of all documents
necessary to issue and deliver the bonds including:
(1) a Bond Purchase Agreement, under the terms of which, among other
things, the City agrees to sell and Hilltop Securities, Inc. (the "Underwriter") agrees
to purchase the Bonds;
(2) a Preliminary Official Statement, which describes the Bonds, the
Assessment District, the Undergrounding Project and related matters;
(3) a Fiscal Agent Agreement, a document between the City and US
Bank National Association which governs the terms of the Bonds; and
(4) a Continuing Disclosure Agreement, included in the Preliminary
Official Statement as Appendix F, for the purpose of making undertakings to
provide certain annual financial information and notice of certain prescribed events
as required for compliance with Rule 15c2-12 of the United States Securities and
Exchange Commission.
This resolution also authorizes officers of the City to take any and all actions necessary
to execute and deliver any and all documents deemed necessary or advisable in
consultation with the City Attorney, Bond Counsel and Disclosure Counsel in order to
carry out the intent of this resolution in general and the Fiscal Agent Agreement and the
Bond Purchase Agreement in particular. In accordance with the City's Debt Management
Policy (F-6), Exhibit A of this resolution provides additional information relating to the
issuance of Bonds, including; the maximum term, maximum annual debt service, call
provisions, cost of issuance and a list of consultants hired for this issuance.
Also, as required by F-6, included as an attachment to this Staff Report, is a memo from
Fieldman, Rolapp & Associates, Inc., the Independent Registered Municipal Advisor
(IRMA) for this issuance, recommending issuing non -rated, publicly offered bonds. The
original par amount of the financing was estimated to be $2.745 million, but was revised
to $2.959 million upon analysis. This was a very marginal change and did not have a
material effect on the financing. The analyses of all financing scenarios considered is also
included as an attachment to this staff report in order to comply with F-6. Finally, per the
requirements of Senate Bill 450, Attachment I contains the good faith estimates provided
by Fieldman, Rolapp & Associates, Inc.
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Underground Utility Assessment District No. 117 — Award of Contract No. 7337-1 and
Authorization of Limited Obligation Improvement Bonds
June 26, 2018
Page 6
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this project exempt from the California
Environmental Quality Act (CEQA) pursuant to Class 2 Section 15302 (d) (conversion of
overhead electrical utility distribution lines where the surface is restored to the condition
existing prior to the undergrounding) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3, because it will not have an adverse effect on the
environment;
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Resolution No. 2018-47
Attachment B — Location Map
Attachment C — Bond Purchase Agreement
Attachment D — Preliminary Official Statement (with Continuing Disclosure Agreement as
Appendix F)
Attachment E — Fiscal Agent Agreement
Attachment F —Memo Recommending Financing Scenario
Attachment G — Financing Scenario Analyses
Attachment H —Good Faith Estimates
Attachment I — Proposed Professional Services Agreement with NV5
22-6
Attachment A
Resolution No. 2018-47 Authorizing Issuance and Sale of Bonds
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RESOLUTION NO. 2018- 47
RESOLUTION OF THE CITY COUNCIL OF CITY OF NEWPORT
BEACH, CALIFORNIA, AUTHORIZING AND PROVIDING FOR THE
ISSUANCE OF BONDS PURSUANT TO THE PROVISIONS OF THE
IMPROVEMENT BOND ACT OF 1915 FOR CITY OF NEWPORT
BEACH ASSESSMENT DISTRICT NO. 117 AND APPROVING
CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN
CONNECTION THEREWITH
WHEREAS, the City Council of the City of Newport Beach ("City") has taken proceedings
under the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways
Code ("Code"), for the formation of City of Newport Beach Assessment District No. 117
("Assessment District") and has confirmed an assessment in the amount of Four Million Six Hundred
Forty Thousand Five Hundred Fifty Dollars and 551100 ($4,640,550.55), which assessment and a
related diagram were recorded in the office of the City's Public Works Director, acting as the
Superintendent of Streets, and with the County Recorder of the County of Orange, State of
California;
WHEREAS, a notice of assessment, as prescribed in Code Section 3114, has been recorded
with the County Recorder of the County of Orange, State of California, whereupon the assessment
attached as a lien upon the property assessed within the Assessment District as provided in
Section 3115 of the Code;
WHEREAS, said proceedings provide that bonds ("Bonds") will be issued pursuant to the
Improvement Bond Act of 1915, Division 10 of the Code ("Act") to represent and be secured by the
unpaid assessments on the parcels within the Assessment District;
WHEREAS, the City Council desires to delegate to the City Manager the authority to
determine the amount of unpaid assessments upon the security of which such Bonds are to be issued
in an amount not to exceed the unpaid assessments;
WHEREAS, it is necessary and desirable that the City sell the Bonds to be issued to
represent a portion of the unpaid assessments and that the Bonds be issued primarily to finance the
undergrounding of utilities within the Assessment District;
WHEREAS, there has been presented to the City Council the forms of a Fiscal Agent
Agreement between the City and U.S. Bank National Association, as Fiscal Agent ("Fiscal Agent
Agreement"), a Continuing Disclosure Agreement by and between the City and Digital Assurance
Certification, LLC ("Continuing Disclosure Agreement"), a Bond Purchase Agreement to be entered
into between the City and Hilltop Securities ("Underwriter"), as the purchaser of the Bonds ("Bond
Purchase Agreement") and the form of a Preliminary Official Statement for the Bonds ("Preliminary
Official Statement"); and
WHEREAS, the City desires to approve the forms of the Fiscal Agent Agreement, the
Continuing Disclosure Agreement and the Bond Purchase Agreement; to authorize the issuance of
the Bonds and the sale thereof to the Underwriter on the terms approved hereby; to authorize the
22-8
mailing of the Preliminary Official Statement to prospective purchasers of the Bonds and to authorize
the officers of the City to take all actions required for the issuance of the Bonds;
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows:
Section 1. The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 2. The Fiscal Agent Agreement is approved in substantially the form presented
to the City Council. The Mayor, the City Manager and the Finance Director, acting as Treasurer of
the Assessment District, and their written designee(s) ("Authorized Officers"), is authorized and
directed to execute, and the City Clerk, or his or her written designee(s), is authorized to attest to, the
Fiscal Agent Agreement substantially in the form approved with such additions thereto and changes
therein as the officer or officers executing the Fiscal Agent Agreement deem necessary to cure any
ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling compensation,
principal amount per maturity, redemption dates and prices and such other related terms and
provisions of the Bonds, or to conform any provisions therein to the Bond Purchase Agreement and
the Official Statement, or as required by the City Attorney, and the City's Bond Counsel, Stradling
Yocca Carlson & Rauth, a Professional Corporation ("Bond Counsel"). Approval of such changes
shall be conclusively evidenced by the execution and delivery of the Fiscal Agent Agreement by one
or more Authorized Officers.
Section 3. Bonds in an aggregate principal amount not to exceed Two Million Nine
Hundred Fifty Nine Thousand Dollars and 00/100 ($2,959,000.00) representing a portion of the
amount of the unpaid assessments as determined by the City Manager shall be issued pursuant to the
provisions of the Act upon the security of unpaid assessments levied within the Assessment District
and as set forth in the Fiscal Agent Agreement. The Bonds shall be dated, be in such aggregate
principal amount, bear interest at such rates, and mature on such dates and in such amounts as are set
forth in the Bond Purchase Agreement upon the execution and delivery thereof in accordance with
Section 7 below. The Bonds shall be issued substantially in the form of bonds set forth in the Act,
except as such form may vary from the terms and conditions set forth in this Resolution and the
Fiscal Agent Agreement. The principal amount of the Bonds to be sold will be determined by the
City Manager, the Finance Director, or their designee(s).
Neither the faith and credit nor the taxing power of the City, the County of Orange, the State
of California or any political subdivision thereof is pledged to the payment of the Bonds. The City is
not obligated to advance available funds from the City treasury to the Redemption Fund in the event
of a delinquency in the payment of an assessment installment or installments. The Bonds are not
general obligations of the City; they are limited obligations payable solely from the funds specified in
the act and the Fiscal Agent Agreement.
The Bonds are being issued in compliance with the City's Debt Management Policy, and in
accordance with Section E.4 thereof, additional information relating to the Bonds is set forth in
Exhibit A attached hereto and incorporated herein by reference.
Section 4. The provisions of Part 11.1 (commencing with Section 8760) of the Act,
providing an alternative procedure for the division of land and the Bonds, shall apply.
2
22-9
Section 5. The Continuing Disclosure Agreement is approved in substantially the form
presented to the City Council; and each Authorized Officer is hereby authorized and directed, for and
in the name of and on behalf of the City, to execute, and the City Clerk, or her written designee(s), to
attest to and deliver to Digital Assurance Certification, LLC, as Dissemination Agent, the Continuing
Disclosure Agreement substantially in the form hereby approved, with such additions thereto and
changes therein, including the selection of an alternate Dissemination Agent from time to time, as
may be approved by the Authorized Officer executing such agreement or required by the City
Attorney or Bond Counsel, such approval or requirement to be conclusively evidenced by the
execution and delivery of the Continuing Disclosure Agreement.
Section 6. The form of the Preliminary Official Statement presented at this meeting is
hereby approved, and the Underwriter is hereby authorized to distribute the Preliminary Official
Statement to prospective purchasers of the Bonds in the form hereby approved, together with such
additions thereto and changes therein as are determined necessary by the City Manager or the
Finance Director, or the written designee of either, to make such Preliminary Official Statement final
as of its date for purposes of Rule 15c2-12 of the Securities and Exchange Commission, including,
but not limited to, such additions and changes as are necessary to make all information set forth
therein accurate and not misleading. Each of the Authorized Officers is hereby authorized to execute
a final Official Statement in the form of the Preliminary Official Statement, together with such
changes as are determined necessary by the City Manager, or his written designee, to make such
Official Statement complete and accurate as of its date. The Underwriter is further authorized to
distribute the final Official Statement for the Bonds and any supplement thereto to the purchasers
thereof upon its execution by one of the Authorized Officers.
Section 7. Subject to Section 3 hereof, the sale of the Bonds to the Underwriter is hereby
approved provided that (a) the Underwriter's discount, exclusive of original issue discount, shall not
exceed nine -tenths of one percent (0.9%) of the original aggregate principal amount of the Bonds,
(b) the interest rates on the Bonds shall not exceed five percent (5.0%) per annum, and (c) the final
principal amounts, discount and interest rates for the Bonds shall have been approved by the City
Manager of the Finance Director, acting as Treasurer; and, subject to such approval, any one of the
Authorized Officers is hereby authorized and directed to evidence the City's acceptance of the offer
made by executing and delivering to the Underwriter a Bond Purchase Agreement substantially in the
form hereby approved with such additions thereto and changes therein as may be approved by the
Authorized Officer executing the agreement, or required by City Attorney or Bond Counsel, such
approval or requirement to be conclusively evidenced by the execution and delivery of the Bond
Purchase Agreement.
Section 8. The Fiscal Agent is hereby authorized and directed to authenticate the Bonds
and to deliver them to The Depository Trust Company on behalf of the Underwriter upon payment of
the purchase price thereof.
Section 9. The officers of the City are hereby authorized and directed, jointly and
severally, to do any and all things and to execute and deliver any and all documents which they may
deem necessary or advisable in order to consummate the sale and delivery of the Bonds and
otherwise to effectuate the purposes of this resolution; and any actions previously taken by such
officers for these purposes are hereby ratified and confirmed.
3
22-10
Section 10. Any action authorized or directed in this resolution to be taken or performed
by an Authorized Officer may be taken or performed by their designee with the same force and effect
as if taken or performed by such Authorized Officer.
Section 11. If any section, subsection, sentence, clause or phrase of this resolution is, for
any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or
constitutionality of the remaining portions of this resolution. The City Council hereby declares that it
would have passed this resolution and each section, subsection, sentence, clause or phrase hereof,
irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be
declared invalid or unconstitutional.
Section 12. The City Council finds the adoption of this resolution is not subject to the
California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will
not result in a direct or reasonably foreseeable indirect physical change in the environment) and
15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines,
California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in
physical change to the environment, directly or indirectly.
Section 13. This Resolution shall take effect immediately upon its adoption by the City
Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 26th day of June, 2018.
MARSHALL "DUFFY" DUFFIELD, Mayor
ATTEST:
LEILANI 1. BROWN
City Clerk
BRIAN P. FORBATH
Bond Counsel
Attachment: Exhibit A
22-11
EXHIBIT A
1. The maximum term of the Bonds: 20 years (final maturity on September 2, 2038)
2. The maximum annual debt service on the Bonds: $242,000
3. The call provisions for the Bonds:
a. The Bonds are expected to be subject to optional redemption prior to maturity on and
after a date that is no later than ten years after the issuance thereof. It is possible that
a shorter call period would result in better pricing for the Bonds, but that won't be
known until the time that the Bonds are priced.
b. Pursuant to Part 11.1 of the Improvement Bond Act of 1915, the Bonds must be
available for redemption from the prepayment of Assessments on each interest
payment date after the issuance thereof.
4. The estimated costs of issuance of the Bonds: $94,000
5. The list of consultants hired with respect to the Bonds:
a. Bond and Disclosure Counsel: Stradling Yocca Carlson & Rauth
b. Assessment Engineer: PENCO Engineering
c. Assessment District Consultant: Willdan Financial Services
d. Trustee: U.S. Bank National Association
e. Municipal Advisor: Fieldman Rolapp & Associates
f. Underwriter: Hilltop Securities.
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Attachment B
Location Map
22-13
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City of Newport Beach
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June 05, 2018
LL -14
Attachment C
Bond Purchase Agreement
22-15
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
BOND PURCHASE AGREEMENT
12018
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92663
Ladies and Gentlemen:
The undersigned (the "Underwriter'), acting not as fiduciary or agent for you, but on
behalf of itself, offers to enter into this Bond Purchase Agreement (the "Purchase Agreement") with the
City of Newport Beach (the "City") in connection with Assessment District No. 117 (the "Assessment
District') which, upon acceptance, will be binding upon the City and upon the Underwriter. This offer is
made subject to acceptance of it by the City on the date hereof, and, if not accepted, will be subject to
withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance
hereof by the City.
The City acknowledges and agrees that: (i) the purchase and sale of the Bonds (as defined
below) pursuant to this Purchase Agreement is an arm's-length commercial transaction between the City
and the Underwriter; (ii) in connection with such transaction, the Underwriter is acting solely as a
principal and not as an agent or a fiduciary of the City; (iii) the Underwriter has financial and other
interests that differ from those of the City; (iii) the Underwriter has not assumed a fiduciary responsibility
in favor of the City with respect to: (A) the offering of the Bonds or the process leading thereto (whether
or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the City on
other matters), or (B) any other obligation to the City except the obligations expressly set forth in this
Purchase Agreement; and (iv) the City has consulted with its respective legal and municipal advisors to
the extent it deemed appropriate in connection with the offering of the Bonds.
Purchase. Sale and Delivery of the Bonds: Establishment of Issue Price.
(a) Subject to the terms and conditions and in reliance upon the representations,
warranties and agreements set forth herein, the Underwriter agrees to purchase from the City, and the City
agrees to sell to the Underwriter, all (but not less than all) of $ aggregate principal amount of
the City of Newport Beach Assessment District No. 117 Limited Obligation Improvement Bonds 2018
Series A (the `Bonds"), bearing interest (payable semiannually on March 2 and September 2 in each year,
commencing September 2, 2018) at the rates per annum and maturing on the dates and in the amounts set
forth in Appendix A attached hereto and incorporated herein. The purchase price for the Bonds shall be
S (representing a price of par, plus/less an original issue premium/discount of S
and less an Underwriter's discount of S ).
(b) The Underwriter agrees to assist the City in establishing the issue price of the
Bonds and shall execute and deliver to the City at Closing an "issue price" or similar certificate, together
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with the supporting pricing wires or equivalent communications, substantially in the form attached hereto
as Appendix B, with such modifications as may be appropriate or necessary, in the reasonable judgment
of the Underwriter, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or
prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the City
under this section to establish the issue price of the Bonds may be taken on behalf of the City by the
City's municipal advisor identified herein and any notice or report to be provided to the City may be
provided to the City's municipal advisor.
(c) [Except as otherwise set forth in Appendix A attached hereto,] the City will treat
the first price at which 10% of each maturity of the Bonds (the "10% test') is sold to the public as the
issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the
Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of
Bonds. [If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the
Underwriter agrees to promptly report to the City the prices at which it sells the unsold Bonds of that
maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has
occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been
satisfied as to the Bonds of that maturity, provided that, the Underwriter's reporting obligation after the
Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or bond
counsel.] For purposes of this Section, if Bonds mature on the same date but have different interest rates,
each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
[Appendix A and subsection (d) shall apply only if the Underwriter agrees to apply the
hold -the -offering -price rule, as described below.]
(d) The Underwriter confirms that it has offered the Bonds to the public on or before
the date of this Purchase Agreement at the offering price or prices (the "initial offering price'), or at the
corresponding yield or yields, set forth in Appendix A attached hereto, except as otherwise set forth
therein. Appendix A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of
the Bonds for which the 10% test has not been satisfied and for which the City and the Underwriter agree
that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial
offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the
"hold -the -offering -price rule'). So long as the hold -the -offering -price rule remains applicable to any
maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any
person at a price that is higher than the initial offering price to the public during the period starting on the
sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or
(2) the date on which the Underwriter has sold at least 10% of that maturity of the
Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the City promptly after the close of the fifth (5th) business
day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is
no higher than the initial offering price to the public.
(e) The Underwriter confirms that:
(i) any selling group agreement and any third -party distribution agreement relating
to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will
contain language obligating each dealer who is a member of the selling group and each broker-dealer that
is a party to such third -party distribution agreement, as applicable:
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(A)(i) to report the prices at which it sells to the public the unsold Bonds
of each maturity allocated to it, whether or not the Closing Date has occurred, until either
all Bonds of that maturity allocated to it have been sold or it is notified by the
Underwriter that the 10% test has been satisfied as to the Bonds of that maturity,
provided that, the reporting obligation after the Closing Date may be at reasonable
periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with
the hold -the -offering -price rule, if applicable, if and for so long as directed by the
Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its
knowledge, are made to a purchaser who is a related party to an underwriter participating
in the initial sale of the Bonds to the public (each such term being used as defined below),
and
(C) to acknowledge that, unless otherwise advised by the dealer or
broker-dealer, the Underwriter shall assume that each order submitted by the dealer or
broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public,
together with the related pricing wires, contains or will contain language obligating each dealer that is a
party to a third -party distribution agreement to be employed in connection with the initial sale of the
Bonds to the public to require each broker-dealer that is a party to such third -party distribution agreement
to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it,
whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have
been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the
Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable
periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the
hold -the -offering -price rule, if applicable, if and for so long as directed by the Underwriter or the dealer
and as set forth in the related pricing wires.
(f) The City acknowledges that, in making the representations set forth in this
section, the Underwriter will rely on (i) in the event a selling group has been created in connection with
the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling
group to comply with the requirements for establishing issue price of the Bonds, including, but not
limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Bonds, as set
forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third -party
distribution agreement was employed in connection with the initial sale of the Bonds to the public, the
agreement of each broker-dealer that is a party to such agreement to comply with the requirements for
establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -
the -offering -price rule, if applicable to the Bonds, as set forth in the third -party distribution agreement
and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for
the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a
third -party distribution agreement, to comply with its corresponding agreement to comply with the
requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to
comply with the hold -the -offering -price rule, if applicable to the Bonds.
(g) The Underwriter acknowledges that sales of any Bonds to any person that is a
related party to an underwriter participating in the initial sale of the Bonds to the public (each such term
being used as defined below) shall not constitute sales to the public for purposes of this section. Further,
for purposes of this section:
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(i) "public" means any person other than an underwriter or a related party,
(ii) "underwriter" means (A) any person that agrees pursuant to a written contract
with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial
sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or
indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public
(including a member of a selling group or a party to a third -party distribution agreement participating in
the initial sale of the Bonds to the public),
(iii) a purchaser of any of the Bonds is a `related party" to an underwriter if the
underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common
ownership of the voting power or the total value of their stock, if both entities are corporations (including
direct ownership by one corporation of another), (B) more than 50% common ownership of their capital
interests or profits interests, if both entities are partnerships (including direct ownership by one
partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of
the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a
corporation and the other entity is a partnership (including direct ownership of the applicable stock or
interests by one entity of the other), and
(iv) "sale date" means the date of execution of this Purchase Agreement.
The Bonds shall be substantially in the form described in, shall be issued and secured
under the provisions of, and shall be payable and subject to redemption as provided in, a Fiscal Agent
Agreement, by and between the City and U.S. Bank National Association, as fiscal agent (the "Fiscal
Agent'), dated as of 1, 2018 (the "Fiscal Agent Agreement'), approved by a resolution (the
"Resolution"), adopted by the City Council of the City (the "City Council') on 12018.
(h) Pursuant to the authorization of the City, the Underwriter has distributed copies
of the Preliminary Official Statement, dated , 2018, relating to the Bonds, which, together with
the cover page and all appendices thereto, is herein called the "Preliminary Official Statement" and
which, as amended with the prior approval of the Underwriter and executed by the City, will be referred
to herein as the "Official Statement." The City hereby ratifies the use by the Underwriter of the
Preliminary Official Statement and the Official Statement and authorizes the Underwriter to use and
distribute the Fiscal Agent Agreement, the Official Statement, the Continuing Disclosure Agreement,
dated as of 1, 2018, by and between the City and Digital Assurance Certification, L.L.C.
("DAC'), as dissemination agent (the "Disclosure Agreement"), and other documents or contracts to
which the City is a party, including this Purchase Agreement, and all information contained therein, and
all other documents, certificates and statements furnished by the City to the Underwriter in connection
with the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of
the Bonds by the Underwriter.
(i) The Underwriter agrees to make a bona fide public offering of the Bonds at the
initial offering price set forth in the Official Statement; however, the Underwriter reserves the right to
make concessions to dealers and to change such initial offering price as the Underwriter shall deem
necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection
with the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter,
the Underwriter will deliver or cause to be delivered to each purchaser a copy of the Official Statement
prepared in connection with the Bonds. The Underwriter also agrees to notify the City by phone or in
writing of the "end of the underwriting period," as defined in Rule 15c2-12 promulgated under the
Securities Exchange Act of 1934 ("Rule 15c2-12'). Terms defined in the Official Statement are used
herein as so defined.
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(j) The City shall deliver, or cause to be delivered, to the Underwriter two (2)
executed copies of the final Official Statement prepared in connection with the Bonds, in such form as
shall be approved by the City and the Underwriter and such additional conformed copies thereof as the
Underwriter may reasonably request. The City deems the Preliminary Official Statement to be `final" as
of its date for purposes of Rule 15c2-12. By acceptance of this Purchase Agreement, the City hereby
authorizes the use of copies of the Official Statement in connection with the public offering and sale of
the Bonds and ratifies and approves the distribution by the Underwriter of the Preliminary Official
Statement.
(k) At approximately 8:00 a.m., Pacific Time, on , 2018, or at such earlier
or later time or date as shall be agreed upon by the City and the Underwriter (such time and date herein
referred to as the "Closing Date'), the City shall deliver (i) through the facilities of The Depository Trust
Company, all Bonds (being in book -entry form, registered in the name of Cede & Co. and having the
CUSIP numbers assigned to them printed thereon) duly executed by the officers of the City as provided in
the Fiscal Agent Agreement and with facsimile seals printed thereon, and (ii) to the Underwriter at the
offices of Stradling Yocca Carlson & Rauth, a Professional Corporation, the other documents herein
mentioned, and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in
same day funds (such delivery and payment being herein referred to as the "Closing"). The Bonds, as so
registered, shall be made available to the Underwriter for inspection not later than the first business day
before the Closing Date.
2. Representations, Warranties and Agreements of the City. The City represents, warrants
and covenants to and agrees with the Underwriter that:
(a) The City is duly organized and validly existing as a municipal corporation under
the laws of the State; and has, and at the Closing Date will have, as the case may be, full legal right,
power and authority (i) to execute, deliver and perform its obligations under this Purchase Agreement, the
Fiscal Agent Agreement, the Resolution and the Disclosure Agreement (collectively, the "City
Documents"), (ii) to execute and deliver the Official Statement, and to carry out all transactions
contemplated by each of the City Documents, (iii) to adopt the Resolution approving the Fiscal Agent
Agreement and enter into the other authorizing documents, (iv) to issue, sell and deliver the Bonds to the
Underwriter pursuant to the Fiscal Agent Agreement as provided herein, and (v) to carry out, give effect
to and consummate the transactions contemplated by the Official Statement and the City Documents;
(b) The City Council has duly and validly (i) taken or caused to be taken, all
proceedings necessary under the Constitution and the laws of the State of California in order to form the
Assessment District and to confirm assessments (the "Assessments') on the parcels located within the
Assessment District in the respective amounts shown in the report of the Assessment Engineer, approved
by the City Council on November 24, 2015 (the "Engineer's Report'), to cause each of the Assessments
to be a valid lien upon the parcel upon which it was confirmed and to authorize the sale and issuance of
the Bonds, (ii) authorized and approved the execution and delivery of the City Documents and the Bonds,
(iii) authorized the preparation and delivery of the Preliminary Official Statement and the Official
Statement and (iv) approved the performance by the City of its obligations contained in, and the taking of
any and all action as may be necessary to carry out, give effect to and consummate the transactions
contemplated by each of the City Documents (including, without limitation, the collection of the
Assessments) and the Assessment District has been validly formed, the Assessments have been validly
confirmed and constitute liens on the respective parcels within the Assessment District, and (assuming
due authorization, execution and delivery by other parties thereto, where necessary) the City Documents
and the Bonds will constitute the valid, legal and binding obligations of the City and will be enforceable
in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
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and other laws affecting the enforcement of creditors' rights in general and to the application of equitable
principles if equitable remedies are sought;
(c) The City is not in breach of or default under any applicable law or administrative
rule or regulation of the State, the United States of America, or of any department, division, agency or
instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan
agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party
or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the
performance by the City of its obligations under the Bonds or the City Documents, and compliance with
the provisions of each thereof, will not conflict with or constitute a breach of or default under any
applicable law or administrative rule or regulation of the State, the United States of America, or of any
department, division, agency or instrumentality thereof, or under any applicable court or administrative
decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other
instrument to which the City is a party or is otherwise subject or bound;
(d) Except as may be required under the "blue sky" or other securities laws of any
jurisdiction, all approvals, consents, authorizations, elections and orders of or filings or registrations with
any State governmental authority, board, agency or commission having jurisdiction which would
constitute a condition precedent to, or the absence of which would materially adversely affect, the
performance by the City of its obligations hereunder, or under the City Documents or the Bonds have
been obtained and are in full force and effect;
(e) Except as disclosed in the Official Statement, there are, to the best knowledge of
the City, no outstanding assessment liens against any of the properties within the City which are senior to
or on a parity with the Assessments;
(f) Each of the Assessments has been duly and lawfully confirmed, may be collected
in installments under the laws of the State, and constitutes a valid and legally binding lien on the property
on which it has been confirmed;
(g) As of the date thereof, to the best knowledge of the City, the Preliminary Official
Statement did not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information contained in the Official Statement is, as of the date
hereof and will be, as of the Closing Date and as of the date of any supplement or amendment thereto
pursuant to paragraph (i) below, true, correct and complete in all material respects and does not, as of the
date hereof and will not, as of the Closing Date or as of the date of any supplement or amendment thereto
pursuant to paragraph (i) below, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(h) Until the date which is twenty-five (25) days after the "end of the underwriting
period" (as hereinafter defined) if any event shall occur of which the City becomes aware as a result of
which it may be necessary to supplement the Official Statement in order to make the statements therein,
in light of the circumstances existing at such time, not misleading, the City shall forthwith notify the
Underwriter of any such event, and shall cooperate fully in furnishing any information available to it for
any supplement to the Official Statement necessary so that the statements therein as so amended or
supplemented will not be misleading in light of the circumstances existing at such time; and the City shall
promptly furnish to the Underwriter a reasonable number of copies of such supplement (as used herein,
the term "end of the underwriting period" means the later of such time as (i) the City delivers the Bonds
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to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underwriting
syndicate, an unsold balance of the Bonds for sale to the public);
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) above, at the time of each supplement or amendment thereto and
(unless subsequently again supplemented or amended pursuant to such paragraph), at all times subsequent
thereto up to and including the Closing Date, the Official Statement so supplemented or amended
(including any financial and statistical data contained therein) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make such
information therein, in light of the circumstances under which it was presented, not misleading;
0) The Fiscal Agent Agreement creates a valid pledge of the Assessments and the
moneys in the Assessment Fund, the Redemption Fund, the Improvement Fund and the Reserve Fund
established pursuant to the Fiscal Agent Agreement, including the investments thereof, subject in all cases
to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on
the terms and conditions set forth therein; and said pledge constitutes a first lien on and security interest in
all of the foregoing;
(k) Except as disclosed in the Official Statement, no action, suit, proceeding, inquiry
or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is
pending or, to the knowledge of the City, threatened against the City (i) which would materially adversely
affect the ability of the City to perform its obligations under the City Documents or the Bonds, or
(ii) seeking to restrain or to enjoin: (A) the development of any of the land within the Assessment District,
(B) the issuance, sale or delivery of the Bonds, (C) the application of the proceeds thereof in accordance
with the Fiscal Agent Agreement, or (D) the collection or application of the Assessments, or the pledge
thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the City
Documents, any tentative or final subdivision map or building permits applicable to property within the
Assessment District, any other instruments relating to the development of any of the property within the
Assessment District, or any action contemplated by any of said documents, or (iii) in any way contesting
the completeness or accuracy of the Preliminary Official Statement, or the Official Statement or the
powers or authority of the City with respect to the Bonds, the City Documents, or any action of the City
contemplated by any of said documents; nor is there any action pending or, to the knowledge of the City,
threatened against the City which alleges that interest on the Bonds is not excludable from gross income
for federal income tax purposes or is not exempt from California personal income taxation;
(1) The City 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 for
the Underwriter 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 of America as the Underwriter may
designate; provided, however, the City shall not be required to register as a dealer or a broker of securities
or to consent to service of process in connection with any "blue sky" filing;
(m) Any certificate signed by any authorized official of the City authorized to do so
shall be deemed a representation and warranty to the Underwriter as to the statements made therein;
(n) The City will apply the proceeds of the Bonds in accordance with the Fiscal
Agent Agreement and as described in the Official Statement;
(o) Based upon projections which the City believes are reasonable, the Assessments
supporting the Bonds, when levied and collected by the City in accordance with the terms of the
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Assessments formula, assuming normal and reasonable delinquency rates, will provide a yearly cash flow
sufficient to make timely payment of principal and interest on the Bonds;
(p) The City is not aware of any toxic waste conditions or adverse soils condition
which would impair development within the Assessment District;
(q) The City will undertake, pursuant to the Disclosure Agreement, to provide annual
reports and notice of certain events;
(r) The Official Statement (except the portions thereof entitled "CONCLUDING
INFORMATION - Legal Opinion" and " - Tax Matters," and APPENDIX E - `BOOK -ENTRY ONLY
SYSTEM," as to which no view need be expressed) is, as of the date thereof, and will be, as of the
Closing Date, true, correct and complete in all material respects; and the Official Statement (except the
portions thereof mentioned above, as to which no view need be expressed) does not, as of the date
thereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(s) The Preliminary Official Statement heretofore delivered to the Underwriter has
been deemed final by the City as of its date, except for the omission of such information as is permitted to
be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The City hereby covenants and agrees
that, within seven (7) business days from the date hereof, or (upon reasonable written notice from the
Underwriter) within sufficient time to accompany any confirmation requesting payment from any
customers of the Underwriter, the City shall cause a final printed or electronic form of the Official
Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and
the City so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-
15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to
accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the
Underwriter, to the accuracy in all material respects of the representations and agreements on the part of
the City contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material
respects of the statements of the officers and other officials of the City made in any certificates or other
documents furnished pursuant to the provisions hereof, to the performance by the City of its obligations to
be performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the City Documents, the Resolution of Formation and any
other applicable agreements shall be in full force and effect, and shall not have been amended, modified
or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have
been taken in connection therewith, with the issuance of the Bonds and with the transactions
contemplated thereby and by this Purchase Agreement, all such actions as, in the opinion of Stradling
YoccaCarlson & Rauth, a Professional Corporation, Bond Counsel for the City, shall be necessary and
appropriate;
(b) Between the date hereof and the Closing Date, the market price or marketability
of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially
adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice to the
City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason
of any of the following:
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(1) legislation introduced in or enacted (or resolution passed) by the
Congress of the United States of America or recommended to the Congress by the President of the United
States of America, the Department of the Treasury, the Internal Revenue Service, or any member of
Congress, or favorably reported for passage to either House of Congress by any committee of such House
to which such legislation had been referred for consideration or a decision rendered by a court established
under Article III of the Constitution of the United States of America or by the Tax Court of the United
States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other
form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service
of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal
income taxation upon the interest as would be received by the owners of the Bonds beyond the extent to
which such interest is subject to taxation as of the date hereof;
(2) legislation introduced in or enacted (or resolution passed) by the
Congress of the United States of America, or an order, decree or injunction issued by any court of
competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or
other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any
other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the
general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not
exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that
the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the Trust
Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general
character of the Bonds, or of the Bonds, including any or all underwriting arrangements, as contemplated
hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws,
rules or regulations as amended and then in effect;
(3) any amendment to the federal or State Constitution or action by any
federal or State court, legislative body, regulatory body or other authority materially adversely affecting
the tax status of the City, its property, income, securities (or interest thereon), the validity or
enforceability of the Assessments or the ability of the City to construct or acquire the improvements as
contemplated by the City Documents, the Resolution of Formation and the Official Statement;
(4) any event occurring, or information becoming known, which, in the
judgment of the Underwriter, makes untrue in any material respect any statement or information
contained in the Official Statement, or results in the Official Statement containing any untrue statement of
a material fact or omitting to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading;
(5) the United States of America has become engaged in hostilities which
have resulted in a declaration of war or a national emergency or there has occurred any other outbreak or
escalation of hostilities (it being agreed by the Underwriter that there is no outbreak, calamity or crisis of
such character as of the date hereof);
(6) The declaration of a general banking moratorium by federal, New York
or California authorities or the general suspension of trading on any national securities exchange; or
(7) The imposition by the New York Stock Exchange or other national
securities exchange, or any governmental authority, of any material restrictions not now in force with
respect to the Bonds or obligations of the general character of the Bonds or securities generally or the
material increase of any such restrictions now in force, including those relating to the extension of credit
by, or the charge to the net capital requirement of, the Underwriter.
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(c) On the Closing Date, the Underwriter shall have received counterpart originals or
certified copies of the following documents, in each case satisfactory in form and substance to the
Underwriter:
(1) The City Documents and the Resolution of Formation together with a
certificate dated as of the Closing Date of the City Clerk of the City, as applicable, to the effect that each
such document is a true, correct and complete copy of the one duly adopted by the City Council and that
it has not been amended, modified or rescinded since its adoption (except as may have been agreed to by
the Underwriter) and is in full force and effect as of the Closing Date;
(2) The Official Statement duly executed;
(3) An unqualified approving opinion, dated the Closing Date and addressed
to the City, of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel for the City,
in customary form for such transactions, to the effect that the Bonds are legal, valid and binding
obligations of the City, the City has the full right, power and authority to levy and pledge the Assessments
to the payment of the Bonds, interest on the Bonds is excluded from gross income for federal income tax
purposes, is not an item of tax preference for purposes of the federal alternative minimum tax, and is
exempt from State personal income taxation, and an unqualified opinion of such counsel, dated the
Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the City may
be relied upon by the Underwriter to the same extent as if such opinion were addressed to it;
(4) A supplemental opinion, dated the Closing Date and addressed to the
Underwriter, of Bond Counsel to the effect that (i) the statements contained in the Official Statement on
the cover and under the captions "INTRODUCTION," `°FHE BONDS," "SECURITY FOR THE
BONDS," "CONCLUDING INFORMATION — Legal Opinion" and "CONCLUDING INFORMATION
— Tax Matters," APPENDIX C — "SUMMARY OF THE FISCAL AGENT AGREEMENT" and
APPENDIX D — "OPINION OF BOND COUNSEL," insofar as such statements purport to summarize
certain provisions of the Fiscal Agent Agreement, Bond Counsel's final approving legal opinion with
respect to the Bonds, and federal and State tax law, present an accurate summary of such provisions; (ii)
the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Fiscal
Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii)
the Resolution, which authorized issuance of the Bonds and approved the form and substance of the
Fiscal Agent Agreement, the Purchase Agreement and the Disclosure Agreement, has been duly adopted
by the City Council of the City; and (iv) the Fiscal Agent Agreement, the Purchase Agreement and the
Disclosure Dissemination Agent Agreement have been duly authorized, executed and delivered by the
City and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal,
valid and binding agreements of the City enforceable in accordance with their respective terms, subject to
laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights
generally and the application of equitable principles if equitable remedies are sought;
(5) An opinion, dated the Closing Date and addressed to the City and the
Underwriter, of Stradling Yocca Carlson & Rauth, a Professional Corporation, Disclosure Counsel, to the
effect that, without passing upon or assuming any responsibility for the accuracy, completeness or
fairness of any of the statements contained in the Official Statement or making any representation that
they have independently verified the accuracy, completeness or fairness of any such statements, but on
the basis of their participation in telephone conferences with the City's representatives, Bond Counsel,
representatives of the Underwriter and others, during which conferences the contents of the Official
Statement and related matters were discussed and in reliance thereon and on the records, documents,
certificates and opinions herein mentioned (as set forth above), during the course of their representation of
the City on the matter, no facts came to the attention of the attorneys in such firm rendering legal services
22-25
in connection with such representation which caused such firm to believe that the Official Statement as of
its date contained any untrue statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were made, not misleading
(except that no opinion need be expressed as to the Appendices of the Official Statement or any financial,
statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs,
estimates, projections, assumptions or expressions of opinion or any information about feasibility,
valuation, appraisals, absorption, real estate, archaeological or environmental matters, or any information
about book -entry, tax exemption or The Depository Trust Company included or referred to therein);
(6) A Certificate, dated the Closing Date and signed by an authorized
representative of the City, ratifying the use and distribution by the Underwriter of the Preliminary Official
Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying
that (i) the representations and warranties of the City contained in Section 2 hereof are true and correct in
all material respects on and as of the Closing Date with the same effect as if made on the Closing Date;
(ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement
affecting the matters contained therein which should be disclosed in the Official Statement for the
purposes for which it is to be used in order to make the statements and information contained in the
Official Statement not misleading in any material respect and the Bonds and the City Documents conform
as to form and tenor to the descriptions thereof contained in the Official Statement and (iii) the City has
complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied
under the City Documents and the Official Statement at or prior to the Closing Date;
(7) An opinion, dated the Closing Date and addressed to the Underwriter, of
the City Attorney, to the effect that (i) to the best of his or her knowledge, except as described in the
Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, regulatory agency, public board or body is pending or threatened in any way affecting the
existence of the City or the titles of its officers to their respective offices, or seeking to restrain or to
enjoin the development of property within the Assessment District, the issuance, sale or delivery of the
Bonds or the exclusion from gross income for federal income tax purposes or State personal income taxes
of interest on the Bonds, or the application of the proceeds thereof in accordance with the Fiscal Agent
Agreement, or the collection or application of the Assessments to pay the principal of and interest on the
Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Fiscal Agent
Agreement, the Resolution of Formation, the Purchase Agreement or any action of the City or which the
City contemplated by any of said documents; (ii) the City is duly organized and validly existing under the
laws of the State, with, as the case may be, full legal right, power and authority to issue the Bonds and to
perform all of its obligations under the Purchase Agreement, the Bonds and the Fiscal Agent Agreement;
(iii) to the best of his or her knowledge after due inquiry, the City has obtained all approvals, consents,
authorizations, elections and orders of or filings or registrations with any State governmental authority,
board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the
Assessments, the issuance of the Bonds or the performance by the City of its obligations thereunder or
under the Fiscal Agent Agreement, except that no opinion is expressed regarding compliance with "blue
sky" or other securities laws or regulations whatsoever; (iv) the City Council has duly and validly adopted
the resolutions and the Resolution of Formation at meetings of the City Council which were called and
held pursuant to law and with all public notice required by law, and the resolutions and the Resolution of
Formation are now in full force and effect and have not been amended; (v) the City has duly authorized,
executed and delivered the Purchase Agreement, the Fiscal Agent Agreement and the Bonds and has duly
authorized the preparation and delivery of the Official Statement; and (vi) the Purchase Agreement, the
Bonds and the Fiscal Agent Agreement constitute legal, valid and binding agreements of the City,
enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights in general and to the application
of equitable principles if equitable remedies are sought;
22-26
(8) One counterpart original or copy certified by the Clerk of the City of a
transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds;
(9) The Certificate of the Fiscal Agent, dated the Closing Date, to the effect
that (i) the Fiscal Agent is duly organized and existing as a national association under the laws of the
State having the full power and authority to perform its duties under the Fiscal Agent Agreement; (ii) the
Fiscal Agent is duly authorized to accept the obligations created by the Fiscal Agent Agreement and to
authenticate the Bonds pursuant to the terms of the Fiscal Agent Agreement; (iii) no consent, approval,
authorization or other action by any governmental or regulatory authority having jurisdiction over the
Fiscal Agent that has not been obtained is or will be required for the authentication of the Bonds or the
consummation by the Fiscal Agent of the other transactions contemplated to be performed by the Fiscal
Agent in connection with the authentication of the Bonds and the acceptance and performance of the
obligations created by the Fiscal Agent Agreement; and (iv) compliance with the terms of the Fiscal
Agent Agreement will not conflict with, or result in a violation or breach of, or constitute a default under,
any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the
Fiscal Agent is a party or by which it is bound, or any law or any rule, regulation, order or decree of any
court or governmental agency or body having jurisdiction over the Fiscal Agent or any of its activities or
properties;
(10) A certified copy of the general resolution of the Fiscal Agent authorizing
the execution and delivery of any City Documents to which the Fiscal Agent is a party;
(11) An opinion, dated the Closing Date and addressed to the Underwriter and
the City, of counsel to the Fiscal Agent in form and substance acceptable to the Underwriter;
(12) The Disclosure Agreement;
(13) A certificate of PENCO Engineering Inc., dated the Closing Date, to the
effect that (i) the statements contained in the Official Statement relating to the size and location of the
Assessment District, the amounts of the Assessments and the Engineer's Report and all other information
furnished by it therein do not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and (ii) in the opinion of PENCO Engineering Inc., the
assessments, as set forth in the Engineer's Report, have been spread in conformance with the requirements
of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code);
(14) A certificate of the City, dated the Closing Date, in a form acceptable to
Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal
Revenue Code of 1986, as amended;
(15) A copy of Internal Revenue Service Form 8038-G, executed by an
authorized officer of the City;
(16) Evidence satisfactory to the Underwriter that, other than as disclosed in
the Official Statement, there are no ad valorem taxes, special taxes or assessments applicable to the
property within the Assessment District that are delinquent; and
(17) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter or Bond Counsel may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in
the Preliminary Official Statement and the Official Statement, of the City's representations and warranties
22-27
contained herein, and the due performance or satisfaction by the City and the Fiscal Agent at or prior to
the Closing of all agreements then to be performed and all conditions then to be satisfied by either of
them in connection with the transactions contemplated hereby by the City Documents and by the Official
Statement
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the
obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated
for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and
neither the Underwriter nor the City shall be under any further obligation hereunder, except that the
respective obligations of the City and the Underwriter set forth in Section 4 and Section 5 hereof shall
continue in full force and effect.
4. Conditions of the City's Obligations. The City's obligations hereunder are subject to the
Underwriter's performance of their obligations hereunder, and are also subject to the following
conditions:
(a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the
duly authorized officer of the City executing the certificate referred to in Section 3 hereof, threatened, to
restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity
of the Bonds or the City Documents or the existence or powers of the City; and
(b) As of the Closing Date, the City shall receive the approving opinions of Bond
Counsel and Disclosure Counsel referred to in Section 3 hereof, dated as of the Closing Date.
5. Eaenses.
Whether or not the Bonds are delivered to the Underwriter set forth herein:
(a) The Underwriter shall be under no obligation to pay, and the City shall pay or
cause to be paid (out of any legally available funds of the City) all expenses incident to the performance
of the City's obligations hereunder, including, but not limited to, the cost of printing and delivering the
Bonds to DTC, the cost of printing, distribution and delivery of the Fiscal Agent Agreement, the
Preliminary Official Statement, the Official Statement and all other agreements and documents
contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the
Underwriter; the cost of the overlapping debt statement and the fees and disbursements of the Fiscal
Agent for the Bonds, Disclosure Counsel and Bond Counsel and any accountants, engineers or any other
experts or consultants the City have retained in connection with the Bonds; and
(b) The City shall be under no obligation to pay, and the Underwriter shall pay,
CUSIP Bureau and CDIAC fees; the cost of preparation of any "blue sky" or legal investment
memoranda; expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws;
and all other expenses incurred by the Underwriter in connection with its public offering and distribution
of the Bonds (except those specifically enumerated in paragraph (a) of this Section), including [the fees
and disbursements of its counsel] and any advertising expenses.
The City acknowledges that the Underwriter will pay from the underwriter's expense
allocation of the underwriting discount certain fees, including the applicable per bond assessment charged
by the California Debt and Investment Advisory Commission.
22-28
6. Notices. Any notice or other communication to be given to the City under this Purchase
Agreement may be given by delivering the same in writing to the City of Newport Beach, 100 Civic
Center Drive, Newport Beach, California 92660; any notice or other communication to be given to the
Underwriter under this Purchase Agreement may be given by delivering the same in writing to Hilltop
Securities Inc., 2533 South Coast Highway 101, Suite 250, Cardiff by the Sea, California 92007.
7. Parties in Interest This Purchase Agreement is made solely for the benefit of the City
and the Underwriter (including their successors or assigns), and no other person shall acquire or have any
right hereunder or by virtue hereof. This Purchase Agreement shall not be assigned by the City or the
Underwriter.
8. Survival of Representations, Warranties and Agreements. The representations,
warranties and agreements of the City set forth in or made pursuant to this Purchase Agreement shall not
be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or
termination of this Purchase Agreement and regardless of any investigations made by or on behalf of the
Underwriter (or statements as to the results of such investigations) concerning such representations and
statements of the City and regardless of delivery of and payment for the Bonds.
9. Effective. This Purchase Agreement shall become effective and binding upon the
respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and
enforceable as of the time of such acceptance. This Purchase Agreement may be signed in counterparts
by each party.
10. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior
negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds by
the City and represents the entire agreement of the parties as to the subject matter herein.
11. Governing Law. This Purchase Agreement shall be governed by the laws of the State of
California.
22-29
12. Counterparts. This Purchase Agreement may be executed simultaneously in several
counterparts, each of which shall be an original and all of which shall constitute one and the same
instrument.
Very truly yours,
HILLTOP SECURITIES INC.
Authorized Officer
ACCEPTED:
CITY OF NEWPORT BEACH
R
Authorized Officer
Time of Execution:
ATTEST
By:
City Clerk
APPROVED AS TO FORM:
Office of the City Attorney
By:
Assistant City Attorney
22-30
APPENDIX A
MATURITY SCHEDULE
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
Maturity Date Principal Interest Yield
(September 2) Rate
22-31
Maturity Date 10% Test
(September 2) Satisfied
10% Test
Not
Satisfied
Subject to
Hold -The -
Offering -Price
Rule
22-32
L\»010111ArI
FORM OF ISSUE PRICE CERTIFICATE
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
The undersigned, on behalf of Hilltop Securities Inc. (the "Underwriter') hereby certifies
as set forth below with respect to the sale and issuance of the above -captioned obligations (the `Bonds').
1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the
Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the
respective price listed in Schedule A.
2. Initial Offering Price of the Hold -the -Offering -Price Maturities.
(a) Underwriter offered the Hold -the -Offering -Price Maturity to the Public for
purchase at the respective initial offering price listed in Schedule A (the "Initial Offering Price") on or
before the Sale Date.
(b) As set forth in the Bond Purchase Agreement, dated , 2018, by and
between the Issuer and Underwriter, Underwriter has agreed in writing that, (i) for the Hold -the -Offering -
Price Maturity, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price
that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity
(the "hold -the -offering -price rule"), and (ii) any selling group agreement shall contain the agreement of
each dealer who is a member of the selling group, and any retail distribution agreement shall contain the
agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the
hold -the -offering -price rule. Pursuant to such agreement, no Underwriter (as defined below) will offer or
sell any Hold -the -Offering -Price Maturity at a price that is higher than the respective Initial Offering
Price for that Maturity of the Bonds during the Holding Period.
3. Defined Terms.
(a) Issuer means City of Newport Beach.
(b) Maturity means Bonds with the same credit and payment terms. Bonds
with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are
treated as separate Maturities.
(c) Public means any person (including an individual, trust, estate,
partnership, association, company, or corporation) other than an Underwriter or a related party to an
Underwriter. The term `related party" for purposes of this certificate generally means any two or more
persons who have greater than 50 percent common ownership, directly or indirectly.
(d) Underwriter means (i) any person that agrees pursuant to a written
contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in
the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract
directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale
22-33
of the Bonds to the Public (including a member of a selling group or a party to a retail distribution
agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only.
Nothing in this certificate represents the Underwriter's interpretation of any laws, including specifically
Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer
with respect to certain of the representations set forth in the Tax Certificate relating to the Bonds and with
respect to compliance with the federal income tax rules affecting the Bonds, and by Orrick, Herrington &
Sutcliffe LLP in connection with rendering its opinion that the interest on the Bonds is excluded from
gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form
8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to
the Bonds.
HILLTOP SECURITIES INC.
R
Name:
Dated: 12018
22-34
Attachment D
Preliminary Official Statement (with Continuing Disclosure Agreement as appendix F)
22-35
PRELIMINARY OFFICIAL STATEMENT DATED 2018
o
o NEW ISSUE -BOOK ENTRY ONLY NOT RATED
as y In the opinion of Stradling Toren Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, subject
to certain qualifications described in the Offcial Statement, under existing statutes, regulations, rules andjudicial decisions, and assuming the
as accuracy of certain representations and compliance with certain covenants and requirements described in the Official Statement, the interest
(and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference
p ,g for purposes of the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, such interest (and
original issue discount) is exempt from State of California personal income taxes. See "CONCLUDING INFORMATION Tax Matters"
oherein.
T $2,955,000'
p o [DAC BOND LOGO] CITY OF NEWPORT BEACH
O C
° ASSESSMENT DISTRICT NO. 117
w . LIMITED OBLIGATION IMPROVEMENT BONDS
° 2018 SERIES A
� o
Dated: Date of Delivery Due: September 2, as shown inside cover
The City of Newport Beach Assessment District No. 117 Limited Obligation Improvement Bonds 2018 Series A (the `Bonds') are
limited obligations of the Ci riof Newport Beach (the "City") secured by special assessments to be levied on real propertylocated within the
o City of Newport Beach Assessment District No. 117 (the "Assessment District").
0
p " The design and undergrounding of certain utilities within the Assessment District (the "Improvements') being financed by the
Assessment District and the levy of special assessments will be undertaken as provided by the Municipal Improvement Act of 1913. The
Bonds are issued pursuant to provisions of the Improvement Bond Act of 1915 and a Fiscal Agent Agreement dated as of July 1, 2018 (the
E U "Fiscal Agent Agreement") by and between the City and U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent") to (i) fund the
6Reserve Fund for the Bonds, (ii) finance capitalized interest on the Bonds through approximately September 2, 2018, (iii) pay costs of
4J 4J
issuance, (iv) pay for the formation costs of the Assessment District, and (v) pay the costs of the Improvements. See "ESTIMATED
° SOURCES AND USES OF FUNDS" and "THE ASSESSMENT DISTRICT" herein.
The Bonds are being issued in fully registered book -entry only form, initially registered in the name of Cede & Co., as nominee of
The Depository Trust Company, New York, New York ("DTC') in the denomination of $5,000 or any integral multiple thereof. Interest is
payable semiannually on March 2 and September 2 of each year, commencing September 2, 2018. Purchasers will not receive certificates
representing their interest in the Bonds. Payments of principal and interest on the Bonds will be paid by the Fiscal Agent directly to the
registered owner of the Bonds. Upon receipt of payments of principal and interest on Bonds registered to its nominee, DTC is to remit such
0 principal and interest to DTC Participants (as defined herein) for subsequent disbursement to the beneficial owners of such Bonds. See
APPENDIX E"BOOK-ENTRY ONLY SYSTEM."
o The Bonds are subject to redemption prior to maturity as described under "THE BONDS—Redemption of Bonds" herein.
ap Under the provisions of the Improvement Bond Act of 1915, installments of principal and interest sufficient to meet annual Bond
debt service will be levied by the City and billed by the County of Orange (the "County') to owners of property within the Assessment District
o against which there are unpaid assessments. Upon receipt by the City from the County, these annual assessment installments are to be
deposited into the Assessment Fund to be held by the City and used to pay debt service on the Bonds as they become due. The Bonds will be
secured by a pledge and lien on the assessments and moneys on deposit in the Assessment Fund.
o Unpaid assessments constitute fixed liens on the lots and parcels assessed within the Assessment District and do not constitute
o a personal indebtedness of the respective owners of such lots and parcels. Accordingly, in the event of a delinquency, proceedings may
,5 be taken only against the real property securing the delinquent assessment. Thus, the value of land within the Assessment District is a
0
critical factor in determining the investment quality of the Bonds. See "THE ASSESSMENT DISTRICT—Value-to-Assessment Lien
° Ratios" and `BONDOWNERS' RISKS—Land Values" herein.
o The Fiscal Agent will establish a Reserve Fund and deposit therein Bond proceeds in the amount of the Reserve Requirement
to provide funds for payment of principal and interest on the Bonds in the event of any delinquent assessment installments. The City's
obligation to advance funds to the Redemption Fund as a result of delinquent installments is limited to the balance in the Reserve
° ' D Fund. The City has covenanted to initiate judicial foreclosure in the event of a delinquency as described herein. See "SECURITY
o FOR THE BONDS—Covenant to Foreclose and Court Foreclosure Proceedings."
3 NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF NEWPORT BEACH, THE
G COUNTY OF ORANGE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE
.p PAYMENT OF THE BONDS. THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE
SOURCES DESCRIBED IN THE FISCAL AGENT AGREEMENT.
'O This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the
entire Official Statement, including without limitation, `BONDOWNERS' RISKS," to obtain information essential to the making of an
.0 �' informed investment decision.
.� The Bonds are offered when, as and if issued and delivered to the Underwriter subject to the approval of Stradling Toren Carlson &
+ S Routh, Newport Beach, California, Bond Counsel and Disclosure Counsel. Certain matters will he passed upon for the City by the City
uAttorney. Certain legal matters will he passed upon for the Underwriter by its counsel, Nixon Peahody LLP, Los Angeles, California. It is
u anticipated that the Bonds will he available for delivery to The Depository Trust Company in New Pork, New Pork on or about
w ° 2018.
O y
[HILLTOP LOGO]
. O o Dated: , 2018
N u y
J Preliminary, subject to change.
F � p
22-36
S
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
BASE CUSIPt:
MATURITY SCHEDULE
Maturity Date Principal
(September 2) Amount Interest Rate Yield CUSIpt
% Term Bonds due September 2, Yield: % CUSIP No.t
CUSIP® Copyright 201S, American Bankers Association. CUSIP® data in this Ct;feial Statement is provided by CUSN
Global Services, managed by S&P Capital IQ on behalf of the American Bmkers'Assoeiation. This data is not intended to
create a database and does not serve in any way as a suhstitute for the CUSIP Service. Neither the City nor the
Underwriter takes any responsibility for the accuracy of CUSIP data in this Ct;feial Statement. The CUSNO numher for a
specific maturity is subject to being ehanged after the issuance of the Bonds as a result of various suhsequent actions
ineluding, hut not limited to, a refunding in whole or in part or as a result of the procurement of secondary marketportfolio
insurance or other similar enhancement by investors that is appkeable to all or a portion of certain maturities of the Bonds.
22-37
CITY OF NEWPORT BEACH
COUNTY OF ORANGE, CALIFORNIA
CITY COUNCIL
Duffy Duffield, Mayor
Will O'Neill, Mayor Pro Tem
Diane Dixon, Councilmember
Brad Avery, Councilmember
Jeff Herdman, Councilmember
Scott Peotter, Councilmember
Kevin Muldoon, Councilmember
CITY OFFICIALS
David Kiff, City Manager
Dan Matusiewicz, Finance Director
Aaron Harp, City Attorney
Leilani Brown, City Clerk
BOND COUNSEL AND DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth,
a Professional Corporation
Newport Beach, California
MUNICIPAL ADVISOR
Fieldman Rolapp & Associates, Inc.
Irvine, California
FISCAL AGENT
U.S. Bank National Association
Los Angeles, California
ASSESSMENT ENGINEER
PENCO Engineering, Inc.
Irvine, California
22-38
No dealer, broker, salesperson or other person has been authorized by the City, the Fiscal Agent or the
Underwriter 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 representations must not be relied upon as
having been authorized by the City, the Fiscal Agent or the Underwriter. This Official Statement does not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in
which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not
expressly so described herein, are intended solely as such and are not to be construed as representations of fact. This
Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally
recognized municipal securities depository. For purposes of compliance with Rule 15c2-12 of the United States Securities
and Exchange Commission, as amended ("Rule 15c2-12"), this Preliminary Official Statement constitutes an "official
statement' of the City with respect to the Bonds that has been deemed "final' by the City as of its date except for the
omission of no more than the information permitted by Rule 15c2-12.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,
but the Underwriter does not guarantee the accuracy or completeness of such information.
The information set forth herein which has been obtained by the City from third party sources is believed to be
reliable but is not guaranteed as to accuracy or completeness by the City or the Fiscal Agent. The information and
expressions of opinion herein are 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 City, the landowners within the City or any other parties described herein since the date hereof. All summaries of
the Fiscal Agent Agreement or other documents are made subject to the provisions of such documents respectively and do
not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on
file with the City for further information in connection therewith.
While the City maintains an internet website for various purposes, none of the information on that website is
incorporated by reference herein or intended to assist investors in making any investment decision or to provide any
continuing information with respect to the Bonds or any other bonds or obligations of the City.
Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking
statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the
United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933,
as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate,"
"project," "budget' or other similar words. Such forward-looking statements include, but are not limited to, certain
statements contained in the information under the caption "THE ASSESSMENT DISTRICT."
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 CITY DOES
NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET
FORTH IN THIS OFFICIAL STATEMENT.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT
BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
22-39
INTRODUCTION.......................................................... 1
Purpose....................................................................... 1
Forward Looking Statements ...................................... 1
The Assessment District ............................................. 2
Property Values and Value -to -Assessment Lien
Ratios...................................................................... 2
No Additional Bonds .................................................. 2
The Improvements...................................................... 3
Professionals Involved in the Offering ....................... 3
Continuing Disclosure ................................................ 3
Bond Owners' Risks ................................................... 3
Other Information....................................................... 3
ESTIMATED SOURCES AND USES OF FUNDS ...... 4
THE BONDS.................................................................. 4
General........................................................................ 4
Redemption of Bonds ................................................. 5
Purchase of Bonds ...................................................... 6
Notice of Redemption ................................................. 6
Selection of Bonds for Redemption ............................ 6
Refunding Bonds ........................................................ 6
Registration, Exchange or Transfer ............................ 7
Annual Debt Service ................................................... 8
SECURITY FOR THE BONDS ..................................... 9
Limited Obligation...................................................... 9
Assessment Liens and Installments ............................. 9
Limited Obligation Upon Delinquency ..................... 10
Reserve Fund............................................................ 10
Covenant to Foreclose and Court Foreclosure
Proceedings........................................................... 11
Priority of Assessment Lien ...................................... 12
No Additional Bonds ................................................ 12
THE ASSESSMENT DISTRICT ................................. 12
Description of the Assessment District ....................
Description of Improvements ...................................
Formation Proceedings ............................................
Allocation of Assessments .......................................
Maximum Annual Assessment for Administrative
Costs and Expenses ..............................................
Value -to -Assessment Lien Ratios ............................
Largest Property Owners .........................................
Historical Assessed Values ......................................
Direct and Overlapping Indebtedness ......................
BONDOWNERS' RISKS ...........................................
General.....................................................................
Risks of Real Estate Secured Investments
Generally..............................................................
Limited Obligations .................................................
Delinquency Resulting in Ultimate or Temporary
Loss on Bonds ......................................................
Non -Cash Payments of Assessments .......................
Limited City Obligation Upon Delinquency............
Disclosures to Future Purchasers .............................
Payment of the Assessments is not a Personal
Obligation of the Owners .....................................
Property Values........................................................
Bankruptcy and Foreclosure ....................................
12
12
13
13
14
14
16
17
17
18
18
19
19
19
19
20
20
20
20
21
FDIC/Federal Government Interests in Parcels ......... 21
No Acceleration Provision.........................................22
ENGINEER'S REPORT...............B-1
Limitation on Remedies.............................................22
APPENDIX C
Natural Disasters........................................................22
Hazardous Substances...............................................23
AGENT AGREEMENT ...............
Limited Secondary Market........................................23
APPENDIX D
Future Debt Issuance.................................................23
Ballot Initiatives........................................................24
COUNSEL ...................................
Constitutional Amendment—Articles IIIC and
APPENDIX E
IIID........................................................................24
CONCLUDING INFORMATION................................25
SYSTEM ......................................
Continuing Disclosure...............................................25
APPENDIX F
LegalOpinion............................................................25
TaxMatters................................................................25
DISCLOSURE AGREEMENT ....
Litigation...................................................................27
Financial Interests......................................................27
NoRating...................................................................27
Underwriting..............................................................
27
Miscellaneous............................................................28
APPENDIX A ASSESSMENT DIAGRAM........ A-1
APPENDIX B
ENGINEER'S REPORT...............B-1
APPENDIX C
SUMMARY OF THE FISCAL
AGENT AGREEMENT ...............
C-1
APPENDIX D
OPINION OF BOND
COUNSEL ...................................
D-1
APPENDIX E
BOOK -ENTRY ONLY
SYSTEM ......................................
E-1
APPENDIX F
FORM OF CONTINUING
DISCLOSURE AGREEMENT ....
F-1
22-40
ASSESSMENT DISTRICT AERIAL
22-41
$2,955,000'
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
INTRODUCTION
Purpose
The purpose of this Official Statement, which includes the cover page, the table of contents and the
attached appendices (collectively, the "Official Statement'), is to provide certain information concerning the
issuance by the City of Newport Beach (the "City") of the $2,955,000 City of Newport Beach Assessment
District No. 117 Limited Obligation Improvement Bonds 2018 Series A (the `Bonds"). The proceeds of the
Bonds will be used to (i) fund the Reserve Fund for the Bonds, (ii) finance capitalized interest on the Bonds
through approximately September 2, 2018, (iii) pay costs of issuance, (iv) pay for the formation costs of the
Assessment District, and (v) pay the costs for the design and undergrounding of certain utilities (the
"Improvements") within the City of Newport Beach Assessment District No. 117 (the "Assessment District').
See "ESTIMATED SOURCES AND USES OF FUNDS" and "THE ASSESSMENT DISTRICT" herein.
The Bonds are to be issued pursuant to a Fiscal Agent Agreement by and between the City and U.S.
Bank National Association (the "Fiscal Agent'), dated as of July 1, 2018 (the "Fiscal Agent Agreement'). The
Bonds are secured under the Fiscal Agent Agreement by a pledge of and lien upon the Assessments (as defined
therein) and all moneys on deposit in the Assessment Fund, the Redemption Fund and the Reserve Fund. See
"SECURITY FOR THE BONDS."
This introduction is not a summary of this Official Statement. It is only a brief description of and
guide to, and is qualified by more complete and detailed information contained in, this entire Official
Statement and the documents summarized or described herein. A full review should be made of the entire
Official Statement. The sale and delivery of Bonds to potential investors is made only by means of the entire
Official Statement. All capitalized terms used in this Official Statement and not defined herein shall have the
meanings set forth in APPENDIX C"SUMMARY OF THE FISCAL AGENT AGREEMENT Definitions"
herein.
Forward Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute
"forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act
of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of
the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the
terminology used such as a "plan," "expect," "estimate," "project," "budget' or similar words. Such forward-
looking statements include, but are not limited to certain statements contained in the information under the
caption "THE ASSESSMENT DISTRICT."
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 CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR
I Preliminary, subject to change.
22-42
REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL
STATEMENT.
The Assessment District
The Assessment District is located in the central portion of the City south of State Highway 1 between
Avocado Avenue and Carnation Avenue. There are 187 parcels in the Assessment District with unpaid
assessments securing the Bonds. The property in the Assessment District is zoned residential and commercial
and all 187 parcels with unpaid Assessments have been developed. See "THE ASSESSMENT DISTRICT"
herein.
Assessment proceedings were initiated by the City Council of the City pursuant to the Municipal
Improvement Act of 1913, Division 12 of the California Streets and Highways Code (the "Act") by adoption
of Resolution No. 2015-79 on September 22, 2015, declaring its intention to form the Assessment District.
PENCO Engineering, Inc., Irvine, California, (the "Assessment Engineer"), prepared a written report which
contained among other things, the proposed assessment for each parcel of land in the Assessment District. The
written report was filed and preliminarily approved by the City Council by Resolution No. 2015-102, adopted
on November 24, 2015 (the "Engineer's Report"). On November 24, 2015, a public hearing was duly held as
noticed, and all persons interested and desiring to be heard were given an opportunity to speak and be heard,
and all matters pertaining to the levy were fully heard and considered by the City Council, and all oral
statements and all written protests or communications were duly considered. Following the public hearing, the
assessment ballots were tabulated by the Assessment Engineer and the City Clerk and it was found that a
majority protest as defined by Article XIIID of the California Constitution did not exist. On November 24,
2015 the City Council adopted its resolution confirming the proposed assessments. The City Council
confirmed a total assessment of $4,640,550.55 and recorded such confirmed assessments. After confirmation
and recordation, the assessments became liens against the various assessed parcels.
All property owners in the Assessment District were then given mailed notice of the opportunity to
pay all or a portion of their Assessments in cash after the recording of the Assessments. Originally, there were
268 assessed parcels with Assessments totaling $4,640,550.55. During the cash prepayment period, 85 parcels
fully prepaid their Assessments and 1 parcel made a partial prepayment. There remains $2,959,753 of unpaid
Assessments securing the Bonds (the "Assessments"). Because certain parcels were split after the formation of
the Assessment District, the Assessments are secured against 187 parcels. See "SECURITY FOR THE
BONDS."
Property Values and Value -to -Assessment Lien Ratios
The aggregate assessed value of the parcels in the City with unpaid Assessments, as shown in the
County of Orange assessor's roll for fiscal year 2017-18, was $223,141,407. The ratio of the assessed value of
such parcels to the total amount of the unpaid Assessments, is approximately 75.4' to 1. See "THE
ASSESSMENT DISTRICTValue-to-Lien Assessment Ratios" for certain value -to -lien information with
respect to the parcels within the Assessment District.
No Additional Bonds
The City is not authorized to issue additional bonds (other than the Bonds or any refunding bonds)
secured by the Assessments.
I Preliminary, subject to change.
22-43
The Improvements
Bond proceeds will primarily be used to provide financing to underground power, telephone and cable
facilities in the Improvement Area. The proposed underground utility improvements will provide conversion
to an upgraded utility system and will enhance neighborhood aesthetics, safety and reliability. See
APPENDIX B"ENGINEER'S REPORT."
Professionals Involved in the Offering
U.S. Bank National Association, Los Angeles, California, will act as Fiscal Agent under the Fiscal
Agent Agreement. Digital Assurance Certification, LLC, Orlando, Florida, will serve as the initial
Dissemination Agent under the City's Continuing Disclosure Agreement. Fieldman Rolapp & Associates,
Inc., Irvine, California, will act as Municipal Advisor to the City in connection with the Bonds. The legal
proceedings in connection with the issuance and delivery of the Bonds are subject to the approval as to their
legality of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond
Counsel and Disclosure Counsel. Certain legal matters will be passed on for the City by the City Attorney.
Certain legal matters will be passed upon for the Underwriter by its counsel, Nixon Peabody LLP, Los
Angeles, California. Other professional services have been performed by PENCO Engineering, Inc., Irvine,
California, as Assessment Engineer, and Willdan Financial Services, as Assessment District Consultant.
For information concerning financial or other interest which certain of the above-mentioned
professionals, advisors, counsel and agents may have in the offering of the Bonds, see "CONCLUDING
INFORMATIONFinancial Interests" herein.
Continuing Disclosure
The City has agreed to provide, or cause to be provided, to each nationally recognized municipal
securities information repository and any public or private repository or entity designated by the State as a state
repository for purposes of Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission, certain
annual financial information and operating data. The City has further agreed to provide notice of certain
enumerated events. These covenants have been made in order to assist the Underwriter in complying with
Rule 15c2 -12(b)(5). See "CONCLUDING INFORMATION Continuing Disclosure" herein and Appendix F
hereto for a description of the specific nature of the annual reports and notices of enumerated events to be
provided by the City.
Bond Owners' Risks
Certain events could affect the timely repayment of the principal of and interest on the Bonds when
due. See the section of this Official Statement entitled `BONDOWNERS' RISKS" for a discussion of certain
factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in
the Bonds. The purchase of the Bonds involves risks, and the Bonds are not suitable investments for some
types of investors. See `BONDOWNERS RISKS" herein.
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to
change.
Brief descriptions of the Bonds and the Fiscal Agent Agreement are included in this Official
Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references
herein to the Fiscal Agent Agreement, the Bonds and the constitution and laws of the State as well as the
proceedings of the City Council of the City, are qualified in their entirety by references to such documents,
22-44
laws and proceedings, and with respect to the Bonds, by reference to the Fiscal Agent Agreement. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the Fiscal Agent Agreement.
Copies of the Fiscal Agent Agreement, the Continuing Disclosure Agreement and other documents
and information referred to herein are available for inspection and (upon request and payment to the Fiscal
Agent of a charge for copying, mailing and handling) for delivery from the Fiscal Agent.
ESTIMATED SOURCES AND USES OF FUNDS
The Fiscal Agent will receive the proceeds from the sale of the Bonds upon delivery of such Bonds to
the purchasers thereof. The proceeds of the Bonds will be applied as set forth in the following table:
SOURCES
Par Amount of Bonds $
[Less] Original Issue [Discount]
Less Underwriter's Discount
Total Sources $
USES:
Improvement Fund(')
Costs of Issuance Fund(2)
Interest Account (3)
Reserve Fund
Total Uses $
(i) Amounts to be used to finance the construction of the Improvements.
«> Includes costs of issuance, such as Fiscal Agent, Bond Counsel and Disclosure Counsel fees and costs, printing costs and
other related costs for the issuance of Bonds, reimbursable expenses of the City, certain upfront design and engineering costs
and the costs of the formation of the Assessment District.
(3) To fund interest on the Bonds through approximately September 2, 2018.
THE BONDS
General
The $2,955,000 aggregate principal amount of the Bonds was authorized for issuance by a resolution
adopted by the City Council of the City and are being issued by the City pursuant to the Act and the Fiscal
Agent Agreement between the City and the Fiscal Agent.
The Bonds will be dated their date of delivery and mature on September 2 in the years and in the
amounts shown on the cover page of this Official Statement. Interest shall be payable semiannually on
March 2 and September 2 of each year until maturity commencing September 2, 2018. The Bonds are issued
as fully registered bonds, with authorized denominations of $5,000 and any increment of $5,000 in excess
thereof.
Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication
thereof unless (i) it is authenticated after a Record Date and on or before the immediately succeeding Interest
Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated
before the close of business on the first Record Date, in which event it shall bear interest from its dated date,
provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond will
bear interest from the Interest Payment Date to which interest has previously been paid or made available for
I Preliminary, subject to change.
22-45
payment thereon or from the date of original delivery of the Bonds, if no interest has previously been paid or
made available for payment on the Outstanding Bonds.
Interest on the Bonds is payable by the Fiscal Agent on each Interest Payment Date, until the principal
amount of a Bond including mandatory sinking fund payments thereon, has been paid or made available for
payment, to the registered Owner thereof at such registered Owner's address as it appears on the registration
books maintained by the Fiscal Agent at the close of the Business Day on the Record Date preceding the
Interest Payment Date. The Bonds will be held in book -entry form and registered in the name of Cede & Co.,
as nominee of The Depository Trust Company (`DTC"), all interest payments will be made directly to DTC
for distribution to the beneficial owners in accordance with DTC's procedures. See APPENDIX E`BOOK-
ENTRY ONLY SYSTEM" herein.
Redemption of Bonds'
Optional Redemption. The Bonds are subject to redemption prior to their stated maturity dates on any
date on and after September 2, 2028 from such maturities as selected by the City, from any source of funds
other than Prepayment of Assessments, including, but not limited to surplus monies on deposit in the
Improvement Fund, at a redemption price equal to the principal amount thereof to be redeemed, together with
accrued interest to the date of redemption, without premium.
Mandatory Redemption From Assessment Prepayments. Whenever, as of an Interest Payment Date,
there are sufficient funds in the Prepayment Account of the Redemption Fund from the proceeds of
prepayments of Assessments, the Bonds shall be called for redemption as provided in Part 11.1 of the
Improvement Bond Act of 1915 (the "1915 Act"). Each Bond, or any portion thereof, in the principal amount
of $5,000 or any integral multiple thereof, may be redeemed and paid in advance of maturity on any Interest
Payment Date in any year pro rata among maturities, by giving notice to the Owner thereof and by paying the
principal amount thereof, plus interest to the date of redemption, unless sooner surrendered, in which event
said interest will be paid to the date of payment, together with a redemption premium (expressed as
percentages of the principal amount of the Bonds to be redeemed) at the following redemption prices:
Redemption Date Redemption Prices
Interest Payment Dates on or prior to March 2, 2026 103%
September 2, 2026 and March 2, 2027 102
September 2, 2027 and March 2, 2028 101
September 2, 2028 and thereafter 100
Mandatory Sinking Fund Redemption. The outstanding Bonds maturing on September 2, are
subject to mandatory sinking fund redemption, in part, on September 2, and on each September 2
thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed,
together with accrued interest to the date of redemption, without premium, and from sinking payments as
follows:
I Preliminary, subject to change.
22-46
Bonds Maturing on September 2,
Sinking Fund Redemption Date
(September 2) Sinking Payments
(Maturity)
The amounts in the foregoing schedule(s) shall be reduced by the City pro rata among redemption
dates, in order to maintain substantially level debt service on the Bonds, as a result of any prior or partial
optional or other mandatory redemption of the Bonds.
Purchase of Bonds
In lieu of payment at maturity or redemption, moneys in the Redemption Fund may be used and
withdrawn by the Fiscal Agent for purchase of outstanding Bonds, upon the filing with the Fiscal Agent of an
Officer's Certificate requesting such purchase, at public or private sale as and when, and at such prices
(including brokerage and other charges) as such Officer's Certificate may provide, but in no event may Bonds
be purchased at a price in excess of the principal amount thereof, plus the premium, if any, which would be
paid upon redemption, plus interest accrued to the date of purchase.
Notice of Redemption
With respect to the Bonds held in book -entry form, notices of redemption will be mailed only to The
Depository Trust Company and not to any beneficial owner of the Bonds.
The Fiscal Agent shall cause notice of any redemption to be mailed by registered or certified mail,
postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the
securities depository and to certain information services, and to the respective registered Owners of any Bonds
designated for redemption, at their addresses appearing on the Bond registration books maintained by the
Fiscal Agent, but the actual receipt of any notice shall not be a condition precedent to such redemption and
failure to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the
redemption of such Bonds, or the cessation of interest on the redemption date.
A notice of redemption for optional redemption may be conditioned on the receipt by the City of
sufficient funds to effect the redemption. If sufficient funds are not received by the City by the redemption
date, the redemption shall not occur and the Bonds will remain outstanding under the Fiscal Agent Agreement.
If any redemption is cancelled due to lack of sufficient funds, the Fiscal Agent shall mail a notice to the
Bondowners stating that such redemption was cancelled and did not occur.
Selection of Bonds for Redemption
Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the
Bonds, the City shall select the Bonds for redemption in such a way that the ratio of Outstanding Bonds to
issued Bonds shall be approximately the same in each maturity of the Bonds insofar as possible. The Fiscal
Agent shall select the particular Bonds to be redeemed from each maturity by lot.
Refunding Bonds
Pursuant to the Refunding Act of 1984 for 1915 Improvement Act Bonds (Division 11.5 of the Streets
and Highways Code) (the "1984 Act"), the City may issue refunding bonds for the purpose of redeeming the
22-47
Bonds. The City may issue and sell refunding bonds without giving notice to and conducting a hearing for the
owners of property in the Assessment District or giving notice to the owners of the Bonds if the City Council
makes the findings required in the 1984 Act.
Registration, Exchange or Transfer
The registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register
by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon
surrender of such Bond for cancellation at the office of the Fiscal Agent, accompanied by delivery of a written
instrument of transfer in a form acceptable to the Fiscal Agent and duly executed by the Bondowner or his or
her duly authorized attorney.
Bonds may be exchanged at the office of the Fiscal Agent for a like aggregate principal amount of
Bonds of other authorized denominations of the same maturity. The Fiscal Agent will not charge the Owner
for any new Bond issued upon any exchange or transfer, but shall require the Owner requesting such exchange
or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or
transfer. The cost of printing any Bonds and any services rendered or any expenses incurred by the Fiscal
Agent in connection with any exchange or transfer shall be paid by the City as Administrative Expenses.
Whenever any Bond or Bonds shall be surrendered for registration of transfer or exchange, the City shall
execute, and the Fiscal Agent shall authenticate and deliver, a new Bond or Bonds of the same maturity for a
like aggregate principal amount; provided, that the Fiscal Agent shall not be required to register transfers or
make exchanges of Bonds (a) 15 days prior to the date established by the Fiscal Agent for selection of Bonds
for redemption, or (b) with respect to a Bond after such Bond has been selected for redemption.
22-48
Annual Debt Service
Table 1 below sets forth the annualized debt service on the Bonds based on the maturity schedule and
interest rates set forth on the cover page of this Official Statement assuming no earlier redemption thereof
(other than mandatory sinking fund redemption, if any).
TABLE 1
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
Annualized Debt Service
Year Ending
September 2 Principal Interest Total
Total
Source: Underwriter.
22-49
SECURITY FOR THE BONDS
Limited Obligation
The obligation of the City relating to the Bonds is not a general obligation of the City, but is a limited
obligation, payable solely from the Assessments and from the funds pledged therefor under the Fiscal Agent
Agreement. Neither the faith and credit nor the taxing power of the City, the County or the State of California,
or any political subdivision thereof, is pledged to the payment of the Bonds. Notwithstanding any other
provision of the Fiscal Agent Agreement, the City is not obligated to advance available surplus funds
from the City treasury to cure any deficiency in the Redemption Fund.
Assessment Liens and Installments
The Bonds are issued upon and secured by and payable solely from the unpaid Assessments on parcels
of property within the Assessment District together with interest thereon, and such unpaid Assessments,
together with interest thereon, constitute a fund for the redemption and payment of the principal, including
mandatory sinking fund payments, of the Bonds and the interest thereon and premium, if any. The Bonds are
secured by the moneys in the Assessment Fund, the Redemption Fund and the Reserve Fund created pursuant
to the Fiscal Agent Agreement. Amounts in the Reserve Fund will secure the payment of debt service on the
Bonds.
THE BONDS ARE NOT SECURED BY THE GENERAL TAXING POWER OF THE CITY,
THE COUNTY OF ORANGE OR THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL
SUBDIVISIONS, NOR IS THE FULL FAITH AND CREDIT OF THE CITY, THE COUNTY, THE
STATE OR ANY OF ITS POLITICAL SUBDIVISIONS PLEDGED TO THE PAYMENT OF THE
BONDS.
Although the unpaid Assessments constitute fixed liens on the lots and parcels assessed, they do not
constitute a personal indebtedness of the respective owners of such lots and parcels. There can be no assurance
as to the ability or the willingness of such owners to pay the unpaid Assessments when due. See
"BONDOWNERS' RISKS" herein.
The unpaid Assessments will be collected in annual installments, together with interest, on the County
secured tax roll on which general taxes on real property are collected (the "Assessment Installments"). The
City will include in the annual installments an amount for the payment of administrative expenses in the
amount set forth in the Engineer's Report, such amounts are not available to pay debt service on the Bonds.
The Assessment Installments are payable and become delinquent at the same time and in the same
proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general
taxes. The properties upon which the Assessments are levied are subject to the same provisions for sale and
redemption as are properties for nonpayment of general taxes. The City shall immediately deposit the annual
Assessment Installments into the Assessment Fund held by the City upon receipt from the County. Amounts
in the Assessment Fund shall secure the payment of debt service on the Bonds. On or prior to the first day of
March and September of each year, the City shall transfer to the Fiscal Agent for deposit into the Redemption
Fund and the Reserve Fund the amount required in the Fiscal Agent Agreement.
The Assessment Installments billed against each of the lots and parcels in the Assessment District
each year represent a pro rata share of the total principal, including mandatory sinking fund payments, and
interest coming due on all of the Bonds that year, including any amounts needed to replenish the Reserve
Fund. The amount billed against each lot or parcel is based on the percentage which the unpaid Assessment
against the property bears to the total of unpaid Assessments in the Assessment District. The failure of a
property owner to pay an annual Assessment Installment will not result in an increase in Assessment
Installments against other property in the Assessment District.
22-50
Each property owner has a statutory right to prepay the Assessment on a parcel in whole or in part on
any date. Amounts received as prepaid Assessments will be deposited in the Prepayment Account of the
Redemption Fund and shall be used solely for the purpose of redeeming Bonds. See "THE BONDS
Redemption of Bonds Mandatory Redemptionfrom Assessment Prepayments."
Limited Obligation Upon Delinquency
THE BONDS ARE LIMITED OBLIGATIONS OF THE CITY AND ARE PAYABLE SOLELY
FROM THE ASSESSMENTS AND THE ASSETS PLEDGED THEREFOR UNDER THE FISCAL AGENT
AGREEMENT. THE CITY HAS DETERMINED NOT TO OBLIGATE ITSELF AND HAS NO LEGAL
OR MORAL OBLIGATION TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY TO
PAY BOND DEBT SERVICE IN THE EVENT OF DELINQUENT ASSESSMENT INSTALLMENTS.
BONDOWNERS SHOULD NOT RELY UPON THE CITY TO ADVANCE AVAILABLE FUNDS FROM
THE CITY TREASURY TO THE REDEMPTION FUND. NOTWITHSTANDING THE FOREGOING,
THE CITY MAY, AT ITS SOLE OPTION AND IN ITS SOLE DISCRETION, ELECT TO ADVANCE
SUCH FUNDS.
Reserve Fund
The Fiscal Agent Agreement provides that a Reserve Fund must be maintained. As established by the
Fiscal Agent Agreement, the Reserve Fund is to be held by the Fiscal Agent. The amount to be maintained in
the Reserve Fund is to equal the Reserve Requirement. The Reserve Requirement means 5% of the principal
amount of the Bonds. Moneys in the Reserve Fund shall be held for the benefit of the Owners of the Bonds as
a reserve for the payment of the principal of, including mandatory sinking fund payments, and interest on the
Bonds and shall be subject to a lien in favor of the Owners of the Bonds. See APPENDIX C"SUMMARY
OF FISCAL AGENT AGREEMENT."
In the event an Assessment is prepaid, in whole or in part, the City shall transfer such payment to the
Fiscal Agent for the redemption of Bonds.
For Bond redemptions, the amount of each Assessment prepaid shall be reduced by the amount the
Fiscal Agent is required to transfer from the Reserve Fund for deposit in the Prepayment Account of the
Redemption Fund. Under the Fiscal Agent Agreement the Fiscal Agent is to transfer the portion of the balance
then in the Reserve Fund equal to the proportion that the Assessment prepaid bears to the total of all
Assessments remaining unpaid as of such date. The City shall notify, or shall cause the Fiscal Agent to be
notified of the amount so transferred. After each such transfer, the Reserve Requirement shall be reduced by
the amount of the related transfer.
Whenever there are insufficient funds in the Redemption Fund to meet the next maturing installment
of principal of, including mandatory sinking fund payments, or interest on the Bonds, the Fiscal Agent shall
transfer from the Reserve Fund for deposit into the Redemption Fund an amount necessary to satisfy such
deficiency. The City agrees in the Fiscal Agent Agreement that if such insufficiency was caused by delinquent
payment of Assessment Installments, then an amount equal to the amount so transferred shall be reimbursed
and transferred by the City to the Fiscal Agent, for deposit in the Reserve Fund from the proceeds of
redemption or sale of the delinquent parcel.
If at any time the amount of interest earned by the investment of any portion of the Reserve Fund,
together with the principal amount in the Reserve Fund, shall exceed the Reserve Requirement, such excess
shall, at the written direction of the City, be transferred by the Fiscal Agent to the Redemption Fund and shall
be credited by the City upon the unpaid Assessments in the manner set for the in the 1913 Act.
Whenever the balance in the Reserve Fund and the Redemption Fund is sufficient to retire all the
remaining outstanding Bonds, the Fiscal Agent shall transfer at the written direction of the City the balance in
22-51
the Reserve Fund to the Redemption Fund and the City shall cease the collection of the principal and interest
on the unpaid Assessments. In such case, the City shall credit the balance so transferred against the
Assessments remaining unpaid in the manner set forth in the 1915 Act.
THE CITY HAS NO OBLIGATION TO REPLENISH THE RESERVE FUND EXCEPT TO THE
EXTENT THAT DELINQUENT ASSESSMENT INSTALLMENTS ARE PAID OR PROCEEDS FROM
FORECLOSURE SALES ARE REALIZED.
Covenant to Foreclose and Court Foreclosure Proceedings
The 1913 Act provides that in the event any Assessment or installment thereof or any interest thereon
is not paid when due, the City may order the institution of a court action to foreclose the lien of the unpaid
Assessment. In such an action, the real property subject to the unpaid Assessment may be sold at judicial
foreclosure sale. This foreclosure sale procedure is not mandatory. However, pursuant to the Fiscal Agent
Agreement, the City will review the public records of the County of Orange, California, in connection with the
collection of the Assessment Installments not later than August 1 of each year to determine the amount of
Assessment Installments collected in the prior Fiscal Year. If the City determines that any parcel or parcels are
delinquent in the payment of Assessment Installments, then the City will cause judicial foreclosure
proceedings to be filed in the Superior Court not later than December 1 of each year, and will prosecute
diligently such foreclosure proceedings to judgment and judicial foreclosure sale, provided, however, the
commencement of any foreclosure action may be deferred in the sole discretion of the City if, and only so long
as, the amount in the Reserve Fund is not less than seventy percent (70%) of the Reserve Requirement.
The 1913 Act provides that the court in a foreclosure proceeding has the power to order property
securing delinquent Assessment Installments to be sold for an amount not less than all Assessment
Installments, interest, penalties, costs, fees and other charges that are delinquent at the time the foreclosure
action is ordered and certain other fees and amounts as provided in the 1913 Act. The court may also include
subsequent delinquent Assessment Installments and all other delinquent amounts.
If the property to be sold fails to sell for the minimum price described above, the City may petition the
court to modify the judgment so that the property may be sold at a lesser price or without a minimum price. In
certain circumstances, the court may modify the judgment after a hearing if the court makes certain
determinations, including, but not limited to, a determination that the sale at less than the minimum price will
not result in an ultimate loss to the Owners of the Bonds, or a determination that the Owners of at least 75% of
the principal amount of the Bonds outstanding have consented to the petition and the sale will not result in an
ultimate loss to the nonconsenting Bond Owners. Neither the property owner, nor any holder of a security
interest in the property, nor any defendant in the foreclosure action, nor any agent thereof may purchase the
property at the foreclosure sale for less than the minimum price.
For any lot or parcel with not more than 4 dwelling units, a period of 140 days must elapse after the
date of the notice of levy of the interest in real property is served on the judgment debtor before the sale of
such lot or parcel can be made. However, pursuant to Streets and Highways Code Section 8832, the 140 day
period may be shortened to 20 days for undeveloped property. If the judgment debtor fails to redeem, and if
the purchaser at the sale is the judgment creditor (e.g., the City), an action may be commenced by the
delinquent property owner within 90 days after the date of sale to set aside such sale.
In the event court foreclosure proceedings are commenced by the City, there may be delays in
payments to Owners of the Bonds pending prosecution of the foreclosure proceedings to completion,
including the receipt of the City of the proceeds of the foreclosure sale. It is also possible that no
qualified bid will be received at the foreclosure sale. See "BONDOWNERS' RISKS" herein.
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Priority of Assessment Lien
The Assessments (and any further assessment or reassessment) and each installment thereof and any
interest and penalties thereon constitute a lien against the lots and parcels of land on which they were imposed
until paid. Such lien has priority over all fixed special assessment liens which may thereafter be created
against the property, and also has priority over all private liens, including the lien of any mortgage or deed of
trust whenever created. Such lien is co -equal to and independent of the lien for general taxes. See "THE
ASSESSMENT DISTRICTDirect and Overlapping Indebtedness" and `BONDOWNERS' RISKS
FDIC/Federal Government Interests in Parcels."
No Additional Bonds
The City is not authorized to issue additional bonds (other than the Bonds or any refunding bonds)
secured by the Assessments. See "THE BONDSRefunding Bonds" above.
THE ASSESSMENT DISTRICT
Description of the Assessment District
The property in the Assessment District is zoned residential and commercial and consists of a variety
of vacant property and completed structures. Originally, there were 268 assessed parcels with Assessments
totaling $4,640,550.55. During the cash prepayment period, 85 parcels fully prepaid their Assessments and 1
parcel made a partial prepayment. There remains $2,959,753 of unpaid Assessments secured against the
remaining parcels within the Assessment District. The first installment of Assessments is expected to be
levied in Fiscal Year 2018-19. The Assessment District is located in the central portion of the City south of
State Highway 1 between Avocado Avenue and Carnation Avenue. The aggregate assessed value of parcels in
the Assessment District with unpaid Assessments was $223,141,407 for Fiscal Year 2017-18. The
Improvements financed by the Assessment District will consist of the design and undergrounding of certain
utilities within the Assessment District. Costs of the Improvements is estimated to be $4,640,550.40. See
"ESTIMATED SOURCES AND USES OF FUNDS." Any surplus monies on deposit in the Improvement
Fund may be used to redeem Bonds. See "THE BONDS—Redemption of Bonds."
Description of Improvements
The Assessment District was formed to provide financing to underground power, telephone and cable
facilities in the area generally bounded by Bayside Dr., Avocado Ave., Pacific Coast Highway & Carnation
Ave. The proposed underground utility improvements will provide conversion to an upgraded utility system
and will enhance neighborhood aesthetics, safety and reliability.
The following table shows a summary of the District Improvement Project Cost Estimate as contained
in the Final Engineer's Report prepared by the Assessment Engineer, a copy of which is attached hereto as
Appendix B.
22-53
TABLE 2
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
ENGINEER'S ESTIMATE OF COSTS AND EXPENSES
UTILITY ENGINEERING & CONSTRUCTION
Southern California Edison
AT&T
Time Warner
Contingency 10%
INCIDENTAL EXPENSES(')
FINANCIAL COSTS(2)
Total Construction:
Total Incidental Expenses:
Total Construction and Incidental Expenses:
Total Financial Costs( )
TOTAL ESTIMATE:
$ 2,550,000.00
799,864.00
152,000.00
350J 86 40
S 3,852,050.40
S 452,500.00
S 4,304,550.40
S 336,000.00
4.640.550.40
(1) Includes costs for inspection, engineering, administration, printing, consultants and legal fees.
(2) Includes Bond Reserve (5.0%), Underwriter's Discount (1%) and Capitalized Interest (1.3%).
(3) Amount shown does not include savings due to payments received during cash collection period.
Source: Assessment Engineer's Report.
Formation Proceedings
The City Council has taken proceedings under the 1913 Act for the formation of the Assessment
District and has confirmed the Assessments, which Assessments and a related diagram were recorded in the
office of the Superintendent of Streets, and with the County Recorder of the County. A notice of assessment,
as prescribed in Section 3114 of the Streets and Highways Code, was recorded with the County Recorder of
the County, whereupon the Assessments attached as a lien upon the property assessed within the Assessment
District as provided in Section 3115 of the Streets and Highways Code. On November 24, 2015 the City
Council conducted a duly noticed public hearing regarding the formation of the Assessment District. As of the
close of the public hearing, there was no majority protest. Property owners were then given an opportunity to
prepay their assessments in cash or to pay them in annual installments following the issuance of the Bonds. At
the end of the cash collection period, a list of unpaid assessments was filed with the Director of Finance of the
City, acting as treasurer pursuant to Section 8620 of the 1915 Act totaling $2,959,753.
Allocation of Assessments
The Assessment District was formed under the authority of the Act and Article XIIID of the California
State Constitution, together with its implementing legislation (collectively "Proposition 218"), which require
that local agencies levy assessments according to the special benefit and prescribe the procedures for such
levy. Costs and expenses of the proposed Improvements must be apportioned against the parcels in the
Assessment District by a formula which proportionally and equitably distributes the costs in direct proportion
to the estimated special benefits these parcels receive from the Improvements. Neither the Act or Proposition
218 specifies the method that is used to apportion the benefits.
In the Engineer's Report, the engineer identified the benefits the proposed Improvements will render
to the properties within the Assessment District and determined that the property owners will receive a unique
and special benefit distinguished from general benefits to the area at large. The unique and special benefit
22-54
from the Improvements identified in the Engineer's Report is the enhancement of neighborhood aesthetics,
safety and reliability which will provide a higher level of utility service and increase the desirability and
specifically enhance the values of the properties within the Assessment District. See APPENDIX B
"ENGINEER'S REPORT" herein for a description of the method of apportionment of the assessments.
Assessments range from a high of $25,583.30 to a low of $7,007.84 depending on the special benefit each
property will receive from the Improvements as set forth in the Engineer's Report confirmed by the City
Council.
Maximum Annual Assessment for Administrative Costs and Expenses
The costs associated with administering the Assessment District will be spread to each parcel in the
Assessment District with unpaid Assessments on a pro -rata basis. Administrative costs for the Assessment
District cannot exceed a total of $50 per parcel per year, subject to an annual increase based on the U.S.
Consumer Price Index, All Urban Consumers, for Los Angeles -Riverside -Orange County, as of January 1 of
each year. Costs of administering the Assessment District will first be paid in Fiscal Year 2018-19.
Value -to -Assessment Lien Ratios
The value of the land within the Assessment District with unpaid Assessments is significant because
in the event of a delinquency in the payment of Assessment Installments, the Assessment District may
foreclose only against delinquent parcels. The assessed value of the property within the Assessment District
with unpaid Assessments was $223,141,407 for fiscal year 2017-2018. Based on fiscal year 2017-2018
assessed values and the unpaid Assessments, the parcels within the Assessment District with unpaid
Assessments have an aggregated assessed value -to -assessment lien ratio of 75.4* to 1. Table 3 below
categorizes the parcels with unpaid Assessments within the Assessment District by value -to -lien range.
TABLE 3
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
VALUE -TO -ASSESSMENT LIEN RATIOS
I Preliminary, subject to change.
22-55
Fiscal Year 2017-I8Assessed Value")
Number
Value to of
Assessment
Overlapping
Percent of
Lien Radio Parcels
Land
Structure
Total
Lien
Debt(2)
Lien
Greater than 49.99: 1 119
$ 157,663,594
$ 36,164,177
$ 193,827,771
$ 1,663,204
$ 1,921,057
56.19%
40.00:1 to 49.99:1 12
7,232,406
2,214,981
9,447,387
215,037
93,635
7.27
30.00:1 to 39.99:1 15
6,773,272
2,995,939
9,769,211
266,242
96,824
9.00
20.00:1 to 29.99:1 9
2,870,178
1,147,608
4,017,786
158,001
39,838
5.34
10.00:1 to 19.99:1 10
2,127,634
1,058,355
3,185,989
206,555
31,577
6.98
5.00:1 to9.99:1 16
1,371,131
1,053,862
2,424,993
337,274
24,034
11.40
Less trtan 5.00:1 6
369,545
98,725
468,270
113,439
4,641
3.82
Totals(') 187
$ 178,407,760
$ 44,733,647
$ 223,141,407
$ 2,959,753
$ 2,211,606
100.00%
(1) Assessed Value and Ow ersldp
as of January 1,
2017 as provided by the County of Orange
Assessor.
M Overlapping Debt provided by
California Municipal Statistics, Inc.
0) Totals may not tie due to rounding.
Source: Orange County Assessor's
Offices compiled
by Willdan Financial
Services.
I Preliminary, subject to change.
22-55
Table 4 below categorizes the parcels with unpaid Assessments within the Assessment District by land use.
TABLE 4
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
VALUE -TO -LIEN BY LAND USE
Fiscal Year 2017-18 Assessed Value0l
Number
Total Direct and
Of
Assessment
Overlapping
Overlapping
Value to
Percentage
Land Use Category Parcels Land Structure Total
Lien
Debt(2)
Debt
Lien(3)
ofLien
Single Family Residential 144 $ 151,151,885 $ 36,625,310 $ 187,777,195
$ 2,105,658
$ 1,861,089
$ 3,966,747
47.34
71.14%
Multi -Family Residential 31 22,065,539 5,822,634 27,888,173
657,427
276,404
933,831
29.86
22.21
Commercial 12 5,190,336 2,285,703 7,476,039
196,668
74,113
270,781
27.61
6.65
Totals(4) 187 $ 178,407,760 $ 44,733,647 $ 223,141,407
$ 2,959,753
$ 2,211,606
$ 5,171,359
43.15
100.00%
Assessed Value and Ownership as of January 1, 2017 as provided by the County of Orange Assessor.
«� Overlapping Debt provided by California Municipal Statistics, Inc.
0) Represents "Total Assessed Value" divided by the "Total Direct and Overlapping Debt"
(4) Totals may not tie due to rounding.
Source: Orange County Assessor's Offices compiled by Willdan Financial Services.
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Largest Property Owners
There is very little concentrated ownership within the Assessment District. No single owned is expected to be responsible for more than 1.70%
of the total unpaid Assessments. Table 5 below sets forth the top ten property owners within the Assessment District by share of unpaid Assessments.
TABLE 5
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
TOP 10 PROPERTY OWNERS
t't Assessed Value and Ownership as of January 1, 2017 as provided by the County of Orange Assessor
«> Property ownership as listed on the County of Orange secured tax roll for Fiscal Year 2017-18.
t3> Represents "Total Assessed Value" divided by "Assessment Lien."
(4) Totals and subtotals may not tie due to rounding.
Source: Orange County Assessor's Offices compiled by Willdan Financial Services
22-57
Fiscal Year 2017-18 Assessed Value( )
Number of
Assessment
Percent of
Value -to -Lien
Property Owner (2)
Parcels
Land
Structure
Total
Lien
Lien
Ratio(3)
1 Schulein Family LTD Partnership
3
$ 350,343
$ 437,235
$ 787,578
$ 50,431
1.70%
15.62
2 Presant, Crary A TR
2
546,151
147,292
693,443
43,140
1.46
16.07
3 Tremaine, Brett A TR
2
2,612,457
105,839
2,718,296
32,915
1.11
82.59
4 Blackbird Investments
2
819,757
266,173
1,085,930
29,746
1.01
36.51
5 Pension Administrators Inc.
2
185,623
243,687
429,310
29,356
0.99
14.62
6 Rostvold, Virginia F TR
1
154,181
100,133
254,314
27,580
0.93
9.22
7 Colesworthy, Theresa L TR
1
84,221
40,573
124,794
27,577
0.93
4.53
8 Miller, StephanM
1
722,114
68,102
790,216
26,787
0.91
29.50
9 Kianipur, Hamid & Amethyst B
1
1,016,808
339,768
1,356,576
26,295
0.89
51.59
10 Miller, Thomas A TR & Miller Living TR
2
3,777,594
668,406
4,446,000
25,815
0.87
172.22
Subtotal (4).
17
$ 10,269,249
$ 2,417,208
$ 12,686,457
$ 319,642
10.80%
39.69
All Other Property Owners
170
$ 168,138,511
$ 42,316,439
$ 210,454,950
$ 2,640,111
89.20%
79.71
Totals(4) :
187
$ 178,407,760
$ 43,733,647
$ 223,141,407
$ 2,959,753
100.00%
75.39
t't Assessed Value and Ownership as of January 1, 2017 as provided by the County of Orange Assessor
«> Property ownership as listed on the County of Orange secured tax roll for Fiscal Year 2017-18.
t3> Represents "Total Assessed Value" divided by "Assessment Lien."
(4) Totals and subtotals may not tie due to rounding.
Source: Orange County Assessor's Offices compiled by Willdan Financial Services
22-57
Historical Assessed Values
The following table summarizes the historical and current assessed values within the Assessment
District over the past 5 Fiscal Years.
TABLE 6
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
HISTORIC ASSESSED VALUE
Increase/(Decrease)
Fiscal
Aggregate
in Property
Year
Assessed Value
Assessed Value
2013-14
$170,245,241
N/A
2014-15
176,235,386
3.52%
2015-16
195,589,153
10.98
2016-17
210,731,342
7.74
2017-18
223,141,407
5.89
Sources: Orange County Assessor's office as compiled by Willdan Financial Services.
Direct and Overlapping Indebtedness
The ability of an owner of land within the Assessment District to pay the Assessment Installments
could be affected by the existence of other taxes and assessments imposed upon the property. These other
taxes and assessments securing the repayment of overlapping debt in the Assessment District are set forth in
Table 7 (the "Debt Report"). The Debt Report sets forth those entities which have issued debt and does not
include entities which only levy or assess fees, charges, ad valorem taxes or special taxes. See Table 7 below
for all entities levying taxes, assessments or other charges on property in the City. The Debt Report does not
include the principal amount of the Bonds. The Debt Report has been derived from data assembled and
reported to the City by California Municipal Statistics, Inc. as of May 1, 2018. The Debt Report includes
information for all parcels with unpaid Assessments. Neither the City nor the Underwriter has independently
verified the information in the Debt Report and neither guarantees its completeness or accuracy.
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TABLE 7
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
DIRECT AND OVERLAPPING ASSESSMENT INDEBTEDNESS
2017-18 Local Secured Assessed Valuation: $223,141,407
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
%Applicable
Debt Outstanding
Metropolitan Water District General Obligation Bonds
0.008%
$ 4,935
Coast Community College District General Obligation Bonds
0.168
1,314,801
Newport Mesa Unified School District General Obligation Bonds
0.335
891,869
City of Newport Beach Assessment District No. 117
100.000
-0)
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
$ 2,211,605
OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations
0.040%
$ 87,911
Orange County Pension Obligation Bonds
0.040
185,721
Orange County Board of Education Certificates of Participation
0.040
5,778
Coast Community College District General Fund Obligations
0.168
5,528
City of Newport Beach Certificates of Participation
0.415
445,662
TOTAL OVERLAPPING GENERAL FUND DEBT
$ 730,600
COMBINED TOTAL DEBT
$ 2,942,205(2)
Ratios to 2017-18 Assessed Valuation:
Direct Debt
- %
Total Direct and Overlapping Tax and Assessment Debt
0.99%
Combined Total Debt
1.32%
)') Excludes unpaid Assessments.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue
and non -bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
BONDOWNERS' RISKS
General
In order to pay debt service on the Bonds, it is necessary that unpaid Assessment Installments on
parcels within the City are paid in a timely manner. The Reserve Fund will be used to pay debt service on the
Bonds if delinquent Assessment Installments should occur. The Assessments are a lien on the parcels of land
and the City has covenanted to institute foreclosure proceedings under certain circumstances against parcels
with delinquent Assessment Installments.
Failure by owners of the parcels to pay Assessment Installments when due, depletion of the Reserve
Fund or the inability of the City to sell parcels which have been subject to foreclosure proceedings for amounts
sufficient to cover the delinquent Assessment Installments for such parcels may result in the inability of the
City to make full or punctual payments of debt service on the Bonds, and Bondowners would therefore be
adversely affected.
The 1915 Act provides that except under certain circumstances property is to be sold upon foreclosure
at a Minimum Price. "Minimum Price" as defined in the 1915 Act is the amount equal to the delinquent
installments of principal or interest of the assessment or assessment, together with all interest penalties, costs,
fees, charges and other amounts more fully detailed in the 1915 Act. The court may authorize a sale at less
than the Minimum Price if the court determines that sale at less than the Minimum Price will not result in an
ultimate loss to the Bondowners or, under certain circumstances, if owners of 75% or more of the outstanding
Bonds consent to such sale. There can be no assurance that foreclosure proceedings will occur in a timely
22-59
manner so as to avoid depletion of the Reserve Fund and a delay in payments of debt service on the Bonds.
See "SECURITY FOR THE BONDS—Covenant to Foreclose and Court Foreclosure Proceedings."
Unpaid Assessment Installments do not constitute a personal indebtedness of the owners of the parcels
within the Assessment District. There is no assurance the owners will be able to pay the Assessment
Installments or that they will pay such installments even though financially able to do so.
Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real
estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the
market value of real property in the vicinity of the Assessment District, the supply of or demand for
competitive properties in such area, and the market value of residential property or buildings and/or sites in the
event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental
rules and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes and floods),
which may result in uninsured losses.
No assurance can be given that the individual homeowners will pay Assessments in the future or that
they will be able to pay such Assessments on a timely basis. See "Bankruptcy and Foreclosure" below, for a
discussion of certain limitations on the City's ability to pursue judicial proceedings with respect to delinquent
parcels.
Limited Obligations
The Bonds and related interest are not payable from the general funds of the City. Except with respect
to the Assessments, the credit and the taxing power of the City is not pledged for the payment of principal or
interest of the Bonds, and, except as provided in the Fiscal Agent Agreement, no Owner of the Bonds may
compel the exercise of any taxing power by the City or force the forfeiture of any City property. The principal
of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge,
lien or encumbrance upon any of the City's property or upon any of the City's income, receipts or revenues,
except the Assessments and other amounts pledged under the Fiscal Agent Agreement.
Delinquency Resulting in Ultimate or Temporary Loss on Bonds
If a temporary deficiency occurs in the Redemption Fund with which to pay the principal of or interest
on Bonds that have then matured, or the principal and interest on Bonds coming due during the current year,
unless it appears to the Treasurer that there will be an ultimate loss to the Bondowners, the Treasurer shall
cause the Fiscal Agent to pay the principal of Bonds which have matured as presented and make interest
payments on the Bonds when due, as long as there are available funds in the Redemption Fund, in the order of
priority and as required by the Fiscal Agent Agreement. If it appears to the Treasurer that there is a danger of
an ultimate loss accruing to the Bondowners for any reason, the Treasurer is required pursuant to the 1915 Act
to withhold payment on all matured Bonds and interest on all Bonds and report the facts to the City so that the
City may take proper action to equitably protect all Bondowners. See APPENDIX C"SUMMARY OF
FISCAL AGENT AGREEMENT."
Non -Cash Payments of Assessments
The 1915 Act may permit the owner of a parcel that is subject to an unpaid Assessment Installment to
tender any Bond secured by such Assessment in payment or partial payment of any installment of the
Assessment or interest or penalties thereon which may be due or payable. A Bond so tendered is to be
accepted at the par amount thereof and credit is to be given for any interest thereon accrued to the date of the
tender. Thus, if Bonds can be purchased at a discount, it may be to the advantage of a property owner to pay
amounts due with respect to an assessment by tendering a Bond. Such a practice would decrease the cash flow
22-60
available to the City to make payments with respect to other Bonds then outstanding and could result in a
default in payment on the Bonds.
Limited City Obligation Upon Delinquency
Pursuant to the 1915 Act, the City has elected not to be obligated to advance funds from the treasury
of the City for delinquent Assessment Installments. The only obligation of the City with respect to such
delinquencies and the consequent deficiencies in the Redemption Fund is to advance money to the Redemption
Fund from the Reserve Fund. The City has no obligation to replenish the Reserve Fund except to the extent
that delinquent Assessment Installments are paid or proceeds from foreclosure sales are realized. There is no
assurance that the balance in the Reserve Fund will always be adequate to pay all delinquent Assessment
Installments and if during the period of delinquency there are insufficient funds in the Reserve Fund, a delay
may occur in payments to the Bondowners.
Disclosures to Future Purchasers
The willingness or ability of an owner of a parcel to pay the Assessments even if the value of the
parcel is sufficient may be affected by whether or not the owner was given due notice of the Assessments
authorization at the time the owner purchased the parcel, was informed of the amount of the Assessments on
the parcel and the risk of such a levy, and, at the time of such a levy, has the ability to pay it as well as pay
other expenses and obligations. The City has caused a notice of the Assessment lien to be recorded in the
Office of the Recorder for the County against each parcel. While title companies normally refer to such
notices in title reports, there can be no guarantee that such reference will be made or, if made, that a
prospective purchaser or lender will consider such Assessments obligation in the purchase of a property within
the Assessment District or lending of money thereon.
Payment of the Assessments is not a Personal Obligation of the Owners
An owner of a parcel subject to an Assessment is not personally obligated to pay such Assessment.
Rather, the Assessment is an obligation which is secured only by a lien against the parcel. If the value of a
parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the
Assessment, the City has no recourse against the owner.
Property Values
The value of the property within the Assessment District is a critical factor in determining the
investment quality of the Bonds. If a property owner is delinquent in the payment of Assessment Installments,
the Assessment District's only remedy is to commence foreclosure proceedings against the delinquent parcel in
an attempt to obtain funds to pay the delinquent Assessment Installments. Reductions in property values due
to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use
regulations, delays in development or other events will adversely impact the security underlying the
assessments. See "THE ASSESSMENT DISTRICTValue-to-Assessment Lien ratios" herein.
The development and marketing of land within the Assessment District may be particularly dependent
on factors which are unique to Southern California. Between 2007 and 2012, the real estate market in
Southern California experienced a significant downturn with taxable values dropping significantly and many
homeowners and developers experiencing foreclosure, bankruptcy and other financial strains. In 2013 the real
estate market in Southern California began to stabilize and the taxable value of real property in Southern
California has been increasing ever since. The City can make no assurance with respect to whether taxable
values of real property will decline in the future.
The assessed values set forth in this Official Statement do not represent market values arrived at
through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current
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owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an
increase of more than 2% per Fiscal Year. No assurance can be given that a parcel could actually be sold for
its assessed value. Additionally, market values within the Assessment District could be impacted by a failure
to complete the Improvements in a timely manner.
No assurance can be given that any bid will be received for a parcel with delinquent Assessment
Installments offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all
delinquent Assessment Installments. See "SECURITY FOR THE BONDS—Covenant to Foreclose and Court
Foreclosure Proceedings."
Bankruptcy and Foreclosure
The payment of Assessments and the ability of the City to foreclose the lien of delinquent unpaid
Assessment Installments, as discussed in the section entitled "SECURITY FOR THE BONDS—Covenant to
Foreclose and Court Foreclosure Proceedings" herein, may be limited by bankruptcy, insolvency, or other laws
generally affecting creditors' rights or by the law of the State of California relating to judicial foreclosure. In
addition, the prosecution of a foreclosure could be delayed due to crowded local court calendars or procedural
delays.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including
Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal
instruments by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors
generally.
Although bankruptcy proceedings would not cause the Assessments to become extinguished,
bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings
and could result in delinquent Assessment Installments not being paid in full. Where property is encumbered
by liens securing mortgage loans, it is highly probable that bankruptcy of a property owner would delay
foreclosure for an extended period of time. Such a delay would increase the likelihood of a delay or default in
payment of the principal and interest on the Bonds.
FDIC/Federal Government Interests in Parcels
The ability of the City to collect interest and penalties specified by the 1915 Act and to foreclose the
lien of delinquent Assessment Installments may be limited in certain respects with regard to parcels in which
the Federal Deposit Insurance Corporation (the "FDIC") has or obtains an interest. Specifically, in the event
that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the
applicable Assessment Installment is not paid, the remedies available to the City may be constrained. The
FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement")
provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC
acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is
appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non -ad
valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize
the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had
an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with
respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed
out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any
penalties, fines or similar claims imposed for the non-payment of taxes.
If a parcel with unpaid Assessments within the Assessment District is owned by a federal
governmental entity, or a private deed of trust secured by a parcel with unpaid Assessments within the
Assessment District is owned by a federal governmental entity, the ability to foreclose on the parcel to collect
delinquent Assessments may be limited. Federal courts have held that, based on the supremacy clause of the
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United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency
cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government
interest. This means that, unless Congress has otherwise provided, if a federal governmental entity owns a
parcel with unpaid Assessments within the Assessment District but does not pay taxes and assessments levied
on the parcel (including Assessments), the applicable state and local governments cannot foreclose on the
parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest
in the parcel and the City wishes to foreclose on the parcel as a result of delinquent Assessments, the property
cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and
assessments on a parity with the Assessments and preserve the federal government's mortgage interest. In
Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that
the Federal National Mortgage Association (`FNMA") is a federal instrumentality for purposes of this
doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held
by FNMA constitutes an exercise of state power over property of the United States.
The City has not undertaken to determine whether any federal governmental entity currently has, or is
likely to acquire, any interest (including a mortgage interest) in any of the parcels with unpaid Assessments
within the Assessment District, and therefore expresses no view concerning the likelihood that the risks
described above will materialize while the Bonds are outstanding.
The City's remedies may also be limited in the case of delinquent Assessment Installments with
respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug
Enforcement Administration) have or obtain an interest.
The City is unable to predict what effect the application of the Policy Statement would have in the
event of a delinquency with respect to a portion of the parcels in which the FDIC has or obtains an interest,
although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or
delay the foreclosure sale.
No Acceleration Provision
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a
payment default or other default under the Bonds or the Fiscal Agent Agreement or in the event interest on the
Bonds becomes included in gross income for federal income tax purposes. See "Limitations on Remedies"
below.
Limitation on Remedies
Remedies available to the owners of the Bonds may be limited by a variety of factors and may be
inadequate to assure the timely payment of principal of and interest on the Bonds.
Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Fiscal Agent
Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of
creditors' rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of
certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights
of the owners of the Bonds.
Natural Disasters
The Assessment District, like many California communities, may be subject to unpredictable seismic
activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic
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activity represents a potential risk for damage to buildings, roads and property within the Assessment District.
In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such
event. The property within the Assessment District is not located in an Alquist Priolo Earthquake Study Zone
though it is located in close proximity to the San Andreas fault. The Assessment District is not located in a
flood plain area.
In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant
damage to both property and infrastructure in the Assessment District. As a result, a substantial portion of the
property owners may be unable or unwilling to pay the Assessment Installments when due. In addition, the
value of land in the Assessment District could be diminished in the aftermath of such a natural disaster,
reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the
Assessment Installments.
Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel,
other less common claims may also be relevant. The value of a parcel may be reduced as a result of a claim
with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law
to remedy conditions 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 "Super Fund Act", is the most well-known and widely applicable of these laws, but
California laws with regard to hazardous substances are also stringent and similar in effect. Under many of
these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether
or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The
effect, therefore, should any of the parcels within the Assessment District be affected by a hazardous
substance, is to reduce the marketability and value by the costs of remedying the condition because the
prospective purchaser of such a parcel will, upon becoming the owner of such parcel, become obligated to
remedy the condition just as the seller of such a parcel is.
Limited 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. Although the City has committed to
provide certain statutorily -required financial and operating information along with notice of certain
enumerated events, there can be no assurance that such information will be available to Bondowners on a
timely basis. The failure to provide the required annual financial information or enumerated event notices does
not give rise to monetary damages but merely an action for specific performance. Occasionally, because of
general market conditions, lack of current information, the absence of a credit rating for the Bonds or because
of adverse history or economic prospects connected with a particular issue, secondary marketing 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 then prevailing circumstances. Such prices could be substantially
different from the original purchase price.
Future Debt Issuance
The ability of an owner of land within the Assessment District to pay the Assessment Installments
could be affected by the existence of other taxes and assessments imposed upon parcels in the Assessment
District with unpaid Assessments. In addition, the City and other public agencies whose boundaries overlap
those of the Assessment District could impose additional taxes or assessment liens on the property within the
Assessment District in order to finance public improvements or services to be located or provided inside of or
outside of such area. The lien created on the property within the Assessment District through the levy of such
additional taxes may be on a parity with the lien of the assessments levied by the City. See "THE
ASSESSMENT DISTRICTDirect and Overlapping Indebtedness" herein.
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The imposition of additional liens on a parity with the Assessment Installments may reduce the ability
or willingness of the landowners to pay the Assessment Installments and increase the possibility that
foreclosure proceeds will not be adequate to pay delinquent Assessment Installments.
The City does not have control over the ability of other entities and districts to issue
indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of
the property within the Assessment District. In addition, the landowners within the Assessment District
may, without the consent or knowledge of the City, petition other public agencies to issue public
indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad
valorem taxes or assessments could reduce the estimated value -to -lien ratios for property within the
Assessment District described herein.
Ballot Initiatives
From time to time constitutional initiatives or other initiative measures may be adopted by California
voters. The adoption of any such initiative might place limitations on the ability of the State, the County or
local districts to increase revenues or to increase appropriations, or on the ability of the landowners to
complete their developments.
Constitutional Amendment—Articles IIIC and IIID
An initiative measure commonly referred to as the "Right to Vote on Taxes Act' (the "Initiative") was
approved by the voters of the State of California at the November 5, 1996 general election. The Initiative
added Article XIIIC (`Article XIIIC") and Article XIIID (`Article XIIID") to the California Constitution.
According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the
Initiative limits "the authority of local governments to impose taxes and property -related assessments, fees and
charges."
Article XIIID requires that, beginning July 1, 1997, the proceedings for the levy of any assessment by
the City under the Act (including, if applicable, any increase in such assessment or any supplemental
assessment under the Act) must be conducted in conformity with the provisions of Section 4 of Article XIIID.
The City completed its proceedings for the levy of assessments in the Assessment District on November 24,
2015 after complying with the procedural requirements of Section 4 of Article XIIID. Under Section 10400 of
the Act, any challenge to the proceedings or the Assessment must be brought within 30 days after the date the
assessment was levied.
Article XIIIC removes limitations on the initiative power in matters of local taxes, assessments, fees
and charges. Article XIIIC does not define the term "assessment', and it is unclear whether this term is
intended to include assessments levied under the Act. In the case of the unpaid Assessments which are
pledged as security for payment of the Bonds, the 1915 Act provides a mandatory, statutory duty of the City
and the County Auditor to post Assessment Installments on account of the unpaid Assessments to the property
tax roll of the County each year while any of the Bonds are outstanding, commencing with property tax year
2018-19, in amounts equal to the principal of and interest on the Bonds coming due in the succeeding calendar
year plus certain administrative costs. It is unlikely that the initiative power can be used to reduce or repeal the
unpaid Assessments which are pledged as security for payment of the Bonds or to otherwise interfere with
performance of the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid
Assessments which are pledged as security for payment of the Bonds.
The interpretation and application of the Initiative has been and will continue to be determined by the
courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with
certainty the outcome of any future determination.
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CONCLUDING INFORMATION
Continuing Disclosure
The City has agreed to execute a Continuing Disclosure Agreement (the "Disclosure Agreement") in
connection with the delivery of the Bonds for the benefit of the Underwriter, holders and beneficial owners of
the Bonds to provide certain financial information and operating data relating to the City by the April 1
following the end of the City's fiscal year (the "Annual Report") and to provide notices of the occurrence of
certain enumerated events (the "Listed Events"). The Annual Reports will be filed on behalf of the City by
Digital Assurance Certificate, LLC (the "Dissemination Agent") with the Municipal Securities Rulemaking
Board (the "Repository"). Notices of Listed Events will be filed by the Dissemination Agent with the
Repository. The specific nature of the information to be included in the Annual Report and the notices of
Listed Events is set forth in APPENDIXF"FORM OF CITY CONTINUING DISCLOSURE
AGREEMENT." The City has agreed to execute the Disclosure Agreement in order to assist the Underwriter
in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5), as amended (the "Rule").
It should be noted that the City is required to file certain financial statements with the Annual Report.
This requirement has been included in the Disclosure Agreement solely to satisfy the provisions of the Rule.
The inclusion of this information does not mean that the Bonds are secured by any resources or property of the
City other than the Assessments and amounts pledged under the Fiscal Agent Agreement. See
"BONDOWNERS' RISKSLimited City Obligation Upon Delinquency." It should also be noted that the list
of Listed Events which the City has agreed to report includes items related to credit enhancements and ratings.
These items have been included in the list solely to satisfy the requirements of the Rule. The Bonds have not
been assigned a credit rating and have no credit enhancement.
Within the past five years, the City has not failed to comply in all material respects with any previous
undertaking with regard to the Rule to provide annual reports or notices of Listed Events. The full text of the
Disclosure Agreement is set forth in Appendix F.
Legal Opinion
Certain proceedings in connection with the issuance of the Bonds are subject to the approval of
Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel
(`Bond Counsel"). The opinion of Bond Counsel attesting to the validity of the Bonds will be delivered with
each Bond. A form of the opinion to be delivered by Bond Counsel is set forth in Appendix D hereto.
Certain legal matters will be passed upon for the City by the City Attorney and by Stradling Yocca
Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Certain
legal matters will be passed upon for the Underwriter by its counsel, Nixon Peabody LLP, Los Angeles,
California.
Tax Matters
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California (`Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming
the accuracy of certain representations and compliance with certain covenants and requirements described
herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item
of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In
the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income
tax.
The difference between the issue price of a Bond (the first price at which a substantial amount of the
Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect
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to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield
method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such
excludable income. The amount of original issue discount deemed received by the Bond Owner will increase
the Bond Owner's basis in the Bond. In the opinion of Bond Counsel, the amount of original issue discount
that accrues to the owner of a Bond is excluded from the gross income of such owner for federal income tax
purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on
individuals, and is exempt from State of California personal income tax.
Bond Counsel's opinion as to the exclusion from gross income of interest (and original issue discount)
on the Bonds is based upon certain representations of fact and certifications made by the City and others and is
subject to the condition that the City and others making such representations comply with all requirements of
the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance
of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in
gross income for federal income tax purposes. Failure to comply with such requirements of the Code might
cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income
tax purposes retroactive to the date of issuance of the Bonds. The City will covenant to comply with all such
requirements.
The amount by which a Bond Owner's original basis for determining loss on sale or exchange in the
applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call
date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code, such
amortizable Bond premium reduces the Bond Owner's basis in the applicable Bond (and the amount of
tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a
result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond
is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the
Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment,
computation and collateral consequences of amortizable Bond premium.
The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-
exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected
for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such
an audit of the Bonds (or by an audit of other similar bonds). No assurance can be given that in the course of
an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation
thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross
income of interest (and original issue discount) on the Bonds or their market value.
SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE,
OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR
INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL,
STATE, OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE IMPOSITION OF
ADDITIONAL FEDERAL INCOME OR STATE TAXES BEING IMPOSED ON OWNERS OF TAX-
EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD
ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE
CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES
WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS
WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF
THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS
REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR
INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE
BONDS.
Bond Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not
occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform
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any person, whether any such actions or events are taken or do occur. The Fiscal Agent Agreement and the
Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion
of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the
exclusion from gross income of interest (and original issue discount) on the Bonds for federal income tax
purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel
other than Stradling Yocca Carlson & Rauth, a Professional Corporation.
Although Bond Counsel will render an opinion that interest (and original issue discount) on the Bonds
is excluded from gross income for federal income tax purposes provided that the City continue to comply with
certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and
original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain persons.
Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any
of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax
consequences relating to the Bonds.
Should interest on the Bonds (including any original issue discount) become includable in gross
income for federal income tax purposes, the Bonds are not subject to early redemption and will remain
outstanding until maturity or until redeemed in accordance with the Fiscal Agent Agreement.
A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix D.
Litigation
There is no action, suit, or proceeding known by the City to be pending at the present time restraining
or enjoining the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any
proceedings of the City taken with respect to the execution or delivery thereof. A no litigation certificate
executed by the City will be required to be delivered to the Underwriter with respect to these matters
simultaneously with the delivery of the Bonds.
Financial Interests
The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel and Underwriter's Counsel
are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the
Underwriter on matters unrelated to the Bonds.
No Rating
The City has not applied to and does not contemplate applying to any bond rating agency for the
assignment of a rating on the Bonds.
Underwriting
The Bonds are being purchased by the Underwriter. The Underwriter has agreed to purchase the
Bonds at a price of $ ($ principal amount, [less] net original issue [discount] in the
amount of $ and less an Underwriter's discount of $ ). The Bond Purchase Agreement
relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the
obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase
Agreement, the approval of certain legal matters by counsel and certain other conditions.
The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the
offering prices stated on the cover page hereof. The offering prices may be changed from time to time by the
Underwriter.
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Miscellaneous
All quotations from, and summaries and explanations of, the Fiscal Agent Agreement, the Continuing
Disclosure Agreement and other statutes and documents contained herein do not purport to be complete, and
reference is made to said documents and statutes for full and complete statements of their provisions.
This Official Statement is submitted only in connection with the sale of the Bonds by the City. All
estimates, assumptions, statistical information and other statements contained herein, while taken from sources
considered reliable, are not guaranteed by the City or the Underwriter. The information contained herein
should not be construed as representing all conditions affecting the City or the Bonds.
The execution and delivery of this Official Statement have been authorized by the City.
CITY OF NEWPORT BEACH
By:
City Manager
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APPENDIX A
ASSESSMENT DIAGRAM
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APPENDIX B
ENGINEER'S REPORT
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APPENDIX C
SUMMARY OF THE FISCAL AGENT AGREEMENT
Definitions. Unless the context otherwise requires, the following terms have the meanings set forth in
the Fiscal Agent Agreement:
[TO COME]
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APPENDIX D
OPINION OF BOND COUNSEL
Upon issuance of the Bonds, Stradling Yocca Carlson & Routh, a Professional Corporation, Bond
Counsel proposes to render its final approving opinion in substantially the following form:
2018
City Council
City of Newport Beach
Newport Beach, California
Re: $ City of Newport Beach Assessment District No. 117 Limited Obligation
Improvement Bonds, 2018SeriesA
Ladies and Gentlemen:
We have examined certified copies of proceedings taken by the City of Newport Beach (the "City")
for the issuance of bonds designated "City of Newport Beach Assessment District No. 117 Limited Obligation
Improvement Bonds, 2018 Series A" (the "Bonds") pursuant to the Municipal Improvement Act of 1913,
Division 12 of the Streets and Highways Code of the State of California (the "1913 Act") and under and by
virtue of the Improvement Bond Act of 1915, Division 10 of said Code (the "1915 Act"). The Bonds are
issued for the purpose of providing the means for paying for the work and improvements described in the
City's Resolution No. and are issued pursuant to a resolution adopted by the City on (the
"Resolution of Issuance") and a fiscal agent agreement (the "Fiscal Agent Agreement") dated as of July 1,
2018, by and between the City and U.S. Bank National Association as fiscal agent. This examination covers
said proceedings down to and including the issuance of the Bonds; however, we have made no examination of
the ownership or use of the property assessed. In rendering this opinion, we have relied upon certain
representations of fact and certifications made by or on behalf of the City, the initial purchasers of the Bonds
and others. We have not undertaken to verify through independent investigation the accuracy of the
representations and certifications relied upon by us.
The Bonds are dated their date of delivery and mature on the dates and in the amounts set forth in the
Fiscal Agent Agreement. The Bonds bear interest payable semiannually on each March 2 and September 2,
commencing on September 2, 2018, at the rates per annum set forth in the Fiscal Agent Agreement.
Based upon our examination of all of the foregoing, and in reliance thereon and on all matters of fact
as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion
that:
1. The Fiscal Agent Agreement has been duly authorized, executed and delivered by the City
and, assuming due authorization, execution and delivery by the Trustee, constitutes the valid and binding
obligation of the City enforceable in accordance with its terms.
2. The Bonds have been duly authorized and issued by the City and are valid and binding
obligations of the City enforceable in accordance with their terms. The Bonds do not constitute a debt of the
City, the State of California or any political subdivision thereof within the meaning of any constitutional or
statutory debt limit or restriction, and do not constitute an obligation for which the City, the State of California
or any political subdivision thereof is obligated to levy or pledge any form of taxation or for which the City,
the State of California or any political subdivision thereof has levied or pledged any form of taxation.
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3. Upon delivery and authentication of the Bonds in accordance with the Fiscal Agent
Agreement, the Bonds will be entitled to the benefits of the Fiscal Agent Agreement.
4. Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue
discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of
tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.
Interest (and original issue discount) on the Bonds is exempt from State of California personal
income tax.
6. The difference between the issue price of a Bond (the first price at which a substantial amount
of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity with respect
to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield
method, and original issue discount will accrue to a Bondowner before receipt of cash attributable to such
excludable income. The amount of original issue discount deemed received by a Bondowner will increase the
Bondowner's basis in the applicable Bond. Original issue discount that accrues for the Bondowner is excluded
from the gross income of such owner for federal income tax purposes, is not an item of tax preference for
purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph
4 above) and is exempt from State of California personal income tax.
7. The amount by which a Bondowner's original basis for determining loss on sale or exchange
in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier
call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Internal
Revenue Code of 1986, as amended, such amortizable Bond premium reduces the Bondowner's basis in the
applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax
purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bondowner
realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less (under certain
circumstances) than the original cost of the Bond to the owner.
The opinions expressed in paragraphs (1), (2) and (3) above are limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the enforcement of
creditors rights generally, by equitable principles, by the exercise of judicial discretion in appropriate cases and
by the limitations on legal remedies against cities in the State of California. We express no opinion with
respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in
the Trust Agreement.
Except as expressly set forth in paragraphs (4), (5), (6), and (7) above, we express no opinion
regarding any tax consequences with respect to the Bonds.
Our opinion is limited to matters governed by the laws of the State of California and federal law. We
assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official
Statement relating to the Bonds or other offering material relating to the Bonds and expressly disclaim any
duty to advise the owners of the Bonds with respect to matters contained in the Official Statement.
Respectfully submitted,
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APPENDIX E
BOOK -ENTRY ONLY SYSTEM
The information in this section concerning DTC and DTC's book -entry only system has been obtained
from sources that the City believes to be reliable, but the City takes no responsibility for the completeness or
accuracy thereof. The following description of the procedures and record keeping with respect to beneficial
ownership interests in the Bonds, payment of principal premium, if any, accreted value and interest on the
Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests
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 to the City which the City believes to be reliable, but
the City and the Underwriter do not and cannot make any independent representations concerning these
matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct
Participants, Indirect 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.
The Depository Trust Company (`DTC"), New York, New York, 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 Bond will be issued for each annual maturity of the Bonds, each in the aggregate principal
amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world's largest securities 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 3.5 million issues of U.S.
and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over
100 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"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its
regulated subsidiaries. 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 a Standard & Poor's rating of AA+. 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.
Purchases of 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 Bonds representing their ownership interests in Bonds, except in the event that use of
the book -entry system for the Bonds is discontinued.
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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 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 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 prepayments, tenders,
defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of 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 a maturity are being
prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds
are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments 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 information from
the City 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, the Trustee, or the City, subject to
any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption
proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by
an authorized representative of DTC) is the responsibility of the City 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.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its
Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer
the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for physical
delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied
when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed
by a book -entry credit of tendered Bonds to the Trustee's DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by
giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor
depository is not obtained, physical certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book -entry only transfers through DTC (or a
successor securities depository). In that event, Bonds will be printed and delivered to DTC.
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APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered by the
City of Newport Beach (the "Issuer") and Digital Assurance Certification, LLC, as Dissemination Agent (the
"Dissemination Agent") in connection with the issuance of City of Newport Beach Assessment District
No. 117 Limited Obligation Improvement Bonds 2018 Series A in the aggregate principal amount of
$ (the "Bonds"). The Bonds are being issued pursuant to a Resolution adopted by the City
Council of the Issuer on and a Fiscal Agent Agreement dated as of July 1, 2018 (the "Fiscal
Agent Agreement") by and between the Issuer and U. S. Bank National Association, as fiscal agent (the "Fiscal
Agent"). The Issuer and Dissemination Agent hereby covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed
and delivered by the Issuer for the benefit of the holders and beneficial owners of the Bonds and in order to
assist the Participating Underwriter in complying with SEC Rule 15c2 -12(b)(5), as amended.
Section 2. Definitions. In addition to the definitions set forth in the Resolution of Issuance
which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this
Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described
in, Sections 3 and 4 of this Disclosure Agreement.
"Dissemination Agent" shall mean Digital Assurance Certification, LLC, or any successor
Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written
acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
"Participating Underwriter" shall mean Hilltop Securities.
"Repository" shall mean the Municipal Securities Rulemaking Board, which has been designated by
the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the
Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange
Commission as such for purposes of the Rule in the future.
"Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The Issuer shall, or shall cause the Dissemination Agent to, by April 1 of each year,
commencing April 1, 2019, provide to the Repository, in an electronic format as prescribed by the Municipal
Securities Rulemaking Board, an Annual Report which is consistent with the requirements of Section 4 of this
Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the Issuer shall provide the
Annual Report to the Dissemination Agent (if other than the Issuer). 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 that the audited financial
statements of the Issuer may be submitted separately from the balance of the Annual Report, and later than the
date required above for the filing of the Annual Report. If the Issuer's fiscal year changes, it shall give notice
of such change in the same manner as for a Listed Event under Section 5(c).
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(b) If the Issuer is unable to provide to the Repository or the Dissemination Agent an
Annual Report by the date required in subsection (a), the Issuer shall in a timely manner send a notice to the
Municipal Securities Rulemaking Board, in an electronic format as prescribed by the Municipal Securities
Rulemaking Board, in substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall:
(i) confirm the electronic filing requirements of the Municipal Securities
Rulemaking Board for the Annual Report, and
(ii) if the Dissemination Agent is other than the Issuer, file a report with the
Issuer certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the
date it was provided to the Repository.
Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or incorporate
by reference the following:
(a) Audited Financial Statements of the Issuer prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from time to time by the
Governmental Accounting Standards Board, together with the following statement: THE ISSUER'S ANNUAL
FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES
EXCHANGE COMMISSION STAFF'S INTERPRETATION OF RULE 15C2-12. NO FUNDS OR ASSETS
FO THE ISSUER ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS, AND THE
ISSUER IS NOT OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER ANY
DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE
ISSUER IN EVALUATING WHETHER TO BUY_ HOLD OR SELL THE BONDS.
(b) The following information regarding the Bonds:
(i) Principal amount of Bonds outstanding,
(ii) Balance in the Prepayment Account of Redemption Fund,
(ii) Balance in the Redemption Fund,
(iv) Balance in the Reserve Fund and a statement of the Reserve Requirement,
(v) Information regarding the annual aggregate special assessment installments,
amount collected, delinquent amount and percent delinquent for the most recent fiscal year and the amount and
percent remaining delinquent for any prior fiscal year, and
(vi) Status of foreclosure proceedings and summary of results of foreclosure
sales, if available.
(c) An update of the value -to -lien information set forth in Table 3 for the most recently
completed fiscal year.
(d) An update to the expected completion date of the Improvements. This requirement
shall cease once the City reports that the Improvements have been completed.
(e) In addition to any of the information expressly required to be provided under
paragraphs (a) through (d) of this Section, the Issuer shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under which they are
made, not misleading.
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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 Issuer or related public entities, which have been submitted
to the Repository 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 Issuer 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 Issuer shall give, or cause the
Dissemination Agent to give, notice 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. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final
determinations 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, trustee or similar officer for an obligated
person in a proceeding under the United States 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 Issuer 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 paragraph 5(a)(5) above, 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. the consummation of a merger, consolidation or acquisition involving an obligated person or
the sale of all or substantially all of the assets of the obligated person, 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 terms,
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3. appointment of a successor or additional trustee or the change of the name of a trustee,
4. nonpayment related defaults,
5. modifications to the rights of Owners of the Bonds,
6. notices of redemption, and
7. release, substitution or sale of property securing repayment of the Bonds.
(c) Upon the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as
soon as possible determine if such event would be material under applicable federal securities laws.
(d) If the Issuer determines that knowledge of the occurrence of a Listed Event under
Section 5(b) would be material under applicable federal securities laws, the Issuer shall file a notice of such
occurrence with MSRB in a timely manner not more than 10 business days after the event.
(e) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement
is the responsibility of the Issuer and that the Dissemination Agent shall not be responsible for determining
whether the Issuer's instructions to the Dissemination Agent under this Section 5 comply with the
requirements of the Rule.
Section 6. Termination of Reporting Obligation. The Issuer's and the Dissemination Agent's
obligations 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
Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5(d).
Section 7. Dissemination Agent. The Issuer 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 Agent, with or without appointing a successor Dissemination Agent. The initial
Dissemination Agent shall be Digital Assurance Certification, LLC.
Section 8. Amendment Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Issuer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement
may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity nature or status of an obligated person with respect to
the Bonds, or type of business conducted,
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion
of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well
as any change in circumstances, and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in
the manner provided in the Fiscal Agent Agreement, or (ii) does not, in the opinion of a nationally recognized
bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended
pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the
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amended operating data or financial information shall explain, in narrative form, the reasons for the
amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in
preparing financial statements, the annual financial information 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. The comparison
shall include a 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 in order to provide
information to investors to enable them to evaluate the ability of the Issuer to meet its obligations. To the
extent reasonably feasible the comparison shall be quantitative. A notice of the change in the accounting
principles shall be sent to the Repository in the same manner as for a Listed Event under Section 5(c).
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this
Disclosure Agreement or any other means of communication, or including any other information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this
Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement,
the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in
any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Issuer or the Dissemination Agent to comply
with any provision of this Disclosure Agreement any holder or beneficial owner of the Bonds may take such
actions as may be necessary and appropriate, including seeking mandate or specific performance by court
order, to cause the Issuer to comply with its obligations under this Disclosure Agreement. A default under this
Disclosure Agreement shall not be deemed an event of default under the Fiscal Agent Agreement or any
Supplemental Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the event of
any failure of the Issuer 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 duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to
indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against
any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its
powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against
any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the
Dissemination Agent and payment of the Bonds. The Dissemination Agent has no power to enforce
performance on the part of the Issuer. The Dissemination Agent shall not be responsible in any manner for the
content of any notice or report prepared by the Issuer pursuant to this Disclosure Agreement.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Issuer, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to
time of the Bonds, and shall create no rights in any other person or entity.
Section 13. Notices. Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery delivered by a representative of the party giving such notice, or
(b) overnight delivery by recognized overnight courier, or (c) United States mail, postage prepaid, registered or
certified mail, or (d) facsimile, addressed as follows:
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If to the Issuer:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92660
If to the Dissemination Agent:
Digital Assurance Certification, LLC
315 E. Robinson Street, Suite 300
Orlando, Florida 32801
or to such other address or to the attention of such other person as hereinafter shall be designated in writing by
the applicable party sent in accordance herewith. Any such notice or communication shall be deemed to have
been delivered either at the time of personal delivery actually received by the addressee or a representative of
the addressee at the address provided above or, if delivered on a business day in the case of delivery service or
certified or registered mail, as of the earlier of the date delivered or the date 72 hours following the date
deposited in the United States mail at the address provided herein, or if by telecopier, upon electronic
confirmation of good receipt by the receiving telecopier.
Section 14. Future Determination of Obligated Persons. In the event that the Securities
Exchange Commission amends, clarifies or supplements the Rule in such a manner that requires any
landowner within the City to be an obligated person as defined in the Rule, nothing contained herein shall be
construed to require the Issuer to meet the continuing disclosure requirements of the Rule with respect to such
obligated person and nothing in this Disclosure Agreement shall be deemed to obligate the Issuer to disclose
information concerning any owner of land within the City except as required as part of the information
required to be disclosed by the Issuer pursuant to Section 4 and Section 5 hereof.
Dated: , 2018 CITY OF NEWPORT BEACH
By:
City Manager
DIGITAL ASSURANCE CERTIFICATION, LLC
as Dissemination Agent
By:
Its:
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Newport Beach
Name of Bond Issue: $ CITY OF NEWPORT BEACH ASSESSMENT DISTRICT
NO. 117 LIMITED OBLIGATION IMPROVEMENT BONDS, 2018
SERIES A
Date of Issuance: , 2018
NOTICE IS HERBY GIVEN that the Issuer has not provided an Annual Report with respect to the
above-named Bonds as required by the Fiscal Agent Agreement dated as of July 1, 2018, by and between the
Issuer and U.S. Bank National Association, as Fiscal Agent. The Issuer anticipates that the Annual Report will
be filed by
Dated:
as Dissemination Agent on behalf of Issuer
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Attachment E
Fiscal Agent Agreement
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FISCAL AGENT AGREEMENT
By and Between
CITY OF NEWPORT BEACH
and
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Relating to
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BONDS
2018 SERIES A
Dated as of July 1, 2018
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section101. Definitions................................................................................................................. 1
Section102. Interpretation..............................................................................................................7
Section 103. Equality of Bonds; Pledge of Assessments; No Obligation to Cure
Deficiency.................................................................................................................. 7
ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
Section 201. Assessments...............................................................................................................7
Section 202. Type and Nature of Bonds; Limited Liability............................................................ 7
Section 203. Authorization and Purpose of Bonds......................................................................... 8
ARTICLE III
TERMS AND PROVISIONS OF BONDS
Section 301.
Terms of Bonds..........................................................................................................
8
Section 302.
Execution and Authentication..................................................................................
10
Section 303.
Registration, Exchange or Transfer.........................................................................
11
Section304.
Bond Register..........................................................................................................
11
Section 305.
Mutilated, Lost, Destroyed or Stolen Bonds............................................................
12
Section 306.
Form of Bonds; Temporary Bonds..........................................................................
12
Section 507.
ARTICLE IV
21
Section508.
REDEMPTION OF BONDS
21
Section 401.
Provisions for the Redemption of 2018A Bonds .....................................................
12
Section 402.
Selection of Bonds for Redemption.........................................................................
13
Section 403.
Notice of Redemption..............................................................................................
14
Section 404.
Partial Redemption of Bonds...................................................................................
15
Section 405.
Effect of Notice and Availability of Redemption Money ........................................
15
ARTICLE V
CREATION OF FUNDS AND ACCOUNTS; APPLICATION OF PROCEEDS AND
ASSESSMENTS
Section 501.
Funds and Accounts.................................................................................................
15
Section 502.
Costs of Issuance Fund............................................................................................
16
Section 503.
Assessment Fund.....................................................................................................16
Section 504.
Redemption Fund.....................................................................................................
17
Section505.
Reserve Fund...........................................................................................................
18
Section506.
Rebate Fund.............................................................................................................
19
Section 507.
Improvement Fund...................................................................................................
21
Section508.
Investments..............................................................................................................
21
Section 509.
Delinquency Resulting in Ultimate or Temporary Loss on Bonds ..........................
23
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ARTICLE VI
ISSUANCE OF 2018A BONDS
Section 601.
Authorization and Designation of 2018A Bonds .....................................................
24
Section 602.
Denominations of 2018A Bonds..............................................................................
24
Section 603.
Interest Payment Date of 2018A Bonds...................................................................
24
Section 604.
Form of 2018A Bonds.............................................................................................
25
Section 605.
Application of Proceeds of the Sale of 2018A Bonds and of the Prepaid
40
Section906.
Amounts...................................................................................................................
32
ARTICLE VII
COVENANTS AND WARRANTY
Section701.
Warranty..................................................................................................................32
Section702.
Covenants.................................................................................................................
32
Section 703.
Continuing Disclosure Agreement...........................................................................
34
ARTICLE VIII
AMENDMENTS TO AGREEMENT
Section 801.
Amendments Not Requiring Bondowner Consent ..................................................
34
Section 802.
Amendments Requiring Bondowner Consent.........................................................
35
Section 803.
Notation of Bonds; Delivery of Amended Bonds ....................................................
36
ARTICLE IX
FISCAL AGENT
Section901.
Fiscal Agent.............................................................................................................36
Section 1202.
Section 902.
Removal of Fiscal Agent.........................................................................................
37
Section 903.
Resignation of Fiscal Agent.....................................................................................
37
Section 904.
Liability of Fiscal Agent..........................................................................................
37
Section 905.
Interested Transactions............................................................................................
40
Section906.
Agents......................................................................................................................
40
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 1001. Event of Default....................................................................................................... 40
Section 1002. Remedies of Owners................................................................................................40
Section 1101. Defeasance
ARTICLE XI
DEFEASANCE
ARTICLE XII
MISCELLANEOUS
Section 1201.
Cancellation of Bonds ............................................
Section 1202.
Execution of Documents and Proof of Ownership
Section 1203.
Unclaimed Moneys ................................................
Section 1204.
Provisions Constitute Contract; Successors...........
Section 1205.
Further Assurances; Incontestability ......................
41
42
42
43
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Section1206.
Severability..............................................................................................................44
Section 1207.
General Authorization..............................................................................................
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Section 1208.
Liberal Construction................................................................................................44
Section1209.
Notice.......................................................................................................................44
Section 1210.
Action on Next Business Day..................................................................................
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Signatures...............................................................................................................................
S-1
EXHIBIT A Form of Written Delivery Requisition — [Costs of Issuing Bonds]
[Improvement Fund]......................................................................
FISCAL AGENT AGREEMENT
This Fiscal Agent Agreement, dated as of July 1, 2018 (the "Agreement"), is made and entered
into by the City of Newport Beach (the "City"), a charter city, duly established and existing under the
laws of the State of California (the "State"), and U.S. Bank National Association (the "Fiscal Agent")
in connection with Assessment District No. 117 (the "Assessment District").
WITNESSETH:
WHEREAS, the City Council of the City of Newport Beach (the "City Council") has taken
proceedings under the Municipal Improvement Act of 1913, Division 12 of the California Streets and
Highways Code (the "1913 Act"), for the formation of Assessment District No. 117 and has confirmed
an assessment, which assessment and a related diagram were recorded with the Superintendent of
Streets, and a notice of assessment, as prescribed in Section 3114 of the Code, has been recorded with
the County Recorder of the County of Orange, whereupon the assessment attached as a lien upon the
property assessed within the Assessment District as provided in Section 3115 of the Code; and
WHEREAS, it is necessary and desirable that the City sell bonds (the "2018A Bonds")
pursuant to the Improvement Bond Act of 1915, Division 10 of the California Streets and Highways
Code (the "1915 Act'), to be issued to represent the unpaid assessments;
In consideration of the mutual covenants herein contained and for other valuable consideration,
the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 101. Definitions. Unless the context otherwise requires, the following terms shall
have the following meanings:
"Administrative Expense Fund" means the City of Newport Beach Assessment District
No. 117 Administrative Expense Fund established with the Treasurer.
"Administrative Expense Requirement" means an amount, not in excess of the aggregate
maximum annual assessment for Administrative Expenses permitted to be levied within the
Assessment District as set forth in the Engineer's Report, to be specified each year by the Treasurer to
be used for Administrative Expenses.
"Administrative Expenses" means the ordinary and necessary fees and expenses for
determination of the Assessment and administering the levy and collection of the Assessment and
servicing, calling and redeeming the Bonds, including any or all of the following: the fees and expenses
of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying
out its duties hereunder (including, but not limited to, annual audits and costs incurred in the levying
and collection of the Assessment) including the fees and expenses of its counsel and all other costs and
expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective
duties hereunder and, in the case of the City, in any way related to the administration of the Assessment
District.
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"Agreement" means this Fiscal Agent Agreement, as amended or supplemented pursuant to
the terms hereof.
"Annual Debt Service" means all principal of, including mandatory sinking fund payments,
and interest on the Bonds due in a Bond Year.
"Assessment" or "Assessments" means the special assessments levied in the Assessment
District in accordance with the 1913 Act and the Resolution of Formation, exclusive of any assessments
levied to pay Administrative Expenses, together with the net proceeds derived from any foreclosure
proceedings and interest and penalties thereon.
"Assessment District" means City of Newport Beach Assessment District No. 117.
"Assessment Fund" means the City of Newport Beach Assessment District No. 117
Assessment Fund established and held by the City pursuant to Section 501 hereof.
"Assessment Installment" means the annual portion of the Assessment levied to pay the
principal of, including mandatory sinking fund payments, and interest on the Bonds which does not
include assessments levied by the City to pay Administrative Expenses.
"Authorized Investments" means, subject to applicable law, (1) Federal Securities; (2) an
Investment Agreement, acceptable to, and approved in writing by, the Treasurer; (3) taxable
government money market funds rated in one of the two highest rating categories by S&P Global
Ratings, a Standard & Poor's Financial Services LLC business, restricted to obligations with average
maturities of one year or less, insured or fully guaranteed as to the principal and interest thereon by the
full faith and credit of the United States of America or by repurchase agreements collateralized by such
obligations including money market funds for which the Fiscal Agent and affiliates provide investment
advisory or other management services; (4) tax-exempt obligations, including tax exempt money
market funds, rated at least "A" or higher by S&P Global Ratings, a Standard & Poor's Financial
Services LLC business, and Moody's Investors Service; (5) commercial paper of "prime" quality of
the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors
Service and S&P Global Ratings, a Standard & Poor's Financial Services LLC business„ limited to
issuing corporations that are organized and operating within the United States and having total assets
in excess of five hundred million dollars ($500,000,000) and having an "A" or higher rating for such
corporation's debt, other than commercial paper, as provided for by Moody's Investors Service and
S&P Global Ratings, a Standard & Poor's Financial Services LLC business, and which may not exceed
180 days maturity nor represent more than 10% of the outstanding paper of an issuing corporation;
(6) notes, bonds or other obligations which are at all times secured by a perfected first security interest
in securities of the types listed by Section 53651 of the California Government Code as eligible
securities for the purpose of securing local agency deposits or which are listed as an Authorized
Investment under any of the clauses (1) through (5) of this definition (except those described in this
clause (6)) and which have a market value, determined at least weekly, at least equal to 102% of the
amount of principal and accrued interest on such obligation, which shall be placed by delivery into the
custody of a trust company or the trust department of a bank which is not affiliated with the issuer of
the secured obligation and which bank shall be responsible for making any market value
determinations, and the security interest shall be perfected in accordance with the requirements of the
Uniform Commercial Code or federal regulations applicable to the types of securities in which the
security interest is granted; (7) The State of California Local Agency Investment Fund; (8) time or
demand deposits (including those of the Fiscal Agent or its affiliates) fully insured by the Federal
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Deposit Insurance Corporation or with institutions rated in one of the two highest rating categories by
Moody's Investors Service or S&P Global Ratings, a Standard & Poor's Financial Services LLC
business; (9) repurchase agreements secured by Federal Securities; (10) the County of Orange Pooled
Investment Fund; and (11) any other investment in which funds of the City may be legally invested.
"Authorized Representative of the Citv" means the members of the City Council, the City
Manager, the Finance Director or any other person or persons designated by the City Council of the
City and authorized to act on behalf of the City by a written certificate signed on behalf of the City by
any member of the City Council and containing the specimen signature of each such person.
"Bond Counsel" means an attorney or a firm of attorneys, selected by the City, of nationally
recognized standing in matters pertaining to the tax treatment of interest on bonds issued by states and
their political subdivisions, duly admitted to the practice of law before the highest court of any state of
the United States of America or the District of Columbia.
"Bond Purchase Agreement" means the Bond Purchase Agreement authorized and executed
by the City and Hilltop Securities as the initial purchaser of the 2018A Bonds.
`Bond Register" means the books which the Fiscal Agent shall keep or cause to be kept
pursuant to Section 304, on which the registration and transfer of the Bonds shall be recorded.
"Bond Year" means the one year period or shorter period ending each year on September 2, or
such other date as may be specified by the City.
"Bondowner" or "Owner" means the person or persons in whose name or names any Bond is
registered as shown on the Bond Register.
"Bonds" means the 2018A Bonds.
"Business Day" means any day of the year in New York, New York or Los Angeles, California
other than a Saturday, Sunday, a day on which the New York Stock Exchange is closed or any day on
which the Fiscal Agent is not open for business.
"Certificate of the City" means a written certificate or warrant request executed by an
Authorized Representative of the City.
"City" means City of Newport Beach, a charter city organized under its charter and the laws
of the State of California.
"City Clerk" means the City Clerk of the City and his or her designee.
"City Council" means the City Council of the City of Newport Beach.
"Closing Date" means the date of delivery of each series of Bonds by the City and payment
therefor by the original purchaser thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Coup " means the County of Orange.
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"Costs of Issuance Fund" means the City of Newport Beach Assessment District No. 117 Costs
of Issuance Fund established with the Fiscal Agent pursuant to Section 501 hereof.
"DTC" means The Depository Trust Company, New York, New York, and its successors and
assigns.
"DTC Participants" means securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations maintaining accounts with DTC.
"Engineer's Report" means the report concerning the Assessment District prepared by PENCO
Engineering, Inc., as approved by the City on September 22, 2015 and on file with the City Clerk.
"Federal Securities" means, subject to applicable law, United States Treasury notes, bonds,
bills or certificates of indebtedness, including United States Treasury Obligations, State and Local
Government Series ("SLGS") or other direct obligations issued by the United States Treasury for which
the faith and credit of the United States are pledged for the payment of principal and interest; and
obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks,
federal home loan banks, the Federal Home Loan Bank Board, the Tennessee Valley Authority, or
other federal agencies or United States Government-sponsored enterprises.
"Fiscal Agent" means U.S. Bank National Association, a national banking association duly
organized and existing under and by virtue of the laws of the United States of America, or any other
bank or trust company which may at any time be substituted in its place as provided in Sections 902
and 903 and any successor thereto.
"Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other
annual accounting period hereafter selected and designated by the City as its Fiscal Year in accordance
with applicable law.
"Improvements" means the design and undergrounding of utilities within the Assessment
District, as described in the Engineer's Report and the redemption premium and interest on Prior Bonds
not being refunded by the Bonds.
"Improvement Fund" means the City of Newport Beach Assessment District No. 117
Improvement Fund established pursuant to Section 501 of this Agreement.
"Independent Financial Consultant" means a financial consultant or firm of such consultants
generally recognized to be well qualified in the financial consulting field, appointed and paid by the
City and who, or each of whom:
(1) is in fact independent and not under the domination of the City;
(2) does not have any substantial interest, direct or indirect, with the City; and
(3) is not connected with the City as a member, officer or employee of the City,
but who may be regularly retained to make annual or other reports to the City.
"Interest Pavment Date" means each March 2 and September 2, commencing September 2,
2018.
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"Investment Agreement" means one or more agreements entered into between the Fiscal
Agent, for the benefit of the City, and an entity or entities whose long term uninsured, unsecured and
unguaranteed debt or claims -paying ability is rated as of the date of the Investment Agreement in either
of the two highest categories (without regard to gradations of plus and minus within such categories)
by S&P Global Ratings, a Standard & Poor's Financial Services LLC business, or Moody's Investors
Service, or an agreement between the Fiscal Agent, for the benefit of the City, and an entity which is
rated as of the date of the Investment Agreement in either of the two highest categories (without regard
to gradations of plus and minus within such categories) by S&P Global Ratings, a Standard & Poor's
Financial Services LLC business, or Moody's Investors Service.
"1913 Act" means the Municipal Improvement Act of 1913, being Division 12 (commencing
with Section 10000) of the California Streets and Highways Code.
"1915 Act" means the Improvement Bond Act of 1915, being Division 10 (commencing with
Section 8500) of the California Streets and Highways Code.
"Nonpurpose Investment" means Authorized Investments described as Nonpurpose
Investments in the Tax Certificate.
"Notice of Assessmenf'means the Notice of Assessment recorded in the Office of the County
Recorder of the County of Orange on 20, as Document No.
"Outstanding Bonds" or "Outstanding" means all Bonds theretofore issued by the City, except:
(1) Bonds theretofore canceled or surrendered for cancellation in accordance with
Section 1201 hereof;
(2) Bonds for the payment or redemption of which moneys shall have been
deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds),
provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption
shall have been given as provided in this Agreement; and
(3) Bonds defeased pursuant to Sections 1101(b) or (c) hereof.
"Owner" means, with respect to any Bond, the person shown as the owner thereof in the Bond
Register.
"Rebate Fund" means the fund by that name established pursuant to Section 501 hereof in
which there are established the accounts described in Section 501 hereof.
"Rebate Regulations" means any final, temporary or proposed Regulations promulgated under
Section 148(f) of the Code.
"Rebate Requirement" shall have the meaning ascribed to it in the Tax Certificate.
"Record Date" means the fifteenth day of the month preceding an Interest Payment Date,
whether or not such day is a Business Day.
"Redemption Fund" means the City of Newport Beach Assessment District No. 117
Redemption Fund established with the Fiscal Agent pursuant to Section 501 hereof.
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"Reserve Fund" means the City of Newport Beach Assessment District No. 117 Reserve Fund
established with the Fiscal Agent pursuant to Section 501 hereof.
"Reserve Requirement" means, 5% of the principal amount of the Bonds.
"Resolution of Formation" means Resolution No. 2015-102, adopted by the City Council on
November 24, 2015, forming the Assessment District and confirming the levy of assessments in
accordance with the Engineer's Report presented at such meeting.
"Resolution of Intention" means Resolution No. 2015-79, adopted by the City Council of the
City on September 22, 2015, stating the City's intention, among other things, to issue the Bonds.
"Resolution of Issuance" means Resolution No. , adopted by the City Council of the City
on , 20 , authorizing the issuance of the Bonds and approving the terms and
provisions of this Agreement.
"Six -Month Period" means the period of time beginning on the Closing Date of Bonds, as
applicable, and ending six consecutive months thereafter, and each six-month period thereafter until
the latest maturity date of the Bonds (and any obligations that refund an issue of the Bonds).
"Securities Depositories" means The Depository Trust Company, 55 Water Street, New York,
New York 10041, Attn: Redemption Area, Facsimile transmission: (212) 855 7232, (212) 855 7233,
or such other securities depositories as are designated by the City and whose business is to perform the
functions of a clearing agency with respect to exempted securities, as defined in Section 3(a)(12) of
the Securities Exchange Act of 1934, and who is registered as a clearing agency under Section 17A of
the Act, such other addresses and/or such other securities depositories as the City may designate in a
Certificate of the City delivered to the Fiscal Agent.
"Superintendent of Streets" means the Director of Public Works of the City, or his or her
designee.
"Supplemental Fiscal Agent Agreement" or "Supplement" means any supplemental agreement
amending or supplementing this Agreement.
"Term Bonds" means those 2018A Bonds maturing on September 2, 20
"Tax Certificate" means the Tax Certificate delivered upon the issuance of the 2018A Bonds.
"Treasurer" means the City Treasurer or the City Manager, or his or her designee.
"2018A Bonds" means City of Newport Beach Assessment District No. 117 Limited
Obligation Improvement Bonds 2018 Series A issued pursuant to the Resolution of Issuance and this
Agreement.
"Yield on the Bonds" has the meaning as described in the Tax Certificate.
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Section 102. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include
the plural, and vice versa and the use of the neuter, masculine, or feminine gender is for convenience
only and shall be deemed to mean and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for
convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction
or effect hereof.
Section 103. Equality of Bonds; Pledge of Assessments; No Obligation to Cure
Deficiency. Pursuant to the 1913 Act, the 1915 Act and this Agreement, the Bonds are equally secured
by a first pledge of and shall be equally payable from the Assessments without priority for number,
issue date, date of sale, date of execution or date of delivery, and the payment of the interest on and
principal, including mandatory sinking fund payments, of the Bonds and any premiums upon the
redemption thereof are equally secured by a first pledge of and shall be exclusively paid from the
Assessments. The Bonds shall also be secured by a first pledge of moneys on deposit in the Assessment
Fund, Redemption Fund and the Reserve Fund which are hereby set aside for the payment of the Bonds.
The Assessments, the amounts in the foregoing funds and any interest earned on such amounts shall
constitute a trust fund held for the benefit of the Owners of the Bonds to be applied to the payment of
the interest on, premium, if any, and principal of, including mandatory sinking fund payments, the
Bonds. So long as any of the Bonds remain Outstanding, such amounts shall not be used for any other
purpose, except as permitted by the 1913 Act, the 1915 Act, this Agreement or any Supplemental Fiscal
Agent Agreement.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
Section 201. Assessments. The Assessments remaining unpaid, and the aggregate principal
amount thereof, have been determined by the Treasurer and the Treasurer has filed a list of said
Assessments in the office of the Superintendent of Streets. For a particular description of the lots or
parcels of land bearing the respective assessment numbers set forth in said unpaid list and upon which
Assessments remain unpaid, reference is hereby made to the Notice of Assessment and to the diagram
recorded in the office of the Superintendent of Streets after confirmation of the Assessments by the
City Council through the adoption of the Resolution of Formation, the several lots or parcels of land
represented by said assessment numbers being so numbered and designated upon the diagram and
Assessments as so confirmed and recorded.
Collection of the remaining Assessments shall cease in the event sufficient moneys are
available to redeem the Bonds as provided in Section 505.
Section 202. Type and Nature of Bonds; Limited Liability. Notwithstanding anything
contained herein, in the Bonds, in the 1915 Act, any other provision of law, or in any of the resolutions
adopted in connection with the proceedings for the Assessment District to the contrary, all Bonds
authorized pursuant to this Agreement shall be a special obligation of the City, and the City shall not
under any circumstances (including, without limitation, after any installment of principal or interest of
any Assessment levied on any lot or parcel in the Assessment District becomes delinquent or after the
City acquires title to any such lot or parcel whether through foreclosure or otherwise) be obligated to
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pay principal, premium, if any, or interest on the Bonds from any source whatsoever other than the
Redemption Fund (including any transfers thereto from the Improvement Fund, the Assessment Fund
and Reserve Fund). Neither the City, the City Council, the officers or employees of the City, any
person or entity acting for or on behalf of the City in connection with the issuance of the Bonds or in
connection with the formation or operation of the Assessment District, nor any persons executing the
Bonds, shall be liable personally on the Bonds or be subject to any personal liability for the Bonds or
any personal liability or accountability whatsoever by reason of or in connection with the issuance of
the Bonds or by reason of any act or acts or the failure or omission to take any act or acts (including,
without limitation, a negligent act or omission) in connection with or related to the formation or
operation of the Assessment District.
Section 203. Authorization and Purpose of Bonds. The Bonds shall be designated "City
of Newport Beach Assessment District No. 117 Limited Obligation Improvement Bonds 2018
Series A" and shall be issued by the City under and pursuant to the 1915 Act and under and pursuant
hereto in the aggregate principal amount equal to a portion of the aggregate amount of the unpaid
Assessments determined by the Treasurer pursuant to Section 201. The designation of the Bonds shall
include, in addition to the name "City of Newport Beach Assessment District No. 117 Limited
Obligation Improvement Bonds 2018 Series A," such further appropriate particular designation added
to or incorporated in the title for the Bonds as the City may determine or as shall be required by the
1915 Act; and each Bond shall bear upon its face the designation so determined. The Bonds may
contain or have endorsed thereon such other descriptive provisions, specifications and words not
inconsistent with the provisions hereof as may be desirable or necessary to comply with custom or the
rules of any securities exchange or commission or brokerage board or otherwise as may be determined
by the City prior to the delivery thereof.
The primary purpose for which the Bonds are to be issued is to provide funds to pay the cost
of the Improvements heretofore ordered by the City Council.
ARTICLE III
TERMS AND PROVISIONS OF BONDS
Section 301. Terms of Bonds.
(a) The interest on and principal of, including mandatory sinking fund payments, and
redemption premiums, if any, on the Bonds shall be payable in lawful money of the United States of
America at the office of the Fiscal Agent designated by the Fiscal Agent. Interest on the Bonds shall
be calculated on the basis of a 360 -day year consisting of twelve 30 -day months.
(b) All Bonds shall be initially issued in the form of a separate single certificated fully
registered Bond for each maturity date, and the ownership of each Bond shall be registered in the Bond
Register in the name of Cede & Co., as nominee of DTC. Except as provided in subsection (e) hereof,
all outstanding Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee
of DTC.
(c) With respect to Bonds registered in the Bond Register in the name of Cede & Co., as
nominee of DTC, the City and the Fiscal Agent shall have no responsibility or obligation as to (i) the
accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any DTC Participant or any other person of any notice with
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respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant
or any other person of any amount with respect to principal of, including mandatory sinking fund
payments, premium, if any, and interest on the Bonds. The City and the Fiscal Agent may treat and
consider the person in whose name each Bond is registered in the Bond Register as the holder and
absolute owner of such Bond for the purpose of payment of principal, , including mandatory sinking
fund payments, premium, if any, and interest on such Bond, for the purpose of giving notices of
redemption and other matters with respect to such Bond, for the purpose of registering transfers with
respect to such Bond, and for all other purposes whatsoever. The Fiscal Agent shall pay all principal
of, including mandatory sinking fund payments, premium, if any, and interest on the Bonds only to or
upon the order of the respective Owners or their respective attorneys duly authorized in writing, and
all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with
respect to payment of principal of, including mandatory sinking fund payments, premium, if any, and
interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner shall
receive a certificated Bond evidencing the obligation of the City to make payments of principal,
including mandatory sinking fund payments, premium, if any, and interest pursuant to this Agreement
Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to
record dates, the word "Cede & Co." in this Agreement shall refer to such new nominee of DTC.
(d) The delivery of a representation letter by the City and the Fiscal Agent shall not in any
way limit the provisions of subsection (b) hereof or in any other way impose upon the City or the Fiscal
Agent any obligation whatsoever with respect to persons having interests in the Bonds other than the
Owners. The Fiscal Agent shall take all action necessary for all representations in the representation
letter with respect to the Fiscal Agent to be complied with at all times.
(e) (i) DTC may determine to discontinue providing its services with respect to the
Bonds at any time by giving written notice to the City and the Fiscal Agent and discharging its
responsibilities with respect thereto under applicable law.
(ii) The City, in its sole discretion and without the consent of any other person,
may terminate the services of DTC with respect to the Bonds if the City determines that:
(A) DTC is unable to discharge its responsibilities with respect to the
Bonds, or
(B) a continuation of the requirement that outstanding Bonds be registered
in the Bond Register in the name of Cede & Co., or any other nominee of DTC, is not in the best
interest of the Beneficial Owners of such Bonds.
(iii) Upon the termination of the services of DTC with respect to the Bonds pursuant
to subsection (e)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with
respect to the Bonds pursuant to subsection (e)(i) or subsection (e)(ii)(A) hereof after which no
substitute securities depository willing to undertake the functions of DTC hereunder can be found
which, in the opinion of the City, is willing and able to undertake such functions upon reasonable and
customary terms, the City is obligated to deliver Bond certificates, as described in this Agreement and
the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede &
Co. as nominee of DTC, but may be registered in whatever name or names DTC shall designate to the
Fiscal Agent in writing, in accordance with the provisions of this Agreement.
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(f) Notwithstanding any other provisions of this Agreement to the contrary, as long as any
Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to
principal, including mandatory sinking fund payments, or, premium, if any, and interest on such Bond
and all notices with respect to such Bond shall be made and given, respectively, in the manner provided
in the DTC representation letter for the Bonds.
(g) Each Bond shall bear interest from the Interest Payment Date next preceding its date
of authentication, unless (i) its date of authentication is after a Record Date and on or before the
immediately succeeding Interest Payment Date, in which event the Bond shall bear interest from such
Interest Payment Date or (ii) its date of authentication is before the close of business on the first Record
Date, in which event the Bond shall bear interest from its dated date; provided, that if at the time of
authentication of any Bond interest is then in default on the Outstanding Bonds, such Bonds shall bear
interest from the Interest Payment Date to which interest has previously been paid or made available
for payment on the Outstanding Bonds.
Payment of interest on the Bonds due on or before the maturity or prior redemption thereof
shall be made only to the person whose name appears in the Bond Register as the registered owner
thereof at the close of business on the Record Date, such interest to be paid by check mailed by first
class mail on the Interest Payment Date to such registered owner at his address as it appears on such
books or at such other address as he may have filed with the Fiscal Agent for that purpose; provided,
however, that, in the case of a registered owner of $1,000,000 or more in aggregate principal amount
of Bonds, upon written request of such registered owner to the Fiscal Agent at least 15 days prior to an
Interest Payment Date, such payment may be made by wire transfer to an account within the United
States designated by such owner. Payment of the principal of, including mandatory sinking fund
payments, and redemption premiums, if any, on the Bonds shall be made by check only to the person
whose name appears in the Bond Register as the registered owner thereof, such principal, including
mandatory sinking fund payments, and redemption premiums, if any, to be paid only on the surrender
of the Bonds at the office of the Fiscal Agent at maturity or on redemption prior to maturity.
(h) The Bonds shall recite, in substance, that the interest on and principal of, including
mandatory sinking fund payments, and redemption premiums, if any, on the Bonds are payable solely
from the levy of the Assessments, that the Bonds are limited obligations of the City and that the City
will not obligate itself to advance available funds from its treasury to cure any deficiency in the
Redemption Fund.
(i) From and after the issuance of the Bonds, the findings and determinations of the City
Council shall be conclusive evidence of the existence of the facts so found and determined in any action
or proceeding in any court in which the validity of such Bonds is at issue; and no bona fide purchaser
of any of such Bonds shall be required to independently establish the existence of any fact or the
performance of any condition or the taking of any proceeding required prior to such issuance or the
application of the purchase price paid for such Bonds. The recital contained in the Bonds that the
Bonds are issued under and pursuant to the 1915 Act and under and pursuant hereto shall be conclusive
evidence of their validity and of the regularity of their issuance and all Bonds shall be incontestable
from and after their issuance. Bonds shall be deemed to be issued, within the meaning hereof,
whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) have been delivered
to the purchaser thereof and the purchase price thereof received.
Section 302. Execution and Authentication. The Bonds shall be signed on behalf of the
City by the manual or facsimile signature of the Treasurer of the City and by the manual or facsimile
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signature of the City Clerk in their capacity as officers of the City, and the seal of the City (or a
facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and
attested by the signature of the City Clerk. In case any one or more of the officers who shall have
signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed
have been authenticated and delivered by the Fiscal Agent (including new Bonds delivered pursuant
to the provisions hereof with reference to the transfer and exchange of Bonds or to lost, stolen,
destroyed or mutilated Bonds), such Bonds shall nevertheless be valid and may be issued as if the
person who signed or sealed such Bonds had not ceased to hold such office.
Only such Bonds as shall bear thereon such certificate of authentication in the form set forth
in Section 604 hereof shall be entitled to any right or benefit under this Agreement, and no Bond shall
be valid or obligatory for any purpose until such certificate of authentication shall have been manually
executed by the Fiscal Agent.
Section 303. Registration, Exchange or Transfer. The registration of any Bond may, in
accordance with its terms, be transferred upon the Bond Register by the person in whose name it is
registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for
cancellation at the aforesaid office of the Fiscal Agent, accompanied by delivery of a written instrument
of transfer in a form acceptable to the Fiscal Agent and duly executed by the Bondowner or his or her
duly authorized attorney.
Bonds may be exchanged at the aforesaid office of the Fiscal Agent for a like aggregate
principal amount of Bonds of other authorized denominations of the same maturity. The Fiscal Agent
will not charge the Owner for any new Bond issued upon any exchange or transfer, but shall require
the Owner requesting such exchange or transfer to pay any tax or other governmental charge required
to be paid with respect to such exchange or transfer. The cost of printing any Bonds and any services
rendered or any expenses incurred by the Fiscal Agent in connection with any exchange or transfer
shall be paid by the City as Administrative Expenses. Whenever any Bond or Bonds shall be
surrendered for registration of transfer or exchange, the City shall execute, and the Fiscal Agent shall
authenticate and deliver, a new Bond or Bonds of the same maturity for a like aggregate principal
amount; provided, that the Fiscal Agent shall not be required to register transfers or make exchanges
of Bonds (a) 15 days prior to the date established by the Fiscal Agent for selection of Bonds for
redemption, or (b) with respect to a Bond after such Bond has been selected for redemption.
Section 304. Bond Register. The Fiscal Agent will keep or cause to be kept, at its corporate
trust office, sufficient books for the registration and transfer of the Bonds which shall at all times during
regular business hours upon reasonable prior notice be open to inspection by the City; and, upon
presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may
prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds as herein
provided.
The City and the Fiscal Agent may treat the Owner of any Bond whose name appears on the
Bond Register as the absolute Owner of such Bond for any and all purposes, and the City and the Fiscal
Agent shall not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on
the address of the Owner as it appears in the Bond Register for any and all purposes. It shall be the
duty of the Bondowner to give written notice to the Fiscal Agent of any change in the Owner's address
so that the Bond Register may be revised accordingly.
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Section 305. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become
mutilated, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of
like tenor, date, maturity and principal amount in exchange and substitution for the Bond so mutilated,
but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so
surrendered to the Fiscal Agent shall be handled in accordance with Section 1201 of this Agreement.
If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be
submitted to the Fiscal Agent; and, if such evidence is satisfactory to the Fiscal Agent and, if indemnity
satisfactory to the Fiscal Agent shall be given, the City, at the expense of the Bondowner, shall execute
and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and maturity, numbered
and dated as such Fiscal Agent shall determine in lieu of and in substitution for the Bond so lost,
destroyed or stolen. Any Bond issued in lieu of any Bond alleged to be lost, destroyed or stolen shall
be equally and proportionately entitled to the benefits hereof with all other Bonds issued hereunder.
The Fiscal Agent shall not treat both the original Bond and any replacement Bond as being Outstanding
Bonds for the purpose of determining the principal amount of Bonds which may be executed,
authenticated and delivered or for the purpose of determining any percentage of Bonds Outstanding
hereunder, but both the original and replacement bond shall be treated as one and the same.
Notwithstanding any other provision of this Section, in lieu of delivering a new Bond to replace a Bond
which has been mutilated, lost, destroyed or stolen, and which has matured or is about to mature, the
Fiscal Agent may make payment with respect to such Bond upon receipt of indemnity satisfactory to
it and the City.
Section 306. Form of Bonds; Temporary Bonds. At the option of the City, the definitive
Bonds may be typewritten, and the Bonds and the certificate of authentication shall be substantially in
the form provided in Section 604.
Until definitive Bonds shall be prepared, the City may cause to be executed and delivered, in
lieu of such definitive Bonds, temporary Bonds in typed, written, printed, lithographed or engraved
form and in fully registered form, subject to the same provisions, limitations and conditions as are
applicable in the case of definitive Bonds, except that they may be in any denominations authorized by
the City. Until exchanged for definitive Bonds, any temporary Bonds shall be entitled and subject to
the same benefits and provisions of this Agreement as definitive Bonds. If the City issues temporary
Bonds, it will execute and furnish definitive Bonds without unnecessary delay and thereupon any
temporary Bond may be surrendered to the Fiscal Agent at the aforesaid office, without expense to the
Owner, in exchange for a definitive Bond of the same maturity, interest rate and principal amount in
any authorized denomination. All temporary Bonds so surrendered shall be canceled by the Fiscal
Agent and shall not be reissued.
ARTICLE IV
REDEMPTION OF BONDS
Section 401. Provisions for the Redemption of 2018A Bonds.
(a) Mandatory Redemption from Assessment Prepayments. Whenever, as of an Interest
Payment Date, there are sufficient funds in the Prepayment Account of the Redemption Fund from the
proceeds of prepayments of Assessments, the 2018A Bonds shall be called for redemption as provided
in Part 11.1 of the 1915 Act on a pro rata basis with all Bonds so called for redemption. The 2018A
Bonds, or any portion of the principal thereof, in the principal amount of $5,000 or any integral multiple
thereof, may be redeemed and paid in advance of maturity on any Interest Payment Date, pro rata
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among maturities, by giving notice to the Owner thereof as provided in Section 403 below and by
paying the principal amount thereof, plus interest to the date of redemption, unless sooner surrendered,
in which event said interest will be paid to the date of payment, at the following redemption prices
(expressed as percentages of the principal amount of the 2018A Bonds to be redeemed):
Redemption Date Price
Interest Payment Dates on or prior to March 2, 20 103%
September 2, 20 and March 2, 20 102
September 2, 20 and March 2, 20 101
September 2, 20 and thereafter 100
(b) Optional Redemption of 2018A Bonds from Other Funds, Excluding Assessment
Prepavments. The 2018A Bonds are subject to redemption prior to their stated maturity dates on the
Interest Payment Dates stated below from such maturities as selected by the City, from any source of
funds other than prepayment of Assessments, at a redemption price equal to the principal amount
thereof to be redeemed, together with accrued interest to the date of redemption at the following
redemption prices (expressed as a percentage of the principal amount of 2018A Bonds to be redeemed):
(c) Mandatory Sinking Fund Redemption. The outstanding 2018A Bonds maturing on
September 2, 20 are subject to mandatory sinking fund redemption, in part, on September 2, 20
and on each September 2 thereafter to maturity, by lot, at a redemption price equal to the principal
amount thereof to be redeemed, together with accrued interest to the date of redemption, without
premium, and from sinking payments as follows:
2018A Bonds Maturing on September 2, 20_
Sinking Fund Redemption Date
(September 2)
(Maturity)
Sinking Payments
The amounts in the foregoing schedule(s) shall be reduced by the City pro rata among
redemption dates, in order to maintain substantially level debt service on the 2018A Bonds, as a result
of any prior or partial optional or other mandatory redemption of the 2018A Bonds.
Section 402. Selection of Bonds for Redemption. If less than all of the Outstanding Bonds
are to be redeemed, the City shall designate the principal amount of Bonds of each maturity to be
redeemed as provided for in Section 8768 of the 1915 Act such that the ratio of Outstanding Bonds to
issued Bonds shall be approximately the same in each maturity of the Bonds insofar as possible, and
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Redemption Date
Price
September 2, 20
through March 2, 20
103%
September 2, 20
and March 2, 20
102
September 2, 20
and March 2, 20
101
September 2, 20
and thereafter
100
(c) Mandatory Sinking Fund Redemption. The outstanding 2018A Bonds maturing on
September 2, 20 are subject to mandatory sinking fund redemption, in part, on September 2, 20
and on each September 2 thereafter to maturity, by lot, at a redemption price equal to the principal
amount thereof to be redeemed, together with accrued interest to the date of redemption, without
premium, and from sinking payments as follows:
2018A Bonds Maturing on September 2, 20_
Sinking Fund Redemption Date
(September 2)
(Maturity)
Sinking Payments
The amounts in the foregoing schedule(s) shall be reduced by the City pro rata among
redemption dates, in order to maintain substantially level debt service on the 2018A Bonds, as a result
of any prior or partial optional or other mandatory redemption of the 2018A Bonds.
Section 402. Selection of Bonds for Redemption. If less than all of the Outstanding Bonds
are to be redeemed, the City shall designate the principal amount of Bonds of each maturity to be
redeemed as provided for in Section 8768 of the 1915 Act such that the ratio of Outstanding Bonds to
issued Bonds shall be approximately the same in each maturity of the Bonds insofar as possible, and
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the Fiscal Agent shall select the particular Bonds to be redeemed from each maturity in said designated
amount by lot in such manner as the Fiscal Agent may choose. The Fiscal Agent shall promptly notify
the City in writing of the Bonds, or portions thereof, selected for redemption.
In lieu, or partially in lieu, of such call and redemption, moneys deposited in the Redemption
Fund may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of
Outstanding Bonds may be made by the City prior to the selection of Bonds for redemption by the
Fiscal Agent, at public or private sale as and when and at such prices as the City may in its discretion
determine, but only at prices (including brokerage or other expenses) of not more than par, plus the
premium, if any, which would be payable with respect to such Bonds upon the redemption thereof,
plus accrued interest, and any accrued interest payable upon the purchase of Bonds may be paid from
the amount in the Interest Account of the Redemption Fund for payment of interest on the next
following Interest Payment Date. The Fiscal Agent shall disburse moneys in the Prepayment Account
for such purpose upon written direction of the City.
Section 403. Notice of Redemption. When Bonds are to be called for redemption under
Section 401 and the Fiscal Agent has received the required notice from the City, the Fiscal Agent shall
give notice, in the name of the City, of the redemption of such Bonds. Such notice of redemption shall
(a) specify the serial numbers and the maturity date or dates of the Bonds selected for redemption,
except that where all the Bonds subject to redemption, or all the Bonds of one maturity, are to be
redeemed, the serial numbers thereof need not be specified; (b) state the date fixed for redemption and
for surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places
where the Bonds are to be surrendered for redemption; and (e) in the case of Bonds to be redeemed
only in part, state the portion of such Bond which is to be redeemed. Such notice shall further state
that on the date fixed for redemption, there shall become due and payable on each Bond or portion
thereof called for redemption, the principal thereof, together with any premium, and interest accrued
to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be
payable. At least thirty (30) days but no more than sixty (60) days prior to the redemption date, the
Fiscal Agent shall mail a copy of such notice, by registered or certified mail, postage prepaid, to the
respective Owners of Bonds selected for redemption at their addresses appearing on the Bond Register.
The actual receipt by the Owner of any Bond of notice of such redemption shall not be a condition
precedent thereto, and failure to receive such notice shall not affect the validity of the proceedings for
the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the
Fiscal Agent that notice of such redemption has been given as herein provided shall be conclusive as
against all parties.
A notice of redemption for a redemption pursuant to Section 401(b) above may be conditioned
upon receipt by the City of sufficient funds to effect the redemption. If sufficient funds are not on
deposit with the Fiscal Agent at least one day prior to the redemption date, the redemption shall not
occur and the Bonds shall remain Outstanding hereunder. If any redemption is cancelled due to a lack
of sufficient funds, the Fiscal Agent shall mail a notice to the Owners stating that such redemption was
cancelled and did not occur.
Notices of redemption of Bonds registered in the name of DTC's nominee will be mailed by
the Fiscal Agent to DTC, or its nominee, and not to the owners of beneficial interests in the Bonds.
Notice of redemption will be provided to such beneficial owners only in accordance with the
procedures governing the DTC book -entry system.
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The Fiscal Agent shall take the following additional actions with respect to such notice of
redemption provided that neither the failure to take such actions nor any defect in the action taken shall
affect the validity of the proceedings for such redemption. On the date on which the notice to
redemption is mailed to the Owners of the Bonds pursuant to the provisions above, such notice of
redemption shall be given to one or more of the Securities Depositories if DTC is not the owner of all
of the Bonds selected by the City by (i) first class mail, postage prepaid, (ii) confirmed facsimile
transmission, or (iii) overnight delivery service.
Section 404. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed
in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at
the expense of the City, a new Bond or Bonds of authorized denominations equal in aggregate principal
amount to the unredeemed portion of the same interest rate and the same maturity.
Section 405. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 403, and the amount necessary for the
redemption having been made available for that purpose and being available therefor on the date fixed
for such redemption:
(a) the Bonds, or portions thereof, designated for redemption shall, on the date fixed for
redemption, become due and payable at the redemption price thereof as provided in this Agreement,
anything in this Agreement or in the Bonds to the contrary notwithstanding;
(b) upon presentation and surrender thereof at the corporate trust office of the Fiscal Agent,
the redemption price of such Bonds shall be paid to the Owner thereof;
(c) from and after the redemption date the Bonds or portions thereof so designated for
redemption shall be deemed to be no longer Outstanding and such Bonds or portions thereof shall cease
to bear further interest; and
(d) from and after the date fixed for redemption no Owner of any of the Bonds or portions
thereof so designated for redemption shall be entitled to any of the benefits of this Agreement, or to
any other rights, except with respect to payment of the redemption price and interest accrued to the
redemption date from the amounts so made available.
ARTICLE V
CREATION OF FUNDS AND ACCOUNTS;
APPLICATION OF PROCEEDS AND ASSESSMENTS
Section 501. Funds and Accounts. There are hereby created and established the following
funds and accounts, which funds and accounts the City agrees and covenants to maintain with the
Fiscal Agent so long as any Bonds are Outstanding hereunder:
(a) the City of Newport Beach Assessment District No. 117 Costs of Issuance Fund (the
"Costs of Issuance Fund");
(b) the City of Newport Beach Assessment District No. 117 Redemption Fund (the
"Redemption Fund"), in which there shall be established and created a Principal Account, an Interest
Account and a Prepayment Account;
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(c) the City of Newport Beach Assessment District No. 117 Reserve Fund (the "Reserve
Fund"); and
(d) the City of Newport Beach Assessment District No. 117 Improvement Fund (the
"Improvement Fund").
The City covenants and agrees to establish with the Treasurer the City of Newport Beach
Assessment District No. 117 Administrative Expense Fund (the "Administrative Expense Fund") and
the City of Newport Beach Assessment District No. 117 Assessment Fund (the "Assessment Fund").
Except for the Administrative Expense Fund, all moneys in the funds and accounts established
hereunder shall be held by the Fiscal Agent and the Treasurer for the benefit of the Bondowners (other
than the Improvement Fund), shall be accounted for separately and apart from all other accounts, funds,
money or other resources of the City held by the Fiscal Agent and shall be allocated, applied and
disbursed solely to the uses and purposes hereinafter set forth in this Article.
The Fiscal Agent may establish such additional funds, accounts or subaccounts of the funds or
accounts listed above as it deems necessary or prudent to further its duties pursuant to this Agreement
or any Supplemental Fiscal Agent Agreement and shall establish any additional funds, accounts or
subaccounts which the City directs it to establish.
Section 502. Costs of Issuance Fund. The Fiscal Agent shall deposit into the Costs of
Issuance Fund the amounts specified in Section 605. The Fiscal Agent shall pay the costs of issuing
the Bonds from the Costs of Issuance Fund as set forth in written requisitions submitted by an
Authorized Representative of the City from time to time which requests shall be substantially in the
form set forth in Exhibit A hereto. Amounts on deposit in the Costs of Issuance Fund after the
completion of the Improvements and the payment of all claims with respect thereto shall be used as
determined by the City in the manner provided in Section 10427 of the 1913 Act. At the direction of
an Authorized Representative of the City, the Fiscal Agent shall transfer any remaining balance in the
Costs of Issuance Fund for deposit in the Improvement Fund and the Costs of Issuance Fund shall be
closed.
Section 503. Assessment Fund. Upon receipt of Assessment Installments, the Treasurer
shall immediately deposit the Assessment Installments into the Assessment Fund. On or prior to the
first day of March and September of each year commencing September 1, 2018, the City shall transfer
to the Fiscal Agent for deposit to the Redemption Fund the amounts set forth in the following clauses,
in the following order of priority:
(a) the Interest Account of the Redemption Fund, an amount sufficient to make the
payment of interest due on the next succeeding Interest Payment Date for the Bonds;
(b) the Principal Account of the Redemption Fund, the amount needed to make the
payment of principal, including mandatory sinking fund payments, due on the following September 2
on the Outstanding Bonds;
(c) the Reserve Fund, the amount needed to restore the Reserve Fund to the Reserve
Requirement; and
(d) the Rebate Fund, the amount, if any, as specified in a written direction of the City.
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At the election of the City, some or all of the moneys remaining in the Assessment Fund after
the deposits described above shall be transferred by the Treasurer to the Prepayment Account of the
Redemption Fund to redeem Bonds as provided in Section 504. To the extent that the amounts in the
Assessment Fund are insufficient to redeem Bonds in an authorized denomination, such moneys shall
be used for the payment of interest or principal, including mandatory sinking fund payments, on the
next Interest Payment Date. The City shall apply such amounts, as a credit against each of the unpaid
Assessments in amounts equal to each parcel's share or portion thereof, of the total amount of
Assessment.
Upon provision for payment or redemption of all Bonds and after payment of any amounts due
to the Fiscal Agent, all moneys remaining in the Assessment Fund shall be paid to the City.
Section 504. Redemption Fund. The principal of, including mandatory sinking fund
payments, and interest on the Bonds until maturity shall be paid by the Fiscal Agent from the
Redemption Fund. At the maturity of the Bonds, and after all principal, including mandatory sinking
fund payments, and interest then due on any Outstanding Bonds has been paid or provided for, moneys
in the Redemption Fund shall be transferred to the Assessment Fund.
(a) On or prior to the first day of March or September of each year, commencing
September 1, 2018, the Fiscal Agent shall transfer to the Interest Account of the Redemption Fund an
amount such that the balance in the Interest Account one day prior to each Interest Payment Date shall
be equal to the installment of interest due on the Bonds on said Interest Payment Date. Moneys in the
Interest Account shall be used for the payment of interest on the Bonds as the same becomes due.
(b) On or prior to the first day of September of each year, commencing September 1, 2019,
the Fiscal Agent shall transfer to the Principal Account of the Redemption Fund an amount up to the
principal payment, including mandatory sinking fund payments, due on the Bonds on the following
September 2. Moneys in the Principal Account shall be used to pay the principal, including mandatory
sinking fund payments, of the Bonds as the same become due at maturity or as a result of mandatory
sinking fund redemption.
(c) Any amounts remaining in the Redemption Fund, other than in the Prepayment
Account, on September 15 of each year, after all principal, including mandatory sinking fund
payments, and interest payments due on the prior September 2 have been paid, shall be transferred to
the Assessment Fund.
(d) Moneys set aside in the Prepayment Account of the Redemption Fund shall be used
solely for the purpose of redeeming Bonds and shall be applied on or after the redemption date to the
payment of principal of, including mandatory sinking fund payments, and premium, if any, on the
Bonds to be redeemed upon presentation and surrender of such Bonds.
Upon receiving any prepayment of an Assessment, the City shall transfer all or a portion of
such prepayment to the Fiscal Agent for deposit in the Prepayment Account, which when coupled with
the moneys transferred from the Reserve Fund pursuant to Section 505 to the Prepayment Account,
shall be used to redeem Bonds pursuant to Section 401(a) or any Supplemental Fiscal Agent
Agreement on the next Interest Payment Date for which proper notice pursuant to Section 403 or
applicable provision of a Supplemental Fiscal Agent Agreement can be given by the Fiscal Agent.
Upon receipt of written instructions from the City, the Fiscal Agent shall transfer that portion, if any,
of the prepayment representing accrued interest owing on the Bonds to the Interest Account of the
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Redemption Fund and that portion representing principal, including mandatory sinking fund payments,
and premium due on the Bonds on the next principal payment date to the Principal Account of the
Redemption Fund. If less than all of the amounts in the Prepayment Account, together with the money
transferred from the Reserve Fund, can be used to redeem Bonds in increments of $5,000, the
remaining portion is to be retained in the Prepayment Account and, when at the written direction of an
Authorized Representative of the City there is sufficient money to redeem Bonds, shall be used to
redeem Bonds as herein provided or as provided in a Supplemental Fiscal Agent Agreement. Money
received from the City from funds other than the prepayment of Assessments, including any surplus
amount in the Improvement Fund transferred to the Fiscal Agent in accordance with Section 10427(d)
of the 1913 Act, shall be deposited in the Prepayment Account and used to redeem Bonds as provided
in Section 401(b) hereof or pursuant to the terms of a Supplemental Fiscal Agent Agreement.
If, after all of the Bonds have been redeemed and canceled or paid and canceled, there are
moneys remaining in any account of the Redemption Fund, said moneys shall be transferred to the
Assessment Fund.
Section 505. Reserve Fund. The Fiscal Agent shall initially deposit into the Reserve Fund
the amount specified in Section 605. Thereafter, the Treasurer shall transfer sufficient funds from the
Assessment Fund as provided in Section 503 in order to maintain the Reserve Requirement in the
Reserve Fund at all times. On or before each February 15 and August 15, the Fiscal Agent shall
determine whether the amount on deposit in the Reserve Fund equals the Reserve Requirement.
Moneys in the Reserve Fund shall be used solely for the purpose of paying the principal of,
including mandatory sinking fund payments, and interest on the Bonds when due in the event that the
moneys in the Redemption Fund are insufficient therefor. The Fiscal Agent shall withdraw moneys as
necessary from the Reserve Fund for deposit in the Redemption Fund on or before the first day of
March and September of each year.
In the event an Assessment is prepaid in whole or in part and used to redeem Bonds, the
Assessment being prepaid shall be reduced by the amount transferred from the Reserve Fund pursuant
to this paragraph to the Prepayment Account of the Redemption Fund. The amount transferred shall
be that portion of the balance then in the Reserve Fund equal to the proportion that the Assessment
prepaid bears to the total of all Assessments remaining unpaid as of such date. The City shall notify,
or shall cause the Fiscal Agent to be notified, of the amount to be transferred.
In the event that moneys in the Reserve Fund and the moneys in the Redemption Fund and the
Assessment Fund are sufficient to retire all of the Outstanding Bonds plus accrued interest thereon,
such moneys in the Reserve Fund and the Assessment Fund shall at the written direction of City be
transferred to the Redemption Fund for the payment of the Bonds.
All amounts remaining in the Reserve Fund in the year in which the last Assessment
Installments become due and payable shall be credited toward said Assessment Installments as set forth
below:
On or prior to July 1st of the Fiscal Year next preceding the Fiscal Year in which the last unpaid
Assessment Installment securing the Bonds becomes due and payable, the City shall determine the
amount remaining in the Reserve Fund, and shall declare such amount to be surplus and direct the
Fiscal Agent as to the transfer of such amount in order that it may be credited in the manner set forth
in Section 10427.1 of the 1913 Act; provided that if all or any part of such Assessments remain unpaid
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and are payable in installments, the amount apportioned to each parcel shall be credited against the last
of such unpaid Assessment Installments and, if the amount apportioned to each parcel exceeds the
amount of said last installment, then such excess shall be credited against the next to last of such
Assessment Installments.
Notwithstanding any provisions herein to the contrary, moneys in the Reserve Fund in excess
of the Reserve Requirement shall be withdrawn from the Reserve Fund by the Fiscal Agent on or
before each February 15 and August 15, and shall be transferred to the Interest Account, the Principal
Account or the Prepayment Account in an amount directed in writing by an Authorized Representative
of the City received at least one Business Day prior to each February 15 and August 15. In the absence
of written direction from the City, all amounts shall be transferred to the Redemption Fund and shall
be used as provided in Section 503.
Section 506. Rebate Fund.
(a) The Fiscal Agent shall establish and maintain a fund separate from any other fund
established and maintained hereunder designated as the Rebate Fund and shall establish a separate
Rebate Account and Alternative Penalty Account therein. All money at any time deposited in the
Rebate Account or the Alternative Penalty Account of the Rebate Fund shall be held by the Fiscal
Agent in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund
with respect to the Bonds shall be governed by this Section 506 and the Tax Certificate, unless the City
obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax
purposes of interest payments on the Bonds will not be adversely affected if such requirements are not
satisfied.
(i) Rebate Account. The following requirements shall be satisfied with respect to
the Rebate Account:
(A) Annual Computation. Within 55 days of the end of each Bond Year,
the City shall calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds in
accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking
into account any applicable exceptions with respect to the computation of the rebatable arbitrage
described in the Tax Certificate (e.g., the temporary investments exceptions of Section 148(f)(4)(B)
and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii)
of the Code (the "1'/2% Penalty") has been made), for this purpose treating the last day of the applicable
Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations
(the "Rebatable Arbitrage"). The City shall obtain expert advice as to the amount of the Rebatable
Arbitrage to comply with this Section.
(B) Annual Transfer. Within 55 days of the end of each Bond Year for
which Rebatable Arbitrage must be calculated as required by the Tax Certificate, upon the written
direction of an Authorized Representative of the City, an amount shall be deposited to each subaccount
of the Rebate Account by the Fiscal Agent from any funds so designated by the City if and to the extent
required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so
calculated by or on behalf of the City in accordance with (i)(A) above. In the event that immediately
following any transfer required by the previous sentence, or the date on which the City determines that
no transfer is required for such Bond Year, the amount then on deposit to the credit of the applicable
subaccount of the Rebate Account exceeds the amount required to be on deposit therein, upon written
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instructions from an Authorized Representative of the City, the Fiscal Agent shall withdraw the excess
from the Rebate Account and then credit the excess to the Assessment Fund.
(C) Payment to the Treasury. The Fiscal Agent shall pay, as directed in
writing by an Authorized Representative of the City, to the United States Treasury, out of amounts in
the Rebate Account,
(1) Not later than 60 days after the end of (A) the fifth Bond Year
for the Bonds, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of
the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds, as applicable; and
(2) Not later than 60 days after the payment or redemption of all of
the Bonds, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end
of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in
accordance with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from the Rebate
Account, the amount in the Rebate Account is not sufficient to make such payment when such payment
is due, the City shall calculate or cause to be calculated the amount of such deficiency and deposit an
amount received from any legally available source equal to such deficiency prior to the time such
payment is due. Each payment required to be made pursuant to this subsection (a)(i)(C) shall be made
to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such
payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made
in such other manner as provided under the Code.
(ii) Alternative Penalty Account.
(A) Six -Month Computation. If the 1'/z% Penalty has been elected for the
Bonds, within 85 days of each particular Six -Month Period, the City shall determine or cause to be
determined whether the 1'/z% Penalty is payable (and the amount of such penalty) as of the close of
the applicable Six -Month Period. The City shall obtain expert advice in making such determinations.
(B) Six -Month Transfer. Within 85 days of the close of each Six -Month
Period, the Fiscal Agent, at the written direction of an Authorized Representative of the City, shall
deposit an amount in the Alternative Penalty Account from any source of funds held by the Fiscal
Agent pursuant to this Fiscal Agent Agreement and designated by the City in such written directions
or provided to it by the City, if and to the extent required, so that the balance in the Alternative Penalty
Account equals the amount of 1'/z% Penalty due and payable to the United States Treasury determined
as provided in subsection (a)(ii)(A) above. In the event that immediately following any transfer
provided for in the previous sentence, or the date on which the City determines that no transfer is
required for such Bond Year, the amount then on deposit in the Alternative Penalty Account exceeds
the amount required to be on deposit therein to make the payments required by subsection (a)(ii)(C)
below, the Fiscal Agent, at the written direction of an Authorized Representative of the City, may
withdraw the excess from the Alternative Penalty Account and credit the excess to the Assessment
Fund.
(C) Payment to the Treasury. The Fiscal Agent shall pay, as directed in
writing by an Authorized Representative of the City, to the United States Treasury, out of amounts in
a subaccount of the Alternative Penalty Account, not later than 90 days after the close of each Six -
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Month Period the 1'/z% Penalty, if applicable and payable, computed with respect to the Bonds in
accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment
required to be made from the Alternative Penalty Account, the amount in the Alternative Penalty
Account is not sufficient to make such payment when such payment is due, the City shall calculate the
amount of such deficiency and direct the Fiscal Agent, in writing, to deposit an amount equal to such
deficiency into the Alternative Penalty Account from any funds held by the Fiscal Agent pursuant to
this Fiscal Agent Agreement and designated by the City in such written directions prior to the time
such payment is due. Each payment required to be made pursuant to this subsection (a)(ii)(C) shall be
made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such
payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made
in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate
Fund with respect to the Bonds after redemption and payment of such issue and after making the
payments described in subsection (a)(i)(C) or (a)(ii)(C) (whichever is applicable), may be withdrawn
by the Fiscal Agent at the written direction of the City and utilized in any manner by the City.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section
or this Fiscal Agent Agreement to the contrary, the obligation to comply with the requirements of this
Section shall survive the defeasance and final payment of the Bonds with respect to which an account
has been created in the Rebate Fund.
(d) Amendment Without Consent of Owners. This Section 506 may be deleted or
amended in any manner without the consent of the Owners, provided that prior to such event there is
delivered to the City an opinion of Bond Counsel to the effect that such deletion or amendment will
not adversely affect the exclusion from gross income for federal income tax purposes of interest on the
Bonds.
Section 507. Improvement Fund. The moneys in the Improvement Fund shall be applied
to pay the costs of the Improvements and shall be disbursed by the Fiscal Agent as specified in a written
direction from an Authorized Representative of the City which must be submitted in connection with
each requested disbursement substantially in the form set forth in Exhibit A hereto.
Upon receipt of a certificate of an Authorized Representative of the City stating that all or a
specified portion of the amount remaining in the Improvement Fund is no longer needed to pay costs
of the Improvements, the Fiscal Agent shall transfer all or such specified portion, as applicable, of the
moneys remaining on deposit in the Improvement to the Prepayment Account of the Redemption Fund
to be used to redeem Bonds or for such other purposes as permitted by the 1913 Act and the 1915 Act,
all as directed in said certificate.
Section 508. Investments. Moneys held in any of the funds and accounts under this
Agreement shall be invested at the written direction of an Authorized Representative of the City only
in Authorized Investments which shall be deemed at all times to be a part of such funds and accounts.
The Fiscal Agent shall provide monthly statements or reports of the principal balances and investment
earnings thereon in each fund and account maintained by the Fiscal Agent hereunder.
Authorized Investments shall be purchased at such prices as directed by an Authorized
Representative of the City in written directions (or telephonic directions confirmed in writing)
delivered to the Fiscal Agent. The Fiscal Agent may conclusively reply upon the written instructions
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of the Authorized Representative as to both the suitability and legality of directed investments.
Directions as to the purchase of all Authorized Investments shall be subject to the limitations
hereinafter in this Section set forth and such additional limitations or requirements consistent with the
foregoing as may be established by the Treasurer.
Moneys in all funds and accounts except for the Reserve Fund shall be invested in Authorized
Investments maturing, or with respect to which payments of principal and interest are scheduled or
otherwise payable, not later than the date on which the Treasurer has estimated that such moneys will
be required by the Fiscal Agent for the purposes specified in this Agreement. Moneys in the Reserve
Fund shall be invested in Authorized Investments.
All interest, profits and other income received from the investment of moneys in any fund or
account established pursuant to this Agreement shall be retained therein, except as transfers from such
funds or accounts are authorized in this Agreement. For investment purposes only, the Fiscal Agent
may commingle the funds and accounts established hereunder, and administered by the Fiscal Agent,
but shall account for each separately.
Notwithstanding anything to the contrary contained in this Section, an amount of interest
received with respect to any Authorized Investment equal to the amount of accrued interest, if any,
paid as part of the purchase price of such Authorized Investment shall be credited to the fund or account
for the credit of which such Authorized Investment was acquired.
For the purpose of determining the amount in any fund or account other than the Reserve Fund,
all Authorized Investments credited to such fund or account shall be valued at the lower of the cost or
the market value thereof, exclusive of accrued interest. Amounts in the Reserve Fund shall be valued
at their market value at least semi-annually on or before February 15 and August 15 (or more frequently
as may be requested by the Treasurer, but in no event more often than monthly). In making any such
valuation, the Fiscal Agent may utilize nationally recognized securities valuation or pricing services
available to it through its accounting system. The Fiscal Agent may rely on such valuations and shall
not be responsible for the accuracy thereof.
The Fiscal Agent, or any of its affiliates, may act as principal or agent in the making or
disposing of any investment or as a sponsor, depository, manager for or advisor to any issuer of
Authorized Investments. The Fiscal Agent shall sell, or present for redemption, any Authorized
Investment so purchased whenever it shall be necessary to provide moneys to meet any required
payment, transfer, withdrawal or disbursement from the fund or account to which such Authorized
Investment is credited, and, subject to the provisions of Section 904, the Fiscal Agent shall not be liable
or responsible for any loss resulting from such investment, or any other investment made at the
direction of the City or otherwise made in accordance with this Agreement.
In the absence of written investment direction from the Treasurer received at least two Business
Days prior to the maturity of an Authorized Investment, the Fiscal Agent shall invest solely in
Authorized Investments set forth in subsection (3) of the definition thereof.
The Fiscal Agent shall be entitled to rely conclusively upon the written instructions of the City
directing investments in Authorized Investments as to the fact that each such investment is permitted
by the laws of the State of California and is an Authorized Investment as required by this Agreement
and shall not be required to make further investigation with respect thereto. With respect to any
restrictions set forth in the list of Authorized Investments which embody legal conclusions (e.g., the
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existence, validity and perfection of security interests in collateral), the Fiscal Agent shall be entitled
to rely conclusively on an opinion of counsel or upon a representation of the provider of such
Authorized Investment obtained at the City's expense.
Except as specifically provided in this Agreement, the Fiscal Agent shall not be liable to pay
interest on any moneys received by it, but shall be liable only to account to the City for earnings derived
from funds that have been invested.
The City acknowledges that regulations of the Comptroller of the Currency grant the City the
right to receive brokerage confirmation of security transactions to be effected by the Fiscal Agent
hereunder as they occur. The City specifically waives the right to receive such confirmation to the
extent permitted by applicable law and agrees that it will instead receive periodic cash transaction
statements which include detail for the investment transactions effected by the Fiscal Agent hereunder;
provided, however, that the City retains its right to receive brokerage confirmation on any investment
transaction requested by the City.
Section 509. Delinquency Resulting in Ultimate or Temporary Loss on Bonds. If a
temporary deficiency occurs in the Assessment Fund with which to pay Bonds that have then matured,
past due interest or the principal and interest on Bonds coming due during the current year, but it does
not appear to the Treasurer that there will be an Ultimate Loss (as defined herein) to the Bondowners,
the Treasurer shall transfer moneys on deposit in the Reassessment Fund to the Fiscal Agent and shall
cause the Fiscal Agent to pay the principal of Bonds which have matured as presented and make interest
payments on the Bonds when due, as long as there are available funds in the Redemption Fund, in the
following order of priority:
(1) All matured interest payments shall be made before the principal of any Bonds is paid.
(2) Interest on Bonds of earlier maturity shall be paid before interest on Bonds of later
maturity.
(3) Within a single maturity, interest on lower -numbered Bonds shall be paid before
interest on higher -numbered Bonds.
(4) The principal of Bonds shall be paid in the order in which the Bonds are presented for
payment. Any Bond which is presented but not paid shall be assigned a serial number according to the
order of presentment and shall be returned to the Bondowner.
When funds become available for the payment of any Bond which was not paid upon
presentment, the Treasurer shall cause the Fiscal Agent to notify the registered owner of such Bond by
registered mail to present the Bond for payment. If the Bond is not presented for payment within ten
days after the mailing of the notice, interest shall cease to run on such Bond.
If it appears to the Treasurer that there is a danger of an Ultimate Loss accruing to the
Bondowners for any reason, he or she is required pursuant to the 1915 Act to withhold payment on all
matured Bonds and interest on all Bonds and report the facts to the City Council so that the City Council
may take proper action to equitably protect all Bondowners.
Upon the receipt of such notification from the Treasurer, the City Council shall fix a date for a
hearing upon such notice. At the hearing the City Council must determine whether in its judgment
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there will ultimately be insufficient money in the Assessment Fund to pay the principal of the unpaid
Bonds and interest thereon. If the City Council determines that in its judgment there will ultimately
be a shortage in the Assessment Fund to pay the principal of the unpaid Bonds and interest thereon (an
"Ultimate Loss'), the City Council shall direct the Treasurer to pay to the Owners of all Outstanding
and unpaid Bonds such proportion thereof as the amount of funds on hand in the Assessment Fund
bears to the total amount of the unpaid principal of the Bonds and interest which has accrued or will
accrue thereon. Similar proportionate payments shall thereafter be made periodically as moneys come
into the Assessment Fund.
Upon the determination by the City Council that an Ultimate Loss will occur, the Treasurer
shall cause the Fiscal Agent to notify all Bondowners to surrender their Bonds to the Treasurer for
cancellation. Upon cancellation of the Bonds, the Bondowner shall be credited with the principal
amount of the Bond so canceled. The Treasurer shall then pay by warrant the proportionate amount of
principal and accrued interest due on the Bonds of each Bondowner as may be available from time to
time out of the money in the Redemption Fund. Interest shall cease on principal payments made from
the date of such payment, but interest shall continue to accrue on the unpaid principal at the rate
specified on the Bonds until payment thereof is made. No premiums shall be paid on payments of
principal on Bonds made pursuant to this Section in advance of the maturity date thereon.
If a Bond is not surrendered for registration and payment, the Treasurer shall cause the Fiscal
Agent to give notice atthe expense of the City to the Bondowner by registered mail, at the Bondowner's
last address as shown on the registration books, of the amount available for payment. Interest on such
amount shall cease as of ten days from the date of mailing of such notice.
If the City Council determines that in its judgment there will not be an Ultimate Loss, it shall
direct the Treasurer to pay matured Bonds and interest as long as there is available money in the
Redemption Fund. The priority of payments will be as set forth in the first paragraph hereof.
ARTICLE VI
ISSUANCE OF 2018A BONDS
Section 601. Authorization and Designation of 2018A Bonds. The City has reviewed all
proceedings heretofore taken relative to the authorization of the 2018A Bonds and has found, as a
result of such review, and hereby finds and determines, that all acts, conditions and things required by
law to exist, happen and be performed precedent to and in the issuance of the 2018A Bonds do exist,
have happened and have been performed in due time, form and manner as required by the 1915 Act,
and that the City is now authorized, pursuant to each and every requirement of the 1915 Act and hereof,
to issue the 2018A Bonds upon the security of the Assessments in the aggregate principal amount
described in the Bond Purchase Agreement and in the form and manner provided herein, which 2018A
Bonds shall be entitled to the benefit, protection and security of the provisions hereof.
Section 602. Denominations of 2018A Bonds. The 2018A Bonds shall be issued as fully
registered 2018A Bonds in the denomination of $5,000 or any increment of $5,000 in excess thereof.
Section 603. Interest Payment Date of 2018A Bonds. The 2018A Bonds shall be dated
their Closing Date and shall mature on September 2 of the years, and in the respective principal
amounts set forth opposite such years, and shall bear interest at the respective rates per annum, set
forth in the following table:
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Maturity Date
(September 2) Principal Amount Interest Rate
Section 604. Form of 2018A Bonds. The 2018A Bonds shall be in substantially the
following form, the blanks to be filled in with appropriate words and figures, conforming to the terms
of this Agreement:
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[FORM OF 2018A BOND]
I�
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AS DEFINED IN THE FISCAL AGENT AGREEMENT) TO THE BOND
REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
INTEREST RATE
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 117
LIMITED OBLIGATION IMPROVEMENT BOND
2018 SERIES A
MATURITYDATE DATED DATE
REGISTERED OWNER:
PRINCIPAL AMOUNT:
September 2, 12018
CEDE & CO.
CUSIP NUMBER
AND 00/100 DOLLARS
Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with
Section 8500) of the California Streets and Highways Code (the "Act') and Resolution No. 16-15 (the
"Resolution of Issuance") adopted by the City Council of the City of Newport Beach (the "City") on
the , 2018, the City will, out of the redemption fund for the payment of the bonds issued
upon the unpaid portion of assessments made for the acquisition, work, and improvements more fully
described in proceedings taken pursuant to Resolution No. 2015-79 (the "Resolution of Intention")
adopted by the City Council of the City on the 22nd day of September, 2015, pay to the registered
owner stated above, on the maturity date stated above, the principal sum stated above in lawful money
of the United States of America, all as provided for in a Fiscal Agent Agreement dated as of July 1,
2018 (the "Fiscal Agent Agreement, by and between U.S. Bank National Association, as fiscal agent
(the "Fiscal Agents and the City. In like manner, the City will pay interest on this bond from the
Interest Payment Date (as defined below) next preceding the date on which this bond is authenticated,
unless (i) its date of authentication is after the fifteenth day of the month preceding an Interest Payment
Date (the "Record Date") and on or before the immediately succeeding Interest Payment Date, in which
event the bond shall bear interest from such Interest Payment Date or (ii) its date of authentication is
before the close of business on the first Record Date, in which event the bond shall bear interest from
the date of this bond; provided, however, that if at the time of authentication of this bond, interest is in
default, interest on this bond shall be payable from the last Interest Payment Date to which the interest
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has been paid or made available for payment. Such interest shall be payable on March 2 and
September 2 of each year, commencing September 2, 2018 (each, an "Interest Payment Date").
Both the principal hereof and redemption premium hereon, if any, are payable at the office of
the Fiscal Agent, and the interest hereon is payable by check mailed by first class mail, postage prepaid,
on the Interest Payment Date to the owner hereof at the owner's address as it appears on the records of
the Fiscal Agent or at such address as may have been filed with the Fiscal Agent for that purpose, at
the close of business on the applicable Record Date; provided, however, that at the written request of
an owner of at least $1,000,000 in aggregate principal amount of bonds, filed with the Fiscal Agent
prior to any Record Date, interest on such bonds will be paid to such owner on such succeeding Interest
Payment Date by wire transfer of immediately available funds to an account within the United States
of America designated in such written request.
This bond will continue to bear interest after maturity at the rate above stated provided it is
presented at maturity and payment hereof is refused upon the sole ground that there are not sufficient
moneys in said redemption fund with which to pay the same. If it is not presented at maturity, interest
hereon will run only until maturity.
This bond is one of several annual maturities of bonds (the `Bonds") of like date, tenor and
effect, but differing in amounts, maturities and interest rates, issued by the City under the Act and the
Fiscal Agent Agreement for the purpose of providing means for paying for the improvements described
in the proceedings; and it is secured by the moneys in the redemption fund and by the unpaid portion
of certain assessments made for the payment of those improvements, and, including principal and
interest, is payable exclusively out of said fund.
This bond, or any portion of the principal hereof, in the principal amount of $5,000 or any
integral multiple thereof, may be redeemed and paid in advance of maturity on any Interest Payment
Date from the proceeds of prepayment of Assessments in the manner provided in Part 11.1 of the Act
in any year by giving notice to the owner hereof as provided in the Fiscal Agent Agreement and by
paying the principal amount thereof, plus interest to the date of redemption, unless sooner surrendered,
in which event said interest will be paid to the date of payment, at the following redemption prices
(expressed as a percentage of the principal amount of the bond to be redeemed):
Redemption Date Price
Interest Payment Dates on or prior to March 2, 20 103%
September 2, 20 and March 2, 20 102
September 2, 20 and March 2, 20 101
September 2, 20 and thereafter 100
This bond is subject to redemption prior to its stated maturity date on any Interest Payment
Date, from any source of funds other than prepayment of assessments at a redemption price equal to
the principal amount thereof to be redeemed, together with accrued interest to the date of redemption
at the following redemption prices (expressed as a percentage of the principal amount of the bond to
be redeemed):
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The outstanding Term Bonds maturing on September 2, 20 are subject to mandatory sinking
fund redemption, in part, on September 2, 20 and on each September 2 thereafter to maturity, by lot,
at a redemption price equal to the principal amount thereof to be redeemed, together with accrued
interest to the date of redemption, without premium, and from sinking payments as follows:
Term Bonds Maturing on September 2, 20_
Sinking Fund Redemption Date
(September 2)
(Maturity)
Sinking Payments
The amounts in the foregoing schedule(s) shall be reduced by the City pro rata among
redemption dates, in order to maintain substantially level debt service on the Bonds, as a result of any
prior or partial optional or other mandatory redemption of the Bonds.
This bond is transferable by the registered owner hereof, in person or by the owner's attorney
duly authorized in writing, at the office of the Fiscal Agent, subject to the terms and conditions
provided in the Fiscal Agent Agreement, including the payment of certain charges, if any, upon
surrender and cancellation of this bond. Upon such transfer a new registered bond or bonds of any
authorized denomination or denominations, of the same maturity, for the same aggregate principal
amount, will be issued to the transferee in exchange herefor.
Bonds shall be registered only in the name of an individual (including joint owners), a
corporation, limited liability company, a partnership, a trust or other legal entity validly existing and
authorized to own the Bonds.
Neither the City nor the Fiscal Agent shall be required to make such exchanges or to register
such transfers of bonds (a) during the 15 days prior to any Interest Payment Date or the date established
by the Fiscal Agent for selection of Bonds for redemption, or (b) with respect to a bond after such bond
has been selected for redemption.
The City and the Fiscal Agent may treat the owner hereof, as shown on the bond register kept
by the Fiscal Agent, as the absolute owner for all purposes; and the City and the Fiscal Agent shall not
be affected by any notice to the contrary.
The Fiscal Agent Agreement is incorporated by reference herein and by acceptance hereof the
registered owner assents to said terms and conditions.
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Redemption Date
Price
September 2, 20
through March 2, 20
103%
September 2, 20
and March 2, 20
102
September 2, 20
and March 2, 20
101
September 2, 20
and thereafter
100
The outstanding Term Bonds maturing on September 2, 20 are subject to mandatory sinking
fund redemption, in part, on September 2, 20 and on each September 2 thereafter to maturity, by lot,
at a redemption price equal to the principal amount thereof to be redeemed, together with accrued
interest to the date of redemption, without premium, and from sinking payments as follows:
Term Bonds Maturing on September 2, 20_
Sinking Fund Redemption Date
(September 2)
(Maturity)
Sinking Payments
The amounts in the foregoing schedule(s) shall be reduced by the City pro rata among
redemption dates, in order to maintain substantially level debt service on the Bonds, as a result of any
prior or partial optional or other mandatory redemption of the Bonds.
This bond is transferable by the registered owner hereof, in person or by the owner's attorney
duly authorized in writing, at the office of the Fiscal Agent, subject to the terms and conditions
provided in the Fiscal Agent Agreement, including the payment of certain charges, if any, upon
surrender and cancellation of this bond. Upon such transfer a new registered bond or bonds of any
authorized denomination or denominations, of the same maturity, for the same aggregate principal
amount, will be issued to the transferee in exchange herefor.
Bonds shall be registered only in the name of an individual (including joint owners), a
corporation, limited liability company, a partnership, a trust or other legal entity validly existing and
authorized to own the Bonds.
Neither the City nor the Fiscal Agent shall be required to make such exchanges or to register
such transfers of bonds (a) during the 15 days prior to any Interest Payment Date or the date established
by the Fiscal Agent for selection of Bonds for redemption, or (b) with respect to a bond after such bond
has been selected for redemption.
The City and the Fiscal Agent may treat the owner hereof, as shown on the bond register kept
by the Fiscal Agent, as the absolute owner for all purposes; and the City and the Fiscal Agent shall not
be affected by any notice to the contrary.
The Fiscal Agent Agreement is incorporated by reference herein and by acceptance hereof the
registered owner assents to said terms and conditions.
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This bond is subject to refunding pursuant to the procedures of the Refunding Act of 1984 for
1915 Improvement Act Bonds.
This bond shall not be entitled to any benefit under the Act or the Fiscal Agent Agreement or
become valid or obligatory for any purpose, until the certificate of authentication and registration
hereon endorsed shall have been manually signed by the Fiscal Agent.
THE CITY HAS DECLARED AND DETERMINED IN THE RESOLUTION OF
INTENTION THAT PURSUANT TO SECTION 8769 OF THE IMPROVEMENT BOND ACT OF
1915 IT WILL NOT OBLIGATE ITSELF TO ADVANCE AVAILABLE FUNDS FROM THE CITY
TREASURY TO CURE ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION
FUND.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF
NEWPORT BEACH, THE COUNTY OF ORANGE, THE STATE OF CALIFORNIA OR ANY
POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE
BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE
SOURCES DESCRIBED IN THE FISCAL AGENT AGREEMENT.
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IN WITNESS WHEREOF, the City of Newport Beach has caused this bond to be signed in
manual or facsimile form by the Treasurer of said City and attested to by the City Clerk of the City
Council of said City, all as of the day of 20
CITY OF NEWPORT BEACH
Treasurer for the City of Newport Beach
ATTEST:
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION]
This is one of the bonds described in the within -mentioned Fiscal Agent Agreement, which
bond has been authenticated and registered on 12018.
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
R
Authorized Signatory
22-118
[FORM OF LEGAL OPINION]
The attached is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation, Newport Beach, California, in connection with the issuance of, and dated as
of the date of the original delivery of, the Bonds. A signed copy is on file in my office.
City Clerk of the City of Newport Beach
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
TAX I.D. #:
the within bond and do(es) hereby irrevocably constitute and appoint
attorney to transfer the same on the register of the Fiscal Agent with full power of substitution in the
premises.
Date:
SIGNATURE GUARANTEED:
Signature(s) must be guaranteed by an eligible
guarantor institution
NOTE: The signature(s) to this Assignment
must correspond with the name(s) as
written on the face of the within bond
in every particular, without alteration
or enlargement or any change
whatsoever and the signature(s) must
be guaranteed by an eligible guarantor.
22-119
Section 605. Application of Proceeds of the Sale of 2018A Bonds and of the Prepaid
Amounts. Proceeds from the sale of the 2018A Bonds shall be used as follows:
(i) $ shall be deposited by the Fiscal Agent into the Reserve Fund
equaling the Reserve Requirement;
(ii) $ shall be deposited by the Fiscal Agent in the Costs of Issuance
Fund;
and
(iii) $ shall be deposited by the Fiscal Agent in the Interest Account;
(iv) $ shall be deposited by the Fiscal Agent in the Improvement Fund.
ARTICLE VII
COVENANTS AND WARRANTY
Section 701. Warranty. The City shall preserve and protect the security of the Bonds and
the rights of the Owners against all claims and demands of all persons.
Section 702. Covenants. So long as any of the Bonds are Outstanding and unpaid, the City
makes the following covenants with the Owners under the provisions of the 1913 Act, the 1915 Act
and this Agreement (to be performed by the City or its proper officers, agents or employees), which
covenants are necessary, convenient and desirable to secure the Bonds and tend to make them more
marketable; provided, however, that said covenants do not require the City to expend any funds or
moneys other than the Assessments:
(a) Punctual Payment: Covenant Against Encumbrances. The City covenants that it will
receive all Assessment Installments in trust and will, consistent with Section 503 hereof, deposit the
Assessment Installments in the Assessment Fund, and the City shall have no beneficial right or interest
in the amounts so deposited except as provided by this Agreement. All such Assessment Installments,
whether received by the City in trust or deposited with the Fiscal Agent, all as herein provided, shall
nevertheless be disbursed, allocated and applied solely to the uses and purposes herein set forth, and
shall be accounted for separately and apart from all other money, funds, accounts or other resources of
the City.
The City covenants that it will duly and punctually pay or cause to be paid the principal of and
interest on every Bond issued hereunder, together with the premium, if any, thereon on the date, at the
place and in the manner set forth in the Bonds and in accordance with this Agreement to the extent
Assessments and interest earnings transferred to the Redemption Fund are available therefor, and that
the payments into the Redemption Fund and the Reserve Fund will be made, all in strict conformity
with the terms of the Bonds and this Agreement, and that it will faithfully observe and perform all of
the conditions, covenants and requirements of this Agreement and all Supplements and of the Bonds
issued hereunder. If at any time the total balance in the Redemption Fund and the Reserve Fund is
sufficient to redeem all Outstanding Bonds pursuant to Section 401 hereof, the Treasurer may direct
the Fiscal Agent to effect such redemption on the earliest date on which all Outstanding Bonds may be
redeemed.
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The City will not mortgage or otherwise encumber, pledge or place any charge upon any of the
Assessment Installments, and will not issue any obligation or security superior to the Bonds, payable
in whole or in part from the unpaid Assessments.
(b) Covenant to Levy. The City will cause the Assessment Installments required to pay
the principal of and interest on the Bonds when due to be placed on the tax bills of the owners of the
parcels assessed and covenants to levy assessments, as permitted by law and the Resolution of
Formation, to satisfy the Administrative Expense Requirement.
(c) Commence Foreclosure Proceedings. The City will review the public records of the
County of Orange, California, in connection with the collection of the Assessment Installments not
later than August 1 of each year to determine the amount of Assessment Installments collected in the
prior Fiscal Year. If the City determines that any parcel or parcels are delinquent in the payment of
Assessment Installments, then the City will cause judicial foreclosure proceedings to be filed in the
Superior Court not later than December 1 of each year, and will prosecute diligently such foreclosure
proceedings to judgment and judicial foreclosure sale; provided, however, the commencement of any
foreclosure action may be deferred in the sole discretion of the City if, and only so long as, the amount
in the Reserve Fund is not less than seventy percent (70%) of the Reserve Requirement.
(d) Books and Accounts. The City will cause the Fiscal Agent to keep proper books of
record and accounts, separate from all other records and accounts of the City, in which complete and
correct entries shall be made of all transactions made by its Fiscal Agent hereunder. Such books of
record and accounts shall at all times during business hours and upon reasonable prior notice be subject
to the inspection of the City or of the Owners of not less than ten percent (10%) of the principal amount
of the Bonds then Outstanding or their representatives authorized in writing.
(e) Tax Covenants. Notwithstanding any other provision of this Agreement, absent an
opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds will not be
adversely affected for federal income tax purposes by reason of the City's failure to do so, the City
covenants to comply with all applicable requirements of the Code, necessary to preserve such exclusion
from gross income and specifically covenants, without limiting the generality of the foregoing, as
follows:
Private Activity. The City will not take or omit to take any action or make any use of the
proceeds of the Bonds or of any other moneys or property which would cause the Bonds to be "private
activity bonds" within the meaning of Section 141 of the Code.
Arbitrage. The City will make no use of the proceeds of the Bonds or of any other amounts or
property, regardless of the source, or take or omit to take any action which would cause the Bonds to
be "arbitrage bonds" within the meaning of Section 148 of the Code.
Federal Guarantee. The City will make no use of the proceeds of the Bonds or take or omit
to take any action that would cause the Bonds to be "federally guaranteed" within the meaning of
Section 149(b) of the Code.
Information Reporting. The City will take or cause to be taken all necessary action to comply
with the informational reporting requirement of Section 149(e) of the Code.
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Rebate Requirements. The City will take no action inconsistent with its expectations stated in
the Tax Certificate and will comply with the covenants and requirements stated therein and
incorporated by reference herein. Without limiting the generality of the foregoing, the City agrees that
there shall be paid from time to time all amounts required to be rebated to the United States pursuant
to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be
applicable to the Bonds from time to time. In particular, the City shall direct the Fiscal Agent to
transfer to the Rebate Fund amounts sufficient to pay and shall instruct the Fiscal Agent to pay to the
United States Treasury any amounts required to be paid as set forth in Section 506 hereof.
(f) Collection of the Administrative Expense Requirements. The City covenants that it
will collect annually an amount specified by the Treasurer to be the Administrative Expense
Requirement, which amount will be expressed as a percentage of the annual levy of Assessment
Installments, to pay for Administrative Expenses. The Administrative Expense Requirement so
collected shall not exceed the amount specified in the Engineer's Report.
Section 703. Continuing Disclosure Agreement. The City hereby covenants and agrees
that it will comply with and carry out all of its obligations under the Continuing Disclosure Agreements
to be executed and delivered by the City in connection with the issuance of each series of Bonds.
Notwithstanding any other provision of this Agreement, failure of the City to comply with the
Continuing Disclosure Agreements shall not be considered an event of default; however, any Owner
or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the City to comply with its obligations under
this Section 703. For purposes of this Section, `Beneficial Owner" means any person which has or
shares the power, directly or indirectly, to make investment decisions concerning ownership of any
Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).
ARTICLE VIII
AMENDMENTS TO AGREEMENT
Section 801. Amendments Not Requiring Bondowner Consent. The City may from time
to time, and at any time, without notice to or consent of any of the Bondowners, adopt Supplements
hereto for any of the following purposes:
(a) to cure any ambiguity or to correct or supplement any provisions herein provided that
such action shall not materially adversely affect the interests of the Bondowners;
(b) to add to the covenants and agreements of, and the limitations and the restrictions upon,
the City contained in this Agreement, other covenants, agreements, limitations and restrictions to be
observed by the City which are not contrary to or inconsistent with this Agreement as theretofore in
effect;
(c) to modify, amend or supplement this Agreement in such manner as to permit the
qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute
hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said
act or similar federal statute, and which shall not, materially adversely affect the interests of the Owners
of the Bonds; or
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(d) to modify, alter, amend or supplement this Agreement in any other respect which is not
materially adverse to the Bondowners.
Section 802. Amendments Requiring Bondowner Consent. Exclusive of the
Supplements described in Section 801, the Owners of not less than a majority in aggregate principal
amount of the Bonds then Outstanding shall have the right to consent to and approve such Supplements
as shall be deemed necessary or desirable by the City for the purpose of waiving, modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Agreement; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an
extension of the maturity date of the principal, or the payment date of interest on, any Bond, (b) a
reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest
thereon, (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a
reduction in the aggregate principal amount of the Bonds the Owners of which are required to consent
to such Supplement without the consent of the Owners of all the Bonds then Outstanding.
If at any time the City shall desire to enter into a Supplement, which pursuant to the terms of
this Section shall require the consent of the Bondowners, the City shall so notify the Fiscal Agent and
shall deliver to the Fiscal Agent a copy of the proposed Supplement. The Fiscal Agent shall, at the
expense of the City, cause notice of the proposed Supplement to be mailed, by first class mail postage
prepaid, to all Bondowners and their addresses as they appear in the Bond Register. Such notice shall
briefly set forth the nature of the proposed Supplement and shall state that a copy thereof is on file at
the office of the Superintendent of Streets and the corporate trust office of the Fiscal Agent for
inspection by all Bondowners. The failure of any Bondowners to receive such notice shall not affect
the validity of such Supplement when consented to and approved by the Owners of not less than a
majority in aggregate principal amount of the Bonds then Outstanding as required by this Section.
Whenever at any time within one year after the date of the first mailing of such notice the Fiscal Agent
shall receive an instrument or instruments purporting to be executed by the Owners of not less than a
majority in aggregate principal amount of the Bonds then Outstanding, which instrument or
instruments shall refer to the proposed Supplement described in such notice, and shall specifically
consent to and approve the Supplement substantially in the form of the copy referred to in such notice
as on file with the Superintendent of Streets and the Fiscal Agent, such proposed Supplement, when
duly executed by the City, shall thereafter become a part of the proceedings for the issuance of the
Bonds. In determining whether the Owners of a majority of the aggregate principal amount of the
Bonds have consented to the adoption of any Supplement, Bonds which are owned by the City or by
any person directly or indirectly controlling or controlled by or under the direct or indirect common
control with the City, shall be disregarded and shall be treated as though they were not Outstanding for
the purpose of any such determination. Upon request, the City shall designate to the Fiscal Agent those
Bonds disqualified by this Section 802.
Upon the execution and delivery by the City and the Fiscal Agent of any Supplement and the
receipt of consent to any such Supplement from the Owners of not less than a majority in aggregate
principal amount of Bonds Outstanding in instances where such consent is required pursuant to the
provisions of this Section, this Agreement shall be, and shall be deemed to be, modified and amended
in accordance therewith, and the respective rights, duties and obligations under this Agreement of the
City, the Fiscal Agent and all Owners of Bonds then Outstanding shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications and amendments.
No Supplement pursuant to either Section 801 or Section 802 shall modify or amend any of
the rights or obligations of the Fiscal Agent without its written consent thereto. The Fiscal Agent shall
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be provided an opinion of counsel, at the expense of the City, that any such Supplement complies with
the provisions of this Article VIII and the Fiscal Agent may conclusively rely upon such opinion.
Section 803. Notation of Bonds; Delivery of Amended Bonds. After the effective date of
any action taken as hereinabove provided, the City may determine that the Bonds may bear a notation,
by endorsement in form approved by the City, as to such action, and in that case upon demand of the
Owner of any Bond Outstanding at such effective date and presentation of his Bond for the purpose at
the office of the Fiscal Agent, a suitable notation as to such action shall be made on such Bonds. If the
City shall so determine, new Bonds so modified as, in the opinion of the City, shall be necessary to
conform to such action shall be prepared and executed, and in that case upon demand of the Owner of
any Bond Outstanding at such effective date such new Bonds shall be exchanged at the office of the
Fiscal Agent without cost to each Owner, for Bonds then Outstanding, upon surrender of such
Outstanding Bonds.
ARTICLE IX
FISCAL AGENT
Section 901. Fiscal Agent. U.S. Bank National Association is hereby appointed Fiscal
Agent for the City for the purpose of receiving all money which the City is required to deposit with the
Fiscal Agent hereunder and to allocate, use and apply the same as provided in this Agreement.
The Fiscal Agent is hereby authorized to and shall mail by first-class mail, postage prepaid,
interest payments to the Bondowners, select Bonds for redemption, and maintain the Bond Register.
The Fiscal Agent is hereby authorized to pay the principal of and premium, if any, on the Bonds when
the same are duly presented to it for payment at maturity or upon redemption, to provide for the
registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the
cancellation of Bonds, and to provide for the authentication of Bonds, and shall perform all other duties
assigned to or imposed on it as provided in this Agreement. The Fiscal Agent shall keep accurate
records of all funds administered by it and all Bonds paid and discharged by it.
The Fiscal Agent is hereby authorized to pay the Bonds when duly presented for payment at
maturity, or on redemption prior to maturity. The Fiscal Agent shall cancel all Bonds upon payment
thereof or upon the surrender thereof by the City pursuant to Section 1201 hereof. The Fiscal Agent
shall keep accurate records of all Bonds paid and discharged and canceled by it for six years or such
longer period as required by applicable law or the policies of the Fiscal Agent.
The Fiscal Agent shall supply information regarding investments made under Article V at the
written request of the City including: (i) purchase date, (ii) purchase price, (iii) any accrued interest
paid, (iv) face amount, (v) coupon rate, (vi) periodicity of interest payments, (vii) disposition price,
(viii) any accrued interest, received, and (ix) disposition date. In the event a Nonpurpose Investment
is subject to a receipt of bids, the City shall maintain a record of all information establishing fair market
value on the date such investment became a Nonpurpose Investment. Such detailed record keeping is
required for the calculation of the Rebate Requirement which shall be performed by the City and, in
part, will require a determination of the difference between the actual aggregate earnings of all
Nonpurpose Investments and the amount of such earnings assuming a rate of return equal to the Yield
on the Bonds.
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The City shall from time to time, subject to any agreement between the City and the Fiscal
Agent then in force, pay to the Fiscal Agent compensation for its services, reimburse the Fiscal Agent
for all its advances and expenditures, including, but not limited to, advances to and fees and expenses
of independent accountants, counsel, agents, receiver and engineers or other experts employed by it in
the exercise and performance of its powers and duties hereunder, and indemnify, defend and save the
Fiscal Agent harmless against any losses, costs, expenses or liabilities, including reasonable fees and
expenses of its attorneys (including the allocated costs and disbursements of in-house counsel, to the
extent such services are not redundant with those provided by outside counsel), not arising from its
own negligence or willful misconduct which it may incur in the exercise and performance of its powers
and duties hereunder, which indemnity shall survive discharge of the Bonds.
Any bank or trust company into which the Fiscal Agent may be merged or converted or with
which it may be consolidated or any bank or trust company resulting from any merger, conversion or
consolidation to which it shall be a party or any bank or trust company to which the Fiscal Agent may
sell or transfer all or substantially all of its corporate trust business, provided such bank or trust
company shall be eligible under Section 902, shall be the successor to such Fiscal Agent without the
execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 902. Removal of Fiscal Agent. The City may in the absence of an event of default
at any time, in the exercise of its sole discretion, upon thirty (30) days prior written notice to the Fiscal
Agent, remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a
successor or successors thereto; provided that any such successor shall be a bank or trust company
doing business and having a corporate trust office in Los Angeles or San Francisco, California, having
a combined capital (exclusive of borrowed capital and surplus) (or whose parent or holding company
has a combined capital (exclusive of borrowed capital and surplus) of at least fifty million dollars
($50,000,000), and subject to supervision or examination by federal or state authority. If such bank or
trust company publishes a report of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority above referred to, then for the purposes of this Section the
combined capital and surplus shall be as set forth in its most recent report of condition so published.
The City shall notify the Bondowners in writing of any such removal of the Fiscal Agent and
appointment of a successor thereto.
Section 903. Resignation of Fiscal Agent. The Fiscal Agent may at any time resign by
giving written notice to the City. Upon receiving such notice of resignation, the City shall promptly
appoint a successor Fiscal Agent by an instrument in writing; provided, however, that in the event that
the City does not appoint a successor Fiscal Agent within thirty (30) days following receipt of such
notice of resignation, the resigning Fiscal Agent may petition, at the expense of the City, an appropriate
court having jurisdiction to appoint a successor Fiscal Agent. Any resignation or removal of the Fiscal
Agent and appointment of a successor Fiscal Agent shall become effective only upon the written
acceptance of appointment by the successor Fiscal Agent, and notice to the Bondowners of the Fiscal
Agent's identity and address.
Section 904. Liability of Fiscal Agent. The recitals of fact and all promises, covenants and
agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and
agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same
and makes no representations as to the validity or sufficiency of this Agreement or of the Bonds, and
shall incur no responsibility in respect thereof other than in connection with its duties or obligations
herein or in the Bonds or in the certificate of authentication assigned to or imposed upon the Fiscal
Agent. The Fiscal Agent shall have no duties or obligations other than as specifically set forth herein
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and no implied duties, covenants or obligations shall be read into this Agreement against the Fiscal
Agent. The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the
Bonds for value. The Fiscal Agent shall not be liable in connection with the performance of its duties
hereunder, except for its own negligence or willful misconduct.
The Fiscal Agent shall have no liability or obligation to the Bondowners with respect to the
payment of debt service by the City or with respect to the observance or performance by the City of
the other conditions, covenants and terms contained in this Agreement, or with respect to the
investment of any moneys in any fund or account established, held or maintained by the City pursuant
to this Agreement or otherwise.
The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent,
order, certificate, report, bond or other paper or documents believed by it to be genuine and to have
been signed or presented by the proper party or parties. The Fiscal Agent may consult with counsel,
who may be counsel to the City, at the expense of the City, with regard to legal questions, and the
opinion or advice of such counsel shall be full and complete authorization and protection in respect of
any action taken or suffered hereunder and in accordance therewith.
The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless
and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily
established, if disputed.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem
it necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may,
in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively
proved and established by a written certificate of the City, and such certificate shall be full warrant to
the Fiscal Agent for any action taken or suffered under the provisions of this Agreement upon the faith
thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter
or may require such additional evidence as to it may deem reasonable.
The Fiscal Agent shall have no duty or obligations whatsoever to enforce the collection of
Assessments or other funds to be deposited with it hereunder, or as to the correctness of any amounts
received, but its liability shall be limited to the proper accounting for such funds as it shall actually
receive. The Fiscal Agent shall have no duty or obligation to monitor the City's compliance with the
1913 Act or the 1915 Act. No provision in this Agreement shall require the Fiscal Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it. The Fiscal Agent shall be entitled to interest on all amounts advanced by it at the
maximum rate permitted by law.
The Fiscal Agent shall have no responsibility, opinion or liability with respect to any
information, statement or recital in any official statement or other disclosure material prepared or
distributed with respect to the issuance of the Bonds.
All protections extended to the Fiscal Agent shall also extend to its officers, directors,
employees and agents. The Fiscal Agent's rights to indemnification hereunder and to payment of its
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fees and expenses shall survive its resignation or removal and the final payment or defeasance of the
Bonds.
The Fiscal Agent makes no covenant, representation or warranty concerning the current or
future tax status of interest on the Bonds.
The Fiscal Agent may become an Owner with the same rights it would have if it were not Fiscal
Agent; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same
rights it would have if it were not the Fiscal Agent; and may act as a depository for and permit any of
its officers or directors to act as a member of, or in any other capacity with respect to, any committee
formed to protect the rights of Owners, whether or not such committee shall represent the Owners of
the majority in principal amount of the Bonds then Outstanding.
The Fiscal Agent may execute any of the trusts or powers hereof and perform the duties
required of it hereunder by or through attorneys, agents, or receivers, shall not be responsible for the
actions or omissions of such attorneys, agents or receivers if appointed by it with reasonable care, and
shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder.
The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder,
except for its own negligence or willful misconduct. The Fiscal Agent shall only perform those duties
specifically set forth herein and no implied duties, covenants or obligations whatsoever shall be read
into this Agreement. In the event of and during the continuance of an event of default, the Fiscal Agent
shall exercise such care in performing its duties hereunder as a prudent person would exercise under
the circumstances in the conduct of its own affairs. No action by the Fiscal Agent shall be construed
or deemed to expand the limitations on the scope of the Fiscal Agent's duties. The Fiscal Agent shall
not be considered in breach of or in default in its obligations hereunder in the event of delay in the
performance of such obligations due to unforeseeable causes beyond its control and without its fault
or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of
government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight
embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or
rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market,
litigation or arbitration involving a party or others relating to zoning or other governmental action or
inaction pertaining to the Assessment District, malicious mischief, condemnation, and unusually severe
weather or delays of suppliers or subcontractors due to such causes or any similar event and/or
occurrences beyond the control of the Fiscal Agent.
In accepting the trust hereby created, the Fiscal Agent acts solely as Fiscal Agent for the
Owners and not in its individual capacity, and all persons, including, without limitation, the Owners
and the City, having any claim against the Fiscal Agent arising from the Agreement shall look only to
the funds and accounts held by the Fiscal Agent hereunder for payment, except as otherwise provided
herein or where the Fiscal Agent has breached its standard of care as described in this Section. Under
no circumstances shall the Fiscal Agent be liable in its individual capacity for the obligations evidenced
by the Bonds.
The Fiscal Agent shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Fiscal Agent or in the exercise of any right
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hereunder. In the event of conflicting instructions hereunder, the Fiscal Agent shall have the right to
decide the appropriate course of action and be protected in so doing.
The Fiscal Agent shall have no responsibility or liability with respect to any information,
statement or recital in any official statement, offering memorandum or any other disclosure material
prepared or distributed in any respect relating to the Bonds.
The Fiscal Agent shall not to be deemed to have knowledge of any event of default hereunder
unless it has actual knowledge thereof at its Principal Office.
Section 905. Interested Transactions. The Fiscal Agent and its officers and employees
may acquire and hold Bonds with the same effect as if it were not Fiscal Agent. The Fiscal Agent,
either as principal or agent, may engage in or be interested in any financial or other transaction with
the City.
Section 906. Agents. The Fiscal Agent may execute any of its duties or powers or perform
its duties through attorneys, agents or receivers and the Fiscal Agent shall not be answerable for the
default or misconduct of any such attorney, agent or receiver selected by it with reasonable care.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 1001. Event of Default. Any one or more of the following events shall constitute an
"event of default":
(a) Default in the due and punctual payment of the principal of or redemption premium, if
any, on any Bond when and as the same shall become due and payable, whether at maturity as therein
expressed or from mandatory redemption;
(b) Default in the due and punctual payment of the interest on any Bond when and as the
same shall become due and payable; or
(c) Default by the City in the observance of any of the other agreements, conditions or
covenants on its part in this Agreement or in the Bonds contained, and the continuation of such default
for a period of thirty (30) days after the City shall have been given notice in writing of such default by
the Fiscal Agent or any Owner, provided that if within thirty (30) days the City has commenced curing
of the default and diligently pursues elimination thereof, such period shall be extended to permit such
default to be eliminated.
Section 1002. Remedies of Owners. Following the occurrence of an event of default, any
Owner shall have the right for the equal benefit and protection of all Owners similarly situated:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his or her rights
against the City and any of the members, officers and employees of the City, and to compel the City
or any such members, officers or employees to perform and carry out their duties under the 1913 Act
or the 1915 Act and their agreements with the Owners as provided in this Agreement;
(b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights
of the Owners; or
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(c) By a suit in equity to require the City and its members, officers and employees to
account as the trustee of an express trust.
Nothing in this article or in any other provisions of this Agreement, or in the Bonds, shall affect
or impair the obligation of the City, which is absolute and unconditional, to pay the interest on and
principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as
herein provided, out of the Assessments pledged for such payment, or affect or impair the right of
action, which is also absolute and unconditional, of such Owners to institute suit to enforce such
payment by virtue of the contract embodied in the Bonds and in this Agreement.
A waiver of any default of breach of duty or contract by any Owner shall not affect any
subsequent default or breach of duty or contract, or impair any rights or remedies on any such
subsequent default or breach. No delay or omission by any Owner to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a waiver of
any such default or an acquiescence therein, and every power and remedy conferred upon the Owners
by the 1913 Act or the 1915 Act or by this article may be enforced and exercised from time to time
and as often as shall be deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or
determined adversely to the Owners, the City and the Owners shall be restored to their former positions,
rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy
herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every
such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without
exhausting and without regard to any other remedy conferred by the 1913 Act, the 1915 Act or any
other law.
In no event shall the Fiscal Agent have any responsibility to cure or cause the City or any other
person or entity to cure an event of default hereunder.
ARTICLE XI
DEFEASANCE
Section 1101. Defeasance. If the City shall pay or cause to be paid, or there shall otherwise
be paid, to the Owners of any Outstanding Bonds the interest due thereon and the principal thereof, at
the times and in the manner stipulated therein and in this Agreement, then the Owners of such Bonds
shall cease to be entitled to the pledge of Assessments and other amounts hereunder, and all covenants,
agreements and other obligations of the City to the Owners of such Bonds under this Agreement shall
thereupon cease, terminate and become void and be discharged and satisfied except for the City's
covenant under Section 702(a) hereof In such event, the Fiscal Agent shall execute and deliver to the
City all such instruments as may be desirable to evidence such discharge and satisfaction, and the
Fiscal Agent shall pay over or deliver to the City after payment of any amounts due the Fiscal Agent
hereunder all money or securities held by it pursuant to this Agreement which are not required for the
payment of the interest due on, and the principal of, such Bonds.
Any Outstanding Bond shall be deemed to have been paid within the meaning expressed in the
first paragraph of this Section if such Bond is paid in any one or more of the following ways:
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(a) by paying or causing to be paid the principal of and interest with respect to such Bond,
as and when the same become due and payable;
(b) by depositing with the Fiscal Agent at or before maturity, money which, together with
the amounts then on deposit in the Assessment Fund, the Reserve Fund and the Redemption Fund, is
fully sufficient to pay the principal of, premium and interest on such Bond as and when the same shall
become due and payable; or
(c) by depositing with the Fiscal Agent Federal Securities in such amount as an
Independent Financial Consultant shall determine will, together with the interest to accrue thereon and
moneys then on deposit in the Assessment Fund, the Reserve Fund and the Redemption Fund which is
available to pay such Bond, together with the interest to accrue thereon without further investment, be
fully sufficient to pay and discharge the principal of, premium, if any, and interest on such Bond as
and when the same shall become due and payable; then, notwithstanding that such Bond shall not have
been surrendered for payment, all obligations of the City under this Agreement with respect to such
Bond shall cease and terminate, except for the obligation of the Fiscal Agent to pay or cause to be paid
to the Owner of any Bond not so surrendered and paid, all sums due thereon from funds provided to it
by the City and except for the City's covenant under Section 702(e) hereof Any money or securities
deposited with the Fiscal Agent to defease any Bond or Bonds shall be accompanied by a certificate of
a certified public accountant confirming the accuracy of the calculations establishing the sufficiency
of such deposit. Any funds held by the Fiscal Agent at the time of payment or defeasance of all
Outstanding Bonds, which are not required for the purpose above mentioned, or for payment of
amounts due the Fiscal Agent hereunder shall be paid over to the City.
ARTICLE XII
MISCELLANEOUS
Section 1201. Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent for
payment upon maturity or for redemption shall upon payment therefor, and any Bond purchased by
the City as authorized herein shall be, cancelled forthwith and shall not be reissued. The Fiscal Agent
shall destroy such Bonds as provided by law and furnish to the City a certificate of destruction.
Section 1202. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Agreement
to be signed or executed by Bondowners may be in any number of concurrent instruments of similar
tenor, may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the commercial bank, trust company or other depository
for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any
such attorney, and of the ownership of Bonds shall be sufficient for the purposes of this Agreement
(except as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such
instrument and of any instrument appointing any such attorney, may be proved by a signature guarantee
of any commercial bank or trust company located within the United States of America. Where any
such instrument is executed by an officer of a corporation or association or a member of a partnership
on behalf of such corporation, association or partnership, such signature guarantee shall also constitute
sufficient proof of his authority.
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(b) As to any Bond, the person in whose name the same shall be registered in the Bond
Register shall be deemed and regarded as the absolute Owner thereof for all purposes, and payment of
or on account of the principal of any such Bond, and the interest thereon, shall be made only to or upon
the order of the registered Owner thereof or his or her legal representative. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Bond and the interest thereon to the
extent of the sum or sums to be paid. The Fiscal Agent shall not be affected by any notice to the
contrary. Nothing contained in this Agreement shall be construed as limiting the Fiscal Agent to such
proof, it being intended that the Fiscal Agent may accept other evidence of the matters herein stated
which the Fiscal Agent may deem sufficient. Any request or consent of the Owner of any Bond shall
bind every future Owner of the same Bond in respect of anything done or suffered to be done by the
Fiscal Agent in pursuance of such request or consent.
Section 1203. Unclaimed Moneys. Anything in this Agreement to the contrary
notwithstanding, any money held by the Fiscal Agent in trust for the payment and discharge of any of
the Bonds which remains unclaimed for one year after the Bonds become due and payable, if such
money was held by the Fiscal Agent at such date, or for one year after the date of deposit of such
money if deposited with the Fiscal Agent after said date when such Bonds become due and payable,
shall be repaid by the Fiscal Agent to the City, as its absolute property and free from trust, and the
Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners shall look
only to the City for the payment of such Bonds; provided, however, that, before being required to make
any such payment to the City, the Fiscal Agent shall, at the written request and the expense of the City,
cause to be mailed to the registered Owners of such Bonds, at their addresses as they appear on the
Bond Register, a notice that said money remains unclaimed and that, after a date named in said notice,
which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance
of such money then unclaimed will be returned to the City.
Section 1204. Provisions Constitute Contract; Successors. The provisions of this
Agreement shall constitute a contract between the City and the Bondowners and the provisions hereof
shall be construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and the Fiscal Agent shall prevail, the Fiscal Agent shall be entitled to receive from
the Assessment District reimbursement for reasonable costs, expenses, outlays and attorneys' fees
(including the allocated costs and disbursements of in-house counsel, to the extent such services are
not redundant with those provided by outside counsel), and should said suit, action or proceeding be
abandoned, or be determined adversely to the Fiscal Agent, then the City, the Fiscal Agent and the
Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or
proceeding had not been brought or taken.
After the issuance and delivery of the Bonds this Agreement shall be irrepealable, but shall be
subject to modifications to the extent and in the manner provided in this Agreement, but to no greater
extent and in no other manner.
This Agreement shall be binding upon and inure to the benefit of the City and the Fiscal Agent,
and their respective successors and assigns.
Section 1205. Further Assurances; Incontestability. The City 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 Agreement, and
22-131
for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided
in this Agreement.
After the sale and delivery of the Bonds by the City, the Bonds shall be incontestable by the
City.
Section 1206. Severability. If any covenant, agreement or provision, or any portion thereof,
contained in this Agreement, or the application thereof to any person or circumstance, is held to be
unconstitutional, invalid or unenforceable, the remainder of this Agreement and the application of any
such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be
deemed severable and shall not be affected thereby, and this Agreement and the Bonds shall remain
valid and the Bondowners shall retain all valid rights and benefits accorded to them under the laws of
the State of California.
Section 1207. General Authorization. Authorized Representatives of the City are hereby
respectively authorized to do and perform from time to time any and all acts and things consistent with
this Agreement necessary or appropriate to carry the same into effect.
Section 1208. Liberal Construction. This Agreement shall be liberally construed to the end
that its purpose may be effected. No error, irregularity, informality and no neglect or omission herein
or in any proceeding had pursuant hereto which does not directly affect the jurisdiction of the City
Council shall void or invalidate this Agreement or such proceeding or any part thereof, or any act or
determination made pursuant thereto.
Section 1209. Notice. Any notices required to be given to the City with respect to the Bonds
for this Agreement shall be mailed, first class, or personally delivered to the City Manager at 100 Civic
Center Drive, Newport Beach, California 92660, and all notices to the Fiscal Agent shall be mailed,
first class, or personally delivered to the Fiscal Agent at U.S. Bank National Association, 633 West
Fifth Street, 24th Floor, Los Angeles, California 90071, Attention: Global Corporate Trust Services.
Section 1210. Action on Next Business Day. If the date for making any payment or the last
date for performance of any act or the exercising of any right, as provided in this Agreement, is not a
Business Day, such payment, with no interest accruing for the period from and after such nominal date,
may be made or act performed or right exercised on the next succeeding Business Day with the same
force and effect as if done on the nominal date provided therefore in this Agreement.
22-132
IN WITNESS WHEREOF, the City and the Fiscal Agent have executed this Agreement,
effective the date first written above.
ATTEST:
City Clerk
CITY OF NEWPORT BEACH
Rim
City Manager
U.S. BANK NATIONAL ASSOCIATION,
as Fiscal Agent
Authorized Officer
22-133
EXHIBIT A
FORM OF WRITTEN DELIVERY REQUISITION —
[COSTS OF ISSUING BONDS] [IMPROVEMENT FUND]
U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent')
RE: Disbursement from the [Improvement Fund pursuant to Section 507] [Costs of Issuance Fund
pursuant to Section 502] of the Fiscal Agent Agreement, dated as of July 1, 2018 (the "Fiscal
Agent Agreement'), by and between the City of Newport Beach ("City") and the Fiscal Agent,
in connection with the issuance of $ City of Newport Beach Assessment District
No. 117 Limited Obligation Improvement Bonds 2018 Series A (the `Bonds").
REQUISITION NO. 1
You are hereby instructed to pay to the parties, listed on Schedule I attached hereto, [as costs
of issuing the Bonds as provided in Section 502] [as costs of the Improvements as provided in
Section 507] of the Fiscal Agent Agreement. These costs have been properly incurred, are a proper
charge against the [Costs of Issuance Fund] [Improvement Fund] and have not been the basis of any
previous disbursements.
The Fiscal Agent is hereby instructed to pay an amount which shall not exceed the amounts
listed on Schedule I attached hereto upon receipt of an invoice of the payee.
CITY OF NEWPORT BEACH
R
City Manager
22-134
SCHEDULEI
Party Purpose Amount
22-135
Attachment F
Memo Recommending Financing Scenario
22-136
To: City of Newport Beach
From: Fieldman, Rolapp & Associates (Independent Registered Municipal Advisor)
Re: Recommended Financing Scenario — Per Debt Management Policy
Date: June 8, 2018
The City's Debt Management policy requires its Independent Registered Municipal Advisor to provide the
City with an "independent analysis of all financing scenarios considered with a specific recommendation
to the City Council supported by the analysis. The written recommendation of the IRMA shall be provided
to City Council as an attachment to the City's Staff Report"
Fieldman, Rolapp & Associates was selected as the City's IRMA for the AD 117 financing in early May.
The City had previously formed and established AD 117, developed cost estimates, and taken pre-
payments from property owners, resulting in an unpaid lien requiring financing of $2.745 million. We were
informed the City's goal was for the financing to be closed by August so the debt service could be provided
for the County tax -roll by their deadline. The City additionally indicated that based on prior discussions
with AD 117 property owners, the financing repayment term would be 20 years.
Recommended Option
Based on our analysis, detailed below, the optimal such scenario is for the City to issue publicly offered
1915 Act Bonds for AD 117. Further, we recommend the Bonds be sold non -rated; our analysis indicates
the cost of obtaining a credit rating is greater than the savings from a lower interest rate on the Bonds.
Financial Scenarios Analyzed
Our analysis was based on market conditions, assumptions, and certain pricing estimates as of May 21,
2018. Due to schedule timing constraints, and lead time required to draft documents, this was the latest
practical date to make a determination regarding the optimal sale approach. Certain cost information was
based on the proposal of the selected underwriter, Hilltop Securities.
As summarized in the table below, the Public Offering— Not Rated was determined to offer the lowest
cost of funding. It was only narrowly better than a Public Offering — Rated, by approximately $500 per
year. Despite lower upfront execution costs, the Direct Bank Placement was assessed at a relatively higher
overall annual cost structure. Detailed breakdowns of each scenario, including all assumptions, are
attached.
Bond Sale Method / Structure
All -In
Financing
Rate*
Average
Annual Debt
Service**
Direct Bank Placement
4.018%
$193,436
Public Offering - Rated
3.652%
$187,323
Public Offering - Not Rated
3.624%
$186,828
*all-inclusive cost of borrowing including interest rate paid and all execution costs
**assumes 20 year repayment term
22-137
Attachment G
Financing Scenario Analyses
22-138
Attachment G.1
22-139
Jun 11, 2018 12:41 pm Prepared by Fieldman, Rolapp & Associates
SOURCES AND USES OF FUNDS
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering (Base Case - for Good Faith)
Dated Date 07/25/2018
Delivery Date 07/25/2018
Sources:
Bond Proceeds
Par Amount
2,959,000.00
Net Premium
392.85
2,959,392.85
Uses:
Other Fund Deposits:
Debt Service Reserve Fund (5% of Par)
147,950.00
Delivery Date Expenses:
Cost of Issuance
94,000.00
Underwriter's Discount
25,365.48
119,365.48
Other Uses of Funds:
Additional Proceeds
2,692,077.37
2,959,392.85
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 1
22-140
Jun 11, 2018 12:41 pm Prepared by Fieldman, Rolapp & Associates
BOND DEBT SERVICE
Period
Ending
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering (Base Case - for Good Faith)
Principal Coupon Interest Debt Service
09/02/2019
104,000
2.000%
101,393.53
205,393.53
09/02/2020
115,000
3.000%
89,863.76
204,863.76
09/02/2021
115,000
3.000%
86,413.76
201,413.76
09/02/2022
120,000
3.000%
82,963.76
202,963.76
09/02/2023
125,000
3.000%
79,363.76
204,363.76
09/02/2024
130,000
3.000%
75,613.76
205,613.76
09/02/2025
130,000
3.000%
71,713.76
201,713.76
09/02/2026
135,000
2.750%
67,813.76
202,813.76
09/02/2027
140,000
2.850%
64,101.26
204,101.26
09/02/2028
145,000
3.000%
60,111.26
205,111.26
09/02/2029
150,000
3.000%
55,761.26
205,761.26
09/02/2030
150,000
3.000%
51,261.26
201,261.26
09/02/2031
155,000
3.200%
46,761.26
201,761.26
09/02/2032
160,000
3.200%
41,801.26
201,801.26
09/02/2033
165,000
3.250%
36,681.26
201,681.26
09/02/2034
170,000
3.250%
31,318.76
201,318.76
09/02/2035
180,000
3.375%
25,793.76
205,793.76
09/02/2036
185,000
3.375%
19,718.76
204,718.76
09/02/2037
190,000
3.500%
13,475.00
203,475.00
09/02/2038
195,000
3.500%
6,825.00
201,825.00
2,959,000
1,108,749.95
4,067,749.95
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 2
22-141
Jun 11, 2018 12:41 pm Prepared by Fieldman, Rolapp & Associates
BOND SUMMARY STATISTICS
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering (Base Case - for Good Faith)
Dated Date
07/25/2018
Delivery Date
07/25/2018
First Coupon
03/02/2019
Last Maturity
09/02/2038
Arbitrage Yield
3.210110%
True Interest Cost (TIC)
3.302755%
Net Interest Cost(NIC)
3.298762%
All -In TIC
3.656294%
Average Coupon
3.226100%
Average Life (years)
11.615
Duration of Issue (years)
9.428
Par Amount
2,959,000.00
Bond Proceeds
2,959,392.85
Total Interest
1,108,749.95
Net Interest
1,133,722.58
Total Debt Service
4,067,749.95
Maximum Annual Debt Service
205,793.76
Average Annual Debt Service
202,347.66
Underwriter's Fees (per $1000)
+ Premium (Discount)
Average Takedown
5.720000
Management Fee
0.659006
Other Fee
2.193309
Total Underwriter's Discount 8.572315
Bid Price 99.156045
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 3
22-142
Par
Average
Average
PV of 1 by
Bond Component
Value Price
Coupon
Life
change
Serial Bonds
2,959,000.00 100.013
3.226%
11.615
2,703.94
2,959,000.00
11.615
2,703.94
All -In
Arbitrage
TIC
TIC
Yield
Par Value
2,959,000.00
2,959,000.00
2,959,000.00
+ Accrued Interest
+ Premium (Discount)
392.85
392.85
392.85
- Underwriter's Discount
-25,365.48
-25,365.48
- Cost of Issuance Expense
-94,000.00
- Other Amounts
TargetValue
2,934,027.37
2,840,027.37
2,959,392.85
Target Date
07/25/2018
07/25/2018
07/25/2018
Yield
3.302755%
3.656294%
3.210110%
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 3
22-142
Jun 11, 2018 12:41 pm Prepared by Fieldman, Rolapp & Associates
BOND PRICING
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering (Base Case - for Good Faith)
Maturity
Bond Component Date Amount Rate Yield Price
Premium
(-Discount)
Serial Bonds:
09/02/2019
104,000
2.000%
1.540%
100.500
520.00
09/02/2020
115,000
3.000%
1.710%
102.652
3,049.80
09/02/2021
115,000
3.000%
1.920%
103.236
3,721.40
09/02/2022
120,000
3.000%
2.110%
103.479
4,174.80
09/02/2023
125,000
3.000%
2.270%
103.497
4,371.25
09/02/2024
130,000
3.000%
2.450%
103.098
4,027.40
09/02/2025
130,000
3.000%
2.610%
102.511
3,264.30
09/02/2026
135,000
2.750%
2.760%
99.926
-99.90
09/02/2027
140,000
2.850%
2.850%
100.000
09/02/2028
145,000
3.000%
2.950%
100.432
626.40
09/02/2029
150,000
3.000%
3.020%
99.810
-285.00
09/02/2030
150,000
3.000%
3.120%
98.796
-1,806.00
09/02/2031
155,000
3.200%
3.210%
99.891
-168.95
09/02/2032
160,000
3.200%
3.290%
98.988
-1,619.20
09/02/2033
165,000
3.250%
3.370%
98.586
-2,333.10
09/02/2034
170,000
3.250%
3.440%
97.663
-3,972.90
09/02/2035
180,000
3.375%
3.500%
98.399
-2,881.80
09/02/2036
185,000
3.375%
3.570%
97.413
-4,785.95
09/02/2037
190,000
3.500%
3.590%
98.760
-2,356.00
09/02/2038
195,000
3.500%
3.610%
98.434
-3,053.70
2,959,000
392.85
Dated Date
Delivery Date
First Coupon
Par Amount
Premium
Production
Underwriter's Discount
Purchase Price
Accrued Interest
Net Proceeds
07/25/2018
07/25/2018
03/02/2019
2,959,000.00
392.85
2,959,392.85 100.013276%
-25,365.48 -0.857231%
2,934,027.37 99.156045%
2,934,027.37
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 4
22-143
Jun 11, 2018 12:41 pm Prepared by Fieldman, Rolapp & Associates
COST OF ISSUANCE
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering (Base Case - for Good Faith)
Cost of Issuance $/1000 Amount
Bond/ Disclosure Counsel
18.58736
55,000.00
Financial Advisor
5.91416
17,500.00
Fiscal Agent
0.84488
2,500.00
Printing
0.67590
2,000.00
District Administration - Upcoming
2.53464
7,500.00
Taxpayer Data Tables
1.85874
5,500.00
Overlapping Debt Table
0.25346
750.00
Contingency /Misc
1.09834
3,250.00
31.76749
94,000.00
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 5
22-144
Jun 11, 2018 12:41 pm Prepared by Fieldman, Rolapp & Associates
UNDERWRITER'S DISCOUNT
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 6
22-145
City of Newport Beach - Assessment Districts
AD 117
- Non -Rated Public Offering (Base Case - for Good Faith)
Underwriter's Discount
$/1000
Amount
Average Takedown
5.72000
16,925.48
Management Fee
0.65901
1,950.00
UW Counsel
1.18283
3,500.00
Expenses
1.01048
2,990.00
8.57231
25,365.48
Note: 1. Good Faith Estimate case based on 6/8 market conditions / scale from Hilltop Securities.
Page 6
22-145
Attachment G.2
22-146
Jun 7, 2018 2:11 pm Prepared by Fieldman, Rolapp & Associates
SOURCES AND USES OF FUNDS
City of Newport Beach - Assessment Districts
AD 117 - S&P Rated Public Offering
Dated Date 07/25/2018
Delivery Date 07/25/2018
Sources:
Bond Proceeds
Par Amount
2,760,886.00
2,760,886.00
Uses:
Project Fund Deposits:
Project Fund
2,489,608.60
Other Fund Deposits:
Debt Service Reserve Fund (5% of Par)
138,044.30
Delivery Date Expenses:
Cost of Issuance
109,000.00
Underwriter's Discount
24,232.27
133,232.27
Other Uses of Funds:
Additional Proceeds
0.83
2,760,886.00
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
Page 1
22-147
Jun 7, 2018 2:11 pm Prepared by Fieldman, Rolapp & Associates
BOND DEBT SERVICE
Period
Ending
City of Newport Beach - Assessment Districts
AD 117 - S&P Rated Public Offering
Principal Coupon Interest
Debt Service
09/02/2019
100,886
1.670%
86,363.27
187,249.27
09/02/2020
110,000
1.720%
76,629.50
186,629.50
09/02/2021
115,000
1.770%
74,737.50
189,737.50
09/02/2022
115,000
2.020%
72,702.00
187,702.00
09/02/2023
115,000
2.120%
70,379.00
185,379.00
09/02/2024
120,000
2.170%
67,941.00
187,941.00
09/02/2025
125,000
2.220%
65,337.00
190,337.00
09/02/2026
125,000
2.470%
62,562.00
187,562.00
09/02/2027
130,000
2.570%
59,474.50
189,474.50
09/02/2028
130,000
2.770%
56,133.50
186,133.50
09/02/2029
135,000
2.870%
52,532.50
187,532.50
09/02/2030
140,000
3.020%
48,658.00
188,658.00
09/02/2031
145,000
3.170%
44,430.00
189,430.00
09/02/2032
150,000
3.270%
39,833.50
189,833.50
09/02/2033
155,000
3.320%
34,928.50
189,928.50
09/02/2034
160,000
3.370%
29,782.50
189,782.50
09/02/2035
165,000
3.420%
24,390.50
189,390.50
09/02/2036
170,000
3.520%
18,747.50
188,747.50
09/02/2037
175,000
3.570%
12,763.50
187,763.50
09/02/2038
180,000
3.620%
6,516.00
186,516.00
2,760,886
1,004,841.77
3,765,727.77
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
Page 2
22-148
Jun 7, 2018 2:11 pm Prepared by Fieldman, Rolapp & Associates
BOND SUMMARY STATISTICS
City of Newport Beach - Assessment Districts
AD 117 - S&P Rated
Public Offering
Dated Date
07/25/2018
Delivery Date
07/25/2018
First Coupon
03/02/2019
Last Maturity
09/02/2038
Arbitrage Yield
3.119067%
True Interest Cost (TIC)
3.213345%
Net Interest Cost(NIC)
3.228504%
All -In TIC
3.652568%
Average Coupon
3.152480%
Average Life (years)
11.545
Duration of Issue (years)
9.484
Par Amount
2,760,886.00
Bond Proceeds
2,760,886.00
Total Interest
1,004,841.77
Net Interest
1,029,074.04
Total Debt Service
3,765,727.77
Maximum Annual Debt Service
190,337.00
Average Annual Debt Service
187,323.75
Underwriter's Fees (per $1000)
Average Takedown
5.720001
Management Fee
0.706295
Other Fee
2.350695
Total Underwriter's Discount
8.776990
Bid Price
99.122301
Par
Average Average
PV of 1 by
Bond Component
Value Price
Coupon Life
change
Bond Component
2,760,886.00 100.000
3.152% 11.545
2,537.10
2,760,886.00
11.545
2,537.10
All -In
Arbitrage
TIC
TIC
Yield
Par Value
2,760,886.00
2,760,886.00
2,760,886.00
+ Accrued Interest
+ Premium (Discount)
- Underwriter's Discount
-24,232.27
-24,232.27
- Cost of Issuance Expense
-109,000.00
- Other Amounts
TargetValue
2,736,653.73
2,627,653.73
2,760,886.00
Target Date
07/25/2018
07/25/2018
07/25/2018
Yield
3.213345%
3.652568%
3.119067%
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
Page 3
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Jun 7, 2018 2:11 pm Prepared by Fieldman, Rolapp & Associates Page 4
BOND PRICING
City of Newport Beach - Assessment Districts
AD 117 - S&P Rated Public Offering
Maturity
Bond Component Date Amount Rate Yield Price
Bond Component:
09/02/2019
100,886
1.670%
1.670%
100.000
09/02/2020
110,000
1.720%
1.720%
100.000
09/02/2021
115,000
1.770%
1.770%
100.000
09/02/2022
115,000
2.020%
2.020%
100.000
09/02/2023
115,000
2.120%
2.120%
100.000
09/02/2024
120,000
2.170%
2.170%
100.000
09/02/2025
125,000
2.220%
2.220%
100.000
09/02/2026
125,000
2.470%
2.470%
100.000
09/02/2027
130,000
2.570%
2.570%
100.000
09/02/2028
130,000
2.770%
2.770%
100.000
09/02/2029
135,000
2.870%
2.870%
100.000
09/02/2030
140,000
3.020%
3.020%
100.000
09/02/2031
145,000
3.170%
3.170%
100.000
09/02/2032
150,000
3.270%
3.270%
100.000
09/02/2033
155,000
3.320%
3.320%
100.000
09/02/2034
160,000
3.370%
3.370%
100.000
09/02/2035
165,000
3.420%
3.420%
100.000
09/02/2036
170,000
3.520%
3.520%
100.000
09/02/2037
175,000
3.570%
3.570%
100.000
09/02/2038
180,000
3.620%
3.620%
100.000
Dated Date
Delivery Date
First Coupon
Par Amount
Original Issue Discount
Production
Underwriter's Discount
Purchase Price
Accrued Interest
Net Proceeds
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
2,760,886
07/25/2018
07/25/2018
03/02/2019
2,760,886.00
2,760,886.00 100.000000%
-24,232.27 -0.877699%
2,736,653.73 99.122301%
2,736,653.73
22-150
Jun 7, 2018 2:11 pm Prepared by Fieldman, Rolapp & Associates
COST OF ISSUANCE
Cost of Issuance
City of Newport Beach - Assessment Districts
AD 117 - S&P Rated Public Offering
$/1000
Amount
Bond/ Disclosure Counsel
19.92114
55,000.00
Financial Advisor
6.33854
17,500.00
Fiscal Agent
0.90551
2,500.00
Printing
0.72441
2,000.00
District Administration - Upcoming
2.71652
7,500.00
Taxpayer Data Tables
1.99211
5,500.00
Overlapping Debt Table
0.27165
750.00
Contingency /Misc
1.17716
3,250.00
Credit Rating
5.43304
15,000.00
39.48008
109,000.00
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
Page 5
22-151
Jun 7, 2018 2:11 pm Prepared by Fieldman, Rolapp & Associates
UNDERWRITER'S DISCOUNT
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
Page 6
22-152
City of Newport Beach - Assessment Districts
AD 117 - S&P Rated Public Offering
Underwriter's Discount
$/1000
Amount
Average Takedown
5.72000
15,792.27
Management Fee
0.70630
1,950.00
UW Counsel
1.26771
3,500.00
Expenses
1.08299
2,990.00
8.77699
24,232.27
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
3. Assumes estimated credit rating benefit of-0.03%to yields.
Page 6
22-152
Attachment G.3
22-153
Jun 7, 2018 1:48 pm Prepared by Fieldman, Rolapp & Associates Page 1
SOURCES AND USES OF FUNDS
City of Newport Beach - Assessment Districts
AD 117 - Private Placement
Dated Date 07/25/2018
Delivery Date 07/25/2018
Sources:
Bond Proceeds:
Par Amount 2,728,100.00
2,728,100.00
Uses:
Project Fund Deposits:
Project Fund
2,489,608.60
Other Fund Deposits:
Debt Service Reserve Fund (5% of Par)
136,405.00
Delivery Date Expenses:
Cost of Issuance
102,000.00
Other Uses of Funds:
Additional Proceeds
86.40
2,728,100.00
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
22-154
Jun 7, 2018 1:48 pm Prepared by Fieldman, Rolapp & Associates
BOND DEBT SERVICE
City of Newport Beach - Assessment Districts
AD 117 - Private Placement
Period
Ending
Principal
Coupon
Interest
Debt Service
09/02/2019
84,100
3.600%
108,305.57
192,405.57
09/02/2020
99,000
3.600%
95,184.00
194,184.00
09/02/2021
103,000
3.600%
91,620.00
194,620.00
09/02/2022
107,000
3.600%
87,912.00
194,912.00
09/02/2023
110,000
3.600%
84,060.00
194,060.00
09/02/2024
114,000
3.600%
80,100.00
194,100.00
09/02/2025
119,000
3.600%
75,996.00
194,996.00
09/02/2026
123,000
3.600%
71,712.00
194,712.00
09/02/2027
127,000
3.600%
67,284.00
194,284.00
09/02/2028
132,000
3.600%
62,712.00
194,712.00
09/02/2029
137,000
3.600%
57,960.00
194,960.00
09/02/2030
141,000
3.600%
53,028.00
194,028.00
09/02/2031
147,000
3.600%
47,952.00
194,952.00
09/02/2032
152,000
3.600%
42,660.00
194,660.00
09/02/2033
157,000
3.600%
37,188.00
194,188.00
09/02/2034
163,000
3.600%
31,536.00
194,536.00
09/02/2035
169,000
3.600%
25,668.00
194,668.00
09/02/2036
175,000
3.600%
19,584.00
194,584.00
09/02/2037
181,000
3.600%
13,284.00
194,284.00
09/02/2038
188,000
3.600%
6,768.00
194,768.00
2,728,100
1,160,513.57
3,888,613.57
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
Page 2
22-155
Jun 7, 2018 1:48 pm Prepared by Fieldman, Rolapp & Associates
BOND SUMMARY STATISTICS
City of Newport Beach - Assessment Districts
AD 117 - Private Placement
Dated Date
07/25/2018
Delivery Date
07/25/2018
First Coupon
03/02/2019
Last Maturity
09/02/2038
Arbitrage Yield
3.599574%
True Interest Cost (TIC)
3.599574%
Net Interest Cost(NIC)
3.600000%
All -In TIC
4.018255%
Average Coupon
3.600000%
Average Life (years)
11.816
Duration of Issue (years)
9.342
Par Amount
2,728,100.00
Bond Proceeds
2,728,100.00
Total Interest
1,160,513.57
Net Interest
1,160,513.57
Total Debt Service
3,888,613.57
Maximum Annual Debt Service
194,996.00
Average Annual Debt Service
193,436.63
Underwriter's Fees (per $1000)
Average Takedown
Other Fee
Total Underwriter's Discount
Bid Price
100.000000
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
Page 3
22-156
Par
Average
Average
PV of 1 by
Bond Component
Value Price
Coupon
Life
change
Bond Component
2,728,100.00 100.000
3.600%
11.816
2,501.72
2,728,100.00
11.816
2,501.72
All -In
Arbitrage
TIC
TIC
Yield
Par Value
2,728,100.00
2,728,100.00
2,728,100.00
+ Accrued Interest
+ Premium (Discount)
- Underwriter's Discount
- Cost of Issuance Expense
-102,000.00
- Other Amounts
TargetValue
2,728,100.00
2,626,100.00
2,728,100.00
Target Date
07/25/2018
07/25/2018
07/25/2018
Yield
3.599574%
4.018255%
3.599574%
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
Page 3
22-156
Jun 7, 2018 1:48 pm Prepared by Fieldman, Rolapp & Associates Page 4
BOND PRICING
City of Newport Beach - Assessment Districts
AD 117 -Private Placement
Maturity
Bond Component Date Amount Rate Yield Price
Bond Component:
09/02/2019
84,100
3.600%
3.600%
100.000
07/25/2018
09/02/2020
99,000
3.600%
3.600%
100.000
2,728,100.00
09/02/2021
103,000
3.600%
3.600%
100.000
09/02/2022
107,000
3.600%
3.600%
100.000
09/02/2023
110,000
3.600%
3.600%
100.000
09/02/2024
114,000
3.600%
3.600%
100.000
09/02/2025
119,000
3.600%
3.600%
100.000
09/02/2026
123,000
3.600%
3.600%
100.000
09/02/2027
127,000
3.600%
3.600%
100.000
09/02/2028
132,000
3.600%
3.600%
100.000
09/02/2029
137,000
3.600%
3.600%
100.000
09/02/2030
141,000
3.600%
3.600%
100.000
09/02/2031
147,000
3.600%
3.600%
100.000
09/02/2032
152,000
3.600%
3.600%
100.000
09/02/2033
157,000
3.600%
3.600%
100.000
09/02/2034
163,000
3.600%
3.600%
100.000
09/02/2035
169,000
3.600%
3.600%
100.000
09/02/2036
175,000
3.600%
3.600%
100.000
09/02/2037
181,000
3.600%
3.600%
100.000
09/02/2038
188,000
3.600%
3.600%
100.000
Net Proceeds 2,728,100.00
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
22-157
2,728,100
Dated Date
07/25/2018
Delivery Date
07/25/2018
First Coupon
03/02/2019
Par Amount
2,728,100.00
Original Issue Discount
Production
2,728,100.00 100.000000%
Underwriter's Discount
Purchase Price
2,728,100.00 100.000000%
Accrued Interest
Net Proceeds 2,728,100.00
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
22-157
Jun 7, 2018 1:48 pm Prepared by Fieldman, Rolapp & Associates
COST OF ISSUANCE
City of Newport Beach - Assessment Districts
AD 117 - Private Placement
Cost of Issuance $/1000
Amount
Bond/ Disclosure Counsel
14.66222
40,000.00
Financial Advisor
6.41472
17,500.00
Fiscal Agent
0.91639
2,500.00
District Administration - Upcoming
2.74917
7,500.00
Taxpayer Data Tables
2.01606
5,500.00
Overlapping Debt Table
0.27492
750.00
Contingency / Misc
1.19131
3,250.00
Placement Agent
5.49833
15,000.00
Bank Counsel Fee
3.66555
10,000.00
37.38866
102,000.00
Notes:
1. Bank rate based on estimated market conditions as of May 21, 2018.
2. Placement Agent fee based on Hilltop proposal.
Page 5
22-158
Attachment G.4
22-159
Jun 7, 2018 12:23 pm Prepared by Fieldman, Rolapp & Associates
SOURCES AND USES OF FUNDS
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering
Dated Date 07/25/2018
Delivery Date 07/25/2018
Sources:
Bond Proceeds
Par Amount
2,745,000.00
2,745,000.00
Uses:
Other Fund Deposits:
Debt Service Reserve Fund (5% of Par)
137,250.00
Delivery Date Expenses:
Cost of Issuance
94,000.00
Underwriter's Discount
24,141.40
118,141.40
Other Uses of Funds:
Additional Proceeds
2,489,608.60
2,745,000.00
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
Page 1
22-160
Jun 7, 2018 12:23 pm Prepared by Fieldman, Rolapp & Associates
BOND DEBT SERVICE
Period
Ending
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering
Principal Coupon Interest
Debt Service
09/02/2019
100,000
1.700%
86,852.02
186,852.02
09/02/2020
110,000
1.750%
77,057.50
187,057.50
09/02/2021
110,000
1.800%
75,132.50
185,132.50
09/02/2022
115,000
2.050%
73,152.50
188,152.50
09/02/2023
115,000
2.150%
70,795.00
185,795.00
09/02/2024
120,000
2.200%
68,322.50
188,322.50
09/02/2025
120,000
2.250%
65,682.50
185,682.50
09/02/2026
125,000
2.500%
62,982.50
187,982.50
09/02/2027
130,000
2.600%
59,857.50
189,857.50
09/02/2028
130,000
2.800%
56,477.50
186,477.50
09/02/2029
135,000
2.900%
52,837.50
187,837.50
09/02/2030
140,000
3.050%
48,922.50
188,922.50
09/02/2031
145,000
3.200%
44,652.50
189,652.50
09/02/2032
150,000
3.300%
40,012.50
190,012.50
09/02/2033
150,000
3.350%
35,062.50
185,062.50
09/02/2034
160,000
3.400%
30,037.50
190,037.50
09/02/2035
165,000
3.450%
24,597.50
189,597.50
09/02/2036
170,000
3.550%
18,905.00
188,905.00
09/02/2037
175,000
3.600%
12,870.00
187,870.00
09/02/2038
180,000
3.650%
6,570.00
186,570.00
2,745,000
1,010,779.52
3,755,779.52
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
Page 2
22-161
Jun 7, 2018 12:23 pm Prepared by Fieldman, Rolapp & Associates
BOND SUMMARY STATISTICS
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated
Public Offering
Dated Date
07/25/2018
Delivery Date
07/25/2018
First Coupon
03/02/2019
Last Maturity
09/02/2038
Arbitrage Yield
3.150222%
True Interest Cost (TIC)
3.244741%
Net Interest Cost(NIC)
3.259889%
All -In TIC
3.624445%
Average Coupon
3.183846%
Average Life (years)
11.565
Duration of Issue (years)
9.480
Par Amount
2,745,000.00
Bond Proceeds
2,745,000.00
Total Interest
1,010,779.52
Net Interest
1,034,920.92
Total Debt Service
3,755,779.52
Maximum Annual Debt Service
190,037.50
Average Annual Debt Service
186,828.88
Underwriter's Fees (per $1000)
Average Takedown
5.720000
Management Fee
0.710383
Other Fee
2.364299
Total Underwriter's Discount
8.794681
Bid Price
99.120532
Par
Average Average
PV of 1 by
Bond Component
Value Price
Coupon Life
change
Bond Component
2,745,000.00 100.000
3.184% 11.565
2,521.80
2,745,000.00
11.565
2,521.80
All -In
Arbitrage
TIC
TIC
Yield
Par Value
2,745,000.00
2,745,000.00
2,745,000.00
+ Accrued Interest
+ Premium (Discount)
- Underwriter's Discount
-24,141.40
-24,141.40
- Cost of Issuance Expense
-94,000.00
- Other Amounts
TargetValue
2,720,858.60
2,626,858.60
2,745,000.00
Target Date
07/25/2018
07/25/2018
07/25/2018
Yield
3.244741%
3.624445%
3.150222%
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
Page 3
22-162
Jun 7, 2018 12:23 pm Prepared by Fieldman, Rolapp & Associates Page 4
BOND PRICING
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering
Maturity
Bond Component Date Amount Rate Yield Price
Bond Component:
09/02/2019
100,000
1.700%
1.700%
100.000
09/02/2020
110,000
1.750%
1.750%
100.000
09/02/2021
110,000
1.800%
1.800%
100.000
09/02/2022
115,000
2.050%
2.050%
100.000
09/02/2023
115,000
2.150%
2.150%
100.000
09/02/2024
120,000
2.200%
2.200%
100.000
09/02/2025
120,000
2.250%
2.250%
100.000
09/02/2026
125,000
2.500%
2.500%
100.000
09/02/2027
130,000
2.600%
2.600%
100.000
09/02/2028
130,000
2.800%
2.800%
100.000
09/02/2029
135,000
2.900%
2.900%
100.000
09/02/2030
140,000
3.050%
3.050%
100.000
09/02/2031
145,000
3.200%
3.200%
100.000
09/02/2032
150,000
3.300%
3.300%
100.000
09/02/2033
150,000
3.350%
3.350%
100.000
09/02/2034
160,000
3.400%
3.400%
100.000
09/02/2035
165,000
3.450%
3.450%
100.000
09/02/2036
170,000
3.550%
3.550%
100.000
09/02/2037
175,000
3.600%
3.600%
100.000
09/02/2038
180,000
3.650%
3.650%
100.000
Dated Date
Delivery Date
First Coupon
Par Amount
Original Issue Discount
Production
Underwriter's Discount
Purchase Price
Accrued Interest
Net Proceeds
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
2,745,000
07/25/2018
07/25/2018
03/02/2019
2,745,000.00
2,745,000.00 100.000000%
-24,141.40 -0.879468%
2,720,858.60 99.120532%
2,720,858.60
22-163
Jun 7, 2018 12:23 pm Prepared by Fieldman, Rolapp & Associates
COST OF ISSUANCE
Cost of Issuance
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering
$/1000
Amount
Bond/ Disclosure Counsel
20.03643
55,000.00
Financial Advisor
6.37523
17,500.00
Fiscal Agent
0.91075
2,500.00
Printing
0.72860
2,000.00
District Administration - Upcoming
2.73224
7,500.00
Taxpayer Data Tables
2.00364
5,500.00
Overlapping Debt Table
0.27322
750.00
Contingency /Misc
1.18397
3,250.00
34.24408
94,000.00
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
Page 5
22-164
Jun 7, 2018 12:23 pm Prepared by Fieldman, Rolapp & Associates
Underwriter's Discount
UNDERWRITER'S DISCOUNT
City of Newport Beach - Assessment Districts
AD 117 - Non -Rated Public Offering
$/1000 Amount
Average Takedown
5.72000
15,701.40
Management Fee
0.71038
1,950.00
UW Counsel
1.27505
3,500.00
Expenses
1.08925
2,990.00
8.79468
24,141.40
Notes:
1. Based on estimated market conditions as of May 21, 2018.
2. UW Discount Information based on Hilltop proposal.
Page 6
22-165
Attachment H
Good Faith Estimates
22-166
Exhibit to Staff Report — SB 450 Required Estimates
Set forth below are good faith estimates of Fieldman, Rolapp & Associates, Inc., the municipal
advisor, as required under Section 5852.1 of the California Government Code (the "Code"). The
following estimates have no bearing on, and should not be misconstrued as, any not -to -exceed
financial parameters authorized by resolution.
(a) The true interest cost of the bonds is estimated at 3.303%, calculated as provided in Section
5852.1(a)(1)(A) of the Code.
(b) The finance charge of the Bonds, including all fees and charges paid to third parties, is
estimated at $119,342.
(c) Proceeds of the Bonds received by the City for the sale of the Bonds, including the estimated
principal amount of the proposed Bonds of $2,955,000 less the finance charges set forth in (b)
above, is equal to $2,835,658.
(d) The total payment amount calculated as provided in Section 5852.1(a)(1)(D) of the Code is
estimated at $4,058,726.
The foregoing are estimates and the final costs will depend on market conditions and can be expected
to vary from the estimated amounts set forth above.
22-167
ATTACHMENT I
PROFESSIONAL SERVICES AGREEMENT
WITH NV5, INC. FOR
CONSTRUCTION AND RESIDENTIAL SUPPORT SERVICES FOR
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 117
THIS PROFESSIONAL SERVICES AGREEMENT ("Agreement") is made and
entered into as of this 26th day of June, 2018 ("Effective Date"), by and between the CITY
OF NEWPORT BEACH, a California municipal corporation and charter city ("City"), and
NV5, INC., a California corporation ("Consultant"), whose address is 9890 Irvine Center
Drive, Irvine, CA 92618, and is made with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of City.
B. City desires to engage Consultant to provide professional construction
administration and residential permit support services for a utility undergrounding
project in Assessment District No. 117 ("Project").
C. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the professional services described in this Agreement.
D. City has solicited and received a proposal from Consultant, has reviewed the
previous experience and evaluated the expertise of Consultant, and desires to
retain Consultant to render professional services under the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows:
1. TERM
The term of this Agreement shall commence on the Effective Date, and shall
terminate on June 30, 2020, unless terminated earlier as set forth herein.
Consultant shall diligently perform all the services described in the Scope of
Services attached hereto as Exhibit A and incorporated herein by reference ("Services"
or "Work"). City may elect to delete certain Services within the Scope of Services at its
sole discretion.
3.1 Time is of the essence in the performance of Services under this Agreement
and Consultant shall perform the Services in accordance with the schedule included in
22-168
Exhibit A. In the absence of a specific schedule, the Services shall be performed to
completion in a diligent and timely manner. The failure by Consultant to strictly adhere to
the schedule set forth in Exhibit A, if any, or perform the Services in a diligent and timely
manner may result in termination of this Agreement by City.
3.2 Notwithstanding the foregoing, Consultant shall not be responsible for
delays due to causes beyond Consultant's reasonable control. However, in the case of
any such delay in the Services to be provided for the Project, each party hereby agrees
to provide notice within two (2) calendar days of the occurrence causing the delay to the
other party so that all delays can be addressed.
3.3 Consultant shall submit all requests for extensions of time for performance
in writing to the Project Administrator as defined herein not later than ten (10) calendar
days after the start of the condition that purportedly causes a delay. The Project
Administrator shall review all such requests and may grant reasonable time extensions
for unforeseeable delays that are beyond Consultant's control.
3.4 For all time periods not specifically set forth herein, Consultant shall
respond in the most expedient and appropriate manner under the circumstances, by
hand -delivery or mail.
4. COMPENSATION TO CONSULTANT
4.1 City shall pay Consultant for the Services on a time and expense not -to -
exceed basis in accordance with the provisions of this Section and the Schedule of Billing
Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's
compensation for all Work performed in accordance with this Agreement, including all
reimbursable items and subconsultant fees, shall not exceed Two Hundred Ninety
Three Thousand Two Hundred Sixty Nine Dollars and 001100 ($293,269.00), without
prior written authorization from City. No billing rate changes shall be made during the
term of this Agreement without the prior written approval of City.
4.2 Consultant shall submit monthly invoices to City describing the Work
performed the preceding month. Consultant's bills shall include the name of the person
who performed the Work, a brief description of the Services performed and/or the specific
task in the Scope of Services to which it relates, the date the Services were performed,
the number of hours spent on all Work billed on an hourly basis, and a description of any
reimbursable expenditures. City shall pay Consultant no later than thirty (30) calendar
days after approval of the monthly invoice by City staff.
4.3 City shall reimburse Consultant only for those costs or expenses specifically
identified in Exhibit B to this Agreement or specifically approved in writing in advance by
City.
4.4 Consultant shall not receive any compensation for Extra Work performed
without the prior written authorization of City. As used herein, "Extra Work" means any
Work that is determined by City to be necessary for the proper completion of the Project,
but which is not included within the Scope of Services and which the parties did not
NV5, Inc. Page 2
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reasonably anticipate would be necessary at the execution of this Agreement.
Compensation for any authorized Extra Work shall be paid in accordance with the
Schedule of Billing Rates as set forth in Exhibit B.
5. PROJECT MANAGER
5.1 Consultant shall designate a Project Manager, who shall coordinate all
phases of the Project. This Project Manager shall be available to City at all reasonable
times during the Agreement term. Consultant has designated Jeffrey M. Cooper, PE to
be its Project Manager. Consultant shall not remove or reassign the Project Manager or
any personnel listed in Exhibit A or assign any new or replacement personnel to the
Project without the prior written consent of City. City's approval shall not be unreasonably
withheld with respect to the removal or assignment of non -key personnel.
5.2 Consultant, at the sole discretion of City, shall remove from the Project any
of its personnel assigned to the performance of Services upon written request of City.
Consultant warrants that it will continuously furnish the necessary personnel to complete
the Project on a timely basis as contemplated by this Agreement.
5.3 If Consultant is performing inspection services for City, the Project Manager
and any other assigned staff shall be equipped with a cellular phone to communicate with
City staff. The Project Manager's cellular phone number shall be provided to City.
6. ADMINISTRATION
This Agreement will be administered by the Public Works Department. City's
Public Works Director or designee shall be the Project Administrator and shall have the
authority to act for City under this Agreement. The Project Administrator shall represent
City in all matters pertaining to the Services to be rendered pursuant to this Agreement.
7. CITY'S RESPONSIBILITIES
To assist Consultant in the execution of its responsibilities under this Agreement,
City agrees to provide access to and upon request of Consultant, one copy of all existing
relevant information on file at City. City will provide all such materials in a timely manner
so as not to cause delays in Consultant's Work schedule.
8. STANDARD OF CARE
8.1 All of the Services shall be performed by Consultant or under Consultant's
supervision. Consultant represents that it possesses the professional and technical
personnel required to perform the Services required by this Agreement, and that it will
perform all Services in a manner commensurate with community professional standards
and with the ordinary degree of skill and care that would be used by other reasonably
competent practitioners of the same discipline under similar circumstances. All Services
shall be performed by qualified and experienced personnel who are not employed by City.
By delivery of completed Work, Consultant certifies that the Work conforms to the
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requirements of this Agreement, all applicable federal, state and local laws, and legally
recognized professional standards.
8.2 Consultant represents and warrants to City that it has, shall obtain, and shall
keep in full force and effect during the term hereof, at its sole cost and expense, all
licenses, permits, qualifications, insurance and approvals of whatsoever nature that is
legally required of Consultant to practice its profession. Consultant shall maintain a City
of Newport Beach business license during the term of this Agreement.
8.3 Consultant shall not be responsible for delay, nor shall Consultant be
responsible for damages or be in default or deemed to be in default by reason of strikes,
lockouts, accidents, acts of God, or the failure of City to furnish timely information or to
approve or disapprove Consultant's Work promptly, or delay or faulty performance by
City, contractors, or governmental agencies.
9. HOLD HARMLESS
9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend
and hold harmless City, its City Council, boards and commissions, officers, agents,
volunteers, employees (collectively, the "Indemnified Parties") from and against any and
all claims (including, without limitation, claims for bodily injury, death or damage to
property), demands, obligations, damages, actions, causes of action, suits, losses,
judgments, fines, penalties, liabilities, costs and expenses (including, without limitation,
attorneys' fees, disbursements and court costs) of every kind and nature whatsoever
(individually, a Claim; collectively, "Claims"), which arise from any breach of the terms
and conditions of this Agreement, any Work performed or Services provided under this
Agreement including, without limitation, defects in workmanship or materials or
Consultant's presence or activities conducted on the Project (including the negligent,
reckless, and/or willful acts, errors and/or omissions of Consultant, its principals, officers,
agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed
directly or indirectly by any of them or for whose acts they may be liable, or any or all of
them).
9.2 Notwithstanding the foregoing, nothing herein shall be construed to require
Consultant to indemnify the Indemnified Parties from any Claim arising from the
negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall
be construed as authorizing any award of attorneys' fees in any action on or to enforce
the terms of this Agreement. This indemnity shall apply to all claims and liability
regardless of whether any insurance policies are applicable. The policy limits do not act
as a limitation upon the amount of indemnification to be provided by Consultant.
10. INDEPENDENT CONTRACTOR
10.1 It is understood that City retains Consultant on an independent contractor
basis and Consultant is not an agent or employee of City. The manner and means of
conducting the Work are under the control of Consultant, except to the extent they are
limited by statute, rule or regulation and the expressed terms of this Agreement. No civil
NV5, I nc. Page 4
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service status or other right of employment shall accrue to Consultant or its employees.
Nothing in this Agreement shall be deemed to constitute approval for Consultant or any
of Consultant's employees or agents, to be the agents or employees of City. Consultant
shall have the responsibility for and control over the means of performing the Work,
provided that Consultant is in compliance with the terms of this Agreement. Anything in
this Agreement that may appear to give City the right to direct Consultant as to the details
of the performance of the Work or to exercise a measure of control over Consultant shall
mean only that Consultant shall follow the desires of City with respect to the results of the
Services.
10.2 Consultant agrees and acknowledges that no individual performing
Services or Work pursuant to this Agreement shall: work full-time for more than six (6)
months; work regular part-time service of at least an average of twenty (20) hours per
week for one year or longer; work nine hundred sixty (960) hours in any fiscal year; or
already be a CalPERS member.
10.3 Consultant must submit to and pass a criminal background investigation by
providing a complete set of fingerprints to City prior to commencing or performing
Services or Work. Consultant is required to submit any fees for the criminal background
investigation according to the City's most current administrative fee schedule or
successor document. Fingerprints may be required to be updated every five (5) years.
11. COOPERATION
Consultant agrees to work closely and cooperate fully with City's designated
Project Administrator and any other agencies that may have jurisdiction or interest in the
Work to be performed. City agrees to cooperate with the Consultant on the Project.
12. CITY POLICY
Consultant shall discuss and review all matters relating to policy and Project
direction with City's Project Administrator in advance of all critical decision points in order
to ensure the Project proceeds in a manner consistent with City goals and policies.
13. PROGRESS
Consultant is responsible for keeping the Project Administrator informed on a
regular basis regarding the status and progress of the Project, activities performed and
planned, and any meetings that have been scheduled or are desired.
14. INSURANCE
Without limiting Consultant's indemnification of City, and prior to commencement
of Work, Consultant shall obtain, provide and maintain at its own expense during the term
of this Agreement or for other periods as specified in this Agreement, policies of insurance
of the type, amounts, terms and conditions described in the Insurance Requirements
attached hereto as Exhibit C, and incorporated herein by reference.
NV5, Inc. Page 5
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15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specifically authorized under this Agreement, the Services to be
provided under this Agreement shall not be assigned, transferred contracted or
subcontracted out without the prior written approval of City. Any of the following shall be
construed as an assignment: The sale, assignment, transfer or other disposition of any
of the issued and outstanding capital stock of Consultant, or of the interest of any general
partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or
joint -venture or syndicate or co -tenancy, which shall result in changing the control of
Consultant. Control means fifty percent (50%) or more of the voting power or twenty-five
percent (25%) or more of the assets of the corporation, partnership or joint -venture.
16. SUBCONTRACTING
The subcontractors authorized by City, if any, to perform Work on this Project are
identified in Exhibit A. Consultant shall be fully responsible to City for all acts and
omissions of any subcontractor. Nothing in this Agreement shall create any contractual
relationship between City and any subcontractor nor shall it create any obligation on the
part of City to pay or to see to the payment of any monies due to any such subcontractor
other than as otherwise required by law. City is an intended beneficiary of any Work
performed by the subcontractor for purposes of establishing a duty of care between the
subcontractor and City. Except as specifically authorized herein, the Services to be
provided under this Agreement shall not be otherwise assigned, transferred, contracted
or subcontracted out without the prior written approval of City.
17. OWNERSHIP OF DOCUMENTS
17.1 Each and every report, draft, map, record, plan, document and other writing
produced, including but not limited to, websites, blogs, social media accounts and
applications (hereinafter "Documents"), prepared or caused to be prepared by Consultant,
its officers, employees, agents and subcontractors, in the course of implementing this
Agreement, shall become the exclusive property of City, and City shall have the sole right
to use such materials in its discretion without further compensation to Consultant or any
other party. Additionally, all material posted in cyberspace by Consultant, its officers,
employees, agents and subcontractors, in the course of implementing this Agreement,
shall become the exclusive property of City, and City shall have the sole right to use such
materials in its discretion without further compensation to Consultant or any other party.
Consultant shall, at Consultant's expense, provide such Documents, including all logins
and password information to City upon prior written request.
17.2 Documents, including drawings and specifications, prepared by Consultant
pursuant to this Agreement are not intended or represented to be suitable for reuse by
City or others on any other project. Any use of completed Documents for other projects
and any use of incomplete Documents without specific written authorization from
Consultant will be at City's sole risk and without liability to Consultant. Further, any and
all liability arising out of changes made to Consultant's deliverables under this Agreement
by City or persons other than Consultant is waived against Consultant, and City assumes
NV5, Inc. Page 6
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full responsibility for such changes unless City has given Consultant prior notice and has
received from Consultant written consent for such changes.
17.3 All written documents shall be transmitted to City in formats compatible with
Microsoft Office and/or viewable with Adobe Acrobat.
18. CONFIDENTIALITY
All Documents, including drafts, preliminary drawings or plans, notes and
communications that result from the Services in this Agreement, shall be kept confidential
unless City expressly authorizes in writing the release of information.
19. INTELLECTUAL PROPERTY INDEMNITY
Consultant shall defend and indemnify City, its agents, officers, representatives
and employees against any and all liability, including costs, for infringement or alleged
infringement of any United States' letters patent, trademark, or copyright, including costs,
contained in Consultant's Documents provided under this Agreement.
20. RECORDS
Consultant shall keep records and invoices in connection with the Services to be
performed under this Agreement. Consultant shall maintain complete and accurate
records with respect to the costs incurred under this Agreement and any Services,
expenditures and disbursements charged to City, for a minimum period of three (3) years,
or for any longer period required by law, from the date of final payment to Consultant
under this Agreement. All such records and invoices shall be clearly identifiable.
Consultant shall allow a representative of City to examine, audit and make transcripts or
copies of such records and invoices during regular business hours. Consultant shall allow
inspection of all Work, data, Documents, proceedings and activities related to the
Agreement for a period of three (3) years from the date of final payment to Consultant
under this Agreement.
21. WITHHOLDINGS
City may withhold payment to Consultant of any disputed sums until satisfaction of
the dispute with respect to such payment. Such withholding shall not be deemed to
constitute a failure to pay according to the terms of this Agreement. Consultant shall not
discontinue Work as a result of such withholding. Consultant shall have an immediate
right to appeal to the City Manager or designee with respect to such disputed sums.
Consultant shall be entitled to receive interest on any withheld sums at the rate of return
that City earned on its investments during the time period, from the date of withholding of
any amounts found to have been improperly withheld.
22. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS
City reserves the right to employ other Consultants in connection with the Project.
NV5, I nc. Page 7
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23. CONFLICTS OF INTEREST
23.1 Consultant or its employees may be subject to the provisions of the
California Political Reform Act of 1974 (the "Act") and/or Government Code §§ 1090 et
seq., which (1) require such persons to disclose any financial interest that may
foreseeably be materially affected by the Work performed under this Agreement, and (2)
prohibit such persons from making, or participating in making, decisions that will
foreseeably financially affect such interest.
23.2 If subject to the Act and/or Government Code §§ 1090 et seq., Consultant
shall conform to all requirements therein. Failure to do so constitutes a material breach
and is grounds for immediate termination of this Agreement by City. Consultant shall
indemnify and hold harmless City for any and all claims for damages resulting from
Consultant's violation of this Section.
24. NOTICES
24.1 All notices, demands, requests or approvals, including any change in
mailing address, to be given under the terms of this Agreement shall be given in writing,
and conclusively shall be deemed served when delivered personally, or on the third
business day after the deposit thereof in the United States mail, postage prepaid, first-
class mail, addressed as hereinafter provided.
24.2 All notices, demands, requests or approvals from Consultant to City shall
be addressed to City at:
Attn: Public Works Director
Public Works Department
City of Newport Beach
100 Civic Center Drive
PO Box 1768
Newport Beach, CA 92658
24.3 All notices, demands, requests or approvals from City to Consultant shall
be addressed to Consultant at:
Attn: Jeffrey M. Cooper, PE
NV5, Inc.
9890 Irvine Center Drive
Irvine, CA 92618
25. CLAIMS
25.1 Unless a shorter time is specified elsewhere in this Agreement, before
making its final request for payment under this Agreement, Consultant shall submit to
City, in writing, all claims for compensation under or arising out of this Agreement.
Consultant's acceptance of the final payment shall constitute a waiver of all claims for
NV5, Inc. Page 8
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compensation under or arising out of this Agreement except those previously made in
writing and identified by Consultant in writing as unsettled at the time of its final request
for payment. Consultant and City expressly agree that in addition to any claims filing
requirements set forth in the Agreement, Consultant shall be required to file any claim
Consultant may have against City in strict conformance with the Government Claims Act
(Government Code sections 900 et seq.).
25.2 To the extent that Consultant's claim is a "Claim" as defined in Public
Contract Code section 9204 or any successor statute thereto, the Parties agree to follow
the dispute resolution process set forth therein. Any part of such "Claim" remaining in
dispute after completion of the dispute resolution process provided for in Public Contract
Code section 9204 or any successor statute thereto shall be subject to the Government
Claims Act requirements requiring Consultant to file a claim in strict conformance with the
Government Claims Act. To the extent that Contractor/Consultant's claim is not a "Claim"
as defined in Public Contract Code section 9204 or any successor statute thereto,
Consultant shall be required to file such claim with the City in strict conformance with the
Government Claims Act (Government Code sections 900 et seq.).
26. TERMINATION
26.1 In the event that either party fails or refuses to perform any of the provisions
of this Agreement at the time and in the manner required, that party shall be deemed in
default in the performance of this Agreement. If such default is not cured within a period
of two (2) calendar days, or if more than two (2) calendar days are reasonably required
to cure the default and the defaulting party fails to give adequate assurance of due
performance within two (2) calendar days after receipt of written notice of default,
specifying the nature of such default and the steps necessary to cure such default, and
thereafter diligently take steps to cure the default, the non -defaulting party may terminate
the Agreement forthwith by giving to the defaulting party written notice thereof.
26.2 Notwithstanding the above provisions, City shall have the right, at its sole
and absolute discretion and without cause, of terminating this Agreement at any time by
giving no less than seven (7) calendar days' prior written notice to Consultant. In the
event of termination under this Section, City shall pay Consultant for Services
satisfactorily performed and costs incurred up to the effective date of termination for which
Consultant has not been previously paid. On the effective date of termination, Consultant
shall deliver to City all reports, Documents and other information developed or
accumulated in the performance of this Agreement, whether in draft or final form.
27. PREVAILING WAGES
27.1 Pursuant to the applicable provisions of the Labor Code of the State of
California, not less than the general prevailing rate of per diem wages including legal
holidays and overtime Work for each craft or type of workman needed to execute the
Work contemplated under the Agreement shall be paid to all workmen employed on the
Work to be done according to the Agreement by the Consultant and any subcontractor.
In accordance with the California Labor Code (Sections 1770 et seq.), the Director of
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22-176
Industrial Relations has ascertained the general prevailing rate of per diem wages in the
locality in which the Work is to be performed for each craft, classification, or type of
workman or mechanic needed to execute the Agreement. A copy of said determination
is available by calling the prevailing wage hotline number (415) 703-4774, and requesting
one from the Department of Industrial Relations. The Consultant is required to obtain the
wage determinations from the Department of Industrial Relations and post at the job site
the prevailing rate or per diem wages. It shall be the obligation of the Consultant or any
subcontractor under him/her to comply with all State of California labor laws, rules and
regulations and the parties agree that the City shall not be liable for any violation thereof.
27.2 Unless otherwise exempt by law, Consultant warrants that no contractor or
subcontractor was listed on the bid proposal for the Services that it is not currently
registered and qualified to perform public work. Consultant further warrants that it is
currently registered and qualified to perform "public work" pursuant to California Labor
Code section 1725.5 or any successor statute thereto and that no contractor or
subcontractor will engage in the performance of the Services unless currently registered
and qualified to perform public work.
28. STANDARD PROVISIONS
28.1 Recitals. City and Consultant acknowledge that the above Recitals are true
and correct and are hereby incorporated by reference into this Agreement.
28.2 Compliance with all Laws. Consultant shall, at its own cost and expense,
comply with all statutes, ordinances, regulations and requirements of all governmental
entities, including federal, state, county or municipal, whether now in force or hereinafter
enacted. In addition, all Work prepared by Consultant shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements and be subject
to approval of the Project Administrator and City.
28.3 Waiver. A waiver by either party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition contained herein, whether of the
same or a different character.
28.4 Integrated Contract. This Agreement represents the full and complete
understanding of every kind or nature whatsoever between the parties hereto, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged herein.
No verbal agreement or implied covenant shall be held to vary the provisions herein.
28.5 Conflicts or Inconsistencies. In the event there are any conflicts or
inconsistencies between this Agreement and the Scope of Services or any other
attachments attached hereto, the terms of this Agreement shall govern.
28.6 Interpretation. The terms of this Agreement shall be construed in
accordance with the meaning of the language used and shall not be construed for or
against either party by reason of the authorship of the Agreement or any other rule of
construction which might otherwise apply.
NV5, Inc. Page 10
22-177
28.7 Amendments. This Agreement may be modified or amended only by a
written document executed by both Consultant and City and approved as to form by the
City Attorney.
28.8 Severability. If any term or portion of this Agreement is held to be invalid,
illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall continue in full force and effect.
28.9 Controlling Law and Venue. The laws of the State of California shall govern
this Agreement and all matters relating to it and any action brought relating to this
Agreement shall be adjudicated in a court of competent jurisdiction in the County of
Orange, State of California.
28.10 Egual Opportunity Employment. Consultant represents that it is an equal
opportunity employer and it shall not discriminate against any subcontractor, employee
or applicant for employment because race, religious creed, color, national origin,
ancestry, physical handicap, medical condition, marital status, sex, sexual orientation,
age or any other impermissible basis under law.
28.11 No Attorneys' Fees. In the event of any dispute or legal action arising under
this Agreement, the prevailing party shall not be entitled to attorneys' fees.
28.12 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which together shall
constitute one (1) and the same instrument.
[SIGNATURES ON NEXT PAGE]
NV5, Inc. Page 11
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: -,Tu l)g 2b` 20 e
n By. Pak
City Atto y
ATTEST:
Date:
EM
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
By:
Marshall "Duffy" Duffield
Mayor
CONSULTANT: NV5, Inc., a California
corporation
Date:
By:
Dickerson Wright
Chief Executive Officer
LM
Stephanie Strong
Chief Financial Officer
[END OF SIGNATURES]
Attachments: Exhibit A — Scope of Services
Exhibit B — Schedule of Billing Rates
Exhibit C — Insurance Requirements
NV5, Inc. Page 12
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EXHIBIT A
SCOPE OF SERVICES
CONSTRUCTION AND RESIDENTIAL PERMIT SUPPORT SERVICES FOR
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 117
Consultant shall provide the following Services:
1. Coordinate and oversee all activities related to the construction of the Project
including residential permit support services, and maintain close liaison with the
City Project Administrator.
2. Serve as contact point for coordination among Contractor, other agencies and
utility companies.
3. Provide project status updates to City Project Administrator.
4. Review and monitor the contractor's schedule through weekly construction
progress meetings.
5. Prepare daily inspection records and bi-weekly status reports.
6. Maintain an awareness of safety and health requirements and enforce applicable
contract provisions for the protection of the public and project personnel.
7. Maintain binders of job records, including photos.
8. Evaluate cost reduction incentive proposals and provide recommendations to
City Project Administrator.
9. Coordinate and track property owner conversions to underground power, phone
and cable systems.
NV5, Inc. Page A-1 22-180
EXHIBIT B
SCHEDULE OF BILLING RATES
NV5, Inc. Page B-1 22-181
N V 5
CITY OF NEWPORT BEACH
CONSTRUCTION ADMINISTRATION AND RESIDENTIAL PERMIT SUPPORT
FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 117
TASK
NO.
WORK DESCRIPTION
Project Manager
$225
Senior Inspector
$160
Admin
$95
TOTAL
FEE
HOURS
$
HOURS
$
HOURS
$
1.0
Oversight of all Construction Related Activities
including Residential Permit Support
50
$11,250
220
$35,200
100
$9,500
$55,950
2.0
Point of Contact for Contractor, City, Utility
Companies, etc.
20
$4,500
124
$19,840
$0
$24,340
3.0
Project Status Updates
20
$4,500
100
$16,000
16
$1,520
$22,020
4.0
Schedule Review
20
$4,500
100
$16,000
16
$1,520
$22,020
5.0
Project Inspection (documented through daily
reports and bi-weekly status reports)
30
$6,750
120
$19,200
$0
$25,950
6.0
Enforce Contract Provisions/Manage health
and safety requirements
10
$2,250
100
$16,000
$0
$18,250
7.0
Detailed project records, including photos
10
$2,250
124
$19,840
16
$1,520
$23,610
8.0
Evaluate cost reduction incentives
10
$2,250
100
$16,000
$0
$18,250
9.0
Coordinate and track property owner
conversions from overhead to underground
services
50
$11,250
250
$40,000
200
$19,000
$70,250
Subtotal
220
$49,500
1238
$198,080
348
$33,060
$280,640
TOTALFEE
Miscellaneous Expenses at 4.5%
$12,629
$293,269
22-182
Project Manager $225
Senior Inspector $160
Project Administrator $95
REIMBURSABLE COSTS
Reproductions; deliveries; travel; facsimiles; models, renderings and photos; Mylars; and CDs,
not included in scope of work.
• All reimbursable costs shall be billed at cost plus 15%
• Mileage shall be billed at $0.555 / mile (office staff only)
22-183
EXHIBIT C
INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES
1. Provision of Insurance. Without limiting Consultant's indemnification of City, and
prior to commencement of Work, Consultant shall obtain, provide and maintain at
its own expense during the term of this Agreement, policies of insurance of the
type and amounts described below and in a form satisfactory to City. Consultant
agrees to provide insurance in accordance with requirements set forth here. If
Consultant uses existing coverage to comply and that coverage does not meet
these requirements, Consultant agrees to amend, supplement or endorse the
existing coverage.
2. Acceptable Insurers. All insurance policies shall be issued by an insurance
company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders'
Rating of A- (or higher) and Financial Size Category Class VII (or larger) in
accordance with the latest edition of Best's Key Rating Guide, unless otherwise
approved by the City's Risk Manager.
3. Coverage Reguirements.
A. Workers' Compensation Insurance. Consultant shall maintain Workers'
Compensation Insurance, statutory limits, and Employer's Liability
Insurance with limits of at least one million dollars ($1,000,000) each
accident for bodily injury by accident and each employee for bodily injury by
disease in accordance with the laws of the State of California, Section 3700
of the Labor Code.
Consultant shall submit to City, along with the certificate of insurance, a
Waiver of Subrogation endorsement in favor of City, its City Council, boards
and commissions, officers, agents, volunteers, employees.
B. General Liability Insurance. Consultant shall maintain commercial general
liability insurance, and if necessary umbrella liability insurance, with
coverage at least as broad as provided by Insurance Services Office form
CG 00 01, in an amount not less than one million dollars ($1,000,000) per
occurrence, two million dollars ($2,000,000) general aggregate. The policy
shall cover liability arising from premises, operations, personal and
advertising injury, and liability assumed under an insured contract (including
the tort liability of another assumed in a business contract).
C. Automobile Liability Insurance. Consultant shall maintain automobile
insurance at least as broad as Insurance Services Office form CA 00 01
covering bodily injury and property damage for all activities of Consultant
arising out of or in connection with Work to be performed under this
Agreement, including coverage for any owned, hired, non -owned or rented
vehicles, in an amount not less than one million dollars ($1,000,000)
combined single limit each accident.
NV5, Inc. Page C-1 22-184
4. Other Insurance Requirements. The policies are to contain, or be endorsed to
contain, the following provisions:
A. Waiver of Subrogation. All insurance coverage maintained or procured
pursuant to this Agreement shall be endorsed to waive subrogation against
City, its City Council, boards and commissions, officers, agents, volunteers,
or shall specifically allow Consultant or others providing insurance evidence
in compliance with these requirements to waive their right of recovery prior
to a loss. Consultant hereby waives its own right of recovery against City,
and shall require similar written express waivers from each of its
subconsultants.
B. Additional Insured Status. All liability policies including general liability,
excess liability, pollution liability, and automobile liability, if required, but not
including professional liability, shall provide or be endorsed to provide that
City, its City Council, boards and commissions, officers, agents, volunteers,
employees.
C. Primary and Non Contributory. All liability coverage shall apply on a primary
basis and shall not require contribution from any insurance or self-insurance
maintained by City.
D. Notice of Cancellation. All policies shall provide City with thirty (30)
calendar days' notice of cancellation (except for nonpayment for which ten
(10) calendar days' notice is required) or nonrenewal of coverage for each
required coverage.
5. Additional Agreements Between the Parties. The parties hereby agree to the
following:
A. Evidence of Insurance. Consultant shall provide certificates of insurance to
City as evidence of the insurance coverage required herein, along with a
waiver of subrogation endorsement for workers' compensation and other
endorsements as specified herein for each coverage. Insurance certificates
and endorsement must be approved by City's Risk Manager prior to
commencement of performance. Current certification of insurance shall be
kept on file with City at all times during the term of this Agreement. City
reserves the right to require complete, certified copies of all required
insurance policies, at any time.
B. City's Right to Revise Requirements. City reserves the right at any time
during the term of the Agreement to change the amounts and types of
insurance required by giving Consultant sixty (60) calendar days' advance
written notice of such change. If such change results in substantial
additional cost to Consultant, City and Consultant may renegotiate
Consultant's compensation.
C. Enforcement of Agreement Provisions. Consultant acknowledges and
agrees that any actual or alleged failure on the part of City to inform
NV5, Inc. Page C-2 22-185
Consultant of non-compliance with any requirement imposes no additional
obligations on City nor does it waive any rights hereunder.
D. Requirements not Limiting. Requirements of specific coverage features or
limits contained in this Section are not intended as a limitation on coverage,
limits or other requirements, or a waiver of any coverage normally provided
by any insurance. Specific reference to a given coverage feature is for
purposes of clarification only as it pertains to a given issue and is not
intended by any party or insured to be all inclusive, or to the exclusion of
other coverage, or a waiver of any type. If the Consultant maintains higher
limits than the minimums shown above, the City requires and shall be
entitled to coverage for higher limits maintained by the Consultant. Any
available insurance proceeds in excess of the specified minimum limits of
insurance and coverage shall be available to the City.
E. Self-insured Retentions. Any self-insured retentions must be declared to
and approved by City. City reserves the right to require that self-insured
retentions be eliminated, lowered, or replaced by a deductible. Self-
insurance will not be considered to comply with these requirements unless
approved by City.
F. City Remedies for Non -Compliance. If Consultant or any subconsultant fails
to provide and maintain insurance as required herein, then City shall have
the right but not the obligation, to purchase such insurance, to terminate this
Agreement, or to suspend Consultant's right to proceed until proper
evidence of insurance is provided. Any amounts paid by City shall, at City's
sole option, be deducted from amounts payable to Consultant or reimbursed
by Consultant upon demand.
G. Timely Notice of Claims. Consultant shall give City prompt and timely notice
of claims made or suits instituted that arise out of or result from Consultant's
performance under this Agreement, and that involve or may involve
coverage under any of the required liability policies. City assumes no
obligation or liability by such notice, but has the right (but not the duty) to
monitor the handling of any such claim or claims if they are likely to involve
City.
H. Consultant's Insurance. Consultant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own
judgment may be necessary for its proper protection and prosecution of the
Work.
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