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HomeMy WebLinkAboutC-7572-4 - Assessment District No. 116 Limited Obligation Improvement Bonds 2019$1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CLOSING MEMORANDUM Time and Place Preclosing will be held on Monday, July 22, 2019 and Closing on Tuesday, July 23, 2019. Preclosing will be held at the offices of Stradling Yocca Carlson & Rauth, 660 Newport Center Drive, Suite 1600, Newport Beach, CA at 1:30 p.m. Closing will be via telephone at 9:00 a.m. Parties Issuer Grace K. Leung, City Manager Dan Matusiewicz, Finance Director/Treasurer Aaron Harp, Esq., City Attorney City of Newport Beach Bond Counsel/ Brian P. Forbath, Esq. Disclosure Counsel Carol L. Lew, Esq. Reed T.C. Glyer, Esq. Stradling Yocca Carlson & Rauth Underwriter Sara Oberlies Brown, Managing Director Jake Campos, Managing Director Jordan Keny-Guyer, Associate Stifel, Nicolaus & Company, Incorporated Underwriter's Counsel Fiscal Agent Fiscal Agent's Counsel Municipal Advisor Assessment Engineer 4820-7609-9996v5/022459-0025 Albert Reyes, Esq. Kutak Rock LLP Martin Meza U.S. Bank National Association Dennis Wong, Esq. Dorsey & Whitney LLP Mark Young, Managing Director Larry Lom, Assistant Vice President Ellen Hall, Public Finance Assistant KNN Public Finance Alison Bouley, Project Manager Harris & Associates Assessment Administrator Beatrice Medina, Senior Project Manager Susanna Hernandez Jocelyne Vega Willdan Financial Services Dissemination Agent Lauren Wooten Digital Assurance Certification, LLC 4820-7609-9996x5/022459-0025 $ 1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CLOSING INDEX RESOLUTIONS Resolution No. 2015-60 entitled "A Resolution of the City Council of the City of Newport Beach Accepting Petition of Assessment District No. 116," adopted July 14, 2015. 2. Resolution No. 2015-94 entitled "A Resolution of the City Council of the City of Newport Beach Approving the Assessment Engineer's Report and Fixing the Time and Place of the Public Hearing for Assessment District No. 116," adopted November 10, 2015. Resolution No. 2015-97 entitled "A Resolution of the City Council of the City of Newport Beach Declaring its Intention to Take Proceedings Pursuant to the Municipal Improvement Act of 1913 and to Issue Bonds Pursuant to the Improvement Bond Act of 1915, and Make Certain Findings and Determinations in Connection Therewith, All Relating to the Formation of Assessment District No. 116," adopted November 10, 2015. 4. Resolution No. 2016-6 entitled "A Resolution of the City Council of the City of Newport Beach Making Determinations, Confirming Assessments and Proceedings and Designating the Superintendent of Streets to Collect and Received Assessments and to Establish a Special Fund for City of Newport Beach Assessment District No. 116," adopted January 12, 2016. 5. Resolution No. 2017-48 entitled "A Resolution of the City Council of City of Newport Beach, California, Regarding its Intention to Recover Costs Associated with the Issuance of the Tax Exempt Obligations for Assessment Districts," adopted July 25, 2017. 6. Resolution No. 2019-62 entitled "A 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. 116 and Approving Certain Documents and Authorizing Certain Actions in Connection Therewith," adopted June 25, 2019. Certified meeting minutes of the City Council for all proceedings listed in 1 through 6 above. Certificate of the City Clerk Bringing Forward Resolutions FORMATION DOCUMENTS AND CERTIFICATIONS 9. Certificate of the Assessment Engineer Regarding Mailing Notice of Assessment Ballots and Notice of Public Hearing; Form of Notice of Assessment Ballot 10. The Certificates as to the Results of Assessment Ballots 4820-7609-9996v5/022459-0025 11. Boundary Map of Assessment District No. 116 Recorded November 19, 2015 12. Assessment Diagram Recorded January 26, 2016 13. Notice of Assessment Recorded May 11, 2016 14. Amended Notice of Assessment Recorded May 15, 2019 15. Engineer's Report dated December 22, 2015 16. Certificate of Willdan Financial Services 17. Certificate of Harris & Associates DOCUMENTS RELATING TO THE SALE OF THE BONDS 18. Bond Purchase Agreement 19. Preliminary Official Statement 20. Official Statement 21. Underwriter's Receipt for the Bonds CITY DOCUMENTS 22. Fiscal Agent Agreement 23. Continuing Disclosure Agreement 24. CDIAC Report of Proposed Debt Issuance, Acknowledgment from CDIAC and CDIAC Report of Final Sale 25. Certificate as to Near Finality of the Preliminary Official Statement 26. Incumbency and Signature Certificate of the City 27. Closing Certificate of the City 28. Instructions to the Fiscal Agent 29. Written Delivery Requisition—Costs of Issuance Requisition No. 1 30. Written Delivery Requisition—Improvement Fund Requisition No. 1 31. Tax Certificate, together with Certificate of the Underwriter; Post -Issuance Compliance Certificate; IRS Form 8038-G 32. DTC Blanket Issuer Letter of Representations 33. Facsimile Signature Filings of the Treasurer and City Clerk 2 4820-7609-9996x5/022459-0025 34. Specimen Bond FISCAL AGENT DOCUMENTS 35. Authorized Signer(s) Certificate 36. Closing Certificate of the Fiscal Agent 37. Fiscal Agent's Receipt of Proceeds OPINIONS OF COUNSEL 38. Approving Opinion of Bond Counsel 39. Reliance Letter to the Fiscal Agent 40. Supplemental Opinion of Bond Counsel 41. Disclosure Counsel Letter 42. Opinion of City Attorney 43. Opinion of Underwriter's Counsel 44. Opinion of Fiscal Agent's Counsel MISCELLANEOUS 45. Distribution List 3 4820-7609-9996v5/022459-0025 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ACCEPTING PETITION OF ASSESSMENT DISTRICT NO. 196 WHEREAS, .the owners of certain real property situated in the City of Newport Beach ( the "City") have filed with the City Clerk several signed counterparts of a petition, requesting the implementation of a project for the undergrounding of certain existing, overhead utiIity.faciI fties, together with appurtenant work and improvements, as described therein, the cost of which is to be specifically assessed against each parcel of land benefiting from such improvements as shown on an exhibit map attached to the petition; and WHEREAS, the petition satisfies the requirements for instituting proceedings for the conversion of existing overhead electric and communication facilities to underground locations in accordance with Section 5896.5 of the Streets and Highways Code of the State of California; and WHEREAS, the City Clerk has also received a certificate to the effect that the petition has been signed by persons owning lands constituting more than sixty percent (60%) in area of the land subject to assessment within the proposed assessment district; and WHEREAS, this City Council finds that the owners of more than sixty percent (60%) in area of the land proposed to be assessed for the proposed improvements, including the owners of more than five of the subject. parcels, have signed such petition and that the petition contains the matters required by Sections 2804 and 2804.5 of the Streets and Highways Code. Resolution No. 2015-60 Page 2 of 3 NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: PETITION ACCEPTED. The petition, as filed with the City Clerk, is hereby found to be legally sufficient and is accepted. Section 2: DETERMINATION TO UNDERTAKE PROCEEDINGS. The special assessment proceedings shall be undertaken by the terms of the petition, pursuant to the Municipal Improvement Act of 1913 and without further compliance with the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (commencing with Section 2800 of the Streets and Highways Code). Section 3: -PUBLIC INTEREST AND CONVENIENCE SERVED. This City Council hereby finds and determines that the public interest and convenience will be served by the taking of such proceedings. Section 3: This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3 because the activity is not a project as defined in Section 15378 and has no potential for resulting in physical change to the environment, directly or indirectly. Section 4: ACTION IS FINAL. This action is "final" within the meaning of Streets and Highways Code Section 3012. Section 5: 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 14" day of July, 2015. ATTEST: � rV�rU Leilani I. Brown, City Clerk Resolution No. 2015-60 Page 3 of 3 Mayor Attachment: Assessment Engineer Certificate of Sufficiency of Petition CERTIFICATE OF SUMCIENCY OF PETITION STATE OF CALIFORNIA COUNTY OF ORANCE CITY OF NEWPORT BEACH The undersigned hereby CERTIMES as follows: That I am the duly appointed ASSESSMENT ENGINEER .of the CITY OF NEWPORT BEACH; GALIF0 MA. That Oil ft 5"' day Of Role, 200, 1 reviewed- a PetitiO for the forniation of an A. ssosmeat District for certain pubH47, works of improvoment, togethot with appurtenances, appurtenant work and m;qui&iAort, where mussaty, *ina special assessmem, disuiot known and designated . as MM98MINT DISTRICT' NO, 116 (hereinafter refined to as: the: `iAssasni exit Distriet"), a copy of which is on file in the OMwe of the City Clerk, The undersigned hereby1bilherspecifically cerci leg as rqllows. I That j,,=sed ;said Petition to be examined and iuy e, ainination, revealed that said Petition. was signed bYU.0t less ffiall 15YO (�) O"Org of-assessablb land in the proposed Assessment District as shown by tbe last equalized assessimuit rQ11 tits 4'by the My,,owning lands oonstitutiug more thatt fifty percent (50%) of the area Of all assessable la -08 wift the proposed Agsesment Digrfot, all as proscribed by oation W6,6 of the Stre&% and 11%bWays Cade of be, State of 2,. Pursuant tp the Special Mscssmeftt Investipiton, thnitotion- airid.Majority Pro -tat Ant of 19.3 1, that -mid Pofifitoo did represent sixty and sixteem one, btindredffis Of A percent (001.6%) of the Executed* this 50' day yoftune, 2415 At 1xvbnQ, Califbvnia, ALISON M. BOULEY, R.E. HARM & ASSOCIATES ASSESSMENT ENGINEER CITY OF NEWPORT 'AEACH STATE- OF CALIFORNIA wffioicnq ad&Um STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2015-60 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 14th day of July, 2015, and that the same was so passed and adopted by the following vote, to wit: AYES: Council Member Peotter, Council Member Petros, Council Member Duffield, Mayor Pro Tem Dixon, Mayor Selich NAYS: None RECUSED: Council Member Curry, Council Member Muldoon IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 15th day of July, 2015. wb��- J'ho' �F t4E�}{i�o City Clerk �A-�' 1t.; •p� Newport Beach, California WR (Seal) �Rh11A A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH PRELIMINARILY APPROVING THE ASSESSMENT ENGINEER'S REPORT AND FIXING THE TIME AND PLACE OF THE PUBLIC HEARING FOR ASSESSMENT DISTRICT NO. 116 WHEREAS, by Resolution No. 2015-97 (the "Resolution of Intention") in the proceedings for the formation of Assessment District No. 116 (the "Assessment District") this City Council ordered a report (the "Report") prepared by Harris & Associates, Inc. (the "Assessment Engineer") under and pursuant to the provisions of Article XIIID of the California Constitution ("Article XIIID") and the Municipal Improvement Act of 1913 (the "1913 Act"), and, in particular, Section 10204 of the California Streets and Highways Code; and WHEREAS, the Assessment Engineer has prepared the Report and filed the same with the City Clerk, and the City Clerk has presented the Report to this City Council for consideration; and NOW, THEREFORE, the Council of the City of Newport Beach does hereby RESOLVE, as follows: 1. Approval of Report. The Report is preliminarily approved, and the City Clerk is directed to endorse the fact and date of such approval on the Report and to file the Report in her office. The Report shall stand as the report for the purpose of all subsequent proceedings under the 1913 Act and Article XIIID except that it may be conformed, modified, or corrected as provided in the 1913 Act and Article XIIID. 2. Legal Findings. Pursuant to Section 2961 of the Streets and Highways Code and based on the information set forth in the Report, this City Council finds that the total amount of the principal sum of all unpaid special assessments levied against the parcels proposed to be assessed, other than contemplated by the present proceedings, plus the principal amount of the special assessment proposed to be levied in the instant proceedings, do not exceed one-half of the total value of the parcels Resolution No. 2015-94 Page 2 of 2 proposed to be assessed, as computed pursuant to paragraph (2) of subdivision (b) of Section 2961. 3. Public Hearing. A public hearing shall be held on January 12, 2016 at 7:00 p.m. at the regular meeting place of the City Council at City Hall Council Chambers, 100 Civic Center Drive, Newport Beach, California 92660, to hear and consider protests and objections to the proposed Assessment District and the Report and to receive and count the ballots for and against the proposed Assessment District. 4. Notice. At least 45 days prior to the public hearing referred to in Section 3 hereof, the City Clerk shall cause a notice of the adoption of the Resolution of Intention, the filing of the Report and the setting of time and place for said public meeting and the public hearing referred to in Section 2 hereof to be mailed, postage prepaid, to all persons owning real property proposed to be assessed and whose names and addresses appear on the last equalized County of Orange assessment roll or the State Board of Equalization assessment roll, as the case may be, or who are known to the City Clerk. Such notice shall conform in all respects to the provisions of Section 53753 of the California Government Code and Article XIIID, Section 4 of the California Constitution. 5. Resolution Effective Immediately. This Resolution shall take effect immediately upon its adoption. ADOPTED, SIGNED AND APPROVED this 1V'h day of November, 2015. r' n �Xk ,A�A Edward D. Selich Mayor ATTEST: I _ EWPp,4T Leilani I. Brown I ' .R,1`i' City Clerk u egc��0 STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } 1, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2015-94 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 101h day of November, 2015, and that'the same was so passed and adopted by the following vote, to wit: AYES: Council Member Peotter, Council Member Petros, Council Member Duffield, Mayor Pro Tem Dixon, Mayor Selich NAYS: None RECUSED: Council Member Curry, Council Member Muldoon IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 12th day of November, 2015. City Clerk Newport Beach, California (Seal) O� TAEV(rp� U Jn RESOLUTION NO. 2015-97 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DECLARING ITS INTENTION TO TAKE PROCEEDINGS PURSUANT TO THE MUNICIPAL IMPROVEMENT ACT OF 1913 AND TO ISSUE BONDS PURSUANT TO THE IMPROVEMENT BOND ACT OF 1915, AND MAKE CERTAIN FINDINGS AND DETERMINATIONS IN CONNECTION THEREWITH, ALL RELATING TO THE FORMATION OF ASSESSMENT DISTRICT NO. 116 WHEREAS, the City Council of the City of Newport Beach (the "City") desires to provide certain property located in the City with the undergrounding of electric, telephone and cable facilities, and the removal of poles, overhead wires, guys, anchors and appurtenant work therewith as further described in Section 3 hereof (the "Improvements") and to order the formation of an Assessment District to pay the costs thereof under and pursuant to the provisions of the Municipal Improvement Act of 1913 (the 1913 Act'); and WHEREAS, the proposed Assessment District, if it is formed, is to be known and designated as Assessment District No. 116 (the "Assessment District'); and WHEREAS, the proposed boundaries of the Assessment District are shown on a map which indicates by a boundary line the extent of the territory proposed to be included in the Assessment District, which map is designated "Boundary of Proposed Assessment District No. 116" (the "Map"), which Map is on file in the office of the City Clerk; and WHEREAS, the City Council has been presented with petitions signed by at least 50% of the property owners located within the boundaries of the proposed Assessment District requesting the formation of the Assessment District to finance the Improvements; and Resolution No. 2015-97 Page 2 of 10 WHEREAS, pursuant to California Streets and Highways Code Section 5896.8, there is on file with the City Clerk a certificate of Harris & Associates, Inc. certifying the sufficiency of such petitions; and WHEREAS, it appears to the City Council that an Assessment District should be formed to finance the installation of said Improvements under the provisions of the 1913 Act; and WHEREAS, the City Engineer, with the assistance of Harris & Associates, Inc., is competent to make and file with the City Clerk the report with regard to the Improvements, which report is required by the 1913 Act to be made and filed; and WHEREAS, the conversion of overhead electric utility distribution system facilities to underground, including connection to existing overhead electric utility distribution lines where the surface is restored to the condition existing prior to undergrounding, is categorically exempt from the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) ("CEQA") and its implementing guidelines (14 California Code of Regulations Section 15000 et seq.) (the "Guidelines") pursuant to Section 15302(d) of the Guidelines; and WHEREAS, before ordering the Improvements, the City Council is required, under the 1913 Act, to adopt a resolution declaring its intention to do so; and WHEREAS, the City Council intends to consider issuing bonds secured by the assessments to be levied on property in the Assessment District pursuant to the Improvement Bond Act of 1915, being Division 10 (commencing with Section 8500) of the Streets and Highways Code (the "1915 Act'); and Resolution No. 2015-97 Page 3 of 10 WHEREAS, before issuing bonds, the City Council is required, under the 1915 Act, to adopt a resolution declaring its intention to do so; NOW, THEREFORE, the Council of the City of Newport Beach does hereby RESOLVE, as follows: 1. Recitals. The above recitals, and each of them, are true and correct. 2. Approval of Map. The Map is hereby approved, adopted and declared to describe the proposed boundaries of the Assessment District; and it shall govern for all details as to the extent of the Assessment District. The City Clerk is hereby directed to endorse her certificate on the original of the Map evidencing the date and adoption of this resolution and to file said Map in her office, and to file a copy of said Map so endorsed with the County Recorder of Orange, California within fifteen (15) days after the adoption of the resolution fixing the time and place of hearing on the formation and extent of the Assessment District, 3. Nature of Improvements. The Improvements generally include the undergrounding of existing electric, telephone and cable facilities, including the removal of poles, overhead wires, guys and anchors and the installation of new underground service connections and new streetlights and appurtenant work therewith as shown on the Map. The improvements will be designed by the Southern California Edison Company ("Edison") and other utility providers. Either Edison or the City will construct the improvements, and the City will inspect the work to ensure conformance to City standards and specifications where applicable. Once completed, the underground facilities will become the property and responsibility of Edison and such other utility providers. Each owner of property located within the Assessment District will be responsible for arranging and paying for work on his or her property necessary to Resolution No. 2015-97 Page 4 of 10 connect facilities constructed by the public utilities in the public streets to the points of connection on the private property. Conversion of individual service connections on private property is not included in the work done by the Assessment District. Failure to convert individual service connections on private property may result in a recommendation to the City Council that the public utilities be directed to discontinue service to that property. Overhead facilities cannot be removed until all overhead service has been discontinued. 4. Public Interest and Necessity. The City Council hereby finds and declares that the public interest and necessity require the Improvements, and the Improvements will be of direct and special benefit to the properties and land within the Assessment District. The City Council hereby declares its intention to order the conversion of the existing overhead electric and communication facilities to underground locations, and the acquisition of the Improvements, to make the expenses thereof chargeable upon the area included within the Assessment District, and to form the Assessment District. . 5. Intention to Levy Assessment. The City Council further declares its intention to levy a special assessment upon the land within the Assessment District in accordance with the respective special and direct benefit to be received by each parcel of land from the Improvements. 6. Initiation Proceedings. This City Council finds and determines that before ordering the acquisition of the Improvements it shall take proceedings pursuant to the 1913 Act and pursuant to Part 7.5 of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931, Streets and Highways Code Section 2960 et seq. (the 1931 Act"). Resolution No. 2015-97 Page 5 of 10 7. Assessment Engineer Report. Harris & Associates, Inc. is appointed the Assessment Engineer. The Assessment Engineer is hereby authorized and directed to make and file with the City Clerk a written report with regard to the 1913 Act (the "Report'), which Report shall comply with the requirements of Section 10204 and Section 2961 of the Streets and Highways Code and Article XIIID of the California Constitution and shall contain the following: (a) Plans and specifications for the Improvements; (b) A general description of works or appliances already installed and any other property necessary or convenient for the operation of the Improvements, if the works, appliances or property are to be acquired as part of the Improvements; (c) An estimate of the cost of the Improvements, and the cost of land, rights of ways, easements, and incidental expenses in connection with the Improvements, including the cost of registering bonds; (d) A diagram showing the exterior boundaries of the Assessment District, the boundaries of any zones within the Assessment District and the lines and dimensions of each parcel of land within the Assessment District as they existed at the time of passage of this resolution (each subdivision to be given a separate number on the diagram); (e) A proposed assessment of the total amount of the cost and expenses of the proposed Improvements upon the several subdivisions of land in the Assessment District in proportion to the estimated benefits to be received by such subdivision, respectively, from the Improvements (the assessment shall refer to the subdivisions by their respective numbers assigned as provided in (d) above); and Resolution No. 2015-97 Page 6 of 10 (f) A proposed maximum annual assessment upon each of the several subdivisions of land in the Assessment District to pay costs incurred by the City and not otherwise reimbursed which result from the administration and collection of assessments or from the administration or registration of any associated bonds and reserve or other related funds. In addition, the Report shall contain the information required by the 1931 Act as set forth in Streets and Highways Code Section 2961(b), including: (a) The total amount, as near as may be determined, of the total principal sum of all unpaid special assessments and special assessments required or proposed to be levied under any completed or pending assessment proceedings, other than the proposed assessments to be levied with respect to the Assessment District, which would require an investigation and report under the 1931 Act against the total area proposed to be assessed; and (b) The total true value, as near as may be determined, of the parcels of land and improvements within the Assessment District which are proposed to be assessed. Total true value may be estimated as the full cash value of the parcels as shown upon the last equalized assessment roll of the county. Alternatively, total true value may be determined by other reasonable means, including, but not limited to, by adjusting the value shown on the last equalized assessment roll to correct for deviations from market value due to Article XIIIA of the California Constitution. 8. Surplus Funds. Following the acquisition of the Improvements and the payment of all incidental expenses in connection with the formation of the Assessment District and the issuance of bonds pursuant to the 1915 Act, any surplus remaining in the improvement fund established for the Assessment District shall be used as Resolution No. 2015-97 Page 7 of 10 determined by the City Council as provided in Section 10427 of the Streets and Highways Code. 9. Notice. Notice is hereby given that serial or term bonds to represent unpaid assessments and to bear interest at a rate not to exceed 12 percent per annum will be issued in the manner provided in the Improvement Bond Act of 1915 to represent the unpaid assessments and the last installment of such bonds shall mature a maximum of 20 years from the second day of September next succeeding 12 months from their date, The principal amount of such bonds maturing or becoming subject to mandatory prior redemption each year shall not be an amount equal to an even annual proportion of the aggregate principal amount of the bonds, but rather (except as specifically otherwise provided by the City Council in connection with the sale of such bonds), shall be an amount which, when added to the amount of interest payable in each year, will be a sum which is substantially equal in each year, except for the moneys falling due on the first maturity or mandatory prior redemption date of the bonds which shall be adjusted to reflect the amount of interest earned from the date when the bonds bear interest to the date when the first interest is payable on the bonds. Such bonds shall be serviced and collected by the City Treasurer or by such registrar and/or paying agent(s) as this City Council may from time to time designate. 10. Advance Payment of Assessments. The provisions of Part 11.1 of the Improvement Bond Act of 1915, providing an alternative procedure for the advance payment of assessments and the calling of bonds, shall apply. 11. Compliance with the 1913 Act. Except as specifically otherwise provided for herein, the Improvements shall be made and ordered pursuant to the provisions of the 1913 Act. Resolution No. 2015-97 Page 8 of 10 12. No Advancement of Funds. The City Council hereby determines that the City will not obligate itself to advance available funds from its treasury to cure any deficiency which may occur in the bond redemption fund established for the Assessment District. 13. No Property Owner Construction. The public interests will not be served by allowing the property owners to take any contract to be let for the construction of the Improvements, and no notice of award of contract shall be published. 14. Refunding of Assessment Bonds. It is hereby determined that the bonds proposed to be issued in these proceedings may be refunded. Any adjustment to assessments resulting from such refunding shall be done on a pro rata basis as required pursuant to Section 8571.5 of the Streets and Highways Code. Any such refunding shall be pursuant to the provisions of Division 11.5 (commencing with Section 9500) of the Streets and Highways Code, except that, if, following the filing of the report specified in Section 9523 and any subsequent modifications of the report, the City Council finds that all of the conditions specified in Section 9525 are satisfied and that the adjustments to assessments are on a pro rata basis, the City Council may approve and confirm the report and any, without further proceedings, authorize, issue, and sell the refunding bonds pursuant to Chapter 3 (commencing with Section 9600) of Division 11.5 of the Streets and Highways Code. Any such refunding bonds shall bear interest at the rate of not to exceed twelve percent (12%) per annum, or such higher rate of interest as may be authorized by applicable law at the time of sale of such bonds; and the last installment of such bonds shall mature on such date as will be determined by the City Council in the proceedings for such refunding. Resolution No. 2015-97 Page 9 of 10 15. Approval of Construction on Private Property. It is in the public interest and more economical to do certain work on private property to eliminate any disparity in level or size between the Improvements and private property and to add the actual cost of such work to the Assessment of the property to which such work was done; provided that no work of this nature shall be performed until and unless the written consent of the owner of property is first obtained. 16. Agreements with Public and Private Utilities. Pursuant to Streets and Highways code Section 10110, the City intends to enter into agreements with Edison and the other utility providers, and any agreement between the City and Edison, or any other public utility, for the ownership, management, or control of the underground electric, telephone and cable facilities to be installed pursuant to the Improvements, would benefit any current or future residents of the Assessment District. 17. Exemption from CEQA. Pursuant to Section 15302(d) of the Guidelines, the undergrounding of the Improvements will have no significant effect on the environment and is categorically exempt from CEQA. The City Clerk is directed to cause a notice of exemption to be posted as required by law. 18. Inquiries. All inquiries for any and all information relating to these proceedings, including information relating to protest procedures, should be directed to: CITY OF NEWPORT BEACH Attention: Michael Sinacori 100 Civic Center Drive Newport Beach, California 92660 (949)644-3342 19. Resolution Effective Immediately. This Resolution shall take effect immediately upon its adoption. Resolution No. 2015-97 Page 10 of 10 ADOPTED, SIGNED AND APPROVED this 10'h day of November, 2015. Edward D. Selich Mayor ATTEST: Leilani VI. Brown City Clerk A Rr s -4/po aN�P STATE OF CALIFORNIA ) COUNTY OF -ORANGE ; ss. CITY OF NEWPORT BEACH 1 I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2015-97 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 10th day of November, 2015, and that the same was so passed and adopted by the following vote, to wit: AYES: Council Member Peotter, Council Member Petros, Council Member Duffield, Mayor Pro Tem Dixon, Mayor Selich NAYS: None RECUSED: Council Member Curry, Council Member Muldoon IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 12th day of November, 2015. �yZTW� City Clerk Newport Beach, California (Seal) '%�f^oRm1P A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH MAKING DETERMINATIONS, CONFIRMING ASSESSMENTS AND PROCEEDINGS AND DESIGNATING THE SUPERINTENDENT OF STREETS TO COLLECT AND RECEIVE ASSESSMENTS AND TO ESTABLISH A SPECIAL FUND FOR CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 WHEREAS, this . City Council has heretofore adopted Resolution No. 2015-97 (the "Resolution of Intention") declaring its intention to order the construction of the improvements described in the Resolution of Intention (the "Improvements") and to form Assessment District No. 116 (the "Assessment District") under the provisions of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code, "the Act"); and WHEREAS, this City Council has heretofore preliminarily approved a report prepared under and pursuant to the Act and, in particular, Section 10204 of the California Streets and Highways Code (the "Engineer's Report"); and WHEREAS, this City Council fixed January 12, 2016, at the hour of 7:00 p.m. at the regular meeting place of the City Council, City Hall, 100 Civic Center Drive, Newport Beach, California 92660, as the time and place of hearing protests and objections to the improvements proposed in the Engineer's Report to be made, the extent of the Assessment District proposed to be created and/or to the proposed assessment; and WHEREAS, the City Clerk has caused notice to be given of the passage of the Resolution of Intention, the filing of the Engineer's Report and the time and place and purpose of said hearing, all as required by the Act and by Section 53753(c) of the California Government Code and Article XIIID, Section 4 of the California Constitution ("Article XIIID"); and WHEREAS, a final Engineer's Report (the "Final Report") has been prepared setting forth the Improvements to be acquired and constructed, and the Final Report has been filed with the City Council and has been available for review by the property owners within the proposed Assessment District; and Resolution No. 2016-6 Page 2 of 5 WHEREAS, at the time and place stated in the aforesaid notice, a hearing was duly held by this City Council and, during the course of said hearing, the Final Report was duly presented and considered, all written protests and objections received, if any, were duly presented, read, heard and considered and all persons appearing at said hearing and desiring to be heard in the matter of said Final Report were heard, and a full, fair and complete hearing has been conducted; and WHEREAS, this City Council has received all ballots filed with the City Clerk prior to the conclusion of the hearing, and the Assessment Engineer, on behalf of the City Clerk, has counted all ballots for and against the formation of the Assessment District as provided in Article XIIID; and WHEREAS, this City Council has considered the assessment proposed in the Final Report and the evidence presented at said hearing; and WHEREAS, under the provisions of Section 10424 of the California Streets and Highways Code, funds collected by the Director of Public Works acting as the Superintendent of Streets (the "Superintendent of Streets") pursuant to an assessment under the Municipal Improvement Act of 1913 are required to be placed in a special improvement fund designated by the name of the assessment proceeding. NOW, THEREFORE, the Council of the City of Newport Beach does hereby RESOLVE, as follows: 1. Recitals. The above recitals, and each of them, are true and correct. 2. Approval of Final Report. The public hearing referred to in the recitals hereof has been duly held, and each and every step in the proceedings prior to and including the hearing has been duly and regularly taken. This City Council is satisfied with the correctness of the Final Report, including the assessment and diagram and the maximum annual assessment for administrative expenses, the proceedings and all matters relating thereto. Resolution No. 2016-6 Page 3 of 5 3. Benefit to Property. The property within the Assessment District to be assessed as shown in the Final Report will be benefited by the Improvements. 4. Majority of Ballots in Favor. The City Council overrules and denies any and all protests, objections and appeals made in regard to these proceedings; and it finds and determines that a majority of the ballots received are in favor of the assessment. In tabulating the ballots, the ballots were weighted according to the proportional financial obligation of the affected property. 5. Confirmation of Assessments. The amount of the assessments shown in the Final Report and the proposed maximum annual assessment per parcel for administrative expenses shown are confirmed and are fixed in said amounts. 6. Approval of Assessments. The amounts to be assessed against the individual parcels shown on the assessment diagram contained in the Final Report are hereby approved and confirmed; and the City Council is authorized and directed to endorse the fact and date of such.approval on the Final Report. 7. Recordation of Documents. The assessment diagram and assessment is to be placed on file in the office of the Superintendent of Streets, and the City Clerk is authorized and directed to record, or cause to be recorded, the assessment diagram and assessment in the office of the County Recorder of the County of Orange as required by Sections 3114, 10401 and 10402 of the California Streets and Highways Code; and the City Clerk shall record, or cause to be recorded, a Notice of Assessment as required by Section 3114 of said Code. 8. Notice of Recordation. The Superintendent of Streets is authorized and directed to give notice of the recordation of the assessment, as provided in Section 10404 of said Code. 9. Compliance with Alternative Proceedings Requirements. This City Council hereby finds and determines that the information set forth at pages 15 and 16 of the Final Report demonstrates compliance with the requirements of Part 7.5 of Division 4 of the Code, thereby Resolution No. 2016-6 Page 4 of 5 dispensing with any further proceedings pursuant to said Division 4, and this determination and action is final and conclusive as to all persons in accordance with Section 3012 of the Code. 10. Receipt of Prepaid Assessments. The Superintendent of Streets is designated to receive the assessments paid during: (i) the 30 -day cash payment period which shall commence on the date of filing the assessment diagram with the Superintendent of Streets, and (ii) approximately 90 days prior to the issuance of the limited obligation improvement bonds referenced in the Resolution of Intention (the "Bonds"). 11. Intention to Issue Bonds. Following receipt of the Certificate re Paid and Unpaid Assessments, this City Council intends to proceed with authorization of the issuance and sale of the Bonds, pursuant to the Improvement Bond Act of 1915 and upon the security of and in a principal amount equal to the unpaid assessments, bearing interest at a rate not to exceed twelve percent (12%) per annum, with the last principal installment of the Bonds to mature not to exceed twenty (20) years from the second day of September next succeeding twelve (12) months from their date. 12. Designation as Underground Utilities District. The area within the Assessment District is hereby designated an underground utilities district pursuant to and in accordance with Chapter 15.32 of the Code of Ordinances of the City, and in accordance with Section 15.32.040 of such Code, this City Council hereby establishes the date which is one year from the date on which the Improvements are released by the utility companies responsible for such Improvements (the "Utility Companies") as a reasonable date by which all affected property owners must be ready to receive underground service. 13. Execution of Utility Company Contracts. The City Manager of the City, or any designees thereof, is authorized to execute any and all contracts with the Utility Companies for the purpose of constructing or funding the Improvements or otherwise carrying out the intentions of this Resolution. Resolution No. 2016-6 Page 5 of 5 14. Severability. 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. 15. California Environmental Quality Act. 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. 16. Effective Date of Resolution. This Resolution shall take effect immediately upon its adoption. PASSED, APPROVED, and ADOPTED this 12`" day of January, 2016. Diane B. Dixon Mayor ATTEST: Leilani I. Brown 0 City Clerk �O I� 1•y 1 P STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH } I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2016-6 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 12th day of January, 2016, and that the same was so passed and adopted by the following vote, to wit: AYES: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Petros, Mayor Dixon NAYS: None RECUSED: Council Member Curry ABSENT: Mayor Pro Tem Muldoon IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 131h day of January, 2016. City Clerk Newport Beach, California (Seal) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, REGARDING ITS INTENTION TO RECOVER COSTS ASSOCIATED WITH THE ISSUANCE OF TAX EXEMPT OBLIGATIONS FOR ASSESSMENT DISTRICTS WHEREAS, the City Council of the City of Newport Beach ( "Issuer") desires to finance the costs of acquiring certain public facilities and improvements within certain Assessment Districts located in the City, as provided in Exhibit A attached hereto and incorporated herein ("Project"); WHEREAS, the Issuer intends to finance the acquisition of the Project or portions of the Project with the proceeds from the sale of obligations the interest upon which is excluded from gross income for federal income tax purposes ("Obligations"); and WHEREAS, prior to the issuance of the Obligations, the Issuer may incur certain expenditures with respect to the Project from available monies of the Issuer, which expenditures are desired to be reimbursed to the Issuer from a portion of the proceeds of the sale of the Obligations. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The Issuer does hereby state its intention and reasonably expects to reimburse Project costs incurred prior to the issuance of the Obligations with proceeds from the sale of the Obligations. Exhibit A describes either the general character, type, purpose, and function of the Project, or the fund or account from which Project costs are to be paid and the general functional purpose of the fund or account. Section 2: The reasonably expected maximum principal amount of the Obligations is Twelve Million Dollars and 00/100 ($12,000,000.00). Section 3: This resolution is adopted on or prior to the date ( "Expenditures Date or Dates") that the Issuer will expend monies for the portion of the Project costs to be reimbursed from proceeds of the Obligations. Section 4: Except as described below, the expected date of issue of the Obligations will be within eighteen (18) months of the later of the Expenditure Date or Dates and the date the Project is placed in service; provided, the reimbursement may not be made more than three (3) years after the original expenditure is paid. For Obligations subject to the small issuer exception of Section 148(f)(4)(D) of the Internal Revenue Code, the "eighteen -month limit" of the previous sentence is changed to "three years" and the limitation of the previous sentence beginning with "; provided, ...." is not applicable. Resolution No. 2017-48 Page 2 of 3 Section 5: Proceeds of the Obligations to be used to reimburse for Project costs are not expected to be used, within one (1) year of reimbursement, directly or indirectly, to: pay debt service with respect to any obligation (other than to pay current debt service coming due within the next succeeding one (1) year period on any tax exempt obligation of the Issuer (other than the Obligations): or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the Issuer or any entity related in any manner to the Issuer: or to reimburse any expenditure that was originally paid with the proceeds of any obligation: or to replace funds that are or will be used in such manner. Section 8: This resolution is consistent with the budgetary and financial circumstances of the Issuer, as of the date hereof. No monies from sources other than the Obligations are, or are reasonably expected to be reserved, allocated on a long term basis, or otherwise set aside by the Issuer (or any related party) pursuant to their budget or financial policies with respect to the Project costs. To the best of our knowledge, this City Council is not aware of the previous adoption of official intents by the Issuer that have been made as a matter of course for the purpose of reimbursing expenditures and for which tax exempt obligations have not been issued. Section 7: The limitations described in Section 2 and Section 3 do not apply to: (a) costs of issuance of the Obligations, (b) an amount not in excess of the lesser of $100,000 or five percent (5%) of the proceeds of the Obligations, or (c) any preliminary expenditures, such as architectural, engineering, surveying, soil testing, and similar costs other than land acquisition, site preparation, and similar costs incident to commencement of construction, not in excess of twenty percent (20%) of the aggregate issue price of the Obligations that finances the Project for which the preliminary expenditures were incurred. Section 8: This resolution is adopted as official action of the Issuer in order to comply with Treasury Regulation Section 1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of Issuer expenditures incurred prior to the date of issue of the Obligations, is part of the Issuer's official proceedings, and will be available for inspection by the general public at the main administrative office of the Issuer. Section 9: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 10: 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. Resolution No. 2017-48 Page 3 of 3 Section 11: 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 12: 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 25th day of July, 2017. ATTEST: Leilani I. Brown City Clerk APPROVED AS TO FORM: CITY ATTO EY'S OFFICE Aaron C. Harp City Attorney Exhibit A — Description of Project Kevin Mul oon Mayor \ZI Foa% Within each of (i) Assessment District No. 111, (ii) Assessment District No. 116, (iii) Assessment District No. 116b and (iv) Assessment District No. 117, the acquisition of certain public facilities and improvements, including: • Utility engineering and construction including the undergrounding of electric, telephone and cable facilities, and the removal of poles, overhead wires, guys, anchors and appurtenant work therewith, such improvements to be designed by utility providers Southern California Edison, AT&T and Time Warner; and • Incidental expenses with respect thereto, including, but not limited to, assessment engineering, contract inspection, city administration and miscellaneous costs. STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH t I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2017-48 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 251h day of July, 2017, and that the same was so passed and adopted by the following vote, to wit: AYES: Council Member Jeff Herdman, Council Member Brad Avery, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Will O'Neill, Mayor Pro Tem Duffy Duffield NAYS: None RECUSED: Mayor Kevin Muldoon IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 26th day of July, 2017. Vv I 6KILIJIN112�, Leilani I. Brown City Clerk Newport Beach, California C� .., 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. 116 ("Assessment District") and has confirmed an assessment in the amount of One Million Nine Hundred Twenty -Five Thousand Dollars and 00/100 ($1,925,000.00), 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; Resolution 2019-62 Page 2 of 5 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 Stifel, Nicolaus & Company, Incorporated ("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 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"), are 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. Resolution 2019-62 Page 3 of 5 Section 3. Bonds in an aggregate principal amount not to exceed One Million Five Hundred Seventy -Eight Thousand Five Hundred Ninety -Six Dollars and 44/100 ($1,578,596.44) 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, 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. 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. Resolution 2019-62 Page 4 of 5 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 one and seventh -tenths percent (1.7%) 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. Resolution 2019-62 Page 5 of 5 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, Division 6, 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 25th day of June, 2019. DIANE B. DIXON, Mayor ATTEST: LEILANI I. BROWN City Clerk APPROVED AS TO FORM: c�<oaN`P CITY ATTORNEY'S OFF CE�� Aaron C. Harp City Attorney Attachment: Exhibit A 1. The maximum term of the Bonds: 20 years (final maturity on September 2, 2039) 2. The estimated maximum annual debt service on the Bonds: $107,950 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: $171,881 5. The list of consultants hired with respect to the Bonds: a. Bond and Disclosure Counsel: Stradling Yocca Carlson & Rauth b. Assessment Engineer: Harris & Associates, Inc. C. Assessment District Consultant: Willdan Financial Services d. Trustee: U.S. Bank National Association e. Municipal Advisor: KNN Public Finance f. Underwriter: Stifel, Nicolaus & Company, Incorporated. STATE OF CALIFORNIA } COUNTY OF ORANGE } ss. CITY OF NEWPORT BEACH 1 I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2019-62 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 251h day of June, 2019; and the same was so passed and adopted by the following vote, to wit.- AYES: it: AYES: Mayor Diane Dixon, Mayor Pro Tem Will O'Neill, Council Member Brad Avery, Council Member Joy Brenner, Council Member Duffy Duffield, Council Member Jeff Herdman NAYS: None RECUSED: Council Member Kevin Muldoon IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 261h day of June, 2019. 51Niffla- Leilani I. Brown " City Clerk Newport Beach, California 1111 11 i ,' ',' # i City Council Minutes Study Session and Regular Meeting July 14, 2015 I. ROLL CALL - 3:30 p.m. Present: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich II. CURRENT BUSINESS SSI. Clarification of Items on the Consent Calendar - None SS2. Balboa Island Seawalls — Repair and Maintenance Options [100-20-751 Public Works Director Webb provided a PowerPoint presentation and thanked those involved in the project, noting that this has been a long process. He provided a brief history of the item and discussed the various public meetings held and the project background. He addressed existing wall conditions, issues of concern regarding the seawalls, and Tidelands Management Committee (TMC) review. Assistant City Engineer Stein highlighted primary issues to address the seawalls, maintaining the structural integrity of the seawalls, current water overtopping of the seawalls, planning for future sea level rise, initial minimum top of seawall elevation levels to provide normal overtopping flood projection until 2025, seawall replacement options considered, details of the various options, Grand Canal as -built conditions, prior seawall failure, Grand Canal cap veneer spalling, and easement requirements. Public Works Director Webb noted that, relative to a new seawall, it will be a cantilevered system and cooperation with residents will be needed. Assistant City Engineer Stein presented a summary of the proposed improvements under the various options, addressed annual dredging for the sand buttress, and discussed the higher risks associated with Options C and D. He provided a cost summary of all the options, including initial costs and expected useful life. Additionally, he provided a comparison of Options B and C, and details of the preliminary schedule. Finance Director Matusiewicz noted the importance of including the time value of money with respect to long term projects. He addressed a present value cost analysis, funding history and results, discussed the Harbor Capital Fund, and highlighted funding options. Public Works Director Webb referenced the Harbor Capital Plan and projects within it. He summarized the options and the benefits of each option. Mayor Selich thanked staff for all the work they have done on this project over the last four years, He added that Assistant City Engineer Stein is an expert on this matter and commented on the value of his expertise. He reported that he has been involved with this project since the day he became a Council Member, talked to many Balboa Island residents to get their input, studied and researched the information, and is familiar with the City's budget. He proposed a modified Option D alternative to: 1) support staffs recommendations relative to seawall heights, 2) stabilize the Grand Canal seawalls by Volume 62 - Page 377 City of Newport Beach Study Session and Regular Meeting July 14, 2015 dredging sand from the canal and maintaining the sand against the seawall on an as - needed basis and maintain the mudline on a no less than annual basis to keep the seawalls stabilized without the need for easements, 3) raise the Grand Canal seawall on an incremental basis as part of a repair and maintenance program to the recommended heights, 4) stabilize the west end wall on a repair and maintenance basis where feasible, 5) conduct an in-depth survey of the 640 -foot section at the west end from Park Avenue toward Garnet, 6) determine if repair is feasible and move forward with stabilization on a repair and maintenance basis, 7) if the repair is not feasible, design a new wall for the 640 - foot section to be constructed on an emergency basis and file the appropriate construction applications, 8) raise the north and south Bayfront walls on an incremental basis as part of a repair and maintenance program, initially concentrating on the overtopping areas, 9) fund the project from a combination of tidelands and General Fund money and have staff return to Council with recommendations on how to fund the project without negatively affecting other funds in the City and putting other projects at risk, and 10) develop a sea level rise plan for the City, as required by the Coastal Commission and other State agencies. Mayor Selich noted the small difference between the cheapest and most expensive plans. He announced an upcoming meeting on Balboa Island on July 26 at the Balboa Island Fire Station and another meeting hosted by Speak Up Newport on August 12 where discussion regarding the matter will take place. Council Member Duffield noted that timing is a concern. He agreed with Mayor Selich's modified option. In response to his question regarding why the idea of a soldier pile and whaler was not considered on the west end in lieu of tie -backs, Assistant City Engineer Stein stated that was suggested as an option a year ago and commented on challenges with installation. Paul Meyer commended staff and Council for their work and reported that, in reviewing the proposals on behalf of Balboa Island residents, they are grateful that the City is considering the importance of property values. He asked whether the North Bayfront had to end at the location shown on the diagrams or whether it should extend to the true north end. Mark Tabbert, Citizens Climate Lobby, provided a written copy of his comments and asked Council to conduct a Citywide, on-going discussion on climate change. He noted the importance of the matter, provided scientific research, and believed that adaptation to changing climate is something every city should consider. He suggested holding community meetings and inviting community educators in climate change, psychology, and economics. He added that Citizens Climate Lobby is well -versed on the subject, John Heffernan asked regarding funding sources for the project, referenced the City's actions regarding reducing Tideland fees and addressed fee increases by the Balboa Yacht Club. He suggested having private pier owners pay their fair share and expressed concerns that residents will be called upon to pay for the seawalls while private pier owners are paying less. Kathy Frazer spoke in support of Option E where Council considers fixing the seawall between Island Avenue and Lindo since Island Avenue floods are causing damage to personal property. Craig Smith distributed a handout and believed that there is a gap in the seawall along Edgewater, between Island Avenue and Lindo. He reported that water has overtopped that area. He referenced seawall measurements included in his handout and noted that, on Thanksgiving, the water was within five inches of the top of the seawall. Voluine 62 - Page 378 City of Newport Beach Study Session and Regular Meeting July 14, 2015 In response to Mayor Selich's question, Public Works Director Webb reported that the area discussed by Mr. Smith is public and outside of the right-of-way. Don Abrams noted the importance of moving the project forward. He believed that dredging the Grand Canal could be done on an emergency basis. He referenced El Nino and urged Council to start dredging as soon as possible. He believed that a special assessment for Balboa Island residents will not be fair and that the plan where 93 easements are required from Grand Canal residents is not practical. Jim Dastur, Chair of the Balboa Island Improvement Association Committee on Seawalls, believed that the City is headed in the right direction. Regarding the options, he stated that the Committee decided that it is not their responsibility to make recommendations based on the options and that the City would be better served if Council did so. He listed the following parameters: 1) the City accept responsibility for the structural integrity of the seawalls now and the foreseeable future, 2) the City accept the responsibility for keeping Balboa Island from flooding now and in the immediate future, 3) the City accept the culture of Balboa Island, as well as protecting access to the public and views of homeowners; and 4) the City pay for the necessary work on the seawalls. He noted there is no clear choice in terms of cost and addressed implementing an incremental solution. In response to Council Member Petros' questions regarding the City's Coastal Commission approval of the Eelgrass Mitigation Plan and the City's ability to dredge, Mayor Selich reported that the City will most likely receive the permit in September. He clarified that the permit is an annual permit and discussed its limitations, restrictions, and purpose. He indicated that he doubts that enough residential pier owners will be able to use the maximum requirements this year, so the difference can be made available to the City in order to dredge the Grand Canal between September 2015 and the end of the year. He added that there is the option to postpone the residential demands until 2016 if the City believed there was an immediate need to conduct the dredging. Harbor Resources Manager Miller confirmed Mayor Selich's explanation. Council Member Petros indicated that he would support action on the Grand Canal dredging as a priority while the City considers a hybrid of Options B and C. In response to Ron Corradini's question, City Manager Diff stated that the proposed heights are 9.0 -feet for the south side and 8.5 -feet for the north side. Mr. Corradini expressed support for the proposed heights and believed that the entire City should be paying for the seawalls since everyone uses the boardwalk. Sue Savary thanked Council and staff. She expressed support for Option A and suggested looking at other government options for funding. Brian Ouzounian addressed unforeseen surface conditions and suggested building the structure to accommodate greater heights, if needed. He added that this is a matter of looking ahead and noted the need to upgrade to a first-class infrastructure. He recommended that the City set up a Go -Fund -Me to save Balboa Island. Lee Pearl thanked Council and staff for their work and addressed the importance of reviewing the Tidelands Fund, City's infrastructure, and capital improvements that need to be made over the next 50 years in order to set money aside for those projects. He believed that the proper thing to do is to rebuild the seawalls. Jeff Herdman asked that the City remove the markers indicating the heights throughout Balboa Island as many have been vandalized. Volume 62 - Page 379 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Council Member Muldoon agreed with Council Member Petros regarding expediting emergency dredging in the area. He noted that Balboa Island has a public easement around it that is not entirely tidelands. He added that other funds could be used since everyone uses Balboa Island. He agreed with Mayor Selich's plan, noting that projects this big do not have to be done overnight. Council Member Petros complimented staff and Mayor Selich. He commented on the Mayor's proposal and stated that he would support that type of an approach for a short- term solution. He commented on Council Member Duffield's alternative methods of installation and believed that they should be studied. He reported that the Coastal Commission recently approved the City's Eelgrass Mitigation Plan and stated that the City should start using it. Additionally, he stated that he would like to see how Council can continue to direct staff to follow-up with Mayor Selich's and Council Member Duffield's proposals to get the Grand Canal dredged as soon as possible. He added that there is a public easement around Balboa Island and believed that it is the City's responsibility to improve, maintain, and manage it. In reply to Mayor Pro Tem Dixon's questions, Public Works Director Webb reported that staff needs to determine the level of permitting required for the project. He stated that there is hope with the new Eelgrass Mitigation Plan and plans are already being made to dredge the Grand Canal. He indicated that staff will need to look at how to repair or cap the walls and see what Coastal Commission permits are required. Regarding her question as to whether the Peninsula Edgewater has been factored in, Public Works Director Webb reported that there are isolated areas that need to be reviewed by the Tidelands Management Committee. Mayor Pro Tem Dixon suggested moving forward with whatever is needed on the Peninsula. Council Member Curry congratulated staff for their research and presentation, as well as the Mayor for working with the community to develop a solution. He addressed the costs of the project and reported that all Newport Beach citizens will participate in financing this project. Additionally, he addressed reductions in Tidelands fees at a time where they need to form the basis for moving forward and reported that the General Fund will most likely subsidize this project. He addressed Bay Island and reported that improvements there were paid for by the residents. He noted the need to move quickly, address these issues, and expressed support for dredging the Grand Canal. Council Member Peotter thanked staff and Mayor Selich, and stated he appreciated him working with Council Member Duffield to develop some engineering alternatives. He agreed with Mayor Pro Tem Dixon in terms of the need for urgency and commented on the need to dredge the Grand Canal this winter. He encouraged conducting engineering studies to look at the west wall and suggested forwarding this matter to the Finance Committee. III. PUBLIC COMMENTS - None City Attorney Harp announced that the City Council will adjourn to Closed Session to discuss the items as listed in the Closed Session agenda and read the titles. IV. CLOSED SESSION - 5:13 p.m. A. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 64967.6) Volume 62 - Page 380 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Agency Designated Representatives: Dave Kiff, City Manager, Terri Cassidy, Deputy City Manager and Jonathan Holtzman, Labor Negotiator; Negotiators. Employee Organizations: All Labor Associations: Association of Newport Beach Ocean Lifeguards (ANBOL); Newport Beach City Employees Association (NBCEA); Newport Beach Employees League (NBEL); Newport Beach Firefighters Association (NBFA); Newport Beach Fire Management Association (NBFMA); Newport Beach Lifeguard Management Association (NBLMA); Newport Beach Police Association (NBPA); Newport Beach Police Management Association (NBP.M.A); Newport Beach Professional and 'Technical Employee Association (NBPTEA); and Part -Time Employee Association of Newport Beach (PTEANB). B. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION - INITIATION OF LITIGATION (Government Code § 54956.9(d)(4)): 2 matters Council Member Peotter recused himself on one of the items because of the possible effect of the matter on his personal finances. C. CONFERENCE WITH LEGAL COUNSEL -EXISTING LITIGATION (Government Code § 54956.9(a), (d)(1)): 1 matter Pacific Shores Properties, LLC, et al, v. City of Newport Beach Newport Coast Recovery, LLC, et al. v. City of Newport Beach, United States District Court, Central District Case Nos. CV 08-00457-JVS (RNBx) & CV 09- 00701-JVX (RNBx) United States Court of Appeals, 9th Circuit Case Nos. 11-55460 & 11-55461 V. RECESS VI. RECONVENED AT 7:00 P.M. FOR REGULAR MEETING AND SPECIAL MEETING VII. ROLL CALL Present: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich VIII. CLOSED SESSION REPORT Regarding Item IV.0 (Existing Litigation), City Attorney Harp announced that Pacific Shores Properties, Newport Coast Recovery, and Yellowstone Women's First Step House have entered into a Settlement Agreement with the City that resolves all disputes between the parties. Pursuant to the terms of the Settlement Agreement, upon the payment of $5.25 million, the plaintiffs will dismiss their lawsuit and file a request to withdraw each of the plaintiffs housing discrimination complaints that were made against the City with the United States Department of Housing and Urban Development. He reported that the Settlement Agreement fully resolves all disputes between the parties. The motion was made by Mayor Selich, seconded by Council Member Peotter, and all members of the City Council voted in favor of the settlement. He announced that the City will have a press release made available regarding this matter. City Attorney Harp also announced that Council Member Peotter recused himself on Item IV,B (Initiation of Litigation) due to the effect of the matter on his personal finances. IX. PLEDGE OF ALLEGIANCE - Council Member Petros X. INVOCATION - Rabbi K'vod Wieder, Temple Beth El of South Orange County Volume 62 -Page 381 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Mayor Selich recessed the meeting to the Special Meeting, for which a separate agenda and minutes were provided under separate cover. He reconvened the Regular Meeting at 9:23p.m. with all members of the City Council in attendance. XI. NOTICE TO THE PUBLIC XII. CITY COUNCIL ANNOUNCEMENTS (NON -DISCUSSION ITEMS) Mayor Pro Tem Dixon commented on the success of the recent July 4th Holiday weekend and provided statistics from the Police and Fire Departments. She thanked all those involved in making it a successful holiday. Council Member Muldoon announced the running of the Special Olympics Torch through the City on July 20. Referencing an email sent by Council Member Peotter regarding the recent Supreme Court decision, Council Member Curry requested that a report come back to the City Council requesting a waiver of City Council Policy A-6 (Open fleeting Policies), consideration of referring Newport Beach Municipal Code (NBMC) violations to the District Attorney, consideration of an amendment to the NBMC regarding use of the City seal, and consideration of adopting a resolution of censure similar to the 2003 resolution for former Council Member Nichols. Council Member Curry reported meeting with the Dalai Lama earlier this month where he spoke regarding Cities of Kindness and the campaign where people could log onto a website and register acts of kindness. Iie stated that Newport Beach can become a City of Kindness and asked staff to bring the matter to Council for consideration. He commented on a previous editorial in the Orange Cou.nly Register regarding City Hall and noted that its parent company, Freedom Communications, gave the City its top award for the top City project in Orange County in 2014. Mayor Selich reported that the City recently won two Golden Hub Awards for Innovation from the Association of California Cities of Orange County (ACC -OC): the Finance Department was selected in the Budgeting and Finance Category for its innovative approach to the City's pension liability, and the Police Department was selected in the Law Enforcement Category for its successful stolen collection advertising campaign. Mayor Selich reported attending the Chamber Marine Committee meeting, the Rotary Club installation of officers, the historical plaque setting on the Goldenrod Bridge, the Newport "Beach Party," the Family 4th of July Parade and Mariners Park Parade, and the Old Glory Boat Parade. Additionally, he reported attending the Ben Carlson Memorial, presented the Key to the City to Mr. Irrelevant,- and attended the OASIS Senior Center officer installment, the Concert on the Green, and the Police Department promotional ceremony. XIII. MATTERS WHICH COUNCIL MEMBERS HAVE ASKED TO BE PLACED ON A FUTURE AGENDA After 5 -years' Notice, Shall the City Consider Moving to a Different Commercial Waste Hauling Model Subject to a Competitive Bid Process that Addresses Community Traffic, Noise and Quality of Life Issues? Council Member Petros stated that he would like Council to have the opportunity to investigate other models used by cities that may improve traffic and consider expenditures on pavement rehabilitation, as well as quality of life issues. Volume 62 - Page 382 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Motion by Council Member Petros, seconded by Mavor Pro Tem Dixon, to direct staff to bring the item back for Council consideration at a future meeting. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich XIV. PUBLIC COMMENTS ON CONSENT CALENDAR Jim Mosher referenced his written comments regarding Item 14 (Annual Report on Council Discretionary Grant Funds) and took issue that the $6,000 allocated to each Council Member is spent without receiving public input. Regarding Item 6 (Petition Certification and Request for Funding for Proposed Underground Assessment District No, 116), Council Member Petros indicated that Southern California Edison (SCE) provided no recommendation on voting timelines for Rule 20B Assessment Districts as it is generally considered outside of their jurisdiction. Regarding Item 13 (Selection of Alternate Piece of Sculpture Exhibition in Civic Center Park), Mayor Pro Tem Dixon noted that it would be helpful going forward to involve members of the community in making sculpture recommendations for the adjacent park and that the City continue to explore private support for the acquisitions. Council Member Muldoon agreed with Mayor Pro Tem Dixon's comments. XV. CONSENT CALENDAR A. READING OF MINUTES AND ORDINANCES Minutes for the June 16, 2015 Special Meeting and the June 23, 2015 Study Session and Regular Meeting [100-2015] Waive reading of subject minutes, approve as amended, and order filed. 2. Reading of Ordinances Waive reading in full of all ordinances under consideration, and direct the City Clerk to read by title only. C. ORDINANCES FOR ADOPTION 4. Adoption of Ordinance No. 2015-20 Amending Newport Beach Municipal Code Subsection 12.44.040 [100-2015] Conduct second reading and adopt Ordinance No. 2015-20, An Ordinance of the City Council of the City of Newport Beach, California, Amending Newport Beach Municipal Code Section 1,44.040 to Increase On -Street Parking Meter Fees. Council Members Peotter and Muldoon voted "no" on this item. 5. Adoption of Ordinance No. 2015-21 Amending Newport_ Beach Municipal Code Section 11.08.060 of Chapter 11.08 [100-2015] Conduct second reading and adopt Ordinance No. 2015-21, An Ordinance of the City Council of the City of Newport Beach, California., Amending Section 11.08.060 of Chapter 11.08 of the Newport Beach Municipal Code Relating to Beach Fire Rings. Volume 62 - Page 383 City of Newport Beach Study Session and Regular Meeting July 14, 2015 D. RESOLUTION FOR ADOPTION 6. Petition Certification and Request for Funding for Proposed Underground Assessment District No. 116 (Area bounded by: Channel Road, the Rivo Alto Channel, 38th Street and Balboa Boulevard) [100-20151 a) Adopt Resolution No. 2015-60, A Resolution of the City Council of the City of Newport Beach, California., Accepting Petition of Assessment District No. 116; and b) Approve Budget Amendment No. 16BA-001 authorizing an advance from the General Fund in the amount of $40,000 to Assessment District No. 116 and appropriating $40,000 to Account No. 74116-9812 for Assessment Engineering Services, Council Member Muldoon recused himself from this item due to financial and business reasons. Council Member Curry recused himself from this item due to a stockholder conflict. E. CONTRACTS AND AGREEMENTS Campus Drive, San Joaquin Hills Road and San Miguel Drive Street Pavement Overlay — Notice of Completion and Acceptance of Contract No. 5582 (CAP14- 0009) [38/100-20151 a) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project; b) Authorize the City Clerk to release the Labor and Materials Bond 65 days after the Notice of Completion has been recorded in accordance with applicable portions of the Civil Code; and c) Release the Faithful Performance Bond one year after acceptance by the City Council. 8. Ocean Boulevard and Marguerite Avenue Pavement Reconstruction — Notice of Completion and Acceptance of Contract No. 5581 (CAP15-0045) [381100-20151 a) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project; b) Authorize the City Clerk to release the Labor and Materials Bond 65 days after the Notice of Completion has been recorded in accordance with applicable portions of the Civil Code; and c) Release the Faithful Performance Bond one year after acceptance by the City Council, 9. Rehabilitation of the City's Dolphin and Tamura Shallow Water Wells — Award of Contract No. 5981 (CAP15-0022, Project No. 15W11) [381100-2015] a) Approve the project plans and specifications; b) Award Contract No. 5981 to General Pump Company, Inc. for the Total Bid Price of $276,280.00 and authorize the Mayor and City Clerk to execute the contract; and c) Establish a contingency of $55,200.00 (approximately 20% of Total Bid) to cover the cost of unforeseen work not included in the original contract. 10. Request to Maintain and Improve Existing Private Improvements within the Public Right -of -Way at 520 De Anza Drive (C-6210) (N2015-0318) [381100-20151 a) Waive City Council Policy L-6, Private Encroachments in Public Rights -of -Way, to allow the Owners to maintain and improve existing improvements within the public right-of- way as described in this report and show on the attached site plan, contingent upon all conditions of the Encroachment Permit process being met; and b) Direct staff to enter into an Encroachment Agreement with the Owners, and authorize the City Manager and City Clerk to execute the Encroachment Agreement within one (1) calendar year upon receipt of approval. Volume 62 - Page 384 City of Newport Beach Study Session and Regular Meeting July 14, 2015 11. Professional Services Agreement for Bill Printing and Mailing Services and Paperless Billing (C-6211) [38/100-20151 Approve the Professional Services Agreement for Document Printing and Mailing Services and Online Presentment, and authorize the Mayor and City Clerk to execute the Agreement. F. MISCELLANEOUS 12. Planning Commission Agenda for the July S, 2015 Meeting [100-20151 Receive and file. 13. Selection of Alternate Piece for Sculpture Exhibition in Civic Center Park [100- 20151 The City Arts Commission recommends that City Council: a) Approve the selection of Act 1Equa.tor Z360 by Kenneth Capps to replace Loonaings; b) Approve the adjusted placement of La. Cage Aux Folles away from the driveway and foot path; and c) Approve the adjusted placement of Re -cycled in a site in which glare will not affect the homes or motorists across MacArthur Blvd. Motion by Mayor Pro Tem Dixon, seconded by Council Member Peotter, to approve the Consent Calendar, except for the items removed (3 and 14); and noting the "no" votes by Council Members Peotter and Muldoon on Item 4 and the recusals to Item 6 by Council Members Curry and Muldoon. The motion carried by the following roll call vote; Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich XVI. ITEMS REMOVED FROM THE CONSENT CALENDAR 3. Hotel Guest Registry Inspections 1100-20151 In response to Council Member Peotter's questions, Assistant Police Chief Lewis addressed how often Hotel Guest Registries are inspected and explained the previous process. He reported that the law now requires an administrative warrant for such requests. Motion by Council Member Peotter, seconded by Council Member Curry, to introduce Ordinance No. 2015-22, An Ordinance of the City Council of the City of Newport Beach, California, Amending Section 5.36.020 of the Newport Beach Municipal Code Regarding Inspections of Hotel Guest Registries, and pass to second reading on July 28, 2015. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich 14. Annual Report on Council Discretionary Grant Funds [100-2015] In response to Council Member Peotter's questions, City Manager Kiff reported that, at the conclusion of the fiscal year, unused funds roll into the fiend balance and become part of the City's surplus and the City Council has the opportunity to allocate them. He added that, for Volume 62 - Page 385 City of Newport Beach Study Session and Regular Meeting July 14, 2015 the new budget year, the same amount was approved. He addressed the guidelines and noted that the expenditure needs to have a community benefit and Council Members have the opportunity to report their uses at the end of the year. Mayor Selich added that there is also a certification that each grantee files with staff to ensure the funds are spent appropriately. Motion by Council Member Peotter, seconded by Council Member Curry. to receive and file. Jim Mosher reported that the policy has been changed over time and provided a brief history of the policy. Council Member Peotter requested that the City Council review the policy at the next Council meeting. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich XVII. PUBLIC COMMENTS ON NON -AGENDA ITEMS Jim Mosher referenced the Special Meeting and believed that the resolution had been previously distributed to the City Council and then was toned down. XVIII. ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Council Member Curry reported that he represents the City on the Orange County Sanitation District (OCSD), announced their recent dedication of a new groundwater replenishment system, and stated that it is a key element in meeting the water needs in Southern California. Council Member Petros reported attending the City's Fourth of July festivities. He also reported attending a Balboa Village Advisory Committee (BVAC) meeting and addressed the items discussed at the meeting. Mayor Pro Tem Dixon reported on her trip to Antibes, France, to represent the City at a 25 -year Anniversary Celebration of the Sister City relationship between Antibes and Newport Beach. She noted that she travelled at her own expense and commented on the Sister City Association. XIX. PUBLIC HEARINGS Without objection, it was the consensus of the City Council to discuss Items 15, 16 and 17 together. 15. Award of Non -Exclusive Solid Waste Collection Franchise to Hartfield Construction Corp., a California Corporation [421100-20151 16. Award of Non -Exclusive Solid Waste Collection Franchise to James Blomberg, a Sole Proprietor [421100-2015] 17. Award of Non -Exclusive Solid Waste Collection Franchise to Praisler Hauling & Demolition, a California Corporation [421100-2015] Municipal Operations Co -Director Pisani provided the staff report for Items 15, 16 and 17. Volume 62 - Page 386 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Mayor Selich opened the public hearing. Jim Mosher commended City staff for making the list accessible on the City website and commented on the number of enterprises in the City. Hearing no further testimony, Mayor- Selich closed the public hearing. Motion by Council Member Curry, seconded by Council Member Petros, to a) conduct second reading and adopt Ordinance No. 2015-17, An Ordinance of the City Council of the City of Newport Beach, California, Granting a Non -Exclusive Solid Waste Franchise to John Hartfield Construction Corp., a. California Corporation, to Provide Solid Waste Collection Services upon the City Streets and Within the City of Newport Beach; b) conduct second reading and adopt Ordinance No. 2015-18, An Ordinance of the City Council of the City of Newport Beach, California., Granting a. Non -Exclusive Solid Waste Franchise to James Blomberg, a. Sole Proprietor, to Provide Solid Waste Collection Services Upon the City Streets and Within the City of Newport Beach.; and c) conduct second reading and adopt Ordinance No. 2015-19, An Ordinance of the City Council of the City of Newport Beach, California., Granting a Non - Exclusive Solid Waste Franchise to Praisler Hauling & Demolition, Inc., a California Corporation, to Provide Solid Waste Collection Services upon the City Streets and Within the City of Newport Beach. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Mayor Selich Absent: Council Member Muldoon 18. An Ordinance to Provide an Expedited, Permitting Process for Small Residential Rooftop Solar Systems [100-2015) Chief Building Official Jurjis addressed Assembly Bill 2188 which requires that all cities pass an ordinance expediting the permitting process for solar systems for single-family and duplex dwellings. He added that the City already has an expedited permitting process but, to be in compliance, the City needs to adopt an ordinance. In response to Council Member Petros' question, Chief Building Official Jurjis stated that the process will be expedited at the front counter. Motion by Council Member Curry, seconded by Council Member Duffield, to a) find this action 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 indirect physical change in the environment), 15061(b)(3) (CEQA only applies to projects which have the potential for causing a significant effect on 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; and b) introduce Ordinance No. 2015-23, An Ordinance of the City Council of the City of Newport Beach, California, Amending Title 15 of the Newport Beach Afunicipal Code to Provide An Expedited, Streamlined Permitting Process for Small Residential Rooftop Solar Systems, and pass to second reading on July 28, 2015. Mayor Selich opened the public hearing. Volume 62 - Page 387 City of Newport Beach Study Session anal Regular Meeting July 14, 2015 Jim Mosher noted the lack of a definition for "electrical metallic tubing" and questioned the requirement for only one inspection. He commented on the expedited process for "roof -top solar systems" but noted references to photovoltaic systems. Hearing no further testimony, Mayor Selich closed the public hearing. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich 19. Approval of Master Fee Schedule and Change in Subsidies [100-2015] Mayor Selich noted receipt of a letter from the Business Industry Association (BIA) requesting a continuance of the item. Motion by Council Member Peotter, seconded by Mayor Pro Tem Dixon, to continue the item. Mayor Selich opened the public hearing. Jim Mosher pointed out that this is for an ordinance and a resolution, and suggested that Council first consider the ordinance and then adopt the resolution. He believed there are flaws in the schedule, as well as a lack of explanation regarding the proposed changes. Hearing no further testimony, Mayor Selich closed the public hearing. The motion carried by the following roll call vote: Ayes: ' Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich XX. CURRENT BUSINESS 20. Establish a Trial Anchorage Area West of Lido Isle — Harbor Commission Recommendation [100-20151 Harbor Resources Manager Miller provided a PowerPoint presentation, presented options for the anchorage area recommended by the Harbor Commission, as well as potential adjustments, and stated that the intention is to move the boundaries around for two or three months and evaluate it regularly. Council Member Petros expressed his support of the trial anchorage, but asked regarding responses to violations and enforcement. Harbor Resources Manager Miller reported that raft -ups are not allowed in the trial and that enforcement will be addressed. In response to Mayor Pro Tem Dixon's questions, Harbor Resources Manager Miller addressed other previous uses in the Harbor, including other anchorage areas, and discussed how the Harbor Patrol will service this area and Marina Park. He added that an RFQ will soon be released for services to manage the mooring fields in Newport Harbor. Council Member Duffield explained the reasons for implementing a trial anchorage. Volume 62 - Page 388 Volume 62 - Page 389 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Lido Yacht Club, or any other stakeholder. He added that he does not understand the urgency and expressed concerns with safety as the proposed anchorage area is where UCI conducts training. Council Member Duffield responded that what is being displayed, is not necessarily the actual location where the anchorage will be. He added that people will be able to sail through the area and commented on the Duncan McIntosh's marina project which will impact a much larger area, Mr. Weinberg stated that he attended a Harbor Commission hearing where a Harbor Patrol representative commented on the lack of resources and questioned their ability to deal with complaints. Judy Cole expressed concern that the proposed anchorage area is close to berthed vessels and to homes, and believed that the initial footprint is too big compared to the current four acre footprint. Additionally, she questioned the need for another anchorage area and expressed concerns with safety, Council Member Duffield suggested making the area the same distance as that of the other anchorage area off of Lido Island. Harbor Commissioner Avery believed that this could be done by moving the anchorage at least 100-feet in each direction. He emphasized that this proposal is on a trial basis. Mayor Selich requested and received confirmation that it would be moved north 100-feet toward Coast Highway Bridge and Coast Highway. Harbor Resources Manager reported that the anchorage area would be subject to additional input after installation. In response to Mayor Pro Tem Dixon's question, Harbor Commissioner Avery commented on the possibility of setting a maximum capacity. Pam Whitesides expressed concern with noise and suggested moving the area further away from residents. She hoped that, if the anchorage becomes permanent, the City will conduct an Environmental Impact Report (EIR). Council Member Petros reiterated that this is a trial and is subject to change. He added that the concerns expressed will be either substantiated or refuted with evidence. Motion by Council Member Petros, seconded by Council Member Duffield, to adopt Resolution No. 2015-62, A Resolution of the City Council of the City of Newport Beach, California, Authorizing the Establishment of a Temporary Trial Anchorage in the Newport Harbor Turning Basin.. Mayor Pro Tem Dixon suggested an amendment to the motion to include constraints, specifically in terms of the movement of the area, setting the time for the trial, and clarifying the process. Council Member Petros indicated that his motion stands as originally presented. The motion carried by the following roll call vote: Ayes: Council Member Peotter; Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich Volume 62 - Page 390 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Noes: Mayor Pro Tem Dixon 21. Appointments to Boards and Commissions [100-20151 City Clerk Brown reviewed the recommendations and outlined the appointment process. Motion by Council Member Curry, seconded by Council Member Petros, to direct the City Clerk to re -post and publish a Vacancy Notice for the Board of Library Trustees vacancies. Jim Mosher addressed the City's appointment process and believed that the nominating committee meetings should be publically noticed. He addressed the service of specific community members and questioned why the Board of Library Trustees appointments are being recommended for continuance. Mayor Selich reported that Council always has the ability to nominate from the floor and that it has been done in the past. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich Council Member Muldoon reported that he was not involved on the nominating committee and commented on the service of Roy Englebrecht on the Parks, Beaches and Recreation Commission. Discussion followed regarding the possibility of waiving Council Policy A-2 (Appoi.ntnaen.ts to Boards, Commissions and Committees) in order to add Roy Englebrecht to the list of the Parks, Beaches and Recreation Commission nominees. Motion by Council Member Muldoon, seconded by Council Member Peotter, to waive Council Policy A-2 for consideration of adding Roy Englebrecht to the list of names to be considered for appointment to the Parks, Beaches and Recreation Commission. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Duffield, Council Member Muldoon, Mayor Selich Noes: Council Member Curry, Mayor Pro Tem Dixon City Clerk Brown read the ballot votes for the Building and Fire Board of Appeals as follows: James Anderson — Peotter, Petros, Dixon, Curry, Duffield, Muldoon, Mayor Selich Khorow (Saum) Nourmohammadi (Noun) — Peotter, Petros, Dixon, Curry, Duffield, Muldoon, Mayor Selich Following a coin toss, City Clerk Brown announced that James Anderson was reappointed to the Building and Fire Board of Appeals for a four year term and Saum Nour was appointed to a term expiring on June 30, 2016 to fill the unscheduled vacancy on the Building and Fire Board of Appeals. City Clerk Brown read the ballot votes for the City Arts Commission as follows: Volume 62 - Page 391 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Arlene Greer — Peotter, Petros, Dixon, Curry, Duffield, Muldoon, Mayor Selich City Clerk Brown announced that Arlene Greer was reappointed to the City Arts Commission for a four year term. City Clerk Brown read the ballot votes for the Civil Service Board as follows: Roberta Fesler — Peotter, Dixon, Duffield, Muldoon Douglas Coulter — Curry, Mayor Selich Gloria Alkire — Petros City Clerk Brown announced that Roberta Fesler was appointed to the Civil Service Board for a four year term. City Clerk Brown read the ballot votes for the Harbor Commission as follows: William Avery — Peotter, Petros, Dixon, Curry, Duffield, Muldoon, Mayor Selich City Clerk Brown announced that William Avery was reappointed to the Harbor Commission for a four year term. City Clerk Brown read the ballot votes for the Parks, Beaches and Recreation Commission as follows: Lee Cassidy — Petros, Dixon Roy Englebrecht — Peotter, Duffield, Muldoon Laird Hayes — Peotter, Petros, Dixon, Curry, Duffield, Muldoon, Mayor Selich William Hossfeld — Curry, Mayor Selich City Clerk Brown announced that Laird Hayes was reappointed to the Parks, Beaches and Recreation Commission for a four year term and a second vote will be cast between Lee Cassidy, Roy Englebrecht, and William Hossfeld Lee Cassidy — Petros Roy Englebrecht — Peotter, Duffield, Muldoon, Dixon William Hossfeld — Curry, Mayor Selich City Clerk Brown announced that Roy Englebrecht was reappointed to the Parks, Beaches and Recreation Commission for a four year term. City Clerk Brown read the ballot votes for the Planning Commission as follows: Hita Mosesman — Petros, Dixon Kory Kramer — Peotter, Petros, Dixon, Curry, Duffield, Muldoon, Mayor Selich Jay Myers — Curry Debra Stevens — Selich Erik Weigand — Peotter, Dixon, Curry, Duffield, Muldoon Peter Zak — Peotter, Petros, Duffield, Muldoon, Mayor Selich City Clerk Brown announced that Kory Kramer was reappointed to the Planning Commission for a four year term and, following a coin toss, Peter Zak was appointed to a four year term and Erik Weigand was appointed to a term expiring on June 30, 2016 to fill the unscheduled vacancy on the Planning Commission, Volume 62 - Page 392 City of Newport Beach Study Session and Regular Meeting July 14, 2015 Motion by Council Member Curry, seconded by Mayor Pro Tem Dixon, to extend the present meeting beyond 11:00 p.m., in accordance with Council Policy A-10 (Procedural Rules for the Conduct of City Council Meetings). The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich 22, Fiscal Year 2015-2016 Special Event Support Funding Recommendations [100-20151 Council Member Duffield recused himself from. the Balboa Island Wine Festival and Balboa Island Centennial Celebration items because Visit Newport Beach is a source of income to his business. Mayor Selich opened public comments for the Balboa Island Wine Festival and the Balboa Island Centennial items. No public testimony was provided. Motion by Council Member Curry, seconded by Council Member Petros, to continue the matters of the Balboa Island Wine Festival and the Balboa Island Centennial to the July 28, 2015 City Council meeting. Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich Recused: Council Member Duffield Mayor Selich opened public comments on the remaining public funding items. Kelly Jawar, Vice President of the Newport Beach Wine and Food Festival, thanked the City for its support, announced that the festival will be held October 2-4, 2015, and listed activities and features of the festival. She reported that the plan going forward is to transition as a non- profit entity. She thanked the City for its recommended contribution and requested that the City waive its fees and sponsor the entire event for $35,000. Joel Carlson, President of the Kiwanis Club, commented on their support of the Pacific Coast Triathlon and. added that the Kiwanis Club supports high school clubs, Sea Base 90, CHOC, and the Special Olympics. He noted the City's prior support and asked that the City continue supporting their endeavors. Gregg Shwenk, Co-founder of the Newport Beach Film Festival, thanked Council for its support and asked that the City adopt staff's recommended funding amount. Jim Walker, President of the Newport Beach Resident Association, reported that the organization is in the process of planning for the next Restaurant Week and asked for Council's support. David Shockley, Commodore of the Newport Sailing Association, thanked Council for its past support and commented on the Newport to Ensenada Race. He urged Council to continue its support. Jim Mosher commented on the process for issuing special events grants, the policy for making recommendations, and the approval process. He believed that some of the signature events Volume 62 - Page 393 City of Newport Beach Study Session and Regular Meeting July 14, 2015 should be at a point where they can fund their own events without City support, such as the Newport Beach Film Festival which provides free tickets to Council Members and City staff. Jerry Murray, Newport Harbor High School teacher, thanked the City for its previous support and asked for its continued support. Motion by Council Member Curry, seconded by Council Member Petros, to continue the item to the July 28, 2015, City Council meeting. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muleloon, Mayor Selich 23. Approval of Agreement with International Line Builders, Inc. for Citywide Streetlight Maintenance and As -Needed Repair Services (C-627.2) (100-20151 Motion by Council Member Curry, seconded by Council Member Petros. to continue this matter to the July 28; 2015, City Council meeting. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Mayor Pro Tem Dixon, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Selich XXI, MOTION FOR RECONSIDERATION - None XXII. ADJOURNMENT - 11:36 p.m. The agenda for the Regular Meeting was posted on the City's website and on the City Hall Electronic Bulletin Board located in the entrance of the City Council Chambers at 100 Civic Center Drive on July 9, 2015, at 4:00 p.m. City Clerk Recording Secretary J/ Mayor• Volume 62 - Page 394 City Council Minutes Study Session and Regular Meeting November 10, 2015 I. ROLL CALL - 5:45 p.m. Present: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich IL CURRENT BUSINESS SSI. Clarification of Items on the Consent Calendar Council Member Petros reported receiving many emails regarding Item 3 (Introduction of Ordinance No. 2015-33 Imposing an Express Ban on Marijuana Cultivation, Marijuana Processing, Marijuana Delivery, and Marijuana Dispensaries in the City) and requested and received clarification from City Attorney Harp that the Ordinance would have no effect on the legal personal use of medical marijuana, noting that the proposed Ordinance focuses on cultivation, dispensaries, processing and marijuana delivery. SS2. Jordan Kessler, Mater Dei student, will read her winning essay, "Voice of Democracy" Jordan Kessler read her essay, "Voice of Democracy". III. PUBLIC COMMENTS Regarding Closed Session Item A, Jim Mosher believed that the mechanism for evaluation and the objectives should be discussed in open session. Relative to Item B, he noted that the job title of labor negotiator Jonathan Holtzman was not identified on the agenda and he could not locate a contract for him in the City Clerk's database. Regarding Item C, he stated that the City Attorney had previously expanded on the item, but it was not done at this time and suggested doing so going forward. City Attorney Harp announced that the City Council will adjourn to Closed Session to discuss the items as listed in the Closed Session agenda and read the titles. IV. CLOSED SESSION — 5:57 p.m. A. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Government Code § 54957 (b)(1)) Title: Dave Kiff, City Manager Aaron C. Harp, City Attorney Leilani Brown, City Clerk B. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 54957.6) Volume 62 - Page 492 City of Newport Beach Study Session and Regular Meeting November 10, 2015 Agency Designated Representatives: Dave Kiff, City Manager, Carol Jacobs, Assistant City Manager, Terri Cassidy, Deputy City Manager, Barbara Salvini, Human Resources Director, and Jonathan Holtzman; Negotiators. Employee Organizations: All Labor Associations: Association of Newport Beach Ocean Lifeguards (ANBOL); Newport Beach City Employees Association (NBCEA); Newport Beach Employees League (NBEL); Newport Beach Firefighters Association (NBFA); Newport Beach Fire Management Association (NBFMA); Newport Beach Lifeguard Management Association (NBLMA); Newport Beach Police Association (NBPA); Newport Beach Police Management Association (NBPMA); Newport Beach Professional and Technical Employee Association (NBPTEA); and Part -Time Employee Association of Newport Beach (PTEANB). C. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION - INITIATION OF LITIGATION (Government Code § 54956.9(d)(4)): 1 matter V. RECESS VI. RECONVENED AT 7:00 P.M. FOR REGULAR MEETING VII. ROLL CALL Present: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich VIII. CLOSED SESSION REPORT - None IX. PLEDGE OF ALLEGIANCE - Mayor Pro Tem Dixon X. INVOCATION - Pastor Tim Keller, Mariners Church XI. NOTICE TO THE PUBLIC XII. CITY COUNCIL ANNOUNCEMENTS (NON -DISCUSSION ITEMS) Council Member Duffield announced the recent loss of the vessel, William B, an icon to the Newport Harbor for 30 years, by fire. He asked that a proclamation be issued, honoring the William B for its service to the City. Council Member Peotter congratulated the Marine Corps on its 240th birthday. Mayor Selich reported recently attending the Hoag Hospital Tree of Life Celebration, honoring recent organ donors and their families. He reported attending a dinner for former Centennial Mayor Don Webb, hosted by the National Eagle Scout Association. Additionally, he reported attending "Seussical the Musical" and commented on the presentation of a proclamation by the Mayor of Whoville. He provided information regarding the Arts and Learning Conservatory of Orange County. XIII, MATTERS WHICH COUNCIL MEMBERS HAVE ASKED TO BE PLACED ON A FUTURE AGENDA - None XIV. PUBLIC COMMENTS ON CONSENT CALENDAR Volume 62 - Page 493 City of Newport Beach Study Session and Regular Meeting November 10, 2015 Regarding Supplemental Item S18 (Contract Updates: Police Chief Jay Johnson and Fire Chief Scott), Jim Mosher pointed out various corrections needed and commented on the new salaries. He referenced Attachments D and E and stated that he was unable to find anything indicating that Council or staff is allowed to increase salaries each year. He questioned the escalation of salaries, the yearly uniform allowance, and addressed the insertion of an entitlement of a 3% at 50 retirement formula. City Manager Kiff reported that both the Police Chief and Fire Chief have always been under the 3% at 50 retirement plan. Previously, it was presented in a different section of the contract, but recently, it has been moved to a new section for increased clarity. He added that the Police Chief and Fire Chief's salaries can be tied in with their management level increases and that their salary changes were approved through the normal processes. Regarding Item 9 (Code Enforcement Services for Water Conservation — Professional Services Agreement with JAS Pacific and Approval of a Budget Amendment), Council Member Peotter pointed out that the City will be hiring "water police" to comply with Governor Brown's mandates and discussed the proposed salary. Council Member Muldoon announced his engagement and that he will be married at the beginning of next year. Council Member Curry congratulated the Police Chief on the marijuana Ordinance (Item 3) and acknowledged Item 12 (Kindness Initiative/Support of Volunteerism and Community Service) which was inspired by the Dali Lama. Additionally, he commended Council Member Peotter for his selection of Patti Gorczyca to the Finance Committee (Item 14). XV. CONSENT CALENDAR READING OF MINUTES AND ORDINANCES 1. Minutes for the October 27, 2015 Study Session and Regular Meeting [100-2015) Waive reading of subject minutes, approve as amended, and order filed. Council Member Curry abstained from this Item. 2. Reading of Ordinances Waive reading in full of all ordinances under consideration, and direct the City Clerk to read by title only. ORDINANCE FOR INTROD UCTION 3. Introduction of Ordinance No. 2015-33 Imposing an Express Ban on Marijuana Cultivation, Marijuana Processing, Marijuana Delivery, and Marijuana Dispensaries in the City [100-20151 Introduce Ordinance No. 2015-33, An Ordinance of the City Council of the City of Newport Beach, California, Imposing an Express Ban ort Marijuana Cultivation, Marijuana Processing, Marijuana Delivery, and Marijuana Dispensaries in the City, and pass to second reading on November 24, 2015. ORDINANCES FOR ADOPTION 4. Newport Center Planned Community Amendments Second Reading of Ordinances (PA2015-109) [100-20151 Volume 62 - Page 494 City of Newport Beach Study Session and Regular Meeting November 10, 2015 a) Conduct second reading and adopt Ordinance No. 2015-31, An Ordinance of the City Council of the City of Newport Beach, California, Approving Planned Community Development Plan Amendment No. PD2015-001 Amending the Corporate Plaza, Corporate Plaza West, and Block 500 Planned Community District Regulations (PA2015-109); and b) Conduct second reading and adopt Ordinance No. 2015-32, An Ordinance of the City Council of the City of Newport Beach, California, Approving Planned Community Development Plan Amendment No. PD2015-001 Amending the North Newport Center Planned Community Development Plan (PA2015-109). Council Member Petros recused himself from this Item due to business interests. RESOLUTIONS FOR ADOPTION 6. Proposed Assessment District Nos. 111, 116 and 116B - Areas Adjacent to Balboa Boulevard between Coast Highway and 23rd Street [891100-2015] a) Adopt Resolution No. 2015-93, A Resolution of the City Council of the City of Newport Beach, California, Preliminarily Approving the Assessment Engineer's Report and Fixing the Time and Place of the Public Hearing for Assessment District No. 111; b) Adopt Resolution No. 2015-94, A Resolution of the City Council of the City of Newport Beach, California, Preliminarily Approving the Assessment Engineer's Report and Fixing the Time and Place of the Public Hearing for Assessment District No. 116; c) Adopt Resolution No. 2015-95, A Resolution of the City Council of the City of Newport Beach, California, Preliminarily Approving the Assessment Engineer's Report and Fixing the Time and Place of the Public Hearing for Assessment District No. 116B; d) Adopt Resolution No. 2015-96, A Resolution of the City Council of the City of Newport Beach, California, Declaring its Intention to take Proceedings Pursuant to the Municipal Improvement Act of 1913 and to Issue Bonds Pursuant to the Improvement Bond Act of 1915, and Make Certain Findings and Determinations in Connection therewith, all Relating to the Formation of Assessment District No. 111; e) Adopt Resolution No. 2015-97, A Resolution of the City Council of the City of Newport Beach, California, Declaring its Intention to take Proceedings Pursuant to the Municipal Improvement Act of 1913 and to Issue Bonds Pursuant to the Improvement Bond Act of 1915, and Make Certain Findings and Determinations in Connection therewith, all relating to the Formation of Assessment District No. 116; f) Adopt Resolution No. 2015-98, A Resolution of the City Council of the City of Newport Beach, California., Declaring its Intention to take Proceedings Pursuant to the Municipal Improvement Act of 1913 and to Issue Bonds Pursuant to the Improvement Bond Act of 1915, and Make Certain Findings and Determinations in Connection therewith, all relating to the Formation of Assessment District No. 116B; and g) Per City Council Policy L-28 (Assessment Ballot Guidelines), determine that the City will not participate in the AD -116B balloting process for the Channel Park property by neither voting for nor against the assessment. Council Member Muldoon recused himself from this Item due to business interests. Council Member Curry recused himself from this Item due to a stockholder conflict. CONTRACTS AND AGREEMENTS 7. Back Bay View Park Maintenance -- Notice of Completion and Acceptance of Contract No. 5892 [38/100-20151 a) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project; Volume 62 - Page 495 City of Newport Beach Study Session and Regular Meeting November 10, 2015 b) Authorize the City Clerk to release the Labor and Materials Bond sixty-five (65) days after the Notice of Completion has been recorded in accordance with applicable portions of the Civil Code; and c) Release the Faithful Performance Bond one (1) year after acceptance by the City Council. 8. Multiple Buildings Painting Project - Notice of Completion and Acceptance of Contract No. 6013 [381100-2015) a) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project; b) Authorize the City Clerk to release the Labor and Materials Bond sixty-five (65) days after the Notice of Completion has been recorded in accordance with applicable portions of the Civil Code; and c) Release the Faithful Performance Bond one (1) year after acceptance by the City Council. 9. Code Enforcement Services for Water Conservation - Professional Service Agreement with JAS Pacific and Approval of a Budget Amendment (C-6357) [381100- 2015] a) Find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) of the CEQA Guidelines; b) Approve and authorize the Mayor and City Clerk to execute a Professional Services Agreement with Jason Addison Smith Consulting, Inc., dba JAS Pacific for a not to exceed limit of $271,700; and c) Approve Budget Amendment No. 16BA-011, increasing Municipal Operations Department expenditures by $268,247. in Fiscal Year 2015/16. S18. Contract Updates: Police Chief Jay Johnson (C-4578) and Fire Chief Scott Poster (C-5049) [381100-2015] Authorize the City Manager to execute the first amended and restated contracts for the Fire Chief and Police Chief. MISCELLANEOUS 10, Planning Comnyission Agenda for the November 5, 2015 Meeting [100-2015] Receive and file. 11. Water Conservation Update [100-2015] Receive and file. 12. Kindness Initiative/Support of Volunteerism and Community Service [100-2015] Authorize the creation of a "Volunteer Opportunities" landing page on the City website to serve as a Kindness Initiative resource for the community. 13. Response to Orange County Grand Jury: "The Mental Illness Revolving Door: A Problem for Police, Hospitals, and the Health Care Agency" [100-20.15] Authorize the Mayor to send a response to the Presiding Judge of the Superior Court. 14. Appointment of a New Finance Committee Member to Fill an Unscheduled Vacancy [100-2015] Confirm Council Member Scott Peotter's appointment of Patti Gorczyca to fill the unexpired balance of Bill McCullough's term on the Finance Committee. Volume 62 - Page 496 City of Newport Beach Study Session and Regular Meeting November 10, 2015 Motion by Mayor Pro Tem Dixon, seconded by Council Member Petros, to approve the Consent Calendar, except for the item removed (Item 5); and noting the abstention to Item 1 by Council Member Curry, recusal by Council Member Petros on Item 4, and recusals by Council Members Curry and Muldoon on Item 6. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich XVI. ITEMS REMOVED FROM THE CONSENT CALENDAR 5. Marina Park Parking - Establish Marina Park Parking Lots Hours, Approve the Marina Park Daily Parking Permit and Provide for Increased Annual Permit Parking at Marina Park [100-20151 Mayor Pro Tem Dixon proposed amending the Resolution for after the first year of the facility's operation, staff shall report to Council every 60 days with an update and analysis of how the parking approach is being implemented. She indicated that this will allow staff, the community, and Council to keep abreast of parkin; and other issues before they become major issues. City Manager Kiff agreed, but suggested reporting back every 90 days instead of 60 days since the City's programming is in 90 -day blocks. Additionally, he stated that staff will provide residents with a telephone number to call if there are any problems. Mayor Pro Tem Dixon accepted the suggestion of staff providing an update every 90 days. City Manager Kiff explained it would be a Consent Calendar item presented as "receive and file." Motion by Mayor Pro Tem Dixon, seconded by Council Member Curry, to a) adopt amended Resolution No. 2015-86, AResolution of the City Council of the City of Newport Beach, California, Amending Resolution No. 2000-38, to Establish the Hours of Operation for the Marina Park Parking Lots; b) adopt Resolution No. 2015-87, A Resolution of the City Council of the City of Newport Beach, California, Establishing the Marina Park Daily Parking Permit; and c) adopt Resolution No. 2015-89, A Resolution of the City Council of the City of Newport Beach, California, Amending Resolution No. 2011-105, to Provide for Annual Permit Parking at Marina Park, as amended. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tens Dixon, Mayor Selich XVIL PUBLIC COMMENTS ON NON -AGENDA ITEMS Tori Horn stated that she is homeless and commented on the number of homeless living in the area of 1550 Avocado. She urged Council and law enforcement to consider its homeless, especially the children, and requested help. Richard Russell spoke of Donald Fuschetti, who was a resident of Newport Beach and recently lost his life after being hit by a car while crossing Westcliff Avenue. He hoped that Council will consider installing flashing lights in the crosswalk. He reported that he will be presenting the City Volume 62 - Page 497 City of Newport Beach Study Session and Regular Meeting November 10, 2015 Clerk with a petition containing 1,300 signatures and asking the City to install crosswalk lights on 17th and Rutland. He read from some of the comments made from people who signed the petition. XVIII. ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Council Member Curry reported that the Finance Committee will meet on November 12, 2015, at 3:00 P.M. Council Member Petros reported that Council is making attempts to learn more about departing flights at John Wayne Airport (JWA). He announced that he will host a conversation, next week, with the City Attorney from the City of Phoenix who has filed a lawsuit against the FAA in order to learn more about what has happened there. He added that he will report back to Council and the public after that meeting. XIX. PUBLIC HEARING 15. Local Coastal Program Implementation Plan (100-20151 Planning Manager Alford provided a PowerPoint presentation to address the Coastal Commission and Coastal Act, its goals, the Coastal Zone, Local Coastal Program requirements, details of the Implementation Plan, major components of the plan, Land Use, development, public access, resource and habitat protection, scenic and visual quality protection, cultural resource protection, and administration of the plan. He provided information on next steps after certification, approximate permit appeal boundaries, 2014 Coastal Development Permits, and addressed community and public outreach. Mayor Selich noted that this is the conclusion of a 12 -year effort, commented on the various challenges, interface with Coastal Commission staff, community outreach, and the General Plan/Local Coastal Program Implementation Committee. He added that the plan meets the needs of the community, as well as the Coastal Act. At Mayor Pro Tem Dixon's request, Planning Manager Alford indicated that benefits to residents living within the Coastal Zone include streamlining the development application process and reduction of costs. Community Development Director Brandt addressed overall staffing and differences between the current process and the proposed process, noting there will be a time savings and the process will be less labor-intensive. Mayor Selich opened the public hearing. Jim Mosher commended staff for their work but, although he acknowledged the amount of community outreach, he believed that the amount of public engagement has been slight. He wondered if what will be submitted to the Coastal Commission is what the public is seeing at this time or asked whether Council or staff has latitude to modify it before it is officially submitted. He expressed concerns regarding the appeals and noticing processes. Ken Schofield commended the City and staff for their work on this matter. .Hearing no further testimony, Mayor Selich closed the public hearing. Council Member Petros agreed with Mayor Selich's comments and commended staff for their work and noted that this is an effort toward local control. Volume 62 - Page 498 City of Newport Beach Study Session and Regular Meeting November 10, 2015 Motion by Council Member Petros, seconded by Mayor Pro Tem Dixon, to a) find that approval of the LCP Implementation Plan is statutorily exempt from California Environmental Quality Act (CEQA) pursuant to Section 15265(a) (1) of the California Code of Regulations, Title 14, and Chapter 3 of the Coastal Act; and b) adopt Resolution No. 2015-99, A Resolution of the City Council of the City of Newport Beach, California, Approving the Local Coastal Program. Implementation Plan (PA2013-001), and authorizing the submittal of applications to the California Coastal Commission for review and approval. Council Member Duffield commended staff and Mayor Selich for their work. Council Member Peotter commented on the process, noted this is a good accomplishment, and thanked staff for their work. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, Mayor Pro Tem Dixon, Mayor Selich XX. CURRENT BUSINESS 16. Appointment of New City Arts Commissioner to Fill an Unscheduled Vacancy (100-- 20151 City Clerk Brown read the paper ballot votes for the City Arts Commission as follows: Michael Kerr — Council Member Peotter, Council Member Petros, Council Member Curry, Council Member Duffield, Council Member Muldoon, and Mayor Selich Jennifer Van Bergh — Mayor Pro Tem Dixon City Clerk Brown announced that Michael Derr was appointed to a term expiring on June 30, 2017 to fill the unscheduled vacancy on the City Arts Commission. 17. Appointment to the Visit Newport Beach, Inc. Executive Committee [100-20151 Council Member Duffield recused himself from this Item due to a business relationship with Visit Newport Beach, Inc. Jim Mosher discussed the funding given to Visit Newport Beach, Inc. by City and believed that appointing a Council liaison to its Executive Committee arose due to a City audit. He stated that the public has heard little from the current appointee and took issue with the money allotted for its annual dinner for the purpose of self -promotion. He commented on the CEO's compensation and believed that the Committee should hold public meetings, subject to the Brown Act. Mayor Pro Tem Dixon hoped that the City will continue to ensure that Visit Newport Beach, Inc. is aware of the requirements of the agreement, including the timely and complete submittal of reports. She expressed hope that they will continue to be an advocate for complete transparency and spoke in support of the organization's work and efforts. City Clerk Brown read the paper ballot votes for the Visit Newport Beach, Inc. Executive Committee as follows: Volume 62 - Page 499 City of Newport Beach Study Session and Regular Meeting November 10, 2015 Dennis O'Neil - Council Member Petros, Council Member Curry, Council Member Muldoon, Mayor Pro Tem Dixon and Mayor Selich Douglas Wood - Council Member Peotter City Clerk Brown announced that Dennis O'Neil was reappointed to serve on the Visit Newport Beach, Inc. Executive Committee for a four year term, effective December 14, 2015. =. MOTION FOR RECONSIDERATION - None SOUL ADJOURNMENT -Adjourned at 8:07 p.nn. in memory of Greg Moddelog The agenda was posted on the City's website and on the City Hall Electronic Bulletin Board located in the entrance of the City Council Chambers at 100 Civic Center Drive on November 5, 2015, at 4.10 p.m. The supplemental agenda was posted on the City's website and on the City Hall Electronic Bulletin Board located in the entrance of the City Council Chambers at 100 Civic Center Drive on November 6, 2015, at 11:00 a.m. Recording Secretary Mayor ,aq / 4, f" City Clerk Volume 62 - Page 500 City Council Minutes Study Session. and Regular Meeting January 12, 2016 ROLL CALL - 3:30 p.m. Present: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Curry, Council Member Petros, Mayor Dixon Absent: Mayor Pro Tem Muldoon (excused) II. CURRENT BUSINESS SSI. Clarification of Items on the Consent Calendar - None SS2. 2015 Junior Lifeguard of the Year Mayor Dixon presented Aaron CIark, Newport Beach Junior Lifeguard of the Year, with a Proclamation. Lifeguard Operations Assistant Chief Williams presented Aaron with a Fire Department Plaque and $250. Aaron thanked his family, the Newport Beach Junior Lifeguard Program, and City Lifeguards for the honor. SS3. Towing Fees, Towing Services Police Sergeant Rachel Johnson provided a PowerPoint presentation to address law enforcement towing, the decline in the number of vehicles towed for law enforcement purposes, and changes that have impacted the number of vehicles towed, Senior Accountant Schweitzer presented information on fees, including total revenues from franchise fees and vehicle impound release fees over the last six years. She also reviewed fees to ensure related costs are being recovered, results of the consultant studies, recommendations relative to franchise fees, and a comparison of fees by surrounding cities. Assistant to the City Manager Houston addressed the RFP process, including Code requirements, Police Department review of towing services, related efficiencies, scoring criteria, proposals received, evaluation of proposals, keeping in line with surrounding communities, recommended providers, and the towing rate schedule. He reported that the towing companies suggested an increase in their fees of 17%, but the City negotiated a reduced rate of 5%. He presented recommendations that will be brought for Council consideration at a future meeting. Council Member Petros commented on the current towing fee to residents and the recommended increase of approximately 39%. He questioned constraints placed on operators and Assistant to the City Manager Houston explained that the 39% increase came from the actual cost of service. Council Member Petros indicated that he does not see the fairness on both sides of the transaction. Jim Mosher commented positively on the presentation and noted that the RFP process began in 2013 and that the current contracts expired on December 31, 2014. He expressed concern that the operators have been working without a contract for a little over a year. He also commented on the accessibility of the RFP on the City's and a third party's websites. Volume 62 - Page 526 City of Newport Beach Study Session and Regular Meeting January 12, 2016 Alex Mohamed, Southside Towing, reported that staff expressed that they did not fit the criteria because of the size of their property and noted that the MetroPro Towing property is 1,000 square feet smaller than their property and should be allowed to also have an overflow yard, which would put them over the standard requirements. He expressed concern that they were not able to present extra services they could provide to the City, such as street sweeping to clean up after major accidents. Additionally, he reported that they build their own trucks and would be able to absorb related costs. Further, they have a water clarifier which would stop toxins from flowing into the storm drains. He reported that they only service CHP and the Orange County Sheriffs Department so they only use approximately 1110th of their facility. In addition, they are able to handle administration and collection of fees. Joey Campbell, MetroPro Towing, commented on the contract structure and on the length of the RFP process. Wayne Miller, G&W Towing, spoke in support of staff's recommendations and expressed concerns regarding the reduced volume of towing demand. Council Member Curry commended the Police Department for their analysis and agreed with staffs recommendations. He added that in 10 -years, he has received no complaints regarding the City's towing services. In response to Council Member Peotter's questions, Assistant to the City Manager Houston noted that direct electronic submittal may be possible and that no parking ticket revenue collection was factored into the recommended contracts. City Manager Kiff indicated that revenue from parking enforcement would not be associated with towing and the associated revenue. That revenue is accounted for in another fund and parking ticket revenue would be collected whether or not the vehicle was towed. Sergeant Johnson responded to Council Member Peotter's questions regarding evaluation of the towing sites, property sizes, and indoor storage versus outside storage. She added that greater consideration is given to indoor storage as vehicles involved in crimes need to be stored indoors and may be stored for many years, She reiterated information regarding the evaluation criteria used. Council Member Peotter indicated he would Iike to see the RFP restored, based on available square footage rather than total square footage. Council Member Curry believed that there is no need recirculate the RFP again or manipulate the scoring so political friends win. He added that staff did a very comprehensive, methodical job, and recommended moving forward with the matter. Mayor Dixon asked regarding the possibility of verifying square footage. Sergeant Johnson noted that would be possible, but added that MetroPro Towing already has an agreement with G&W Towing to make up differences in square footage. City Manager Kiff indicated that he is seeking direction as to whether or not to bring recommendations for approval of the top-ranked providers. Mayor Dixon responded affirmatively. SS4. LED Streetlights Municipal Operations Co -Director Murdoch provided a PowerPoint presentation to address energy efficiency in the City. He introduced Rebecca Houser with the Energy Network and Volume 62 - Page 527 City of Newport Beach Study Session and Regular Meeting January 12, 2016 provided a summary of the work they have done, at no cost, to help the City. He reported on the City's partnership with other agencies and cities in Orange County and savings achieved. Rebecca Houser, the Energy Network, reported on her organization and its programs to help cities implement energy efficiency practices. She addressed upgrading the City's streetlights to LED and on the benefits of doing so. Additionally, she provided a brief overview on how the City's energy bills will remain neutral and discussed recommendations, Municipal Operations Co -Director Murdoch addressed the number of lights replaced so far, as well as the number remaining. He noted that City buildings and facilities already use high - efficiency lighting. Council Member Petros commented on utility undergrounding and related challenges. He asked if there is consideration where undergrounding may have efficiency benefits or savings. Municipal Operations Co -Director Murdoch stated that he would have to look into the matter. Jim Mosher spoke in support of the recommendation and commented on the City's previous adoption of an independent energy action plan and its reference to a 25 -year streetlight master plan. He asked regarding the status of the latter and wondered regarding the total energy budget for municipal lighting versus residential/commercial lighting. Bruce Bell, Howard Lighting Industries, commented on his organization and asked regarding the bidding process for the project. He also addressed additional incentives provided by SCE, as well as other programs that his company may provide. Municipal Operations Co -Director Murdoch reported that the City will not replace any light poles and addressed the process once Council approves the matter. He stated that SCE has contractors to do the work so that the City will not be going through an RFP process. Council Member Curry asked regarding a grant received by the City for streetlight retrofitting. Public Works Director Webb stated that he does not remember the amount of the grant, but he does recall a grant received through the Recovery Act and commented on other incentives received over the years for streetlight projects. III. PUBLIC COMMENTS Jim Mosher thanked staff for listing only the specific Employee Organization for which discussion will take place under Closed Session Item A. He asked about the difference between the Newport Employee Association and the Newport Beach Employees League, and asked whether employees have an opportunity to decide who will be representing them. He referenced Closed Session Item E and believed there is a lack of transparency regarding the matters to be discussed. City Attorney Harp announced that the City Council will adjourn to Closed Session to discuss the items as listed in the Closed Session agenda and read the titles. IV. CLOSED SESSION — 4:33 p.m. A. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 54957.6) Agency Designated Representatives: Dave Kiff, City Manager, Carol Jacobs, Assistant City Manager, and Barbara Salvini, Human Resources Director. Employee Organizations: Newport Beach Employees League (NBEL). Volume 62 - Page 528 City of Newport Beach Study Session and Regular Meeting January 12, 2016 B. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Government Code § 54957 (b)(1)) Title: Dave Kiff, City Manager Aaron C. Harp, City Attorney Leilani Brown, City Clerk C. CONFERENCE WITH LABOR NEGOTIATOR (Government Code § 54957.6) Agency Designated Representative: Council Member Tony Petros Unrepresented Employees: Dave Kiff, City Manager, Aaron C. Harp, City Attorney, and Leilani Brown, City Clerk D. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code § 54956.8): 1 matter Property: 1 Newport Pier, Newport Beach, California Agency Negotiator: Lauren Wooding and Seimone Jurjis Negotiating Parties: Blue Water Grill, Cube Restaurants, Machan Group Under Negotiation: Instruct negotiator as to price and terms of payment. E. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION - SIGNIFICANT EXPOSURE TO LITIGATION (Government Code § 54956.9(d)(2) and (e)(1)): 2 matters F. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (Government Code § 54956.9(a), (d)(1)): 1 matter Banning Ranch Conservancy, et al. u. City of Newport Beach, et al. Orange County Superior Court, Case No, 30-2012-00593557 California Court of Appeal, 4th District, Division 3, Case No. G049691 California Supreme Court, Case No. S227473 V,ER CESS VI. RECONVENED AT 7:00 P.M. FOR REGULAR MEETING VII. ROLL CALL Present: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Curry, Council Member Petros, Mayor Dixon Absent: Mayor Pro Tena Muldoon (excused) VIII. CLOSED SESSION REPORT - None IX. PLEDGE OF ALLEGIANCE - Council Member Selich X. INVOCATION - Reverend Canon Cindy Evans Voorhees, St. James the Great Episcopal Church X1. NOTICE TO THE PUBLIC Volume 62 - Page 529 City of Newport Beach Study Session and Regular Meeting January 12, 2016 XII. CITY COUNCIL ANNOUNCEMENTS (NON -DISCUSSION ITEMS Council Member Petros reported participating in a coastal clean-up hosted by Dory Deli and commented positively on the event. Additionally, he attended the Southern California Association of Governments (SLAG) unveiling of the Regional Transportation Plan (RTP). He encouraged City Manager Kiff and staff to follow-up after completion of the RTP to possibly receive Sustainable Planning Grants in the summer. Council Member Curry congratulated Mayor Pro Tem Muldoon on his recent marriage and reported he is currently on his honeymoon. Additionally, he reported that Verizon has withdrawn their appeal of the Planning Commission's action regarding a recent application for a cell tower. He stated that Verizon will retool the project to a different location and will return with an application to the City. Council Member Selich announced that Speak Up Newport will meet from 6:00 p.m. to 7:00 p.m. in the Civic Center Community Room on January 13, 2016, for a presentation by the Police Department on "Preparing for the Unthinkable.". Mayor Dixon announced the grand opening of the Credit Union of Southern California at the Central Library on January 13, 2016, from 4:00 p.m. to 6:00 p.m. Additionally, she announced that, on January 25, 2016, at the Central Library Friends Room at 7:00 p.m., a lecture will be provided regarding "Researching Ways to Make Memories Last a Lifetime" which deals with Alzheimer's Disease and memory enhancement. She reported that the Recreation and Senior Services Department is accepting donations of coats and blankets through January 22, 2016, in conjunction with OneWarmCoat.org. She commented on El Nino and asked staff to provide an update. Municipal Operations Director Pisani provided a PowerPoint presentation to address sandbags distributed to the public and beach clean-up. Mayor Dixon commended Dory Deli on their recent hosting of a beach clean-up event. XVIII. PUBLIC HEARINGS (Pursuant to City Council Policy A-6, Items 16, 17 & 18 are being taken out of order) 16. Proposed Assessment District No. 111 - Area Bounded by 31st Street, Ocean Front, 23rd Street and Newport Boulevard [38/89/100-2016] Council Member Curry recused himself from this Item due to a stockholder conflict. Mayor Dixon opened the public hearing. Richard Grossman thanked staff for their work and efforts on this matter. He commented on his experience reaching out to the City and reported forwarding several concerns to the City Attorney's Office. He noted the importance of residents having pertinent information, including foreclosures and liens placed on properties. He asked if property owners will be held responsible for increases in assessments and whether the project will be held up from going forward if someone in the Assessment District refuses to participate. City Attorney Harp reported that his office advises staff and deferred to the City's Bond Counsel for a response. Brian Forbath, Stradling, Yocca, Carlson & Rauth, City Bond Counsel, reported that property owners will not be responsible for cost overruns. If bids are more than the assessment, there is no assurance that the project will get built and offered options. He added that residents who do not Volume 62 - Page 530 City of Newport Beach Study Session and Regular Meeting January 12, 2016 participate, will not hold up the project. He indicated that, if the matter passes, those property owners will have a lien on their property and will have an obligation to pay on an annual basis. In response to Mr. Grossman's question regarding approval by 50% of the voters, Mr. Forbath reported that the City has a majority protest provision and explained the related process. Mary Hyatt asked if SCE ever figured out why underground vaults were exploding in the City of Long Beach. She asked whether the lien must be paid off before selling a property. Public Works Director Webb believed that the Long Beach incident was an isolated case and stated he does not have the details on the matter. Mr. Forbath reported that the lien does not need to be paid off before selling a property and that it travels with the home. City Clerk Brown announced that those counting ballots have been deputized to do so. Hearing no further testimony, Mayor Dixon closed the public hearing. She announced that the ballots will be counted at this time and the results will be announced once the tabulations have been completed. City Clerk Brown announced that, based on the tabulations for the ballots received, 58.1% of the ballots were submitted in favor of the Assessment District for a total assessment of $1,500,404.08. 41.9% of the votes were submitted in opposition, for a total assessment of $1,080,769.41. Motion by Council Member Peotter, seconded by Council Member Petros, to a) adopt Resolution No. 2016-5, A Resolution of the City Council of the City of Newport Beach, California, Making Determinations, Confirming Assessments and Proceedings and Designating the Superintendent of Streets to Collect and Receive Assessments and to Establish a Special Fund for City of Newport Beach Assessment District No. 111, overruling protests, approving final engineer's report, levying assessments without modification, approving and ordering the work and improvements for the utility underground project, and authorizing and directing related actions with respect to Assessment District No. 111, since there was greater than or equal to 50% of weighted "Yes" votes versus "No" votes submitted; and b) approve Budget Amendment No. 16BA- 022 authorizing an advance from the General Fund in the amount of $ 269,030 to Assessment District No. 111 and appropriating $130,000 to Account No. 66002-941027 for electrical utility design by SCE, $39,030 to Account No. 66002-941005 for phone system design by AT&T and $100,000 to Account No. 66002-941006 for assessment engineering services; and transferring expenses from Account No. 65002-941006 to 66002-941006 in the amount of $36,223.75 for assessment engineering services paid to date. Funds remaining in this fiscal year will be carried forward to future annual budgets per Council Policy F-3. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Petros, Mayor Dixon Recused: Council Member Curry Absent: Mayor Pro Tem Muldoon 17. Proposed Assessment District No. 116 - Area Bounded by Channel, East of River Avenue/38th Street/Balboa Boulevard and 44th Street [38189/100-20161 Council Member Curry recused himself from this Item due to a stockholder conflict. Mayor Dixon opened the public hearing. Volume 62 - Page 531 City of Newport Beach Study Session and Regular Meeting January 12, 2016 Paul DeRidder provided a summary of the process and thanked resident volunteers and staff for their hard work, Mayor Dixon, and all the property owners who voted for the Assessment District. Hearing no further testimony, Mayor Dixon closed the public hearing. She announced that the ballots will be counted at this time and the results will be announced once the tabulations have been completed. City Clerk Brown announced that those counting ballots have been deputized to do so. City Clerk Brown announced that, based on the tabulations for the ballots received, 74.3% of the ballots were submitted in favor of the Assessment District for a total assessment of $1,000,006.33. 25.7% of the votes were submitted in opposition, for a total assessment of $346,214.68. Motion by Council Member Peotter, seconded by Council Member Petros, to a) adopt Resolution No. 2016-6, A Resolution of the City Council of the City of Newport Beach, California, Making Determinations, Confirming Assessments and Proceedings and Designating the Superintendent of Streets to Collect and Receive Assessments and to Establish a Special Fund for City of Newport Beach Assessment District No. 116, overruling protests, approving final engineer's report, levying assessments without modification, approving and ordering the work and improvements for the utility underground project, and authorizing and directing related actions with respect to Assessment District No. 116, since there was greater than or equal to 50% of weighted "Yes" votes versus "No" votes submitted; and b) approve Budget Amendment No. 16BA- 023 authorizing an advance from the General Fund in the amount of $141,270 to Assessment District No. 116 and appropriating $85,000 to Account No. 65902-941027 for electrical utility design by SCE, $21,270 to Account No. 65902-941005 for phone system design by AT&T and an additional $35,000 to Account No. 65902-941006 for assessment engineering services; and transferring expenses from Account No. 65002-941006 to 65902-941006 in the amount of $36,255.00 for assessment engineering services paid to date. Funds remaining in this fiscal year will be carried forward to future annual budgets per Council Policy F-3. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Petros, Mayor Dixon Recused: Council Member Curry Absent: Mayor Pro Tem Muldoon 18. Proposed Assessment District No. 116B - Area Bounded by Balboa Boulevard/Neptune Avenue/47th Street/45th Street/Channel Road [381891100-2016] Council Member Curry recused himself from this Item due to a stockholder conflict. Mayor Dixon opened the public hearing. George Schroeder spoke about undergrounding costs and reported that utility undergrounding will improve property values. He added that the cost of undergrounding will be offset by increased property values. Hearing no further testimony, Mayor Dixon closed the public hearing. She announced that the ballots will be counted at this time and the results will be announced once the tabulations have been completed. City Clerk Brown announced that those counting ballots have been deputized to do so. Volume 62 - Page 532 City of Newport Beach Study Session and Regular Meeting January 12, 2016 Public Works Director Webb expressed his appreciation to City staff for their work on this matter. City Clerk Brown announced that, based on the tabulations for the ballots received, 60.6% of the ballots were submitted in favor of the Assessment District for a total assessment of $343,169.00. 39.4% of the votes were submitted in opposition, for a total assessment of $223,401.94. Motion by Council Member Peotter, seconded by Council Member Petros, to a) adopt Resolution No. 2016-7, A Resolution of the City Council of the City of Newport Beach, California, Making Determinations, Confirming Assessments and Proceedings and Designating the Superintendent of Streets to Collect and Receive Assessments and to Establish a Special Fund for City of Newport Beach Assessment District No. 116B, overruling protests, approving final engineer's report, levying assessments without modification, approving and ordering the work and improvements for the utility underground project, and authorizing and directing related actions with respect to Assessment District No. 116B, since there was greater than or equal to 50% of weighted "Yes" votes versus "No" votes submitted; and b) approve Budget Amendment No. 16BA- 024 authorizing an advance from the General Fund in the amount of $105,560 to Assessment District No. 116B and appropriating $35,000 to Account No. 66102-941027 for electrical utility design by SCE, $10,560 to Account No. 66102-941005 for phone system design by AT&T and $60,000 to Account No. 66102-941006 for assessment engineering services; and transferring expenses from Account No. 65002-941006 to 66102-941006 up to $25,000 for assessment engineering services contracted to date. Funds remaining in this fiscal year will be carried forward to future annual budgets per Council Policy F-3. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Petros, Mayor Dixon Recused: Council Member Curry Absent: Mayor Pro Tem Muldoon XIII. PUBLIC COMMENTS ON CONSENT CALENDAR City Manager Diff noted that there is an amendment to Item 3 (Water Efficient Landscape Ordinance Amendment) that should be adopted along with the item. Additionally, relative to Item 14 (Request to Waive City Council Policy A-5), he reported that when the City Arts Commission raises funds, they are processed through the City and the City Council controls all of the funds of the City. Regarding Item 12 (Annual Mayoral Appointments), Jim Mosher asked regarding the status of the Ad Hoe Building Committee. City Manager Kiff reported that there is no Building Committee at this time. XIV. CONSENT CALENDAR READING OF MINUTES AND ORDINANCES 1. Minutes for the December 8, 2015 Regular Meeting [100-2015] Waive reading of subject minutes, approve as amended, and order filed. 2. Reading of Ordinances Waive reading in full of all ordinances under consideration, .and direct the City Clerk to read by title only. Volume 62 - Page 533 City of Newport Beach Study Session and Regular Meeting January 12, 2016 ORDINANCE FOR INTRODUCTION 3. Water Efficient Landscape Ordinance Amendment (NBMC Chapter 14.17) [100-20151 a) Find that the adoption of Code Amendment No. CA2015-001 is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15307, Class 7 (Actions by Regulatory Agencies for the Protection of Natural Resources); and b) Introduce Ordinance No. 2015-34, An Ordinance of the City Council of the City of Newport Beach, California, Amending Chapter 14.17 of Title 14 of the Newport Beach Municipal Code in its Entirety Pertaining to Regulations Required for Water Efficient Landscaping (PA2015- 169), and pass to second reading on January 26, 2016. RESOLUTIONS .FOR ADOPTION 4. Resolution Updating the List of Designated Employees for 2016 Under the City's Conflict of interest Code 1100-20151 Adopt Resolution No. 2016-1, A Resolution of the City Council of the City of Newport Beach, California, Adopting an Updated Designated Employees List for 2016. 5. City Council Policy F-9 (City Vehicle/Equipment Replacement Guidelines) [1.00-2015] Continue the item to a future City Council meeting. 6. Adoption of Memoranda of Understanding with the Newport Beach City Employees Association (C-2059) and the Newport Beach Professional and Technical Employees Association (C-2051) [381100-20151 a) Adopt Resolution No. 2016-3, A Resolution of the City Council of the City of Newport Beach, California, Adopting a Memorandum of Understanding between the City of Newport Beach and the Newport Beach City Employees Association for the Period July 1, 2015 through December 31, 2018; and b) Adopt Resolution No. 2016-4, A Resolution of the City Council of the City of Newport Beach, California, Adopting a Memorandum of Understanding between the City of Newport Beach and the Newport Beach Professional and Technical Employees Association for the Period July 1, 2015 through December 31, 2018. CONTRACTS AND AGREEMENTS 7. Grand Canal Emergency Sand Maintenance Work — Notice of Completion and Acceptance of Contract No. 6274 (161115) [381100-2015] a) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project; b) Authorize the City Clerk to release the Labor and Materials Bond sixty-five (65) days after the Notice of Completion has been recorded in accordance with applicable portions of the Civil Code; and c) Release the Faithful Performance Bond one (1) year after acceptance by the City Council. 8. Professional Service Agreement with PlaceWorks for Environmental Services for the Proposed 180 -Roam Hotel Project Located at 4311 Jamboree Road (PA2015-208) (C-6420) [381100-20151 Authorize the City Manager to execute the SCE incentive application, OBF application, OBF agreement and other documents related to the application process with SCE for the City -Wide LED Streetlight Retrofit. Volume 62 - Page 534 City of Newport Beach Study Session and Regular Meeting January 12, 2016 9. City Wide LED Streetlight Retrofit (C-6421) [381100-2015] Authorize the City Manager to execute the SCE incentive application, OBF application, OBF agreement and other documents related to the application process with SCE for the City -Wide LED Streetlight Retrofit. 10. Tentative Agreement with the Newport Beach Firefighters Association (C2060) [381100- 2015] Receive and file the Tentative Agreement between the City of Newport Beach and the Newport Beach Firefighter's Association. 11. Tentative Agreement with the Newport Beach Fire Management Association (C-2946) [381100-2015] Receive and file the Tentative Agreement between the City of Newport Beach and the Newport Beach Fire Management Association. MISCELLANEOUS 12. Annual Mayoral Appointments [100-20151 Confirm Mayor Diane B. Dixon's appointments under City Council Policy A-9, as provided in the staff report. 13. Code Amendment Initiation for Properties Located at 3008, 3010, and 3012 Balboa Boulevard [100-2015] Initiate an amendment to Zoning Code Setback Map. No S-213 that specifies five feet as the required front yard setback for 3008, 3010, and 3012 Balboa Boulevard. 14. Request to Waive City Council Policy A-5, Fund Raising/Contracts by City Boards, Commissions, or Committees [100-2015] Staff requests that City Council waives Council Policy A-5, Fund. Raising/Contracts by City Boards, Commissions, or Committees, and allow the City Arts Commission to independently raise and collect funds on behalf of itself for arts programming and projects in the City of Newport Beach. 15. Budget Amendment to Accept a Check in the Amount of $22,805 from the California State Library for Literacy Services (CLLS) and Appropriate Funds to the Library's Fiscal Year 2015/2016 Maintenance and Operation Budget [100-2015] Approve Budget Amendment No. 16BA-021 to increase revenue estimates by $22,805 in account 01060005-431070 (California Literacy Campaign) and to increase expenditure estimates by the same amount in Division 01060604-711003 (Literacy Services). Motion by Council Member Petros, seconded by Council Member Curry, to approve the Consent Calendar. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Curry, Council Member Petros, Mayor Dixon Absent: Mayor Pro Tem Muldoon XV. ITEMS REMOVED FROM THE CONSENT CALENDAR — None XVI. PUBLIC COMMENTS ON NON -AGENDA ITEMS Volume 62 - Page 535 City of Newport Beach Study Session and Regular Meeting January 12, 2016 Dorothy Kraus, Stop Polluting Our Newport (SPON), referenced an email sent to the City Council and asked that Council consider televising the Planning Commission meetings and airing them on the City's website. XVII. ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Council Member Curry reported that the Finance Committee will meet on January 14, 2016, at 3:00 p.m. Mayor Dixon announced that the Balboa Village Advisory Committee (BVAC) will meet on January 13, 2016, at 4:00 p.m. at Marina Park. Additionally, she reported that the annual City Council Planning Session will be held at 9;00 a,m. on January 23, 2016, at Marina Park. XVIII. CURRENT BUSINESS 19. Appointment of Jay Johnson as Interim Police Chief (C-4578) 1381100-20151 City Manager Kiff provided the staff report and asked that Council approve a contract with Mr. Johnson until a new Police Chief is recruited. Jinn Mosher commented on PERS requirements, referenced Council Policy F-20 (Contracts with Former Employees), and asked why the City is not availing itself on using either of the Deputy Police Chiefs instead of issuing a contract to Mr. Johnson, Motion by Council Member Curry, seconded by Council Member Petros, to a) adopt Resolution No. 2016-8, A Resolution of the City Council of the City of Newport Beach, California, Confirming Appointment of Jay R. Johnson as Interim Police Chief in Accordance with Government Code Section 21221(h) (effective January 13, 2016), and Certifying the Exception to the 180 Day Wait Period Under Government Code Section 7522,56(f)(4), and certifying that the position of Police Chief is a critical position within the City structure; and b) authorize the City Manager to execute the proposed Post Retirement Temporary Employment Agreement with Jay Johnson. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Duffield, Council Member Selich, Council :Member Curry, Council Member Petros, Mayor Dixon Absent: Mayor Pro Tem Muldoon 20. Harbor Commission 2016 Objectives [100-20151 Harbor Resources Manager Miller introduced Harbor Commission Chair Girling. Harbor Commission Chair Girling introduced fellow Commissioners in attendance and provided a PowerPoint presentation with the Harbor Commission's goals and objectives for 2016. Council Member Selich expressed concerns regarding regulations on boat bottom paint and asked why it is not one of the Harbor Commission's objectives. Chairman Girling noted that the City is in the process of negotiations and vetting that issue, Harbor Resources Manager Miller added that staff is working with the State Water Board to work on a creative and collaborative solution that might postpone any permanent action. Council Member Selich indicated that he would feel more comfortable knowing that the Harbor Resources Department and the Harbor Commission is monitoring that issue. Volume 62 - Page 536 City of Newport Beach Study Session and Regular Meeting January 12, 2016 Council. Member Selich stated that he would like the Harbor Commission to consider preserving the City's shipyards. Council Member Duffield thanked Chairman Girling and commended the Harbor Commission for its work. He encouraged his attendance at Council meetings to give regular updates regarding the Harbor Commission's accomplishments, Mayor Dixon thanked the Harbor Commission. She asked if it would be possible to have other Boards and Commissions attend Council meetings to provide updates on their activities. In response to Mayor Dixon's question, Chairman Girling reported that the Harbor Commission is looking into discovering more on regulations, education and conditions of all water -powered crafts, not just paddleboards, to ensure increased safety in the Harbor. Jim Mosher commented positively on the Harbor Commission's goals and objectives; however, stated that he is uncomfortable regarding the need for approval of the goals and objectives by Council. He agreed with Mayor Dixon's comments regarding other Commissions setting goals and objectives. Council Member Petros believed that the Harbor Commission is an exception in terms of the type of work it does and how it brings the information to Council. Motion by Council Member Petros, seconded by Council Member Selich, to approve the Harbor Commission's 2016 objectives. The motion carried by the following roll call vote: Ayes: Council Member Peotter, Council Member Duffield, Council Member Selich, Council Member Curry, Council Member Petros, Mayor Dixon Absent: Mayor Pro Tem Muldoon Mayor Dixon recessed the meeting at 8:05 p.m. in order- to complete the Assessment District ballot tabulation. The meeting reconvened at 8:1x7 p.m. with all City Council members from the Roll Call present. The City Council proceeded to Items 16, 17 and 18. XIX, MOTION FOR RECONSIDERATION - None XX. ADJOURNMENT — Adjourned at $:25 p.m. in memory of Captain Tim Newman, Newport Beach Police Department (Retired); and Robert Earl Johnson, Sr. The agenda was posted on the City's website and on the City Hall Electronic Bulletin Board located in the entrance of the City Council Chambers at 104 Civic Center Drive on January 7, 2016, at 4:00 p.m. r ei bmK pOR Rec rding Secretawy R Mayor City Clerk Volume 62 - Page 537 City Council Minutes Study Session and Regular Meeting July 25, 2017 ROLL CALL - 4:00 p.m. Present: Council Member Jeff Herdman, Council Member Brad Avery, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Will O'Neill, Mayor Pro Tem Duffy Duffield, Mayor Kevin Muldoon II. CURRENT BUSINESS SSI. Clarification of Items on the Consent Calendar - None SS2. Presentation of Small Business of the Year Award by Assemblyman Matt Harper Assemblyman Matt Harper presented Figge Photography with an Assembly Resolution, and Council Member Dixon read and presented a proclamation to them. Mayor Pro Tem Duffield and Council Member Herdman commended the business. SS3. Presentation to Russell Surfboards on Their 50th Anniversary Council Member Dixon read and presented John Paul "JP" Roberts with the proclamation. SS4. Friends of the Library Check Presentation Friends of the Library President Amy Hunt and Bookstore Manager Wendy Frankel presented the City with a $250,000 check. SS5. Newport Beach and CompanyNisit Newport Beach Annual Report/Presentation Mayor Pro Tem Duffield recused himself from Item. SS5 since he conducts business with. Visit Newport. Beach. Debbie Snavely, General Manager Marriott Newport Beach Hotel and Spa & Chairperson of Visit Newport Beach & Newport Beach and Co., reviewed their annual report, introduced the Visit Newport Beach Executive Committee members in attendance, and discussed their purpose. Jonathon Vopinek, VP of Asset Management & Marketing for R.D. Olson Development, highlighted the Lido House Hotel project, which is scheduled to open February 2018. Gary Sherwin, President and CEO of Newport Beach and Company, discussed travel patterns, hotel average daily rates and comparisons within the County, the 2017 budget, group sales performance and room night production, industry recognition, brand promise and advertising, digital and international marketing, public relations, leisure marketing performance, Visit Newport Beach's total impact, Newport Beach and Company's structure, community resources and marketing partnerships, and critical issues (new hotels in the County, international instability, hotel renovations, group sales/meeting slowdowns), and new programing for Newport Beach TV. Volume 63 - Page 324 City of Newport Beach Study Session and Regular Meeting July 25, 2017 In response to Council questions, Mr. Sherwin discussed the importance of having more meeting spaces and the reason for the off-year reporting. Finance Director Matusiewicz reported on the City's Transient Occupancy Tax (TOT) and property tax amounts, and short- term rental issues. Mr. Sherwin further answered questions relative to the budgets, membership dues, importance of the Board of Directors, involvement with the Balboa Merchants Association and Balboa Island Museum and Historical Society, and the importance of Newport Harbor. Jim Mosher commented on the organization's membership dues, the Visit Newport Beach restricted fund, and the Newport Beach Christmas Boat Parade funding; and asked if they have other funds that are not reviewed by the City. SS6. Sununary of Sewer Rate Proposal Municipal Operations Director Murdoch provided the staff report, highlighting the use of sewer rates, rate history, the proposed increase and rationale, use of the Enterprise Fund, fund balance, the current and proposed rate structure, the revenue and expenditure balance, typical bill impacts, and next steps. Municipal Operations Director Murdoch answered Council questions relative to the fund balance as it relates to the target reserve balance, the automatic CPI increase, Proposition 218 process, the Sewer Master Plan history and purpose, Capital Improvement Program (CIP) funding, sewer reserve policies, the Hazard Mitigation Plan, the use of the Enterprise Fund, the potential for changing the proposed rate increase, the new billing system, and the 60/40 rate structure. He emphasized the risk of not increasing the rates, the potential impacts to the Harbor due to pump station failures, and the use of the General Fund transfer money for CIP uses. Finance Director Matusiewicz provided information relative to the reserve policy, the purchase of bonds, and the City's financial rating. City Manager Diff confirmed that the recession had something to do with the previous Council not raising the sewer fees since they had raised water fees. John Farnkopf, HF&H Consultants LLC Senior Vice President, clarified the 80/20 rule relative to the cost structure. Council Member O'Neill pointed out that the increases never occurred in 2010 pursuant to the Sewer Master Plan, highlighted the compounding structural deficit, and emphasized that the City should not use General Fund to cover sewer fee related shortfalls. Jack Skinner expressed the importance of water quality in the Bay, touted Mr. Murdoch's expertise, and expressed concern with the threat of a sewer system failure. Nancy Skinner commended MOD Director Murdoch and Finance Director Matusiewicz, and expressed hope that the sewer rate will be increased. Jim Mosher asked if the City's facilities are being used efficiently and if the increase is too modest. III. PUBLIC COMMENTS Jim Mosher provided comments relative to the Closed Session agenda, believing it was not informative. City Attorney Harp announced that. the City Council would adjourn. to Closed Session. to discuss the items as listed in. the C.'losed. Session agenda and, read the titles. Volume 63 - Page 325 City of Newport Beach Study Session and Regular Meeting July 25, 2017 IV. CLOSED SESSION - Council Chambers Conference Room A. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 54957.6) Agency Designated Representatives: Dave Kiff, City Manager, Carol Jacobs, Assistant City Manager, Barbara Salvini, Human Resources Director, and Peter Brown; Labor Negotiators. Employee Organizations: Newport Beach Police Association (NBPA); and Newport Beach Police Management Association (NBPMA). B. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION (Government Code § 54956.9(d)(2) (e)(1)): 2 matters C. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code § 54956.8): 1 matter Property: 2807 Newport Boulevard, Newport Beach, CA 92663 (APN 047-0310-22) Agency Negotiator: Seimone Jurjis, Assistant Community Development Director Lauren Wooding, Real Property Administrator Negotiating Party: MNG Newport Beach, LLC Under Negotiation: Instruct negotiator as to price and terms of payment. D. CONFERENCE WITH LEGAL COUNSEL EXISTING LITIGATION (Government Code § 54956.9(d)(1)): 1 matter County of Orange i). Air California; City of Newport Beach- u. County of Orange, et al. U.S. District Court Case No, CV 85-1542 TJH (MCx) V. RECESSED - 6:15 p.m. VI. RECONVENED AT 7:04 P.M. FOR REGULAR MEETING VII. ROLL CALL Present: Council Member Jeff Herdman, Council Member Brad Avery, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Will O'Neill, Mayor Pro Tem Duffy Duffield, Mayor Kevin Muldoon VIII. CLOSED SESSION REPORT City Attorney Harp reported that there were no reportable actions taken. IX. PLEDGE OF ALLEGIANCE - Council Member Herdman X. INVOCATION - Pastor Jordan Hansen, Newport Mesa Church XI. NOTICE TO THE PUBLIC XII. CITY COUNCIL ANNOUNCEMENTS (NON -DISCUSSION ITEM) Council Member O'Neill: • Attended the Crystal Cove Community Emergency Response'1'eam (CERT) Program meeting • Attended the Pacific Symphony performance Volume 63 - Page 326 City of Newport Beach Study Session and Regular Meeting July 25, 2017 • Toured the Irvine Ranch Water District wastewater treatment plant • Attended the Corona del Mar Residents Association meeting • Represented the City at the Orange County Fair for Newport Beach Day • Wished his wife "Happy Anniversary" • Wished Council Member Herdman "Happy Birthday" Council Member Peotter: • Toured Big Canyon Reservoir Council Member Dixon: • Commended the City Arts Commission for the Pacific Symphony performance Council Member Herdman: o Displayed photos of the Park Avenue Bridge (aka Little Balboa Island Bridge) Grand Opening • Attended the Newport Beach Chamber of Commerce Spirit Award Ceremony • Provided an update at the Newport Beach Chamber of Commerce Government Affairs meeting • Attended the 1/1 Marines Foundation car wash • Attended the Junior Lifeguards hot dog dinner • Attended the Speak Up Newport meeting where they discussed the Animal Shelter Foundation • Attended the Big Canyon Ribbon Cutting Ceremony Mayor Muldoon: • Attended the Park Avenue Bridge Grand Opening XIII. MATTERS WHICH COUNCIL MEMBERS HAVE ASKED TO BE PLACED ON A FUTURE AGENDA • Moving the Finance Conunittee's Citizen Appointees to Terms that Align with Fiscal Years; Correcting the Times at which the Finance Conunittee Meets (O'Neill) The City Council unanimously concurred to place the matter on a future agenda. • Future Study Session on Drone Policies, Including Policies in Other Cities (Dixon, Peotter) The City Council unanimously concurred to place the matter on a future agenda. XIV. PUBLIC COMMENTS ON CONSENT CALENDAR City Manager Kiff provided a report relative to Item 3 (Employment Agreement with Charles Duncan for Dire Chief Services); and noted that an ordinance for introduction has been provided relative to Item 13 (Establish Pilot Program Allowing A-fi•ame Signs in Lido Marina Village and Initiate Zoning Code Amendment Allowing A -frames Long -`Perm). Deputy City Manager Finnigan requested that Recommendation b to Item 15 (Newport Beach & Company's 2018 Destination Marketing Plan Supplement, the FY 2017-2018 Visit Newport Beach, Inc. Budget, and the Newport Beach Tourism Business Improvement District (NBTBID) Fiscal Year 2017-2018 Annual Report and Budget) be amended to read, "Authorize a waiver of the timeline provided in Section 3 of the NBTBID Management Agreement." XV. CONSENT CALENDAR READING OF MINUTES AND ORDINANCES 1. Minutes for the July 11, 2017 City Council Meeting [100-2017] Volume 63 - Page 327 City of Newport Beach Study Session and Regular Meeting July 25, 2017 Waive reading of subject minutes, approve as amended, and order filed. 2. Reading of Ordinances Waive reading in full of all ordinances under consideration, and direct the City Clerk to read by title only. RESOLUTIONS FOR ADOPTION Employment Agreement with Charles Duncan for Fire Chief Services (C-8459-1) [381100- 20171 a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not. result in a physical change to the environment, directly or indirectly; and b) Adopt Resolution No. 2017-46, A Resolution, of the City Council of the City of Newport Beach, California, Autltorizin.g the City Manager to Execute a.n. Enrploytnent Agreement Between, the City of Newport Beach and Charles Duncan for the Seruices of Fire Chief and to Adjust the Salary Range for Fire Chief Contnrensu.rate with the L'nrployntent Agreeni.ettt. 4. Resolution No. 2017-47: Adopting a Memorandum of Understanding with the Association of Newport Beach Ocean Lifeguards (ANBOL) and Establishing Salary Ranges (C-2058) [381100-2017] a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; and b) Adopt Resolution No. 2017-46, A Resolution of the City Council of th.e City of Newport Beaclr, California, Adopting a Dlemarandunt of Understandiacg Between, the City of Newport Beach and the Association of Newport Beach. Ocean Lifeguards and to Adjust the Salary Ranges to be Cotttntensurate with the Contract Prouisions, for the period July 1, 2017 through June 30, 2021 and establishing salary ranges for the Lifeguard I, II and III classifications. 5. Resolution No. 2017-48: Reimbursement for Assessment District Project Costs Incurred Prior to Issuance of Tax Exempt Obligations [100-20171 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Adopt Resolution No. 2017-48, A Resolution of th.e City Council of the City of Newport Beach,, California, Regarding its Intention. to Recouer Costs Associated with the Issuance of Tarr Exempt Obligations for Assessment Districts. Mayor Muldoon recused himself front Itent. 5 dine to his employment in the telecommunications field. CONTRACTS AND AGREEMENTS 6. Contract Approval for Public Safety Helicopter Services Between the Cities of Newport Beach and Huntington Beach (C-8285-1) [381100-20171 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Approve the services agreement for public safety helicopter support between the City of Huntington Beach and the City of Newport Beach ("Agreement"), and authorize the Mayor to execute the Agreement on behalf of the City. Council Member O'Neill recused himself front Itent 6 in. an. abundance of caution due to a. fancily relationship with sonteon.e employed by the Huntington. Beaclr. Police Department. Volume 63 - Page 328 City of Newport Beach Study Session and Regular Meeting July 25, 2017 7. School Resource Officer Program Agreement (C-8510-1) [38/100-20171 a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; and b) Approve the Agreement between the City of Newport Beach and the Newport -Mesa Unified School District to participate in the School Resource Officer Program ("Agreement"), and authorize the Mayor to execute the Agreement on behalf of the City. 8. Agreement for On -Call Streetlight Electrical Repair Services with Siemens Lidustry, Inc. (C-8511-1) [38/100-20171 a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; and b) Approve the agreement with Siemens Industry, Inc. for on-call streetlight electrical repair services fora five-year term fora not to exceed amount of $2,500,000, and authorize the Mayor and City Clerk to execute the agreements. 9. Agreement with ES Engineering Services, LLC for Landfill Gas Control System Operation and Maintenance Services at Newport Terrace Landfill (C-8512-1) [381100- 20171 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Authorize and approve the A4ayor to execute a professional services agreement with ES Engineering Services LLC for an amount not to exceed $472,500 over a three-year contract term. MISCELLANEOUS 10. Planning Connnission Agenda for the July 20, 2017 Meeting [100-20171 Receive and file. 11. Budget Amendment to Accept a Check from the Friends of the Newport Beach Library and Appropriate Funds to the Library's Fiscal Year 2017/2018 Maintenance and Operation Budget []00-20171 a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; and b) Approve Budget Amendment No. 18BA-001 to increase revenue estimates by $250,000 in Account 0106052-511080 (Friends of the Library Donations) and to increase expenditure estimates by the same amount in Division 0106052 (Friends of the Library) and Division 01060604 (Literacy Services): Increase expenditure accounts; 0106052-841052 Library Materials $190,000 0106052-841004 Programming $ 55,000 01060604-841004 Literacy Programming $ 4,000 01060604.841052 Literacy Materials 1,000 Total $250,000. 12. Newport Coast Local Coastal Program and Planned Community Amendments Initiation [100-20171 a) Find that the action is not subject to the California Environmental Quality Act pursuant to Sections 15060(c)(2) and 15060(c)(3); and Volume 63 - Page 329 City of Newport Beach Study Session and Regular Meeting July 25, 2017 b) Initiate amendments to the City's certified Local Coastal Program and the Newport Coast Planned Community Development Plan to. incorporate Newport Coast into the City's certified Local Coastal Program, 13. Establish Pilot Program Allowing A -frame Signs in Lido Marina Village and Initiate Zoning Code Amendment Allowing A -frames Long -Term (PA2014-054) [100-20171 a) Find the project is categorically exempt wider Section 15303, of the State CEQA (California Environmental Quality Act) Guidelines - Class 3 (Construction or Conversion of Small Structures); b) Initiate an amendment to the Newport Beach Municipal Code allowing A -frame signs in Lido Marina Village; and c) Introduce No. Ordinance No. 2017-12, An Orditian.ce of the City Council of the City of Newport Beach., California, Temporarily Allowing A-frant.e Signs in Lido Marinavillage, and pass to second reading on August 8, 2017. 14. Proposed Sewer Rates [100-20171 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Review the results and proposed recommendations of the sewer rate study; c) Direct staff to send rate notices to customers in compliance with Proposition 218; and d) Set the date of September 12, 2017, for tabulation of protests and conduct a public hearing of proposed rates. 15. Newport Beach & Company's 2018 Destination Marketing Plan Supplement, the FY 2017-2018 Visit Newport Beach, Inc. Budget, and the Newport Beach Tourism Business Improvement District (NBTBID) Fiscal Year 2017-2018 Annual Report and Budget (C- 4961) [381100-20171 a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; b) Authorize a waiver of the timeline provided in Section 3 of the NBTBID Management Agreement; c) Receive and file Newport Beach & Company's 2018 Destination Marketing Plan Supplement and the Performance Standards Report; d) Review and approve, as presented, VNB's FY 2017-2018 budget; e) Review and approve, as presented, NBTBID's FY 2017-2018 Annual Report; and f) Review and approve, as presented, NBTBID's FY 2017-2018 budget. Mayor Pro Tena Duffield recused, h.intself front Itent 15 since he conducts business with Visit Newport. Beach.. 16. Annual Formal Reporting of Council Discretionary Funds [100-20171 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Receive and file. Motion by Mayor Pro Teri Duffield, seconded by Council Member Peotter, to approve the Consent Calendar; and noting the recusals by Mayor Muldoon on Item 5, Mayor ProTem Duffield on Item 15, and Council Member O'Neill on Item 6; the amended recommendation to Item 15; and the introduction of an ordinance to Item 13. The motion carried by the following roll call vote: Volume 63 - Page 330 City of Newport Beach Study Session and Regular Meeting July 25, 2017 Ayes: Council Member Herdman, Council Member Avery, Council Member Dixon, Council Member Peotter, Council Member O'Neill, Mayor Pro Tem Duffield, Mayor Muldoon XVI. ITEMS REMOVED FROM THE CONSENT CALENDAR - None XVII. PUBLIC COMMENTS ON NON -AGENDA ITEMS Chad Kroeger expressed his desire to have cities build a Paul Walker statue and the nation to change the U.S. Natiorr.al An.theni to Don't Stop Belieuin'by Journey. Diane Blaisure, Newport Citizens for Responsible Growth, expressed concerns with the change in the proposed project for the Corona del Mar High School Sports Complex. Jim Mosher believed there is confusion about Council's actions if they are not restated before taking the vote, and requested public comment opportunities be provided if Council discusses non -agenda issues and noted that the City Charter previously allowed resolution titles to be read similar to ordinance titles. XVIII. ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Council Member O'Neill noted that "Chad I i-oeger and his brother" have made national news delivering the same speech to other cities. Council Member Herdman reported on Aviation Committee and Water Quality/Coastal Tidelands Committee meetings. XIX. PUBLIC HEARINGS 17. Resolution Amending Rent for Commercial Tidelands Uses in Newport Harbor [100- 20171 Mayor Pro Tern Duffield recused himself from Item 17 due to a business property he uses on the conranercial marina. Assistant Community Development Director Jurjis provided information relative to reducing the existing marina rates, the rate history since 2012, examples of the commercial rate changes, how the rate affects fuel dock business and the rationale behind the fuel dock rate, and revenue comparison and uses. Discussion ensued relative to finding out if the three fuel dock businesses have a preference between paying a flat rate vs. a base rate plus a usage fee, in order to make it revenue -neutral. In response to Council questions, Assistant Community Development Director Jurjis and City Manager Kiff discussed the differences in the appraisals, the median rate, the 2012 rate increase, and the freezing of the rates in 2015. They confirmed there would be no rate increases proposed tonight and that the Rental Rate table in Attachment A of the Resolution should be amended to read, "Fuel Docks — Greater of base rent or percentage rent, percentage rent calculated at $0.015 per gallon up to 100,000 gallons per year, and $0.02 per gallon over 100,000 gallons per year." Mayor Muldoon. opened the public heaving. Michael Morgan requested and received clarification relative to the rates adopted in 2012, when frozen in 2015, and those proposed today; and requested that the 2015 rates not be unfrozen. Jim Parker, Port Calypso Marina, referenced an email he sent and asked that Council consider his suggestions for more equitable treatment of commercial marinas. Volume 63 - Page 331 City of Newport Beach Study Session and Regular Meeting July 25, 2017 Jim Mosher expressed confusion about the authority to freeze the rate increase and how the proposed resolution would work since the previous resolution was not repealed. Hearing no further testincony, Mayor Muldoon closed the public hearing. Mayor Muldoon expressed his opinion why this is not similar to residential docks or moorings. He pointed out that the recommendation would reduce the commercial marina rates in all the categories; however, understood how the rates could be perceived as increased if the 2015 rates were unfrozen. Council Member O'Neill clarified that, regarding fuel dock rates, he is not requesting an amendment to the proposed rate, but to have staff meet with the operators if they prefer a flat rate vs. a flat rate plus use fee, and bring back the information to Council for future discussion. Council Member Avery noted that the City analyzed the appraisal, the rates were not implemented for two years since the rates were too high, and the City wanted to charge fair rates. He expressed the opinion that the City has done its due diligence and the City Manager was trying to assist with the change by freezing the rates in 2015. He believed it is not the City's intention to cause hardship for the commercial marinas, but it was time to implement the new rates. Mayor Muldoon clarified for Council Member Herdman that the City was not provided direction from the State Lands Commission on this issue. Motion by Mayor Muldoon, seconded by Council Member Dixon, to a) find this project exempt from 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, because this project has no potential to have a significant effect on the environment; and b) adopt Resolution No. 2017-49, A Resolution, of the City Council of the City of Newport Beach., California, Adjusting the Rent Charged for Commercial Uses Located Upon Tidelands, including the amendment to the Rental Rate table in Attachment A of the resolution. Following more discussion relative to meeting with the fuel dock businesses in order to discuss their rate preference, Council Member O'Neill suggested not to change the recommendation tonight and go with staff recommendation since the flat rate amount has not been calculated yet. He requested staff determine what the revenue -neutral number (flat rate) is and offer that to fuel dock businesses as an option, which would require an amendment to the Resolution to come back before Council at a later date. After clarifying discussions between staff and Council, it was determined by Mayor Muldoon to remove fuel dock fees in its entirety and bring this individual item back to a future City Council meeting after staff is able to meet with fuel clock businesses for further input. The motion carried by the following roll call vote: Ayes: Council Member Herdman, Council Member Avery, Council Member Dixon, Council Member Peotter, Council Member O'Neill, Mayor Muldoon Recused: Mayor I'm Tem Duffield 18. Amendment to Local Coastal Program to Establish a Comprehensive Program for Properties Along East Ocean Front to Allow Encroachments and to Remove Unpermitted Development Beyond the Encroachment Area (PA2013-057) [100-20171 Council Member Avery recused himself due to property interests. Volume 63 - Page 332 City of Newport Beach Study Session and Regular Meeting July 25, 2017 Deputy Community Development Director Wisneski provided the staff report and explained that the encroachment permit program is only for the sand areas along East Ocean Front. Mayor Muldoon opened the public hearing. Hearing no testinton.y, he closed the public hearing. Motion by Council Member Dixon, seconded by Mayor Muldoon, to a) determine that the Local Coastal Program amendment, per California Public Resources Code Section 21080.9 and California Environmental Quality Act ("CEQA") Regulation Section 15265, exempts local governments from the requirements of preparing an environmental impact report or otherwise complying with CEQA in connection with the adoption of a Local Coastal Program; b) adopt Resolution No. 2017-50, A Resolution of the City Council of the City of Newport Beach, California, Authorizing the Subn0tal of Local Coastal Program. Anaen.dmen.t No. LC2013-002 Establish.i.ng th.e East Ocean Front Encroachment and Reutoval and Replacement Prograni; and c) authorize staff to submit the Local Coastal Program Amendment and the East Ocean Front Comprehensive Eneroachment and Removal and Replacement Program to the California Coastal Commission for review and action. Council Member Peotter suggested that the City have Don Schmitz of Schmitz & Associates assist staff in working with the Coastal Commission. Mayor Muldoon believed staff should be able to use any lobbyistleonsultant they choose. Discussion ensued relative to whether a contract already exists with a lobbyist/consultant, if a new one needs to be created and brought back to Council, or if the City Manager can approve the contract himself. In response to Jim Doman's question, City Manager Kiff displayed a map of the encroachment permit program area. Amended motion by Council Member Dixon, seconded by Mayor Muldoon, to a) determine that the Local Coastal Program amendment, per California Public Resources Code Section 21080.9 and California Environmental Quality Act ("CEQA") Regulation Section 15265, exempts local governments from the requirements of preparing an environmental impact report or otherwise complying with CEQA in connection with the adoption of a Local Coastal Program; b) adopt Resolution No. 2017-50, A Resolution of the City Council of the City of Newport Beach, California, Authorizing the Submittal of Local Coastal Program. Aniendnten.t No. LC2013-002 Establishing the East Ocean Front Encroachment and Rentoi)al and Replacement Program; and c) authorize staff to submit, with the assistance of a lobbyist/consultant, the Local Coastal Program Amendment and the East Ocean Front Comprehensive Encroachment and Removal and Replacement Program to the California Coastal Commission for review and action. The amended motion carried by the following roll call vote: Ayes: Council Member Herdman, Council Member Dixon, Council Member Peotter, Council Member O'Neill, Mayor Pro Tem Duffield, Mayor Muldoon Recused: Council Member Avery 19. Amendments to the City's Regulations Regarding Accessory Dwelling Units (ADU) (PA2017-069) [100-20171 Senior Planner Murillo discussed the change in State law, different types of ADUs, ADU standards based on type, and the recommendations. In response to Council questions, Senior Planner Murillo and Assistant City Attorney Torres provided information relative to how it could be considered affordable housing, proposed deed restrictions, the approval process, the effect on the City, how homeowner associations still maintain control, and confirmed that this applies to single-family homes. Volume 63 - Page 333 City of Newport Beach Study Session and Regular Meeting July 25, 2017 Council Member O'Neill expressed concern that this is being mandated by the State. Mayor Muldoon opened the public hearing. Debra Allen, President of Harbor View Hills Community Association, questioned how applicants would know this does not supersede Covenants, Conditions and Restrictions (CC&Its). Barry Allen believed the ordinance should include clearer language relative to CC&Rs. Hearing no further testinton.y, Mayor Muldoon closed the public hearing. In response to Council questions, Community Development Director Brandt and Senior Planner Murillo reported that State law does not supersede CC&Rs regarding ADUs, the applicant is advised to consult their HOAs, the ADU must conform to Building Codes, and the City defined existing structures and has the ability to change the minimum lot size for ADUs, as long as it can justify the change. Motion by Council Member O'Neill, seconded by Council Member Herdman, to a) find this project statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15282(h) of the CEQA Guidelines, which states that the adoption of an ordinance regarding second units to implement the provisions of Sections 65852.1 and 65852.2 of the Government Code are exempt from the requirements of CEQA; b) waive full reading, direct the City Clerk to read by title only, introduce Ordinance No. 2017-I1, An Ordinance of the City Council of the City of Newport Beach, California, Adopting Zoning Code Amendment No. CA2017-003 to Implement Nein State Laru Requirements Relating to Accessory Dtuelling Units (PA2017-069), and pass to second reading on August 8, 2017; and c) adopt Resolution No. 2017-51, A Resolution of the City Council of the City of Newport Beach, California, Autltorizi.ng the Submittal of Local Coastal Program, Aniendmettt No. LC2017-003 to the California Coastal Comm.i.ssion, Implementing Nero State Lail) Requirements Relating to Accessory Dwelling Units (PA2017-069). Mayor Muldoon requested and received clarification from Assistant City Attorney Torres that the City's risk of having its own regulation is that the State could default the City to the State's standards which is less restrictive. The motion carried by the following roll call vote: Ayes: Council Member Herdman, Council Member Avery, Council Member Dixon, Council Member Peotter, Council Member O'Neill, Mayor Pro Tetn Duffield, Mayor Muldoon 20. Adoption of the Complementary Paratransit Plan for the Balboa Peninsula Trolley and an Update on Ridership (100-20171 Deputy Community Development Director Wisneski provided the staff report and answered a question relative to how many vehicles may be off the road due to utilizing the trolley. Motion by Council Member Peotter, seconded by Council Member Dixon, to a) find this action exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the State CEQA Guidelines because it will not result in a physical change to the environmental, directly or indirectly; b) adopt a Complementary Paratransit Plan as required by the Americans with Disabilities Act (ADA) and the Orange County Transportation Authority (OCTA) 2016 Project V Grant for the fixed -route local transit service (tile Balboa Peninsula Trolley); and c) receive and file report on Balboa Peninsula Trolley use statistics. Mayor Muldoon opened the public hearing. Hearing no testintony, he closed the public )tearing. Volume 63 - Page 334 City of Newport Beach Study Session and Regular Meeting July 25, 2017 The motion carried by the following roll call vote: Ayes: Council Member Herdman, Council Member Avery, Council Member Dixon, Council Member Peotter, Council Member O'Neill, Mayor Pro Tem Duffield, Mayor Muldoon XX. CURRENT BUSINESS 21. Appointment of New Civil Service Board Member to Fill the Unscheduled Vacancy on the Civil Service Board j2U100-20171 City Clerk Brown provided the staff report and read the ballots as follows: Howard Herzog — Avery, Dixon, Peotter, O'Neill Hugh Logan — Herdman, Duffield, Muldoon City Clerk Brown announced that Howard Herzog was appointed to the Civil Service Board for a term expiring June 30, 2020. XXI. MOTION FOR RECONSIDERATION - None XXII. ADJOURNMENT - 8:54 p.m. The agenda was posted on the City's website and on the City Hall Electronic Bulletin Board located in the entrance of the City Council Chambers at 100 Civic Center Drion July 20, 2017, at 4:00 p.m. r Leilani I. Brown City Clerk Kevin M Mayor/ Volume 63 - Page 335 n Lei WWII! �.-Nn UA Ni 01 City Council Minutes Closed Session and Regular Meeting June 25, 2019 I. ROLL CALL - 5:30 p.m. Present: Mayor Diane Dixon, Mayor Pro Tem Will O'Neill, Council Member Brad Avery, Council Member Joy Brenner, Council Member Duffy Duffield, Council Member Jeff Herdman, Council Member Kevin Muldoon II. PUBLIC COMMENTS - None III. CLOSED SESSION - Council Chambers Conference Room A. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION - INITIATION OF LITIGATION (Government Code § 54956.9(d)(4)): 1 matter IV. RECESSED - 5:31 p.m. V. RECONVENED AT 7:00 P.M. FOR REGULAR MEETING VI. ROLL CALL Present: Mayor Diane Dixon, Mayor Pro Tem Will O'Neill, Council Member Brad Avery, Council Member Joy Brenner, Council Member Duffy Duffield, Council Member Jeff Herdman, Council Member Kevin Muldoon VII. CLOSED SESSION REPORT - None VIII. INVOCATION - Father Michael Laffoon, St. Mark Antiochian Orthodox Church IX. PLEDGE OF ALLEGIANCE - Council Member Herdman X. NOTICE TO THE PUBLIC XI. CITY COUNCIL ANNOUNCEMENTS AND ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Council Member Avery: • Attended Concert on the Green on June 16, 2019, and recognized Michelle Bendetti, Vice Chair of the City Arts Commission, for her assistance in selecting the bands Council Member Duffield: • Attended the Watershed Executive Committee meeting and provided an update on what is being done to keep the City's water clean Council Member Brenner: • Attended Speak Up Newport, a Corona del Mar Chamber of Commerce Government Affairs meeting, a solid waste and recycling meeting, the annual Newport Beach Art Exhibition, the Sculpture Exhibition grand opening in the Civic Center Park, the Corona del Mar Residents Association meeting, the Newport Beach Sister City Association meeting, two family graduations, a graduation play day at the Civic Center, and an Election Reform Committee meeting • Utilized slides to discuss her attendance at the Junior Lifeguard Program opening day ceremony and recognized the founder Reenie Boyer • Met with City staff, the Balboa Island Improvement Association and representatives from Southern California Edison to discuss work on Balboa Island, Scott Griffiths from Great Scott Tree Care to discuss the preservation of Eucalyptus trees on Marine Avenue, Murphy McCann regarding traffic Volume 64 - Page 130 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 mitigation measures, City staff and members from the Back Bay Conservancy to discuss the timeline on the Big Canyon Restoration project, and Jim Walker from The Bungalow Restaurant to discuss Business Improvement Districts (BIDs) • Requested Council consider forming a Traffic Affairs Committee to get more input from the public about traffic issues throughout the City Council Member Herdman: • Thanked members of the community that attended the Orange County Board of Supervisors meeting that morning regarding John Wayne Airport (JWA) • Attended the Sculpture Exhibition and thanked members of the City Arts Commission, and the Balboa Island Improvement Association Pancake Breakfast and Awards Ceremony for the Balboa Island Parade • Spoke at the Corona del Mar Chamber of Commerce meeting • Recognized Tim Stoaks, President of Friends of the Newport Beach Animal Shelter (FONBAS), and displayed a slide to tell the story of Maggie, a successful shelter rescue • Announced a free Pet Adoption Day at the Tustin Animal Shelter on June 29, 2019 • Discussed the Orange County Mosquito and Vector Control District's Tip and Toss campaign to remind residents to eliminate standing water and shared statistics Mayor Pro Tem O'Neill • Attended the Corona del Mar High School Living History Program, Newport Beach Chamber of Commerce ribbon cutting for Spinnaker Investments, Newport Beach Art Exhibition, Concert on the Green and announced the next concert is July 7, 2019, Chapman University's Economic Forecast, and the Boys and Girls Club Breakfast with Council Member Herdman • Announced the Fourth of July celebrations at Mariners Park and the Peninsula, and the Junior Lifeguard Program's celebration of Ben Carlson Day on July 6, 2019 • Spoke at the Newport Beach Chamber of Commerce Government Affairs Committee meeting Mayor Dixon: • Chaired and highlighted the Association of Orange County Cities (ACC -OC) panel discussion regarding pension issues and reported Finance Director Matusiewicz also sat on the panel • Attended the Newport Beach Art Exhibition and opening of the Sculpture Exhibition • Displayed slides to announce July 4th celebrations on the Peninsula and Mariners Park, and invited everyone to the Vote Center Community Workshop on June 28, 2019 in the Friends Room • At the Mayor's request, City Attorney Harp utilized a PowerPoint presentation to review the morning's Orange County Board of Supervisors meeting to discuss the General Aviation Improvement Program proposal at JWA Philip Bettencourt recognized and shared his memories of former Mayor and Council Member John Cox. XII. MATTERS WHICH COUNCIL MEMBERS HAVE ASKED TO BE PLACED ON A FUTURE AGENDA Consideration of Forming an Ad Hoc Committee for the Design and Construction of the Library Lecture Hall — Members to be Appointed by the Mayor, Confirmed by the City Council, without Compliance of City Council Policy A-2 (Dixon) The City Council unanimously concurred to place the matter on a future agenda. Without objection, Mayon Dixon tools Item 26 out of order. XVIII. CURRENT BUSINESS 26. Resolution No. 2019-65: Declaring July 6 as Benjamin M. Carlson Day [100-20191 Mayor Dixon read the proclamation and presented it to Teri Carlson, Ben's mother, Stephanie Janz, Ben's sister, Jake Janz, Ben's brother-in-law and artist who created the McFadden Square statue, and Ben's nephews, Brody and Bronson. Volume 64 - Page 131 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 On behalf of the family, Jake Janz thanked Council for recognizing his brother-in-law. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Herdman, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) adopt Resolution No. 2019-65, A Resolution of the City Council of the City of Newport Beach, California, Recognizing July 6 as Benjamin M. Carlson Day. The motion carried unanimously. Without objection, Mayor Dixon announced that Item 25 under Current Business would be tahen out of order. XIII. PUBLIC COMMENTS ON CONSENT CALENDAR Jim Mosher explained why he believed Item 3 (Ordinance regarding the Medium Density Residential Zone) should be referred to the Planning Commission, took issue with waiving City Council Policy F-7 for Item 12 (Farmers' Market Agreement), and questioned the support to the Newport Beach Film Festival in Item 13 (Special Events Support). Community Development Director Jurjis noted the Planning Commission already reviewed Item 3, recommended approval, and indicated staff will be researching the density questions. Hoiyin Ip utilized slides to discuss Item 9 (General Plan Update Outreach) and affordable housing. She also encouraged attendance at the General Plan Update Steering Committee meetings. Regarding Item 13, Daniel Hodge, Commodore of the Newport Ocean Sailing Association (NOSA), noted NOSA hosts the Newport to Ensenada Yacht Race which just completed its 72nd year, thanked the City for its support over the years and requested continued support, discussed the updated tracking devices, and announced the new race they will be hosting. Regarding Item 13, Stefanie Salem, Founder and CEO of the Newport Beach Wine & Food Festival, requested City support for the festival in order to grow the event and discussed the event, ticket prices, and marketing. Recreation and Senior Services Director Detweiler explained the reason for recommending that the grant request not be funded. Regarding Item 13, Robert Moores noted NOSA is a non-profit organization, the Newport to Ensenada Yacht Race is a Newport Beach event that is centered around Newport Harbor, is one of the world's largest and longest running offshore races, discussed the event's economic impact to the City, and noted they requested $25,000 but is recommended to receive $10,000. XIV. CONSENT CALENDAR READING OF MINUTES AND ORDINANCES 1. Minutes for the June 11, 2019 City Council Meeting [100-20191 Waive reading of subject minutes, approve as amended, and order filed. 2. Reading of Ordinances Waive reading in full of all ordinances under consideration, and direct the City Clerk to read by title only. ORDINANCE FOR ADOPTION 3. Ordinance No. 2019-10: Adoption of an Ordinance Amending the Municipal Code to Rename the Multiple Residential Detached (RM -D) Zoning District to Medium Density Residential (RMD) and Include Reference to Attached Dwelling Units (PA2019-065) [100-20191 Volume 64 - Page 132 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 a) Find this project from the California Quality Act (CEQA) pursuant to Section 15303 under Class 5 (Minor Alterations in Land Use Limitations) of the CEQA Guidelines, because it has no potential to have a significant effect on the environment; and b) Conduct second reading and adopt Ordinance No. 2019-10, An Ordinance of the City Council of the City of Newport Beach, California, Amending the Newport Beach Municipal Code to Rename the Multiple Residential Detached (RM D) Zoning District to Medium Density Residential (RMD) and Include Reference to Attached Dwelling Units (PA2019-065). RESOLUTIONS FOR ADOPTION 4. Resolution No. 2019-56: Adopting a Memorandum of Understanding with the Part Time Employees Association of Newport Beach (PTEANB) (C-3362) [38/100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Adopt Resolution No. 2019-56, A Resolution of the City Council of the City of Newport Beach, California, Adopting a Memorandum of Understanding Between the City of Newport Beach and the Part Time Employees Association of Newport Beach and Establishing Salary Ranges for Certain Represented and Unrepresented Part-time Positions for the period January 1, 2019 through December 31, 2021; and c) Authorize Finance Department staff to post an administrative budget amendment in Fiscal Year 2019-20 in the amount of $112,014 to provide funding for the fust twelve months of the PTEANB contract. 5. Resolution No. 2019-57: Adopting a Memorandum of Understanding with the Newport Beach Fire Management Association (NBFMA) (C-2946) [38/100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Adopt Resolution No. 2019-57, A Resolution of the City Council of the City of Newport Beach, California, Adopting a Memorandum of Understanding Between the City of Newport Beach and the Newport Beach Fire Management Association; and c) Authorize Finance Department staff to post an administrative budget amendment in Fiscal Year 2019-20 in the amount of $26,939 to provide funding for the first twelve months of the NBFMA contract. 6. Resolution No. 2019-58: Approving the Side Letter of Agreement to the Memorandum of Understanding between the City of Newport Beach and the Newport Beach Firefighters Association (C-2060) [38/100-2019] a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Adopt Resolution No. 2019-58, A Resolution of the City Council of the City of Newport Beach, California, Approving the Side Letter of Agreement to the Memorandum of Understanding between the City of Newport Beach and the Newport Beach Firefighters Association. 7. Resolution No. 2019-59: Proposed Deletion of City Council Policy I-7 - Library Meeting Rooms and Approval of Newport Beach Public Library Policy 14 [100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Delete Council Policy I-7, Library Meeting Roonts, and approve new Newport Beach Public Library Policy 14, The Friends Meeting Roont; and c) Adopt Resolution No. 2019-59, A Resolution of the City Council of the City of Newport Beach, California, Deleting City Council Policy I-7 'Library Meeting Roonts" front the City Council Policy Manual and approving "Newport Beach Public Library Policy 14. Volume 64 - Page 133 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 CONTRACTS AND AGREEMENTS 8. Balboa Island Water Main Replacement Phase II - Notice of Completion for Contract No. 7173-2 (19W11) [381100-20191 a) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project. On November 27, 2018, the City Council found this project exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15302(c); b) Authorize the City Clerk to release the Labor and Materials Bond 65 days after the Notice of Completion has been recorded in accordance with applicable portions of Civil Code; and c) Release Faithful Performance Bond one year after acceptance by the City Council. Council Member Herdman recused himself on Item 8 due to real property interest conflicts. 9. Professional Services Agreement with Kearns & West for General Plan Update Outreach (C- 8180-1) [381100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Accept the General Plan Update Steering Committee's Recommendation and Authorize the Mayor and City Clerk to execute a Professional Services Agreement with Kearns & West to prepare, implement, and facilitate an outreach program to assist in preparation of a future General Plan update in an amount not to exceed $452,000. 10. Amendment No. One to On -Call Maintenance and Repair Services Agreements for Underground Utility Installation and Repair Services with GCI Construction, Inc. and T.E. Roberts, Inc. [381100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and- 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Approve Amendment No. 1 to On -Call Maintenance and Repair Services Agreement for Underground Utility Installation and Repair Services with GCI Construction, Inc. (C-8556-1) and T.E. Roberts, Inc. (C-8556-3) with an additional $250,000 for each agreement for a total not -to - exceed amount of $750,000 for each agreement, and authorize the Mayor and City Clerk to execute the Amended Agreements. Council Member Muldoon recused himself on Item 10 date to business interest conflicts. 11. Approval of Amendment No. 1 to the Professional Services Agreement with NV5, Inc. for On - Call Development and Utility Permit Inspection Services and Construction Administration (C-7565-1) [38/100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Approve Amendment No. 1 to the current Professional Services Agreement with NV5, Inc. for on- call Development and Utility Permit Inspection Services and Construction Administration, increasing the original contract by $180,000 and extending the term of the agreement to September 24, 2023; and c) Authorize the Mayor and City Clerk to execute Amendment No. 1 of the Agreement. Council Member Muldoon recused himself on Item 11 date to business interest conflicts. 12. Revocable License Agreement with Lido Group Retail, LLC to Operate a Certified Farmers' Market Located in Lido Marina Village (C-8181-1) [381100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; Volume 64 - Page 134 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 b) Approve a waiver of City Council Policy F-7 — Income Property based on the findings contained in this staff report and the license agreement, that conducting an open bid process or changing the licensee would result in excessive vacancy, and the use of the property provides an essential or unique service to the community and is of a statewide benefit, and might not otherwise be provided were an open bid or full fair market value of the property be required; and c) Authorize the City Manager and City Clerk to execute a five-year Revocable License Agreement for Temporary Use of City Property for a Certified Farmers' Market at Lido Marina Village with Lido Group Retail, LLC, in a form substantially similar to the agreement attached to the staff report. 13. Special Event Support Program Fiscal Year 2019-20 Funding Recommendations (C-8082) [381100-20191 a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Approve the Special Event Support Program recommendations for Fiscal Year 2019-20; c) Authorize staff to execute one-year grant agreements with Signature event organizers for the Komen Orange County Race for the Cure, Hoag Classic, Newport Beach Restaurant Week, and the Newport to Ensenada Yacht Race; and d) Authorize staff to enter a three-year agreement with Newport Beach Film Festival. This agreement is for $150,000 per year for three consecutive years for a total of $450,000. Council Member Herdman recused himself on Item 13 due to real property interest conflicts. 14. Removed from the Consent Calendar 15. Removed from the Consent Calendar MISCELLANEOUS 16. Planning Commission Agenda for the June 20, 2019 Meeting [100-20191 Receive and file. 17. Confirmation of Voting Delegate and Alternate for the 2019 League of California Cities Annual Conference - October 16, 2019 to October 18, 2019 [100-2019] a) Determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; b) Designate Mayor Pro Tem Will O'Neill to be the Voting Delegate and Council Member Kevin Muldoon to be the Alternate Voting Delegate at the League of California Cities Conference; and c) Direct the City Clerk to complete and submit the designation form to the League of California Cities. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Herdman, to approve the Consent Calendar, except the items removed (14 and 15); and noting the recusals by Council Member Herdman on Items 8 and 13, recusals by Council Member Muldoon on Items 10 and 11, and amendments to Item 1. The motion carried unanimously. XV. ITEMS REMOVED FROM THE CONSENT CALENDAR 14. Approval of Funding Support for the Balboa Village Merchants Association (BVMA Inc.) (C- 8132-5) [381100-20191 Mayor Pro Tem O'Neill questioned why the City still provides funding after seven years when it was supposed to stop after five years. City Manager Leung requested Council direction on how to proceed. Volume 64 - Page 135 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 Craig Batley explained -why the BVMA Inc. was created, how their model saves the City money, the importance of the funding to BVMA Inc. since they do not assess businesses because they are not a BID, and how the funds are used. Council Member Brenner suggested the Business Improvement District Ad Hoc Committee review BVMA Inc.'s funding. Deputy City Manager Finnigan provided the background behind BVMA Inc. and Balboa Island Marketing, Inc. (Item 15), and noted it is the Council's discretion whether to continue funding. Steve Rosansky, President and CEO of the Newport Beach Chamber of Commerce, noted the City once had employees that handled economic development and encouraged the City to assist business organizations. Jim Mosher discussed BIDs and how they are supposed to assess themselves, noted the City's funding makes up BVMA Inc.'s entire budget, took issue with their use of the funds, agreed with Council Member Brenner's suggestion to have the ad hoc committee review BVMA Inc. and Balboa Island Marketing, Inc.'s funding, and recommended this type of funding be offered to every business. Craig Batley indicated BVMA Inc. makes money on some of their events and explained how Newport Beach and Company is used to promote some of their events. Mayor Pro Tem O'Neill discussed BVMA Inc.'s budget, believed they could request funding for specific events through the special event funding process, noted Balboa Village also has a parking district, and suggested decreasing the amount to $20,000 this year and encouraging them to apply for special event funding so this does not come back next year. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Duffield, to a) .determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) approve $20,000 in funding support for the BVMA Inc. for Fiscal Year 2019-20 and encourage them to apply for Special Event Support Program funding next year; and c) authorize the City Manager to execute a grant agreement with the BVMA Inc. for Fiscal Year 2019-20. Mayor Dixon agreed that this should be looked at holistically and clarified the purpose of the Balboa Village Advisory Committee (BVAC). Council Members Muldoon, Avery and Duffield expressed support for the motion and agreed that all businesses should have the opportunity to request funding. The motion carried unanimously. 15. Approval of Funding Support for Balboa Island Marketing, Inc. (C-8133-5) [381100-20191 Council Member Herdman recused himself due to real property conflicts. Mayor Pro Tem O'Neill indicated his concerns are similar to what was mentioned in Item 14. Jim Mosher noted the City's funding makes up Balboa Island Marketing, Inc.'s entire budget and has more money carried over from last year than BVMA Inc. did. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Duffield, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) approve $20,000 in funding support for the Balboa Island Marketing, Inc. for Fiscal Year 2019-20 and encourage them to apply for Special Event Support Program funding next year; and c) authorize the City Manager to execute a grant agreement with the Balboa Island Marketing, Inc. for Fiscal Year 2019-20. Volume 64 - Page 136 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 With Council Member Herdman recusing himself, the motion carried 6-0. XVI. PUBLIC COMMENTS ON NON -AGENDA ITEMS Denys Oberman expressed concerns regarding fire clearance setbacks in residential zones and believed the City is supposed to submit updates to the State related to fire -related building codes by June 30, 2019. Community Development Director Jurjis reported staff met with Ms. Oberman regarding fire clearance, her property has two access points, there is no June 30, 2019 deadline for local governments, and the City will be updating its codes toward the end of the year. Ken Rawson expressed concerns regarding boardwalk safety, requested the Police Department release statistics relative to citations issued on the boardwalk, and took issue that laws are not being enforced, especially for electric bikes, surreys and skateboards. Cari Mock relayed a bicycle accident incident involving her son and a vehicle at Clay Street and Fullerton Avenue while on his way to Ensign Intermediate School, explained why she believed the accident occurred, and requested the City continue to look for safety solutions. Murphy McCann discussed accidents over the years on Clay Street, between Irvine Avenue and Fullerton Avenue, and believed the City should install sidewalks and bike lanes. Public Works Director Webb discussed the traffic study that was conducted and noted that the community is opposed to installing bike lanes. Council Member Avery confirmed that the neighborhood is not in favor of those solutions because of parking concerns and emphasized the need for community support. At the request of Mayor Dixon, Police Chief Lewis discussed traffic safety initiatives the Police Department has been doing in school areas. Council Member Brenner indicated this is one of the reasons she is recommending creating a Traffic Affairs Committee and suggested this issue be looked at Citywide. Lindsay Fox discussed traffic issues on Clay Street, suggested creating bike lanes for school access, but limit the bike lane hours since the area has ample parking on the side streets. XVII. PUBLIC HEARINGS 18. Reconsideration of the City Council's Decision on May 28, 2019 to Approve the Application for a Reconfigured Residential Dock at 939 Via Lido Soud [100-2019] Mayor Dixon reported her concerns regarding the existing dock have been clarified and indicated she will be supporting the applicant's request to rebuild the dock. She noted City Council Policy H-1 (Harbor Permit Policy) will be discussed under Item 24. Motion by Mayor Dixon, seconded by Council Member Duffield, to a) find the project exempt from the California Environmental Quality Act ("CEQA') pursuant to Section 15301 (Existing Facilities) and Section 15302 (Replacement or Reconstruction) of the CEQA Guidelines, Code of Regulations, Title 14, Chapter 3; and c) adopt Resolution No. 2019-48, A Resolution of the City Council of the City of Newport Beach, California, Approving the Residential Dock Reconstruction Project (File No. 2585-2018) at the Property Located at 939 Via. Lido Soud. Mayor Dixon opened the public hearing. Jim Mosher took issue with making a motion prior to hearing public testimony and believed Council should consider the information in Attachment G, nothing should be built past the pierhead line, and Council should not approve the request. Sherman Stacey, on behalf of Mark and Shana Conzelman, utilized a PowerPoint presentation to discuss the findings, the current and neighboring docks, and why the project should be approved. Volume 64 - Page 137 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 Hearing no further testimony, Mayor Dixon closed the public hearing. Council Member Avery noted the City will be trying to make the standards uniform in the Harbor, but cannot ask current dock owners to change their dock configuration, believed a system is needed to check dock sizes before home purchases are final, and indicated he will be supporting the motion but feels this issue needs to be contained. Council Member Brenner indicated she will be abstaining in deference to the Harbor Commission, With Council Member Brenner abstaining, the motion carried 6-0-1. 19. Public Hearing, Adopt a Resolution to Confirm the Levying of Assessments, and Appointing the Advisory Board of Directors for the Corona del Mar Business Improvement District's Fiscal Year 2019-20 [100-20191 Administrative Analyst Locey explained the annual renewal process and confirmed no protests were received. Mayor Dixon opened the public hearing. Jim Mosher discussed his myths about BIDS relative to State law, the 1989 BID law, that BIDS are areas, BIDS do not need to be renewed annually, and how the Board of Directors are appointed. Hearing no further testimony, Mayor Dixon closed the public hearing. Motion by Council Member Duffield, seconded by Council Member Herdman, to a) adopt Resolution No. 2019-60, A Resolution of the City Council of the City of Newport Beach, California, Confirming the Levying of Assessments for the Fiscal Year of July 1, 2019 to June 30, 2020 for the Corona del Mar Business Improvement District, since the protests represented less than 50 percent of the total assessment amount; b) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and c) appoint the following Corona del Mar Business Improvement District members to serve as the Corona del Mar Business Improvement District's Advisory Board of Directors for Fiscal Year 2019-2020: Ernie Caponera, Newport Properties; Keith Dawson, Dawson & Dawson; Edward Hanley, Hanley Investment Group; Hamid Kianipur, 76 Gas Station; Scott LaFleur, representing Cafe Jardin; Scott Laidlaw, Laidlaw Schultz Architects; Shawn Lim, Rose Bakery Cafe; Jasmin Mortazavi, Mathnasium; and Bernie Svalstad, Upland Stor King. With Mayor Pro Tem O'Neill and Council Member Muldoon voting no, the motion carried 5-2. 20. Public Hearing, Adopt a Resolution to Confirm the Levying of Assessments, and Appointment of the Advisory Board of Directors for the Newport Beach Restaurant Association Business Improvement District's Fiscal Year 2019-20 [100-20191 Administrative Analyst Franceschini provided a brief report and City Clerk Brown confirmed no protests were received. Mayor Dixon opened the public hearing. Hoiyin Ip utilized a PowerPoint presentation to encourage creating an environmental program that would include banning plastic in restaurants. Jim Walker noted no protests were received and requested Council support. Hearing no further testimony, Mayor Dixon closed the public hearing. Volume 64 - Page 138 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 Motion by Council Member Herdman, seconded by Council Member Brenner, to a) adopt Resolution No. 2019-61, A Resolution of the City Council of the City of Newport Beach, California, Confirming the Leuying of Assessment for the Fiscal Year of July 1, 2019 to June 30, 2020 for the Newport Beach Restaurant Association Business Lnprouement District, since the protests represented less than 50 percent of the total assessment amount; b) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and c) appoint the following Newport Beach Restaurant Association Business Improvement District members to serve as the Newport Beach Restaurant Association Business Improvement District's Advisory Board of Directors for Fiscal Year 2019-2020: Phil Crowley, Modo Mio; Thaddeus Foret, The Winery Restaurant and Bar; Juan Carlos Godinez, On the Rocks Bar & Grill; Matthew Meddock, Sessions West Coast Deli; Jordan Otterbein, A Restaurant and A Market; Kenyon Paar, Five Crowns; Eunjoo Pluenneke, Balboa Lily's; Christopher Roman, Fork, Knife + Spoon; Talia Samuels, Moulin; Ron Schwartz, Muldoon's Irish Pub; Jim Walker, The Bungalow Restaurant. With Mayor Pro Tem O'Neill voting no, the motion carried 6-1. XVIII. CURRENT BUSINESS Without objection, Item 25 was considered first under Current Business. 25. Addition of One Full -Time Police Officer Position [100-20191 Mayor Dixon utilized a PowerPoint presentation to discuss her reasons for requesting an additional Police Officer position, which included crime statistics in Newport Beach and surrounding cities, the possible reasons for the increase in crime, the current department staffing levels, the attrition rates, costs involved in hiring an additional officer, California's safest cities (Newport Beach is number 38 of 50), and quotes from District Attorney Todd Spitzer and Orange County Supervisor Don Wagner. Motion by Mayor Dixon, seconded by Council Member Herdman, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) approve addition of one Police Officer FTE to the Police Department Patrol Division; and c) authorize Finance Department staff to execute an administrative budget amendment appropriating $136,555.30 in the Patrol Division's salary and benefit accounts and $10,000.00 in uniforms and equipment in the Fiscal Year 2019-20 budget. Mayor Pro Tem O'Neill believed that one of the prime directives of the City Council is public safety, but indicated he could not support adding another position at this time. He utilized a PowerPoint presentation to explain his reasons for not supporting an additional officer position, which included Newport Beach crime statistics, calls for service and ABC Licenses, a 2018 area comparison of Part 1 crimes, department staffing levels since 2010, Newport Beach Police Department budget comparison with other Orange County cities' general funds, PERS funding statistics, and the economy inverted yield curve. He suggested using the allocated funds for the proposed position towards overtime, believing this would save the City from having to add to the pension deficit by adding another permanent position. Council Member Muldoon voiced his concerns about the State distorting crime numbers and passing propositions that are adding to crime rates. He believed the Council's job is to see trends on the horizon and supports adding one position, but prefers allowing the Police Chief to make the decision on where the position is needed. He agreed with Council Member Brenner that Council should be aspiring for lower crime rates. Council Member Duffield concurred with Mayor Pro Tem O'Neill on using the proposed funds for overtime instead of adding another position and expressed concern regarding the length of time it would take to hire another officer when the need is great right now. Volume 64 - Page 139 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 Discussion ensued between Council and staff regarding overtime, pension, and current staffing levels in the Police Department. The following individuals provided their reasons for supporting the hiring of an additional officer: Craig Batley Carol Martin Maureen Cotton Denys Oberman Kellee Fitzgeorge Fred Levine Unidentified Speaker Jim Mosher expressed opposition to increasing the Police Department's budget and discussed other areas of the City where the additional funds could be used, questioned the accuracy of the crime statistics, concurred with Mayor Pro Tem O'Neill's suggestion regarding overtime, and believed the way the item was agendized could be an issue if Council chooses to move forward. In response to Mayor Dixon's questions, City Manager Leung and Police Chief Lewis discussed the overtime rate and workers' compensation costs, and confirmed there would be no increase in benefit costs when utilizing overtime. Council Member Muldoon offered a friendly amendment to the motion to include approving $25,000.00 from the base annual salary for the additional officer to cover additional overtime during the summer months since it is likely the position will not be filled for some time. City Manager Leung confirmed that, if the position is put into the Fiscal Year 2019-20 budget until it is filled, the added surplus could be used for overtime. Mayor Dixon and Council Member Herdman accepted the friendly amendment. Mayor Pro Tem O'Neill restated his reasons for not supporting the additional position, expressed concerns regarding pension savings in the future, and noted he was not in support of the current motion. Mayor Dixon conveyed her concern with the increase in crime and believed more enforcement is needed. With Mayor Pro Tem O'Neill, Council Member Duffield, and Council Member Avery voting no, the amended motion carried 4-3. 21. Annual Appointments to Boards and Commissions [241100-20191 City Clerk Brown provided a brief report and noted four votes are required in order to be appointed. Jim Mosher questioned if the appointment process properly adhered to City Council Policy A-2, suggested requiring the City Clerk to retain applications until a confirmed lack of interest is received by the applicant, and expressed opposition to possibly reappointing Arlene Greer to the City Arts Commission for a third term since it would contradict with Council's message that encourages people to keep applying for positions. Council Member Brenner supported the idea of requiring the City Clerk to retain all applications until a lack of interest was received and suggested staff liaisons for the various boards, commissions and committees be part of the interview process. Noting she served on the City Council ad hoc review committee, she believed appointees should have the expertise and skillset needed to advise Council. Mayor Dixon announced the City received 43 applications, with 21 individuals being interviewed, and explained that some candidates applied for positions that they are not experienced in and Council cannot nominate someone just to fill a slot. Volume 64 - Page 140 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 In response to Mayor Pro Tem O'Neill's question, Council Member Brenner confirmed that Arlene Greer asked to serve for only one year but, due to the City Charter, would end up being appointed to a four- year term. Motion by Mayor Pro Tem O'Neill, seconded by -Council Member Herdman, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) make appointments pursuant to City Council Policy A-2 (Boards, Commissions and Committees). The motion carried unanimously. City Clerk Brown read the ballot votes for the Board of Library Trustees as follows: Janet Ray — Avery, Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill Barbara Glabman — Avery, Brenner, Dixon, Duffield, Herdman, O'Neill Ash Kumra — Muldoon City Clerk Brown announced that Janet Ray was reappointed and Barbara Glabman was appointed to the Board of Library Trustees for a four-year term. City Clerk Brown read the ballot votes for the Building and Fire Board of Appeals as follows: Robert Ahlke — Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill Crystal Chavez -Jones — Avery City Clerk Brown announced that Robert Ahlke was reappointed to the Building and Fire Board of Appeals for a four-year term. City Clerk Brown read the ballot votes for the City Arts Commission as follows: Arlene Greer —Avery, Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill City Clerk Brown announced that Arlene Greer was reappointed to the City Arts Commission for a four-year term. City Clerk Brown read the ballot vote for the Civil Service Board as follows: Maiqual (Mike) Talbot —Avery, Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill City Clerk Brown announced that Maiqual (Mike) Talbot was appointed to the Civil Service Board for a four-year term. City Clerk Brown read the ballot votes for the Harbor Commission as follows: Marie Marston — Avery, Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill Steve Scully — Avery, Dixon, Duffield, Muldoon Renee West — Brenner, Herdman, O'Neill Motion by Mayor Pro Tem O'Neill, seconded by Council Member Avery, to appoint Marie Marston to the Harbor Commission for a term ending June 30, 2023, and Steve Scully to the Harbor Commission with a term ending June 30, 2021. The motion carried unanimously. City Clerk Brown read the ballot votes for the Parks, Beaches and Recreation Commission as follows: Volume 64 - Page 141 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 Laird Hayes - Avery, Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill Cynthia Sender — Dixon Kate Malouf —Avery, Brenner, Duffield, Herdman, Muldoon, O'Neill City Clerk Brown announced that Laird Hayes was reappointed and Kate Malouf was appointed to the Parks, Beaches and Recreation Commission for four-year terms. City Clerk Brown read the ballot votes for the Planning Commission as follows: Sara Klaustermeier — Avery, Brenner, Dixon, Duffield, Herdman, Muldoon, O'Neill Alex Chazen — Brenner, Dixon, Herdman Mark Rosene — Avery, Duffield, Muldoon, O'Neill City Clerk Brown announced that Sara Klaustermeier and Mark Rosene were appointed to the Planning Commission for four year terms. 22. Resolution No. 2019-62: Underground Utility Assessment District No. 116 — Authorization of Limited Obligation Improvement Bonds (C-7572-4 & C-7572-5) [38/100-20191 Council Member Muldoon recused himself due to business interest conflicts and City Clerk Brown recused herself due to real property interest conflicts. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Duffield, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) adopt Resolution No. 2019-62, A Resolution of the City Council of the City of Newport Beach, California, Authorizing and Prouiding for the Issuance of Bonds Pursuant to the Provisions of the Improvement Bond Act of 1915 for City of Newport Beach Assessment District No. 116 and Approving Certain Documents and Authorizing Certain Actions in Connection Therewith; and c) authorize the City Manager and or designee 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 and Bond Counsel in order to carry out the intent of this resolution, the Fiscal Agent Agreement and the Bond Purchase Agreement. With Council Member Muldoon recusing himself, the motion carried 6-0. 23. Resolution No. 2019-63: Underground Utility Assessment District No. 116B — Authorization of Limited Obligation Improvement Bonds (C-7572-6 & C-7572-7) [38/100-2019] Council Member Muldoon recused himself due to business interest conflicts. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Herdman, to a) determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) adopt Resolution No. 2019-63, A Resolution of the City Council of the City of Newport Beach, California, Authorizing and Prouiding for the Issuance of Bonds Pursuant to the Provisions of the Intiprouement Bond Act of 1915 for City of Newport Beach Assessment District No. 116B and Approving Certain Documents and Authorizing Certain Actions in Connection Therewith; and c) authorize the City Manager and or designee 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 and Bond Counsel in order to carry out the intent of this resolution, the Fiscal Agent Agreement and the Bond Purchase Agreement. With Council Member Muldoon recusing himself, the motion carried 6-0. Volume 64 - Page 142 City of Newport Beach Closed Session and Regular Meeting June 25, 2019 24. Resolution No. 2019-64: City Council Policy Manual Update - H-1 (Harbor Permit Policy) [100-20191 Council Member Duffield recused himself due to business interest conflicts. Administrative Manager Miller, Mayor Pro Tem O'Neill, and Mayor Dixon provided a brief explanation of the policy history. Sherman Stacey discussed concerns with the policy amendment process and requested the permit issue date be amended. Jim Mosher expressed his support for the policy amendments, but asked for clarification on the appeal process, and questioned why Council would approve the policy and then send it to the Harbor Commission for review after the fact. Mayor Pro Tem O'Neill confirmed that five factors would be analyzed by the Harbor Commission and reviewed by the City Council if there was an appeal and confirmed with City Attorney Harp that the permit issue date in Resolution No. 2019-64 should be changed to June 26, 2019. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Avery, to a) find that the action is exempt from the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines, Code of Regulations, Title 14, Chapter 3 because it will not result in a physical change to the environment, directly or indirectly; b) adopt amended Resolution No. 2019-64, A Resolution of the City Council of the City of Newport Beach, California., Adopting Revised City Council Policy H-1; and c) direct the Harbor Commission to review the revised City Council Policy H-1 and to make recommendations to the City Council regarding any proposed revisions thereto. With Council Member Duffield recusing himself, the motion carried 6-0. 26. Discussed before Consent Calendar XIX. MOTION FOR RECONSIDERATION - None XX. ADJOURNMENT - Adjourned at 10:54 p.m. in memory of former Mayor and Council Member John Cox The agenda was posted on the City's website and on the City Hall electronic bulletin board located in the entrance of the City Council Chambers at 100 Civic Center Drive on June 20, 2019, at 4:00 p.m. Leilani I. Brown City Clerk ot_,-K�4 4f Diane B. Dixon Mayor pO P'`5 Volume 64 - Page 143 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CERTIFICATE OF THE CITY CLERK BRINGING FORWARD RESOLUTIONS I hereby certify that the resolutions listed on Exhibit A attached hereto are true, correct and complete copies of the ones duly adopted by the City Council of the City of Newport Beach (the "City") and have not been amended, supplemented, superseded or rescinded since their respective dates of adoption, and are in full force and effect as of the date hereof. Dated: July 23, 2019 CITY OF NEWPORT BEACH r By: dw City Clerk 4820-7609-9996/022459-0025 Resolution No. 2015-60 entitled "A Resolution of the City Council of the City of Newport Beach Accepting Petition of Assessment District No. 116," adopted July 14, 2015. Resolution No. 2015-94 entitled "A Resolution of the City Council of the City of Newport Beach Approving the Assessment Engineer's Report and Fixing the Time and Place of the Public Hearing for Assessment District No. 116," adopted November 10, 2015. Resolution No. 2015-97 entitled "A Resolution of the City Council of the City of Newport Beach Declaring its Intention to Take Proceedings Pursuant to the Municipal Improvement Act of 1913 and to Issue Bonds Pursuant to the Improvement Bond Act of 1915, and Make Certain Findings and Determinations in Connection Therewith, All Relating to the Formation of Assessment District No. 116," adopted November 10, 2015. Resolution No. 2016-6 entitled "A Resolution of the City Council of the City of Newport Beach Making Determinations, Confirming Assessments and Proceedings and Designating the Superintendent of Streets to Collect and Received Assessments and to Establish a Special Fund for City of Newport Beach Assessment District No. 116," adopted January 12, 2016. Resolution No. 2017-48 entitled "A Resolution of the City Council of City of Newport Beach, California, Regarding its Intention to Recover Costs Associated with the Issuance of the Tax Exempt Obligations for Assessment Districts," adopted July 25, 2017. Resolution No. 2019-62 entitled "A 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. 116 and Approving Certain Documents and Authorizing Certain Actions in Connection Therewith," adopted June 25, 2019. A-1 4820-7609-9996/022459-0025 Harris & Associates - Shaping the Fvtare, One Projea of a Paw— CERTIFICATE OF THE ASSESSMENT ENGINEER REGARDING MAILING OF ASSESSMENT BALLOTS AND NOTICE OF PUBLIC HEARING FOR CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned, under penalty of perjury, CERTIFIES AS FOLLOWS: MAILING The NOTICE OF PUBLIC HEARING and the ASSESSMENT BALLOT PACKAGE were mailed to the record owners of all real property proposed to be assessed according to the names and addresses of such owners as the same appear on the last County Assessment Roll, said mailing being accomplished on the 24th day of November, 2015, being at least forty-five (45) days prior to the date set for the public hearing. A copy of the Notice of Public Hearing and a list of each property owner receiving the Notice and Ballot are attached as Exhibit A. EXECUTED this 24th day of November, 2015, at Irvine, California. Alison M. Boul , P.E. Title: SR. PROJECT MANAGER HARRIS & ASSOCIATES 22 Executive Park, Suite 200 Irvine, California 92614 (949) 655-3900 fax (949) 655-3995 WeAreHarris.com EXHIBIT A �ASSESSMENT IER 1 • FULLAPIN 423-295-05 OWNER NAME 204 44TH ST LLC MAILING ADDRESS 3211 E 15TH ST MAIL CITY STATE, ZIP NEW PORT BEACH, CA 92663-4201 2 939-840-35 ROBINSON, STEVEN J 206 44TH ST NEWPORT BEACH, CA 92663-2501 3 939-840-36 HEMPHILL, JASON M 206 1/2 44TH ST NEWPORT BEACH, CA 92663 4 423-295-03 STEWART, DON M TR D M & F 428 OLD NEWPORT BLVD NEWPORT BEACH, CA 92663 5 423-295-02 CASSESSO, LOUIS TR 304 35TH ST NEWPORT BEACH, CA 92663 6 423-295-01 PEAIRS, PERRI LEE PO BOX 11755 COSTA MESA, CA 92627-0755 7 423-292-01 JESSEN, ERIK KENNETH TR 30343RD ST NEWPORT BEACH, CA 92663 8 423-295-12 TUCCI, DOMINIC TR PO BOX 1304 NEWPORT BEACH, CA 92659-0304 9 939-840-29 GRONAUER, ROBERT J 21143RD ST#A NEWPORT BEACH, CA 92663-2961 10 939-840-30 REYNOLDS, MARK E TR 7708 E RAINVIEW ANAHEIM HILLS, CA 92808-2118 11 423-295-10 GIBSON, DOUGLAS JOHN TR 209 43RD ST NEWPORT BEACH, CA 92663-2910 12 423-295-09 CHELSTOWSKI, JOSEPH 404 N BERRY ST BREA, CA 92821-3104 13 423-295-08 NAFFA, MONATR 7390 KITE DR ANAHEIM HILLS, CA 92808-2106 14 939-840-15 TORRES, ANDREW JOHN 425 MADISON AVE POMONA, CA 91767 15 939-840-16 ROBIN, DELAINE STR ROBIN 20443RD ST, UNIT B NEWPORT BEACH, CA 92663 16 939-840-08 WEIR, AUSTIN P 20643RD ST#1 NEWPORT BEACH, CA 92663-2947 17 939-840-09 MIDDLETON,ANDREWR 20643RD ST#2 NEWPORT BEACH, CA 92663 18 423-296-03 WATERTOWNE HOMES LLC 17771 COWAN, STE 100 IRVINE, CA 92614 19 423-296-02 STURDIVANT, CATHY 21043 RD ST NEWPORT BEACH, CA 92663 20 423-296-01 NORSE, PETER W 1R TR P 401 PROSPECT ST NEWPORT BEACH, CA 92663 21 423-293-01 SULLIVAN, ROBERT L 227 20TH ST SUITE 103 NEWPORT BEACH, CA 92663-4343 22 423-293-02 GEMINIS PROPERTY PO BOX 2767 SAME FE SPRINGS, CA 90670 23 423-293-03 BENSON, NUEL 4206 RIVER AVE NEWPORT BEACH, CA 92663 24 423-293-04 THORNTON, SALLY TR H L & 1312 E MERONA PL ANAHEIM, CA 92805 25 423-293-05 NELSON, KIRK C 4200 RIVER AVE NEWPORT BEACH, CA 92663-2916 26 423-296-14 TRONCALE, KATHLEEN N TR K 213 1/2 42ND ST NEWPORT BEACH, CA 92663 27 423-296-15 E & 1 SCHORR ENTRPRS INC P O BOX 571930 TARZANA, CA 91357-1930 28 423-296-10 BRIGHT, MARTIN T 209 42ND ST NEWPORT BEACH, CA 92663-2908 29 423-296-09 FRUMIN, HOWARD TR 27332 SILVER CREEK DR SAN JUAN CAPISTRANO, CA 92675 30 423-296-08 CHEATHAM FAMILY LIMITED 827 N 5TH ST GROVER BEACH, CA 93433-1351 31 423-305-05 REYNEN, GREGGORY S 60 WEGIS AVE BAKERSFIELD, CA 93314-7878 32 423-305-04 POWERS, SHARON LEE 206A 42ND ST NEWPORT BEACH, CA 92663 33 423-305-03 VICKERS, WILLIAM W 1R TR 3412 SEASHORE DR NEWPORT BEACH, CA 92663-3039 34 423-305-02 ASCHA, DEBRA 20160 E LIMECREST DR COVINA, CA 91724-3945 35 423-305-01 GERIAK, ANDREW C 32494 TIMBERRIDGE CT WESTLAKE VILLAGE, CA 91361 36 933-940-72 SMITH, MELVIN TR 501 S PERALTA HILLS DR ANAHEIM, CA 92807-3515 37 933-940-73 SMITH, MELVIN TR 10950 DALE ST STANTON, CA 90680-2732 38 423-301-02 DE RIDDER, PAULA TR 4108 RIVER AVE NEWPORT BEACH, CA 92663-2915 39 423-301-03 CHARBONEAU, SHIRLEY ATR 4106 RIVER AVE NEWPORT BEACH, CA 92663 40 423-301-04 GOODGAME, GARY 10201 VALLEY SPRING LN TOLUCA LAKE, CA 91602-2931 41 423-301-05 DUNBAR, STEVEN 5125 AVENIDA DE AMOR YORBA LINDA, CA 92886-4629 42 423-301-06 VAUGHAN, PORTER D PO BOX 5175 HUNTINGTON BEACH, CA 92615-5175 43 423-305-12 MULTIFAMILY HOLDINGS M2 2220 UNIVERSITY DR NEWPORT BEACH, CA 92660 44 423-305-11 FELTON, ROBERT G TR 41 BALBOA CVS NEWPORT BEACH, CA 92663-3226 45 423-305-10 SPRADLING, PAUL GTR 6746 SOLANDRA DR CARLSBAD, CA 92011-3427 46 423-305-09 GUIRGUIS, EMIL 20741ST ST NEWPORT BEACH, CA 92663 47 423-305-08 THREE PEAT EQUITIES LLC 205 41ST NEWPORT BEACH, CA 92663 48 423-306-04 HARVEY, BARBARA ANN TR B 1919 W CORONET, SPC 60 ANAHEIM, CA 92801 49 423-306-03 DEADY, KEVIN JAMES TR PO BOX 1367 ARCADIA, CA 91077-1367 50 423-306-14 ZOTOVICH DEVELOPMENT CO 1201 DOVE ST, STE 650 NEWPORT BEACH, CA 92660-2825 51 423-306-13 ZOTOVICH DEVELOPMENT 1201 DOVE ST, STE 650 NEWPORT BEACH, CA 92660-2825 52 933-941-30 LEWIS, BRIAN M TR 44700 VILLAGE CT STE 100 PALM DESERT, CA 92260-3808 53 933-941-31 LEWIS, BRIAN M TR 44700 VILLAGE CT STE 100 PALM DESERT, CA 92260-3808 54 423-302-01 NELSON, KIRK C 4200 RIVER AVE UNIT A NEWPORT BEACH, CA 92663-2916 55 423-302-02 FORBATH, JOSEPH W 555 ANTON BLVD, STE 1200 COSTA MESA, CA 92626-7670 56 423-302-03 ANDERSON, PHOEBE BTR 4006 RIVER AVE #B NEWPORT BEACH, CA 92663-1531 57 423-302-04 MITHRUSH, YVONNE MARIE 4004 RIVER AVE NEWPORT BEACH, CA 92663-2941 58 423-302-05 SANDBERG, ROBERT W TR 18832 WINNWOOD LN SANTA ANA, CA 92705-1233 59 423-302-06 PRENDERGAST, VICKIE TR 4000 RIVER AVE NEWPORT BEACH, CA 92663-2914 60 423-306-11 HARRIS, TIMOTHY R 2289 W FIR AVE FRESNO, CA 93711 61 423-306-10 MCCUTCHAN, THOMAS OLIVER 215 STARLIGHT CREST DR LA CANADA, CA 91011 62 423-306-09 FUN 4 FIVE INVESTORS LLC 7333 TRASK AVE PLAYA DEL REY, CA 90293 63 933-940-17 WALSH, SUZANNE MARIE TR 5 105 DARTMOUTH CIR SEAL BEACH, CA 90740 64 933-940-18 ELLIOTT, MICHELE LTR M L 21 MANZANITA RD FAIRFAX, CA 94930 65 423-306-07 ESCHER, WERNERTR 20540TH ST NEWPORT BEACH, CA 92663-2904 66 423-307-05 SAMAAN, WASSEM ATR 20440TH ST, UNIT A & B NEWPORT BEACH, CA 92660 67 423-307-04 STANLEY, ANN M TR PO BOX 3234 NEWPORT BEACH, CA 92659-0878 68 423-307-03 BARRAZA-GOODRIDGE, 1527 CUMBERLAND LN NEWPORT BEACH, CA 92660-4726 69 423-307-02 FM MARKETING & PROPERTIES 2920 SONOMA ST TORRANCE, CA 90503 70 423-307-01 DANNELLEY, DONNA TR 23 OPERA LN ALISO VIEIO, CA 92656-2875 71 423-303-01 ARNOLD, GERTRUDE V TR 289 RODNEY AVE ENCINITAS, CA 92024-2901 72 423-303-02 CHAVEZ, ELEANOR M TR E M 3910 RIVER AVE NEWPORT BEACH, CA 92663 73 423-303-03 LAMB, AUDREY LTR 4786 MONTE MAR DR EL DORADO HILLS, CA 95762-5031 74 423-303-04 ROSEN, RICHARD LTR R L 25602 ROLLING HLS LAGUNA HILLS, CA 92653 75 423-303-05 HOLMAN, ROBERT DTR 3904 RIVER AVE NEWPORT BEACH, CA 92663-2913 76 423-303-06 RYAN, GENEVA M TR 3902 RIVER AVE NEWPORT BEACH, CA 92663-2913 77423-303-07 ITARANTELLO, ROCCO D TR 3900 RIVER AVE NEWPORT BEACH, CA 92663-2913 78 423-307-11 1 KUHLMANN, KENNETH G 213 39TH ST NEWPORT BEACH, CA 92663-2902 W0:ua1ra ASSESSMENT NUMBER 79 FULLAPN 423-307-10 OWNER NAME RICHARDSON, JANDYRA R TR MAILING ADDRESS 19634 CRYSTAL SPRINGS LI MAIL CITY, STATE, ZIP NEWHALL, CA 91321 80 423-307-09 SCHOONOVER, ROC TR 209 39TH ST NEWPORT BEACH, CA 92663-2902 81 423-307-08 DELANEY, NEIL 207 39TH ST NEWPORT BEACH, CA 92663-2902 82 933-940-10 PADGETT, ANGELA 1 205 39TH ST, UNIT 1 NEWPORT BEACH, CA 92663 83 933-940-11 SCHARFE, RAYMOND 273 N GOLDENROD ST BREA, CA 92821-4708 84 423-308-06 GREEN, ANDREW L 3810 W BALBOA BLVD NEWPORT BEACH, CA 92663-2900 85 423-308-05 O-MALLEY, MICHAEL K 1495 UPLAND HILLS DR N UPLAND, CA 91784-9165 86 423-308-04 BECK, LLEWELLYN TR P O BOX 5155 FULLERTON, CA 92838-0155 87 423-308-03 GARKANI,MC) 21039TH ST NEWPORT BEACH, CA 92663 88 423-308-02 VANDER HULST, JOHN C 212 39TH ST NEWPORT BEACH, CA 92663-2903 89 423-308-01 KOLLER, GARY R 3811 RIVER AVE NEWPORT BEACH, CA 93036 90 423-304-01 MILLER, THOMAS E TR 9034 REALES ALTA LOMA, CA 91737 91 423-304-02 SEIN, DENNIS J TR 3810 RIVER AVE NEWPORT BEACH, CA 92663-2912 92 423-304-03 TEITSCHEID, DANIEL A TR 3808 RIVER AVE NEWPORT BEACH, CA 92663-2912 93 423-304-04 COOLEY, RICHARD L 3806 RIVER AVE NEWPORT BEACH, CA 92663-2912 94 423-304-05 SHAPIRO, PAUL S TR 3804 RIVER AVE NEWPORT BEACH, CA 92663-2912 95 423-304-06 FULLER, GARY W TR 3802 RIVER AVE NEWPORT BEACH, CA 92663-2912 96 423-304-07 DOYLE, BEULAH M TR DOYLE 5238 W REESE CT VISALIA, CA 93277 97 423-308-14 KLEPPE, ROBERT M TR 1249 PASEO EL MIRADOR PALM SPRINGS, CA 92262-4924 98 423-308-13 HEIDE, WILLIAM 526 E MEADOWBROOK AVE ORANGE, CA 92865-1318 99 423-308-12 BEISTLE, ROGER W TR 1261 GROSSMONT DR RIVERSIDE, CA 92506-4714 100 933-941-09 MORALES, EDMUND 3100 CHINO HILLS PKWY, STE42692709 101 933-941-10 GOLUB, STUART S TR 1315 N TUSTIN AVE #1-400 ORANGE, CA 92867-3905 102423-308-10 RICHARDSON, SCOTT C 15978 VIRGINIA POINT RD POULSBO, WA 98370-8040 103 423-308-09 GURMIN, NICHOLA C TR 214 JACARANDA PL FULLERTON, CA 92832 Re: 100 Civic Center Drive Newport Beach, California 92660 949-644-3311 1 949-644-3308 FAX newportbeachca.gov November 24, 2015 Assessment Ballot — City of Newport Beach Assessment District No. 116 NOTICE OF PUBLIC HEARING — JANUARY 12, 2016 Dear Property Owner: Enclosed with this letter is the official Assessment Ballot for the City of Newport Beach Assessment District No. 116. Please complete the ballot and return it to the City Clerk of the City of Newport Beach sealed in the envelope provided by 7:00 p.m., January 12, 2016. Your sealed ballot may be sent via US Mail or hand delivered to the City Clerk of the City of Newport Beach, but it must be received prior to the time and date specified. The votes will be tabulated at a regular meeting of the City Council of the City of Newport Beach on January 12, 2016 at 7:00 p.m. As a property owner, you are voting for or against the proposed assessment clearly indicated in the top portion of the ballot. This figure represents the maximum amount that may be assessed for the portion of the underground utilities improvement that will benefit your property. The total is based on construction costs estimates prepared by a licensed civil engineer, and it includes soft costs such as design, permitting, legal expenses, and other necessary expenses. The assessment amount also includes the cost to issue municipal bonds (the "Bonds") to provide long term financing. The assessment district formation process is governed by State law. The assessment will be approved if a majority of respondents vote in favor of the assessment. It is important that you submit your ballot to ensure that your vote is considered in the tabulation. If the assessment is approved, you will have the option of paying the total assessment over a period of 20 years, with payments collected as a line item on your bi-annual property tax bill. Alternatively, you will have the options of making a one-time cash payment for the assessment, less financing costs, on two separate occasions: (1) within thirty (30) days after the assessment is approved and (2) approximately ninety (90) days prior to the issuance of any Bonds. The City shall provide notice to all property owners of the opportunity to make such one-time cash payment prior to the periods set forth in the preceding sentence. These options will be communicated to you in a letter that will be sent following the vote. To ensure that adequate funds are collected to complete the desired underground utilities improvements, the cost estimates and the assessment amounts are conservative in nature. The actual assessment amount may be reduced if cost savings are realized during the financing stage. In this case, future assessments would be appropriately reduced and rebates would be issued to property owners who paid cash during the cash payment periods. This would occur upon completion of the project. Details of the proposed assessment district, including cost estimates and detailed boundary diagrams, are provided in the Preliminary Engineer's Report which is available on-line under the Assessment District 116 tab on the City's Assessment District website page that can be found at http://newportbeachca.gov/ADstatus. November 24, 2015 Page 2 of 2 You may contact Michael J. Sinacori, Assistant City Engineer of the City of Newport Beach directly with any questions or inquiries. Mr. Sinacori can be reached by telephone at (949) 644-3342 or by email at msinacori@newportbeachca.gov. Your cooperation in this matter is greatly appreciated. Sincerely, Michael J. Sinacori, P.E. Assistant City Engineer PROPOSED NEW ASSESSMENTS and ASSESSMENT BALLOT for the City of Newport Beach Assessment District No. 116 The CITY OF NEWPORT BEACH GIVES NOTICE that 1. Purpose of Assessments. The City of Newport Beach is proposing to levy new assessments in the proposed City of Newport Beach Assessment District No. 116 that includes your property. The purpose of the assessment is to fund the estimated costs of underground utility improvements within Assessment District No. 116 and all related administrative, financing and incidental costs, including the costs of forming Assessment District No. 116. 2. The Assessments. The total of the proposed assessments for the whole Assessment District No. 116 will not exceed $1,925,000. The proposed total assessment on your property is identified on the ballot included herein. Information on the way the assessments are calculated is included as an attachment to this Notice. Please read it carefully. If the assessments are confirmed, the unpaid assessments, unless paid in cash, will continue to be collected against the properties in Assessment District No. 116 on the property tax bill as long as needed to pay installments of principal and interest on the proposed bonds, but not for more than 20 years from the second day of the September next succeeding 12 months following the date of issuance of the bonds. If the assessments are confinned, you will receive new notices telling you of your option to pay all or part of the final assessment in cash, or allow it to go to bond over a period of not more than 20 years from the second day of the September next succeeding 12 months following the date of issuance of the bonds. The proposed total assessment assumes an interest rate on the bonds of approximately 5.00%. Annual City administrative fees shall not exceed fifty dollars ($50) per parcel per year, subject to an annual increase based on the Consumer Price Index during the preceding year ending in January for all Urban Consumers in the Los Angeles, Riverside and Orange County areas. The proposed total assessment on your property as identified on the ballot included herein cannot be increased without another assessment hearing and ballot. Each owner of property located within the assessment district would be responsible for arranging for, and paying for, the work on his or her properrti, necessary to connect facilities constructed by the City on public rights-of-way to the points of connection on their private property. The cost of the conversion of the individual service connections on private property to the systems is not included in the work to be financed through the assessment district. Failure to convert individual service cotmections on private property may result in a fine, an assessment for the conversion cost, or loss of service. 3. Public Hearing. On January 12, 2016, at 7:00 p.m., the City Council of the City of Newport Beach will hold a public hearing at its regular meeting place City Hall Council Chambers, 100 Civic Center Drive, Newport Beach, California, to take public testimony, hear protests, tabulate the Assessment Ballots and take final action on the levy the assessments. 4. Assessment Ballot. Any time before the end of the public hearing, any property owner in the Assessment District may submit the Assessment Ballot, which is part of this Notice, to the City Clerk. To do so, the owner must cut off the Ballot portion; mark the Ballot either "I am in Favor" or "I am Opposed"; SIGN THE BALLOT and put it in the return envelope provided with this Notice. Seal the envelope and return it and the Ballot by mail or by hand delivery to the City Clerk. ANY BALLOT RETURNED UNMARKED, UNSIGNED OR NOT ENCLOSED IN THE RETURN ENVELOPE WILL BE REJECTED AND NOT COUNTED. The Ballot may be submitted, changed or withdrawn at any time before the end of the public hearing. If you need a replacement Ballot, contact the person shown below. The Assessment District may not be formed and the Assessment may not be imposed if the Ballots submitted in opposition to the assessment outweigh the Ballots submitted in favor of the assessments, with each Ballot weighted according to the amount of the proposed assessment on the property to which that Ballot relates. (This means I vote for each $1 of assessment.) 5. More Information. For additional information about the assessments, the Ballot or Assessment District No. 116, contact Michael J. Sinacori, Assistant City Engineer of the City of Newport Beach at 100 Civic Center Drive, Newport Beach, California 92660, or by telephone at (949) 644-3342. The Engineer's Report and other written material about the Assessment District may be reviewed at the City Clerk's offices at the above address during regular business hours. The report is also available online under the Assessment District 116 tab on the City's Assessment District website page that can be found at http://newportbeachca.gov/ADstatus. Dated as of November 24, 2015 Leilani Brown City Clerk, City of Newport Beach City of Newport Beach Utility Improvements Assessment District No. 116 METHOD OF ASSESSMENT A. Back rg o Assessment District jurisprudence requires that assessments levied pursuant to the Municipal Improvement Act of 1913 be based on the "special benefit" properties receive from the Works of Improvement. However, the law does not specify the method or formula that should be used to apportion the assessments in Assessment District proceedings. In addition, Article XIIID of the California Constitution, added in November 1996 through the passage of Proposition 218 by voters of the State of California, requires, inter alia, that (i) only special benefits be assessable, (ii) no assessment may exceed the proportional special benefit conferred on the parcel assessed, and (iii) publicly owned parcels shall not be exempt from assessment unless clear and convincing evidence demonstrates that such publicly owned parcels receive no special benefits from the improvements for which the assessment is levied. "Special benefit" is a particular and distinct benefit over and above general benefits conferred on real property located in the Assessment District or to the public at large. Importantly, the general enhancement of property value does not constitute special benefit. Methodologically, it is necessary and essential to identify the special benefit that the improvements will render to the properties within the Assessment District. It is also necessary that the properties receive a special and direct benefit as distinguished fiom benefit to the general public. All costs associated with the financing of the improvements are to be fairly distributed among the lots and parcels within the Assessment District based upon the special benefit received by each lot and parcel. Additionally, in compliance with the California Constitution Article XIIID Section 4, each parcel's assessment may not exceed the reasonable cost of the proportional special benefit conferred upon it. In sum, each of the properties benefiting from the improvements proposed for the Assessment District will be assessed only for the special benefit conferred on such properties. The Assessment Engineer is appointed for the purpose of analyzing the facts and detennining the method and formula for apportionment of the assessment obligation to the benefited properties. For these proceedings, the City has retained the firm of Harris & Associates as the Assessment Engineer. The Assessment Engineer makes his or her recommendation for the method of apportionment in this Engineer's Report for consideration at the public hearing. The final authority and action rests with the City after hearing all testimony and evidence presented at the public hearing and the tabulation of the assessment ballots. Upon conclusion of the public hearing, the City must make the final action in determining that the assessment has been made in direct proportion to the special benefit received. Ballot tabulation will then be completed, and if a majority of ballots received, weighted by assessment amount, do not protest the assessment, then the City may establish the Assessment District. B. Special Benefit In further making the analysis, it is necessary that the properties receive a special benefit distinguished from general benefits conferred on real property located in the Assessment District or to the public at large. The purpose of this Assessment District is to provide the financing to underground existing overhead electrical, telephone and cable facilities as well as rehabilitate the affected portions of streets and alleys within the Assessment District. These facilities are the direct source of service to the properties within the Assessment District. The proposed replacement of existing overhead utility facilities (power, telephone and cable facilities) with underground facilities and removal of the existing utility poles and the overhead wires will provide a special benefit to the parcels connected to and adjacent to, or in near proximity of, the facilities as follows: Improved Aesthetics Benefit. This benefit relates to the improved aesthetics of the streetscape due to the removal of overhead wires and utility poles. For the put -poses of the Engineer's Report, a street is defined as either a street or alley. The removal of guy wires and other support structures related to the overhead facilities are included in the definition of improved aesthetics. Properties that are directly adjacent to overhead facilities receive an aesthetic benefit. This benefit is based on the area of the parcel. Additional Safety Benefit. This benefit relates to the additional safety of having the overhead distribution wires placed underground and having the power poles removed, which eliminates the threat of downed utility .lines and poles due to wind, rain and other unforeseeable events. Falling facilities can lead to personal injuries and damage to structures, including fire. Properties immediately adjacent to the facilities usually have a greater risk. Furthermore, in compact communities like the Balboa Peninsula, the negative effects of falling lines and poles are more widespread including blocked roadways and alleys, and property damage due to impact. Properties that 'are adjacent to, or in proximity of, overhead facilities receive a safety benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the assessment district boundary. Connection Benefit. This benefit relates to the enhanced reliability of service from the utilities being underground, due to having all new wires and equipment and having that equipment underground, which reduces the threat of service interruption from downed lines. When compared to overhead systems, fewer outages occur due to various acts of nature, traffic collisions and obstructions (such as trees). Properties that are connected to, or have the ability to connect to, the facilities proposed to be undergrounded receive a connection benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the assessment district boundary. By virtue of such special benefits, the proposed improvements will provide a higher level of service, increase the desirability of the properties and will specifically enhance the values of the properties within the Assessment District. In addition, properties will receive easier access to garage parking within the residential alleyways. Therefore, the proposed improvements are of direct and special benefit to these properties. C. Apportionment MethodologX The special benefit received by the properties within the boundaries of the Assessment District is the conversion from an overhead to an underground utility system resulting in additional safety, enhanced reliability, and improved aesthetics to the adjacent properties. Based on these conditions, the improvements specially benefit all assessed properties in the Assessment District. To establish the benefit to the individual parcels within the Assessment District, the highest and best use of each property is considered. For example, a vacant property is considered developed to its highest potential and connected to the system. The more a property is developed, the more -it benefits from the proposed improvements. Most of properties within this Assessment District are zoned residential and some have one or two dwelling units on them. There is a direct correlation between the size of a property and the extent to which a property may develop. Because parcel size is one of the main limiting factors for what can be built on a property, or the extent the property is developed, the size of each parcel is used as the base unit for measuring benefit. Consideration was given to reducing the amount of area assigned to parcels based upon the building setbacks applicable to each parcel. Due to the combined factors of (a) significant variations in the setback requirements, including front, side and rear setbacks, (b) availability of future variances from currently applicable setback requirements as well as existing variances already in place, and (c) significant variations in the ratios between building size and lot size, it was concluded that adjustments to parcel areas on account of setback requirements would not improve upon the assessment methodology. Accordingly, no reductions have been made to parcel area based upon applicable setback requirements or the existence of easements within those setbacks. The area of a condominium is calculated by taking the area of the base parcel and dividing by the number of condominiums. The special benefits from the undergrounding of overhead utilities are categorized into the three (3) distinct benefits identified above. All parcels within the Assessment District receive 3 of the 3 benefits. For the Improved Aesthetics Benefit the parcel area is multiplied by 1 to calculate the "Aesthetics Benefit Area". For the "Additional Safety Benefit", each parcel is considered to receive 1 unit of benefit. For condominiums, each unit is assigned a 0.5 safety benefit unit. The average parcel size, 2674 square feet, is multiplied by the safety benefit factor to calculate the "Safety Benefit Area". For the Connection Benefit, each lot is assigned 1 benefit unit. For condominiums, each unit is assigned a 0.5 connection benefit. The average parcel area, 2674 square feet, within the district is multiplied by the benefit unit for each parcel to determine "Connection Benefit Area". The Assessed Benefit Area per parcel is equal to the Aesthetics Benefit Area plus the Safety Benefit Area plus the Connection Benefit Area, divided by 3. Exceptions There are no exceptions to the above methodology. Each parcel will be apportioned its fair share of the construction costs based on the Assessed Benefit Area calculated for each property. Incidental Expenses and Financial Costs have been allocated to the entire Assessment District on a pro rata basis relative to the total construction cost allocations. rd ASMT_NO» City CIerk City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 OWNER» MSTREET» <<MCITYSTZIP» OFFICIAL ASSESSMENT BALLOT City of Newport Beach Assessment District No. 116 Assessment Number: «ASMT NO» Assessor's Parcel Number: «APNn Parcel Address: <<SADD» The proposed Maximum Assessment: «MAX ASMT» The person completing and submitting this assessment ballot must be the record owner of the property identified above or the representative of the record owner of such property who is legally authorized to complete and submit this ballot for and on behalf of the record owner. Please see "Summary of Assessment Balloting Procedures" on the back of this ballot for assistance in filling out the ballot. If there are two or more property owners, only one needs to sign and return the ballot. Please mark your ballot in ink. Do not use pencil. BALLOTS MUST BE SIGNED TO BE VALID. Upon completion, fold the assessment ballot, place it in the return envelope and seal the envelope. Mail or deliver the assessment ballot to the address shown on the return envelope pursuant to the instructions on the back of this ballot. Please see the "Summary of Assessment Ballot Procedures" on the back of this sheet. For additional information about City of Newport Beach Assessment District No. 116, please see the enclosed legal notice. This is not a bill. �'�C Please cut along this line, fold the ballot, seal in the provided envelope, and return to the City Clerk❑ X PROPERTY OWNER ASSESSMENT BALLOT Assessment Number: «ASMT NO)) Assessor's Parcel Number: <<APN» 0Owner Name: <<OWNER» J Maximum Assessment for this Parcel: «MAX ASMT» ❑ Yes, I am IN FAVOR of City of Newport Beach Assessment District No. 116 and the levying of Jthe proposed Assessment and the annual administrative cost assessment ❑ No, I am OPPOSED to City of Newport Beach Assessment District No. 116 and the levying of the proposed Assessment and the annual administrative cost assessment The undersigned certifies under penalty ofperjury that the undersigned is entitled to complete and submit this assessment ballot. Signature of person completing assessment ballot Print name of person completing assessment ballot NII 11111111 II I I IIII III II l IiII II I IiIII 11 IN 11 HIM 111111111111111 SUMMARY OF ASSESSMENT BALLOT PROCEDURES If you are the owner of the property described on the enclosed ballot, or the authorized representative of the record owner, you may submit the enclosed ballot to the City to support or oppose the City of Newport Beach Assessment District No. 116 (the "Assessment District"). Please follow the instructions below to complete and return your ballot. 1. Register your vote on the enclosed ballot in favor or against the proposed Assessment District by placing an "X" in the corresponding box. 2. Mark and sign your ballot in pen. (Assessment Ballots received without a signature will not be counted.) Do not use pencil. 3. Place your ballot into the provided return envelope and seal the envelope. 4. Mail or personally deliver your ballot to the City Clerk of the City of Newport Beach, 100 Civic Center Drive, Newport Beach, CA 92660. The City must receive mailed assessment ballots by 7:00 p.m., January 12, 2016. Postmarks will not be accepted. 5. Assessment Ballots must be received by the City Clerk prior to the close of the Public Hearing concerning the proposed Assessment District on Tuesday, January 12, 2016, at the Newport Beach City Hall Council Chambers. The Public Hearing is scheduled for 7:00 p.m. Any ballots received after the close of the Public Hearing cannot legally be counted. 6. Following the close of the Public Hearing, the City Clerk or designee will tabulate the assessment ballots received. The ballots are weighted by the assessment amount for each property. (Simplified, this means one vote per each dollar of assessment.) 7. The Assessment District may be confirmed unless a majority protest exists. A majority protest exists if, upon the close of the January 12, 2016 Public Hearing, the monetary value of the ballots submitted in opposition to the Assessment District exceeds the monetary value of the ballots submitted in favor of the Assessment District. 8. If a majority protest exists based upon the value of the ballots received by the City Clerk, prior to the close of the January 12, 2016 Public Hearing, the Assessment District will not be formed. 9. Your assessment ballot is not confidential and may be subject to public disclosure. The information in this notice and the accompanying materials were compiled and are distributed at public expense by the City of Newport Beach in compliance with Proposition 218. This information is presented in the public interest. It is not intended to influence or attempt to influence the actions of the voters to vote "yes " or "no " on the enclosed ballot. 11 <Asmt No> Assessment Ballot Enclosed DO Not Open until after the Public Hearing (Assessment District No. 116) CITY CLERK CITY OF NEWPORT BEACH 100 CIVIC CENTER DR NEWPORT BEACH, CA 92660-3267 City of Newport Beach Utility Undergrounding Assessment District No. 116 ASSESSMENT BALLOT TABULATION RESULTS Total of Ballots Received Total "Yes" Ballots Total "No" Ballots No. of Ballots: 72 No. of Ballots: 115 No. of Ballots: Asmt Amt: $ ZZ 0( Asmt Amt: $),OOQOQ6 _ Asmt Amt: $ .3d4Zl .(o� Asmt Amt Percent Yes: % Asmt Amt Percent No: Z -i os ab, lated by: Ball Harris & Associates Date: // z - 4 1 f = Harris & Associates. City of Newport Beach Utility Underground Assessment District No. 116 Vote Summary - January 12, 2016 YES VOTE NO VOTE NO ASSESSMENT 1 APN 423-295-05 YES 2 939-840-35 YES 3 939-840-36 NO 4 423-295-03 YES 5 423-295-02 YES 6 423-295-01 NO 7 423-292-01 YES 8 423-295-12 YES 9 939-840-29 YES 11 423-295-10 YES 14 939-840-15 NO 16 939-840-08 NO 17 939-840-09 YES 19 423-296-02 YES 20 423-296-01 NO 21 423-293-01 YES 23 423-293-03 YES 24 423-293-04 YES 25 423-293-05 YES 26 423-296-14 NO 27 423-296-15 YES 28 423-296-10 YES 30 423-296-08 YES 31 423-305-05 YES 32 423-305-04 YES 33 423-305-03 YES 35 423-305-01 YES 36 933-940-72 YES 37 933-940-73 YES 38 423-301-02 YES 39 423-301-03 YES 40 423-301-04 YES 41 423-301-05 YES 42 423-301-06 YES 44 423-305-11 NO 45 423-305-10 YES 52 933-941-30 YES 53 933-941-31 YES 54 423-302-01 YES 55 423-302-02 YES 56 423-302-03 YES 57 423-302-04 YES 58 423-302-05 YES 59 423-302-06 YES 61 423-306-10 YES 62 423-306-09 YES 63 933-940-17 YES 64 933-940-18 YES 65 423-306-07 YES 69 423-307-02 NO 70 423-307-01 January 12, 2016 Page 1 of 2 City of Newport Beach Utility Underground Assessment District No. 116 Vote Summary - January 12, 2016 YES VOTE YES NO VOTE ASSESSMENT 72 APN 423-303-02 YES 74 423-303-04 YES 75 423-303-05 NO 76 423-303-06 YES 78 423-307-11 NO 80 423-307-09 NO 81 423-307-08 YES 84 423-308-06 YES 88 423-308-02 NO 89 423-308-01 YES 90 423-304-01 YES 91 423-304-02 YES 93 423-304-04 YES 94 423-304-05 YES 95 423-304-06 NO 97 423-308-14 NO 98 423-308-13 NO 99 423-308-12 YES 101 933-941-10 NO 102 423-308-10 NO 103 423-308-09 74.3%I Weighted YES Percentage 25.7% Weighted NO Percentage $1,000,006.33 Total YES Assessment Amount $346,214.68 Total NO Assessment Amount $1,346,221.01 1 Total Assessment Ballots Received January 12, 2016 Page 2 of 2 City of Newport Beach Utility Underground Assessment District No. 116 Vote Summary - January 12, 2016 Asmt Preliminary No, APN Property Address Max. Asmt Vote 1 423-295-05 204 44TH ST $21,646,71 NO 2 939-840-35 206 44TH ST $10,114.84 YES 3 939-840-36 206 1/2 44TH ST $10,114.84 YES 4 423-295-03 208 44TH ST $20,163.27 NO 5 423-295-02 210 44TH ST $18,536.85 YES 6 423-295-01 4313 CHANNEL RD $20,027.95 YES 7 423-292-01 303 43RD ST $22,537.79 NO 8 423-295-12 213 43RD ST $19,854.34 YES 9 939-840-29 211 A 43RD ST $9,925.90 YES 10 939-840-30 211 B 43RD ST $9,925.90 11 423-295-10 209 43RD ST $19,851.77 YES 12 423-295-09 207 43RD ST $21,079.89 13 423-295-08 205 43RD ST $19,861.99 14 939-840-15 204 A 43RD ST $9,941,21 YES 15 939-840-16 204 B 43RD ST $9,941.21 16 939-840-08 206 43RD ST Unit 1 $9,928.45 NO 17 939-840-09 206 43RD ST Unit 2 $9,928.45 NO 18 423-296-03 208 43RD ST $19,851.77 19 423-296-02 210 43RD ST $19,851.77 YES 20 423-296-01 212 43RD ST $19,854.34 YES 21 423-293-01 4210 RIVER AVE $21,312.23 NO 22 423-293-02 4208 RIVER AVE $21,312.23 23 423-293-03 4206 RIVER AVE $21,312.23 YES 24 423-293-04 4204 RIVER AVE $25,142.10 YES 25 423-293-05 4200 RIVER AVE $25,142.10 YES 26 423-296-14 213 42ND ST $19,854.33 YES 27 423-296-15 211 42ND ST $19,851.76 NO 28 423-296-10 209 42ND ST $19,851.76 YES 29 423-296-09 207 42ND ST $19,851.76 30 423-296-08 205 42ND ST $19,851.76 YES 31 423-305-05 204 42ND ST $19,851.76 YES 32 423-305-04 206 42ND ST $19,851.76 YES 33 423-305-03 208 42ND ST $19,851.76 YES 34 423-305-02 210 42ND ST $19,851.76 35 423-305-01 212 42ND ST $19,854.33 YES 36 933-940-72 4110 RIVER AVE $10,656.10 YES 37 933-940-73 4110 1/2 RIVER AVE $10,656.10 YES 38 423-301-02 4108 RIVER AVE $21,312.22 YES 39 423-301-03 4106 RIVER AVE $21,312.22 YES 40 423-301-04 4104 RIVER AVE $21,312.22 YES 41 423-301-05 4102 RIVER AVE $21,312.22 YES 42 423-301-06 4100 RIVER AVE $21,312.22 YES 43 423-305-12 213 41 ST ST $19,854.33 44 423-305-11 211 41 ST ST $19,851.76 YES 45 423-305-10 209 41 ST ST $19,851.76 NO 46 423-305-09 207 41 ST ST $19,851.76 47 423-305-08 205 41 ST ST $21,337.76 48 423-306-04 204 41 ST ST $19,851.76 49 423-306-03 206 41 ST ST $19,851.76 50 423-306-14 208 41 ST ST $19,851.76 January 12, 2016 Page 1 of 3 City of Newport Beach Utility Underground Assessment District No, 116 Vote Summary - January 12, 2016 Asmt Preliminary No. APN Property Address Max. Asmt Vote 51 423-306-13 210 41 ST ST $19,851.76 52 933-941-30 212 A 41 ST ST $9,899.08 YES 53 933-941-31 212 B 41 ST ST $9,899.08 YES 54 423-302-01 4010 RIVER AVE $21,312.22 YES 55 423-302-02 4008 RIVER AVE $21,312.22 YES 56 423-302-03 4006 RIVER AVE $21,312.22 YES 57 423-302-04 4004 RIVER AVE $21,312.22 YES 58 423-302-05 4002 RIVER AVE $21,312.22 YES 59 423-302-06 4000 RIVER AVE $21,312.22 YES 60 423-306-11 213 40TH ST $19,851.76 61 423-306-10 211 40TH ST $19,851.76 YES 62 423-306-09 209 40TH ST $19,851.76 YES 63 933-940-17 207 A 40TH ST $9,925.89 YES 64 933-940-18 207 B 40TH ST $9,925.89 YES 65 423-306-07 205 40TH ST $19,851.76 YES 66 423-307-05 204 40TH ST $20,459.43 67 423-307-04 206 40TH ST $20,581.99 68 423-307-03 208 40TH ST $20,581.99 69 423-307-02 210 40TH ST $20,581.99 YES 70 423-307-01 212 40TH ST $20,584.54 NO 71 423-303-01 3912 RIVER AVE $20,947.10 72 423-303-02 3910 RIVER AVE $20,947.10 YES 73 423-303-03 3908 RIVER AVE $20,947.10 74 423-303-04 3906 RIVER AVE $20,947.10 YES 75 423-303-05 3904 RIVER AVE $20,947.10 YES 76 423-303-06 3902 RIVER AVE $20,947.10 NO 77 423-303-07 3900 RIVER AVE $20,949.67 78 423-307-11 213 39TH ST $20,581.99 YES 79 423-307-10 211 39TH ST $20,581.99 80 423-307-09 209 39TH ST $20,581.99 NO 81 423-307-08 207 39TH ST $20,581.99 NO 82 933-940-10 205 A 39TH ST $9,688.43 83 933-940-11 205 B 39TH ST $9,688.43 84 423-308-06 3810 BALBOA BLVD $18,248.32 YES 85 423-308-05 206 39TH ST $21,184.56 86 423-308-04 208 39TH ST $19,716.44 87 423-308-03 210 39TH ST $19,716.44 88 423-308-02 212 39TH ST $19,716.44 YES 89 423-308-01 3811 RIVER AVE $19,716.44 NO 90 423-304-01 3812 RIVER AVE $20,947.10 YES 91 423-304-02 3810 RIVER AVE $20,947.10 YES 92 423-304-03 3808 RIVER AVE $20,947.10 93 423-304-04 3806 RIVER AVE $20,947.10 YES 94 423-304-05 3804 RIVER AVE $20,947.10 YES 95 423-304-06 3802 RIVER AVE $20,947.10 YES 96 423-304-07 3800 RIVER AVE $20,949.67 97 423-308-14 215 38TH ST $19,716.44 NO 98 423-308-13 213 38TH ST $19,716.44 NO 99 423-308-12 211 38TH ST $19,716.44 NO 100 933-941-09 209 38TH ST $9,859.49 January 12, 2016 Page 2 of 3 City of Newport Beach Utility Underground Assessment District No. 116 Vote Summary - January 12, 2016 Asmt Preliminary No. APN Property Address Max. Asmt Vote 101 933-941-10 209 1/2 38TH ST $9,859.49 YES 102 423-308-10 207 38TH ST $$19,716.44 NO 103 423-308-09 205 38TH ST $19,716.44 NO Total Voted Assessment Amount $1,346,221.01 Total "YES" Assessment Amount $1,000,006.33 Total "YES" Percentage 74.3% Total "NO" Assessment Amount $346,214.68 Total "NO" Percentage 25.7% January 12, 2016 Page 3 of 3 4k— NOTICE OF APPOINTMENT AS DEPUTY CITY CLERK Notice is hereby given that Dennis Anderson is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016. Leilani-T. own, City Clerk Date SFO RN�� NOTICE OF APPOINTMENT AS DEPUTY CITY CLERK Notice is hereby given that Alison Bouley is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016. root ---_t Leilani I. Brown, City Clerk Date NOTICE OF APPOINTMENT AS DEPUTY CITY CLERK Notice is hereby given that Carol Hill is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016. Leilani I. Brown, City Clerk /.I ),. I(y Date NOTICE OF APPOINTMENT AS DEPUTY CITY CLERK Notice is hereby given that Lisa Thompson is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016. Leilani I. Brown, City Clerk Date Z-[1FOAr; NOTICE OF APPOINTMENT AS DEPUTY CITY CLERK Notice is hereby given that Jamie Copeland is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016. LOA - "�O NW, --� Leilam I. Brown, City Clerk Date NOTICE OF APPOINTMENT AS DEPUTY CITY CLERK Notice is hereby given that Brittany Ramirez is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016. C444ic , �MVK--1 Leilani I. Brown, City Clerk Date Z'1 FOIkr.; NOTICE OF APPOINTMENT AS DEPUTY CITY CLERIC Notice is hereby given that Patrick Achis is appointed Deputy City Clerk effective January 12, 2016. This appointment shall continue until January 13, 2016, and is for the purpose of tabulating ballots for proposed Assessment District Nos. 111, 116, and 116B at the City Council meeting of January 12, 2016, Leilani I. Brown, City Clerk !, 11'k Date LCN PROPOSED BOUNDARY OF ASSESSMENT DISTRICT NO. 116 (CHANNEL RD / 44TH ST / BALBOA BLVD / 38TH ST) CITY OF NEWPORT BEACH, COUNTY OF ORANGE STATE OF CALIFORNIA Assessors Map Book 423 11 �N BALBOA BLVD THE BOUNDARY OF THE PROPOSED ASSESSMENT DISTRICT COINCIDES WTH THE ASSESSOR'S PARCELS WITHIN THE BCUND RI SHORN ON THIS MAP_ FOR PARTICULARS OF LINES AND DIMENSIONS OF ASSESSOR'S PARCELS. REFERENCE iS MADE TO THE MAPS O� THE ORANGE COUNTY ASSESSOR, SPECIFICALLY BOOK 423 PAGES 29, 30, AND 36. ALL DIMENSIONS SHOWN HEREIN ARE PER THE ASSESSOR'S PARCEL MAPS. U �I'nRt.ii7; C -"1'Y ACCEPTED AND FILED AT THE REQUEST OF CITY OF NEWPORT BEACH DATE_NWCMb(,i I-1 1015 TIME'.2 ,FM IFEE$ INSTRUMENTI ZG15GL7 t2 LP BOOK 127_ PAGE gU OF THE ASSESSMENT AND COMMUNITY FACILITIES DISTRICTS IN THE OFFICE OF THE RECORDER OF THE COUNTY OF ORANGE, STATE OF CALIFORNIA HUGHNGUYEN _ COUNTY CLERK RECORDER EXEMPT RECORDING PER G.C.8103 FILED IN THE NEWPORT BEACH TIHS�1^DAY OF �CITYC�� CITY OF NEWPORT BEACH I HEREBY CERTIFY THAT THE WITHIN MAP SHOWING PROPOSED BOUNDARIES OF ASSESSMENT DISTRICT NO.116. CITY OF NEWPORT BEACH, STATE OF CALIFORNIA, WAS APPROVED BY THE ,CITY COUNCIL OF THE CITY OF NEWPORT OR DAY OF J-/nU�.Q�[--.LL!lfCy' 20G BY ITS RESOLUTION HE NO CITY CLERK LEGEND -- - ASSESSOR'S PARCEL LINE ---- ASSESSMENT DISTRICT BOUNDARY () ASSESSORS PARCEL NUMBER (DI ASSESSOR'S PAGE SECTION GHMRIC SCAIF. !'Harris & Associates_ 22 Ex U,. Pork, S.R. 200 irvlm Colif—I. 92614 800-827-4901 DATE 9/11/15 SHEET 1 OF 1 CI, Assessor's Map Book 423 ASSESSMENT DIAGRAM FOR ASSESSMENT DISTRICT NO. 116 (CHANNEL RD / 44TH ST / BALBOA BLVD / 38TH ST) CITY OF NEWPORT BEACH, COUNTY OF ORANGE STATE OF CALIFORNIA CHANNEL 9G ���II_.i I ��_I® ��q i �ER�AVE.�CZII(i21 �IC7� fL4� ®I�I� 11 I �L�-z�_L ' ? 3 _ _ 1 �L_---:-1- RIV 14 1 7 all o ®3 a N ® ' e s®� 3_ �® ry' tl Vis, 1a �j 4� L P>C 1 to N— III ----"1 _ — r 70 o r J.' FffG O I m Z y R12 Pq ax 14 DA * h R as qg zl ao_- f1a BALBOA BLVD THE BOUNDARY OF THE PROPOSED ASSESSMENT DISTRICT COINCIDES WIH 'HE ASSESSOR'S PARCELS WITHIN THE BOUNDARY SHOWN ON THIS MAP. FOR PARTICULARS OF LINES AND DIMENSIONS OF ASSESSOR'S PARCELS, REFERENCE IS MADE TO THE MAPS OF THE ORANGF COUNTY ASSESSOR, SPECIFICALLY BOOK 423 PAGES 29. 30, AND 36. ALL DIMENSIONS SHOWN HEREIN ARE PER iHi_ ASSESSOR'S PARCEL MAPS. /n3 ACCEPTED AND FILED AT THE REQUEST OF CITY OF NEWPORT BEACH DATE Zc!Aggr!j 2(/. 20110 TIME 17, pen FEES INSTRUMENT# f.O1V 0000 BOOK L 3 PAGE OF THE ASSESSMENT THE NF ICE COMMUNITY ES DISTRICTS IN THE OFFICE OF THE RECORDER OF THE COUNTY OF ORANGE, STATE OF CALIFORNIA HUGH NGUYEN COUNTY CLERK RECO -� BY_ / DEPUTY EXEMPT RECORDING PER G.C. 6103 RECORDED IN THE OFFICE OF THE SUPERINTEN NT OF $Tg�TS CITY OF N ORT BEACH, THIS W DAY f SUPERI o NT O TR ETS AN ASSESSMENT WAS LEVIED BY THE CRY COUNCIL ON THE LOTS, PIECES AND PARCELS OF LAND SHOWN ON THIS ASSES�S{�1EM OWG SAID ASSESSMENT WAS LEVIED ON THE j DAY OF� 20. REFERENCE IS MADE TO THE ASS MENT LL REC RDED IN THE OFFICE OF THE SUPERINTENDENT OF STREETS FOR THE EXACT AMOUNT OF EACH ASSESSMENT LEVIED AGAINST THE PARCELS SHOWN ONTHAS ASSESWENT DIAGRAM, FILLED IN THE OFFICE QQ��j�1111E CITY C E OF THE NEWPORT BEACH THIS 1Q"DAYOF Z ,U,i..la.- A LEGEND __.._..._ WIRESTOBEREMOVED ASSESSORS PARCEL UNE ---- ASSESSMENT DISTRICT BOUNDARY ® POLE TO BE REMOVED ASSESSOR'S PARCEL NUMBER ASSESSORS PAGE SECTON ASSESSMENT NUMBER =Harris & Associates. 22 Exocutim Park. Suila 200 BOD -827-4901 42fi16 800-827-4901 DATE 9/11/15 SHEET 1 OF -1 RECORDING REQUESTED AND AFTER RECORDATION RETURN TO City Clerk City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder �IIII� IIIII��IIIIIIIIIIIII III�IIIIIIII IIII�II� I III ��III NO FEE *$ R o 0 0 8 3 6 7 4 5 8$ 2016000210856 1: 37 pm 05111116 217 413 N06 6 0.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 NOTICE OF ASSESSMENT CITY OF NEWPORT BEACH Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Pursuant to the requirements of Section 3114 of the Streets and Highways Code of California, the undersigned City Clerk of the City of Newport Beach, County of Orange, State of California, hereby gives notice that a diagram and assessment were recorded in the office of the Superintendent of Streets of the City, as provided for in the Section, and relating to the real property more particularly described on that certain assessment diagram filed in accordance with the Section, in Book 103 of Maps of Assessments and Community Facilities Districts at Page 17 in the office of the County Recorder of the County of Orange. Notice is further given that upon the recording of this Notice in the office of the County Recorder, the several assessments assessed on the lots, pieces and parcels as shown on the filed assessment diagram shall become a lien upon the lots or portions of lots assessed, respectively. The City of Newport Beach City Council approved the assessment on January 12, 2016. Reference is made to the diagram and assessment recorded in the office of the Superintendent of Streets of said City. The name or names of the assessed owners as they appear on the latest secured assessment roll are set forth in Exhibit "A" hereto attached and by reference incorporated herein. Dated:, 2016 t City Clerk, City of Newport Beach N U ;��W CALIF Fi IA ALL PUF3POO SE ACK OO LEDG E TCIVIL CODE § 1181 Gf _v. _A _A _a _A _cL _A .a1 .A _A _va .A .A _A .A .A .Vf .A _va .A .A .A _va _A Va .0 .i1 .A .Ow .A .Gf .�!L���C.'1 .aCG� .'.1<.A+.O .L1J�G{•.L�. vG1�. A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of fp "V115 (ne ) On rntcd U before me, \eNNtFEvL QtiN-� Mouft`1 NcDTIA24 PUBLl� Date Here Insert Name and Titlre of the Officer personally appeared L-Gt t„ A r s 1 I a R O ,�A tj Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s)-whose name(s) is/are subscribed to the within instrument and acknowledged to me that .he/she/they executed the same in his/her/their authorized capacity(ies), and that by hisfher/their signature(4 on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. JENNIFER ANN MULVEY Commission � 2045022 Z '� Notary Public - California Orange County %Comm. Ex ires Oct 12, 2017 I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS m4 hand and official seal. Signature of Notalry Public Place Notary Seal Above OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Number of Pages: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: ©2014 National Notary Association • www. National Notary.org • 1 -800 -US NOTARY (1-800-876-6827) Item #5907 Exhibit "A" Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Property Owner list APN OWNER NAME 423-292-01 JESSEN FAMILY TRUST, TRUSTEES 423-293-01 SULLIVAN, ROBERT L 423-293-02 GEMINIS PROPERTY DEVELOPMENT LLC 423-293-03 BENSON, NUEL AND BENSON, JUDITH 423-293-04 POLLEY, RICHARD 423-293-05 NELSON, KIRK C AND NELSON, TAMARA LYNN 423-295-01 PEAIRS, PERRI LEE 423-295-02 CASSESSO, LOUIS TR 423-295-03 STEWART, DON M TR D M & F 423-295-05 204 44TH ST LLC 423-295-08 NAFFA, MONA TR 423-295-09 CHELSTOWSKI, JOSEPH 423-295-10 GIBSON, DOUGLAS JOHN TR 423-295-12 TUCCI, DOMINIC TR 423-296-02 STURDIVANT, CATHY 423-296-03 WATERTOWNE HOMES LLC 423-296-09 FRUMIN, HOWARD TR 423-296-10 BRIGHT, MARTIN T 423-296-14 TRONCALE, KATHLEEN N TR K 423-296-15 E & J SCHORR ENTRPRS INC 423-301-02 DE RIDDER, PAUL A TR 423-301-03 CHARBONEAU, SHIRLEY A TR 423-301-04 GOODGAME, GARY AND SHARI 423-301-05 DUNBAR, STEVEN AND JANELLE 423-301-06 VAUGHAN, PORTER D AND DORIS K 423-302-01 NELSON, KIRK C AND NELSON, TAMARA 423-302-02 FORBATH, JOSEPH W AND ALLISON L 423-302-03 ANDERSON, PHOEBE B TR 423-302-04 MITHRUSH, YVONNE MARIE 423-302-05 SANDBERG, ROBERT W TR 423-302-06 PRENDERGAST, VICKIE TR 423-303-01 ARNOLD, GERTRUDE V TR 423-303-02 CHAVEZ, ELEANOR M TR E M 423-303-03 LAMB, AUDREY L TR 423-303-04 ROSEN, RICHARD L TR R L 423-303-05 HOLMAN, ROBERT D TR 423-303-06 RYAN, GENEVA M TR 423-303-07 TARANTELLO, ROCCO D TR 423-304-01 MILLER, THOMAS E TR 423-304-02 SEIN, DENNIS J TR 423-304-03 TEITSCHEID, DANIEL A TR 423-304-04 COOLEY, RICHARD L 423-304-05 SHAPIRO, PAUL S TR 423-304-06 FULLER, GARY W TR 423-304-07 DOYLE, BEULAH M TR DOYLE 423-305-01 GERIAK, ANDREW C AND GERIAK, AMY Page A-1 Exhibit "A" Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Property Owner list OWNER NAME 423-305-02 ASCHA, DEBRA AND ASCHA, OSSAMA 423-305-03 VICKERS, WILLIAM W JR TR 423-305-04 POWERS, SHARON LEE 423-305-05 REYNEN. GREGGORY S AND REYNEN, DENISE M 423-305-08 THREE PEAT EQUITIES LLC 423-305-09 GUIRGUIS. EMIL 423-305-10 SPRADLING, PAUL G TR 423-305-11 FELTON, ROBERT G TR 423-305-12 MULTIFAMILY HOLDINGS M2 LLC 423-306-03 DEADY, KEVIN JAMES TR 423-306-04 HARVEY, BARBARA ANN TR B 423-306-07 ESCHER, WERNER TR 423-306-09 FUN 4 FIVE INVESTORS LLC 423-306-10 MCCUTCHAN, THOMAS OLIVER JR 423-306-11 HARRIS, TIMOTHY R 423-306-13 ZOTOVICH DEVELOPMENT CO INC 423-306-14 ZOTOVICH DEVELOPMENT CO INC 423-307-01 DANNELLEY, DONNA TR 423-307-02 CLOYD. KEVIN & SHELLY 423-307-03 BARRAZA-GOODRIDGE, 423-307-04 STANLEY, ANN M TR 423-307-05 SAMAAN, WASSEM A TR 423-307-08 DELANEY, NEIL 423-307-09 SCHOONOVER, ROC TR 423-307-10 RICHARDSON, JANDYRA R TR 423-307-11 KUHLMANN, KENNETH G AND KUHLMANN, DARLEEN J 423-308-01 KOLLER, GARY R 423-308-02 VANDER HULST. JOHN C AND VICTORIA M 423-308-03 GAQ*1101.110 a0-GA-WC-AVI. ANNE 423-308-04 BECK, LLEWELLYN TR 423-308-05 O'MALLEY, MICHAEL K 423-308-06 GREEN, ANDREW L AND LISA 423-308-09 GURMIN, NICHOLA C TR 423-308-10 RICHARDSON, SCOTT C 423-308-12 BEISTLE, ROGER W TR 423-308-13 HEIDE, WILLIAM J AND LINDA T 423-308-14 KLEPPE, ROBERT M TR 933-940-10 PADGETT, ANGELA J 933-940-11 SCHARFE, RAYMOND AND SCHARFE, DEBORAH 933-941-09 MORALES, EDMUND AND CONSUELO M 933-941-10 GOLUB, STUART S TR 933-941-30 LEWIS, BRIAN M TR 933-941-31 LEWIS, BRIAN M TR 939-840-08 WEIR, AUSTIN P 939-840-09 MIDDLETON, ANDREW R AND TERRA 939-840-15 TORRES, ANDREW JOHN Page A-2 Exhibit "A" Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Property Owner list no OWNER NAME 939-840-16 ROBIN, DELAINE S TR ROBIN 939-840-30 REYNOLDS, MARK E TR 939-840-35 ROBINSON, STEVEN J 939-840-36 HEMPHILL, JASON M Page A-3 Batch 4576235 Confirmation RECORDING REQUESTED AND AFTER RECORDATION RETURN TO: City Clerk City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder II I I II II I II II I IIII III I II II III NO FEE *$ R 0 0 1 0 8 3 4 9 0 6$ 201900016303512:19 pm 05/15119 90 SC5 N06 3 0.00 0.00 0.00 0.00 6.00 0.00 0.000.000.00 0.00 Exempt from Recordation Fees Govt Code section 27383 AMENDED NOTICE OF ASSESSMENT CITY OF NEWPORT BEACH Assessment District No. 116 (Channel east of River Avenue 138th St I Balboa Boulevard and 44th Street) This Amended Notice of Assessment amends "Exhibit A" of the original Notice of Assessment recorded on May 11, 2016 at 1;37 p.m. as Instrument Number 2016000210856 in the Office of the County Recorder of the County of Orange, State of Califomia. The Names of the assessed owners as they appear on the latest secured assessment roll are set forth in the "Corrected Exhibit A" hereto attached and by reference incorporated herein. During the cash collection, certain parcels and property owners paid their respective assessments in full; those parcels and property owners have been removed from the Corrected Exhibit A and their liens are hereby released. All other details and notices specified in the original Notice of Assessment are unchanged and are by reference included herein. Dated: _MAI 15 2019 -d' V S City Clerk, City of Newport Beach ncnclllnin RECORDING REQUESTED AND AFTER RECORDATION RETURN TO: City Clerk City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Exempt from Recordation Fees Govt Code section 27383 AMENDED NOTICE OF ASSESSMENT CITY OF NEWPORT BEACH Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) This Amended Notice of Assessment amends "Exhibit A" of the original Notice of Assessment recorded on May 11, 2016 at 1:37 p.m. as Instrument Number 2016000210856 in the Office of the County Recorder of the County of Orange, State of California. The Names of the assessed owners as they appear on the latest secured assessment roll are set forth in the "Corrected Exhibit A" hereto attached and by reference incorporated herein. During the cash collection, certain parcels and property owners paid their respective assessments in full; those parcels and property owners have been removed from the Corrected Exhibit A and their liens are hereby released. All other details and notices specified in the original Notice of Assessment are unchanged and are by reference included herein. Dated: 2019 0i, roovll_ City Clerk, City of Newport Beach Corrected Exhibit "A" Assessment District No. 116 (Channel east of River Avenue 138th St I Balboa Boulevard and 44th Street) Property Owner list APN OWNER NAME 939-840-35 ROGERS, GARRETT R & CHANELLE M 939-840-36 HEMPHILL, JASON 423-295-03 STEWART, DON M TR D M & F 423-295-01 DUONG VAN 423-292-01 THORSON SHARON LYNN TR JESSEN FAMIL 423-295-12 TUCCI, DOMINIC 423-295-10 GIBSON, DOUGLAS JOHN TR 423-295-09 CHELSTOWSKI, JOSEPH 423-295-08 NAFFA, MONA TR 939-840-15 TORRES, ANDREW 939-840-16 HERBERT, JERRY W 939-840-08 WEIR, AUSTIN P 939-840-09 MIDDLETON, ANDREW & TERRA 423-296-03 VANDERHAM, DENNIS TR 423-296-02 STURDIVANT, CATHY AND MOHERMAN, AUS 423-293-01 SULLIVAN, ROBERT L 423-293-02 GEMINIS PROPERTY DEVELOPMENT 423-293-03 BENSON, NUEL 423-293-04 POLLEY, RICHARD 423-293-05 NELSON, KIRK C 423-296-14 TRONCALE, KATHLEEN 423-296-10 AXELSON CHAD & SHEILA 423-296-09 FRUMIN, HOWARD TR 423-305-05 REYNEN, GREGGORY S & DENISE M 423-305-04 BALBOA R & E INVS LLC 423-305-03 VICKERS, WILLIAM W JR 423-305-02 ASCHA, DEBRA & OSSAMA 423-305-01 GERIAK, ANDREW & AMY 423-301-04 _ GOODGAME, GARY & SHARI 423-301-05 DUNBAR, STEVEN & JANELLE 423-301-06 VAUGHAN, PORTER D 423-305-12 MULTIFAMILY HOLDINGS M2 LLC 423-305-11 FELTON, DIANE K TR 423-305-10 SPRADLING, PAUL G 423-305-09 GUIRGUIS, EMIL 423-305-08 THREE PEAT EQUITIES LLC 423-306-04 HARVEY, BARBARA ANN TR B 423-306-03 DEADY, KEVIN JAMES TR 423-306-14 ZOTOVICH DEVELOPMENT CO INC 423-306-13 ZOTOVICH DEVELOPMENT CO INC 423-302-01 NELSON, KIRK C 423-302-02 OSTLUND VACATION PROP LLC 423-302-03 SALAZAR, MICHAEL B & ALEXIS E 423-302-04 MITHRUSH, YVONNE M 423-302-06 PRENDERGAST, VICKIE 423-306-11 HARRIS. TIMOTHY R Page A-1 Corrected Exhibit "A" Assessment District No. 116 (Channel east of River Avenue 138th St I Balboa Boulevard and 44th Street) Property Owner list APN OWNER NAME 423-306-10 MCCUTCHAN, THOMAS OLIVER JR 423-306-09 FUN 4 FIVE INVESTORS LLC 423-306-07 ESCHER, WERNER 423-307-05 SAMAAN WASSEM A TR 423-307-03 RYAN, ROBERTA BARRAZA TR 423-307-02 CLOYD, KEVIN & SHELLY 423-307-01 DANNELLEY, DONNA O 423-303-01 SHEINBERG REBECCA 423-303-02 CHAVEZ, ELEANOR 423-303-03 LAMB, AUDREY 423-303-04 ROSEN, RICHARD L TR R L 423-303-05 BRIGHTVIEW DEVELOPMENT 423-303-06 RYAN, GENEVA 423-303-07 TARANTELLO, ROCKY TR 423-307-11 KUHLMANN, KEN / DARLEEN 423-307-10 APPLEBAUM, GEORGE ROBERT 423-307-09 SCHOONOVER, ROC TR 423-307-08 DELANEY, NEIL 933-940-10 PADGETT, ANGELA J 933-940-11 SCHARFE, RAYMOND & DEBORAH 423-308-06 GREEN, ANDREW L & LISA 423-308-05 GOUDCHAUX, LOUISE 423-308-04 BECK, LLEWELLYN 423-308-03 GARKANI, MO & ANNIE 423-308-01 BARRETT, JEFF 423-304-02 DENNIS SEIN 423-304-03 TEITSCHEID, DANIEL A TR 423-304-04 COOLEY, RICHARD L 423-304-05 SHAPIRO, PAUL S 423-304-06 FULLER, GARY W 423-308-14 KLEPPE, ROBERT M 423-308-13 HEIDE, WILLIAM & LINDA 423-308-12 BEISTLE, ROGER W 933-941-09 SOUTH COUNTY ESTATES INC 933-941-10 GOLUB, STUART 423-308-10 RICHARDSON, SCOTT C 423-308-09 GURMIN, NICHOLA C Page A-2 Final Engineer's Report for Underground Utility Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Prepared under the provisions of the Municipal Improvement Act of 1913 For the City of Newport Beach County of Orange, California December 22, 2015 City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report 4 i Page Introduction and Certifications............................................................................................ 1 PART I Plans and Specifications................................................................................... 4 PARTII Cost Estimate..................................................................................................... 5 PART III Assessment Roll and Method of Assessment Spread ..................................... 6 Table1 — Assessment Roll.................................................................................. 8 DebtLimit Valuation........................................................................................ 11 Exhibit 1 — Method and Formula of Assessment Spread..................................12 PART IV Annual Administrative Assessment...............................................................17 PART V Diagram of Assessment District..................................................................... 18 PART VI Description of Facilities.................................................................................. 20 Right -of -Way Certificate.................................................................................. 21 Certification of Completion of Environmental Proceedings ............................ 22 APPENDIX A. Assessment Calculations Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 1 AGENCY: CITY OF NEWPORT BEACH PROJECT: ASSESSMENT DISTRICT NO. 116 TO: CITY COUNCIL ENGINEER'S "REPORT" PURSUANT TO THE PROVISIONS OF SECTIONS 2961 AND 10204 OF THE STREETS AND HIGHWAYS CODE The purposes of this Assessment District is to provide financing to underground power, telephone and cable facilities in the area generally bounded by 44th Street, the channel east of River Avenue, 38th Street, and Balboa Boulevard. The proposed underground utility improvements will provide conversion to an upgraded utility system and will enhance neighborhood aesthetics, safety and reliability. The construction of these improvements will conform to existing City of Newport Beach, Southern California Edison, AT&T and Time Warner Cable standards. The proposed improvements are of special and direct benefit to the properties within the boundary of the proposed assessment district. Pursuant to the provisions of Article XIIID of the State Constitution, Part 7.5 of the "Special Assessment Investigation, Limitation and Majority Protest Act of 1931", being Division 4 of the Streets and Highways Code of the State of California, and the "Municipal Improvement Act of 1913", being Division 12 of said Code, and the Resolution of Intention, adopted by the City Council of the CITY OF NEWPORT BEACH, State of California, in connection with the proceedings for Underground Utility Assessment District No. 116 (hereinafter referred to as the "Assessment District"), I, Alison M. Bouley, P.E., a Registered Professional Engineer and authorized representative of Harris & Associates, the duly appointed Engineer of Work, herewith submits the "Report" for the Assessment District, consisting of six (6) parts as stated below. PART I This part contains the plans and specifications which describe the general nature, location and extent for the proposed improvements to be constructed, and are filed herewith and made a part hereof. Said plans and specifications are on file in the Office of the Superintendent of Streets. PART II This part contains an estimate of the cost of the proposed improvements, including capitalized interest, if any, incidental costs and expenses in connection therewith as set forth herein and attached hereto. PART III This part consists of the following information: A. A proposed assessment of the total amount of the costs and expenses of the proposed improvements upon the several subdivisions of land within the Assessment District, in proportion to the special benefits to be received by such subdivisions from said improvements, which is set forth upon the assessment roll filed herewith and made a part hereof. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 2 B. The total amount, as near as may be determined, of the total principal sum of all unpaid special assessments and special assessments required or proposed to be levied under any completed or pending assessment proceedings, other than that contemplated for the Assessment District, which would require an investigation and report under the "Special Assessment Investigation, Limitation and Majority Protest Act of 1931" against the total area proposed to be assessed. C. The total true value, determined from the latest Assessor's roll, of the parcels of land and improvements which are proposed to be assessed. PART IV This part contains the proposed maximum annual administrative assessment to be levied upon each subdivision or parcel of land within the Assessment District to pay the costs incurred by the CITY OF NEWPORT BEACH, and not otherwise reimbursed, resulting from the administration and collection of assessments, from the administration and registration of any associated bonds and reserve or other related funds, or both. PART V This part contains a map showing the boundaries of the Assessment District, and a diagram showing the Assessment District, the boundaries and the dimensions of the subdivisions of land within said Assessment District, as the same existed at the time of the passage of the Resolution of Intention. The Boundary Map and Assessment Diagram are filed herewith and made a part hereof, and part of the assessment. This part shall consist of the following information: A. Description of facilities B. Right -of -Way Certificate C. Environmental Certificate This report is submitted on December 22, 2015. HARRIS & ASSOCIATES ALISON M. BOULEY; P.E. R.C.E. No. C61383 ENGINEER OF WORK CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No.116 (Channel east of River Ave 138th St f Balboa Blvd and 44th St) Final Engineer's Report Page 3 Preliminary approval by the CITY COUNCIL of the CITY OF NEWPORT BEACH, CALIFORNIA, on the 10 day of Nod _, 2015. PORT r e pk �y CITY CLERK r Z CITY OF NEWPORT BEACH v STATE OF CALIFORNIA Cgtl FOV' Final approval by the CITY COUNCIL of the CITY OF NEWPORT BEACH, CALIFORNIA, on the —1 day of jt� , 2016. ,iI �+ §A% CITY CLERK CITY OF NEWPORT BEACH STATE OF CALIFORNIA L91-1 FO�i 81 Hams & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 4 Part I Plans and Specifications The plans and specifications to construct the utility undergrounding improvements, and any ancillary improvements thereof, for the area generally described as Underground Utility Assessment District No. 116, (Channel east of River Ave / 38th St / Balboa Blvd and 44th St), describe the general nature, location and extent of the improvements for this Assessment District are referenced herein and incorporated as if attached and a part of this Report. Said Plans and Specifications for the improvements are shown on the assessment diagram. Final plans and specifications will be prepared by the City in conjunction with the utility companies and will be on file in the office of the Superintendent of Streets when completed. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 5 Part II Cost Estimate CALCULATION Final Estimate Length in ft. Cost per ft. Utility Engineering & Construction Southern California Edison 2,830 $300 $850,000.00 AT&T 2,830 $147 $416,000.00 Time Warner 2,830 $55 $155,000.00 $1,421,000.00 Contingecy 10% $142,100.00 TOTAL CONSTRUCTION $1,563,100.00 11010111011011 F -Al 0 :V14 WA kq MM Assessment Engineering $50,000.00 Contract Inspection $30,000.00 City Administration $30,000.00 Financial Advisor $20,000.00 Bond and Disclosure Counsel $55,000.00 Underwriter's Counsel $15,000.00 Paying Agent $2,500.00 Credit Rating Fee $15,000.00 Printing, Advertising, Notices $2,500.00 Miscellaneous $2,900.00 Subtotal Incidential Expenses $222,900.00 Construction $1,563,100.00 Subtotal Incidental & Construction $1,786,000.00 FINANCIAL COSTS Underwriter's Discount 1.0% $19,000.00 Bond Reserve 5.0% $96,000.00 Capitalized Interest - 5% for 3 months 1.3% $24,000.00 Subtotal & Financial Costs 7.3% $139,000.00 TOTAL ESTIMATE $1,925,000.00 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 6 Part III Assessment Roll and Method of Assessment Spread WHEREAS, on November 10, 2015 the City Council of the CITY OF NEWPORT BEACH, State of California, did, pursuant to the provisions of the 1913 Act "Municipal Improvement Act of 1913", being Division 12 of the Streets and Highways Code, of the State of California, adopt its Resolution of Intention No. 2015-97, for the installation and construction of certain public improvements, together with appurtenances and appurtenant work in connection therewith, in a special assessment district known and designated as ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"); and WHEREAS, said Resolution of Intention, as required by law, did direct the Engineer of Work to make and file a "Report", consisting of the following as required by Section 10204 of the Act: a. Plans and Specifications; b. A general description of works or appliances already installed and any other property necessary or convenient for the operation of the improvement, if the works, appliances, or property are to be acquired as part of the improvement; c. Cost Estimates; d. Assessment Diagram showing the Assessment District and the subdivisions of land therein; e. A proposed assessment of the costs and expenses of the works of improvement levied upon the parcels within the boundaries of the Assessment District; f. The proposed maximum annual assessment to be levied upon each subdivision or parcel of land within the Assessment District to pay the costs incurred by the City and not otherwise reimbursed resulting from the administration and collection of assessments or from the administration and registration of any associated bonds and reserve or other related funds. For particulars, reference is made to the Resolution of Intention as previously adopted. NOW, THEREFORE, I, Alison M. Bouley, P.E., the authorized representative of HARRIS & ASSOCIATES, pursuant to Article XIIID of the California Constitution and the "Municipal Improvement Act of 1913", do hereby submit the following: Pursuant to the provisions of law and the Resolution of Intention, I have assessed the costs and expenses of the works of improvement to be performed in the Assessment District upon the parcels of land in the Assessment District specially benefited thereby in direct proportion and relation to the special benefits to be received by each of said parcels. For particulars as to the identification of said parcels, reference is made to the Assessment Diagram, a copy of which is attached hereto and incorporated herein. 2. As required by law, a Diagram is hereto attached, showing the Assessment District, as well as the boundaries and dimensions of the respective parcels and subdivisions of land within said District as the same existed at the time of the passage of said Resolution of Intention, each of which subdivisions of land or parcels or lots respectively have been given a separate number upon said Diagram and in said Assessment Roll. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 7 The subdivisions and parcels of land the numbers therein as shown on the respective Assessment Diagram as attached hereto correspond with the numbers as appearing on the Assessment Roll as contained herein. 4. NOTICE IS HEREBY GIVEN that bonds will be issued in accordance with Division 10 of the Streets and Highways Code of the State of California (the "Improvement Bond Act of 1915"), to represent all unpaid assessments, which bonds shall be issued in one or more series, each with a term not to exceed the legal maximum term as authorized by law, THIRTY-NINE (39) YEARS from the 2nd day of September next succeeding twelve (12) months from their date. Said bonds shall bear interest at a rate not to exceed the current legal maximum rate of 12% per annum. 5. By virtue of the authority contained in said "Municipal Improvement Act of 1913", and by further direction and order of the legislative body, I hereby recommend the following Assessment to cover the costs and expenses of the works of improvement for the Assessment District based on the costs and expenses as set forth below: For particulars as to the individual assessments and their descriptions, reference is made to Table 1 (Assessment Roll) attached hereto. The Method of Spread of Assessment is as set forth in the exhibit identified as Part III (Exhibit 1), which is attached hereto, referenced and so incorporated. Harris & Associates As Preliminarily Approved As Confirmed Estimated Cost of Design and Construction: $1,563,100 $1,563,100 Estimated Incidental Expenses: $222,900 $222,900 Estimated Financial Costs: $139,000 $139,000 Estimated Contribution: $0 $0 Estimated Total to Assessment: $1,925,000 $1,925,000 For particulars as to the individual assessments and their descriptions, reference is made to Table 1 (Assessment Roll) attached hereto. The Method of Spread of Assessment is as set forth in the exhibit identified as Part III (Exhibit 1), which is attached hereto, referenced and so incorporated. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 8 Table 1 Assessment Roll Assessor's Total Assessments as Assessments Value Asmt Parcel True Existing Preliminarily as Confirmed to Lien No. Number Value Liens Approved and Recorded Ratio 1 42329505 $1,705,600 $0 $21,646.71 $ 21,646.71 79 2 93984035 $1,075,841 $0 $10,114.84 $ 10,114.84 106 3 93984036 $599,396 $0 $10,114.84 $ 10,114.84 59 4 42329503 $52,509 $0 $20,163.27 $ 20,163.27 3 5 42329502 $132,495 $0 $18,536.85 $ 18,536.85 7 6 42329501 $304,903 $0 $20,027.95 $ 20,027.95 15 7 42329201 $208,875 $0 $22,537.79 $ 22,537.79 9 8 42329512 $966,141 $0 $19,854.34 $ 19,854.34 49 9 93984029 $1,065,000 $0 $9,925.90 $ 9,925.90 107 10 93984030 $1,050,000 $0 $9,925.90 $ 9,925.90 106 11 42329510 $450,026 $0 $19,851.77 $ 19,851.77 23 12 42329509 $553,132 $0 $21,079.89 $ 21,079.89 26 13 42329508 $519,158 $0 $19,861.99 $ 19,861.99 26 14 93984015 $474,371 $0 $9,941.21 $ 9,941.21 48 15 93984016 $429,113 $0 $9,941.21 $ 9,941.21 43 16 93984008 $485,648 $0 $9,928.45 $ 9,928.45 49 17 93984009 $527,776 $0 $9,928.45 $ 9,928.45 53 18 42329603 $764,985 $0 $19,851.77 $ 19,851.77 39 19 42329602 $1,611,568 $0 $19,851.77 $ 19,851.77 81 20 42329601 $1,097,357 $0 $19,854.34 $ 19,854.34 55 21 42329301 $950,372 $0 $21,312.23 $ 21,312.23 45 22 42329302 $2,200,000 $0 $21,312.23 $ 21,312.23 103 23 42329303 $835,778 $0 $21,312.23 $ 21,312.23 39 24 42329304 $214,297 $0 $25,142.10 $ 25,142.10 9 25 42329305 $1,622,174 $0 $25,142.10 $ 25,142.10 65 26 42329614 $899,653 $0 $19,854.33 $ 19,854.33 45 27 42329615 $1,181,431 $0 $19,851.76 $ 19,851.76 60 28 42329610 $392,922 $0 $19,851.76 $ 19,851.76 20 29 42329609 $846,470 $0 $19,851.76 $ 19,851.76 43 30 42329608 $247,015 $0 $19,851.76 $ 19,851.76 12 31 42330505 $753,176 $0 $19,851.76 $ 19,851.76 38 32 42330504 $1,115,000 $0 $19,851.76 $ 19,851.76 56 33 42330503 $976,119 $0 $19,851.76 $ 19,851.76 49 34 42330502 $498,149 $0 $19,851.76 $ 19,851.76 25 35 42330501 $389,259 $0 $19,854.33 $ 19,854.33 20 36 93394072 $997,500 $0 $10,656.10 $ 10,656.10 94 37 93394073 $640,557 $0 $10,656.10 $ 10,656.10 60 38 42330102 $635,207 $0 $21,312.22 $ 21,312.22 30 39 42330103 $126,777 $0 $21,312.22 $ 21,312.22 6 40 42330104 $636,403 $0 $21,312.22 $ 21,312.22 30 41 42330105 $2,700,692 $0 $21,312.22 $ 21,312.22 127 42 42330106 $342,850 $0 $21,312.22 $ 21,312.22 16 43 42330512 $1,290,087 $0 $19,854.33 $ 19,854.33 65 44 42330511 $192,661 $0 $19,851.76 $ 19,851.76 10 45 42330510 $122,018 $0 $19,851.76 $ 19,851.76 6 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Enqineer's Report Page 9 Asmt No. Assessor's Parcel Number Total True Value Existing Liens Assessments as Preliminarily Approved Assessments as Confirmed and Recorded Value to Lien Ratio 46 42330509 $1,357,695 $0 $19,851.76 $19,851.76 68 47 42330508 $720,904 $0 $21,337.76 $21,337.76 34 48 42330604 $79,874 $0 $19,851.76 $19,851.76 4 49 42330603 $725,923 $0 $19,851.76 $19,851.76 37 50 42330614 $2,282,697 $0 $19,851.76 $19,851.76 115 51 42330613 $2,270,617 $0 $19,851.76 $19,851.76 114 52 93394130 $566,158 $0 $9,899.08 $9,899.08 57 53 93394131 $582,472 $0 $9,899.08 $9,899.08 59 54 42330201 $807,117 $0 $21,312.22 $21,312.22 38 55 42330202 $895,191 $0 $21,312.22 $21,312.22 42 56 42330203 $127,742 $0 $21,312.22 $21,312.22 6 57 42330204 $886,223 $0 $21,312.22 $21,312.22 42 58 42330205 $692,944 $0 $21,312.22 $21,312.22 33 59 42330206 $841,471 $0 $21,312.22 $21,312.22 39 60 42330611 $1,407,572 $0 $19,851.76 $19,851.76 71 61 42330610 $1,408,839 $0 $19,851.76 $19,851.76 71 62 42330609 $1,008,523 $0 $19,851.76 $19,851.76 51 63 93394017 $120,013 $0 $9,925.89 $9,925.89 12 64 93394018 $158,990 $0 $9,925.89 $9,925.89 16 65 42330607 $96,400 $0 $19,851.76 $19,851.76 5 66 42330705 $559,533 $0 $20,459.43 $20,459.43 27 67 42330704 $81,079 $0 $20,581.99 $20,581.99 4 68 42330703 $86,137 $0 $20,581.99 $20,581.99 4 69 42330702 $1,342,437 $0 $20,581.99 $20,581.99 65 70 42330701 $423,577 $0 $20,584.54 $20,584.54 21 71 42330301 $503,045 $0 $20,947.10 $20,947.10 24 72 42330302 $153,777 $0 $20,947.10 $20,947.10 7 73 42330303 $139,359 $0 $20,947.10 $20,947.10 7 74 42330304 $2,150,000 $0 $20,947.10 $20,947.10 103 75 42330305 $128,426 $0 $20,947.10 $20,947.10 6 76 42330306 $301,410 $0 $20,947.10 $20,947.10 14 77 42330307 $184,967 $0 $20,949.67 $20,949.67 9 78 42330711 $157,967 $0 $20,581.99 $20,581.99 8 79 42330710 $205,557 $0 $20,581.99 $20,581.99 10 80 42330709 $684,218 $0 $20,581.99 $20,581.99 33 81 42330708 $1,020,328 $0 $20,581.99 $20,581.99 50 82 93394010 $436,358 $0 $9,688.43 $9,688.43 45 83 93394011 $459,714 $0 $9,688.43 $9,688.43 47 84 42330806 $902,265 $0 $18,248.32 $18,248.32 49 85 42330805 $1,541,008 $0 $21,184.56 $21,184.56 73 86 42330804 $181,801 $0 $19,716.44 $19,716.44 9 87 42330803 $1,325,974 $0 $19,716.44 $19,716.44 67 88 42330802 $398,085 $0 $19,716.44 $19,716.44 20 89 42330801 $903,814 $0 $19,716.44 $19,716.44 46 90 42330401 $1,818,478 $0 $20,947.10 $20,947.10 87 91 42330402 $922,752 $0 $20,947.10 $20,947.10 44 92 42330403 $783,933 $0 $20,947.10 $20,947.10 37 93 42330404 $1,527,043 $0 $20,947.10 $20,947.10 73 94 42330405 $302,345 $0 $20,947.10 $20,947.10 14 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 10 Assessor's Total $790,927 Assessments as Assessments Value Asmt Parcel True Existing Preliminarily as Confirmed to Lien No. Number Value Liens Approved and Recorded Ratio 95 42330406 $392,681 $0 $20,947.10 $20,947.10 19 96 42330407 $790,927 $0 $20,949.67 $20,949.67 38 97 42330814 $589,797 $0 $19,716.44 $19,716.44 30 98 42330813 $292,316 $0 $19,716.44 $19,716.44 15 99 42330812 $240,188 $0 $19,716.44 $19,716.44 12 100 93394109 $943,000 $0 $9,859.49 $9,859.49 96 101 93394110 $751,533 $0 $9,859.49 $9,859.49 76 102 42330810 $270,242 $0 $19,716.44 $19,716.44 14 103 42330809 $71,723 $0 $19,716.44 $19,716.44 4 Total $75,885,620 $1,925,000.00 $1,925,000.00 39 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 11 Table 2 Debt Limit Valuation A. ESTIMATED BALANCE TO ASSESSMENT $1,925,000 B. UNPAID SPECIAL ASSESSMENTS $0 TOTAL A & B $1,925,000 C. TRUE VALUE OF PARCELS $75,885,620 ** AVERAGE VALUE TO LIEN RATIO 39:1 Unpaid Special Assessments shall consist of the total principal sum of all unpaid special assessments previously levied or proposed to be levied other than in the instant proceedings. ** True Value of Parcels means the total value of the land and improvements as estimated and shown on the last equalized roll of the County or as otherwise reasonably calculated. This report does not represent a recommendation of parcel value, economic viability or financial feasibility, as that is not the responsibility of the Assessment Engineer. CERTIFICATION I, the undersigned Assessment Engineer, do hereby certify that (i) the total amount of the principal sum of the special assessments proposed to be levied, together with the principal amount of previously levied special assessments, as set forth above, do not exceed one-half (1/2) the total true value of the parcels proposed to be assessed, and (ii) the amount proposed to be assessed upon any parcel does not exceed one-half of the true value of the parcel. EXECUTED on December 22, 2015. HARRIS & ASSOCIATES f 1 ALISON M. BOULEY, P.E. R.C.E. NO. C61383 ASSESSMENT ENGINEER CITY OF NEWPORT BEACH COUNTY OF ORANGE, STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 12 Exhibit 1 Method and Formula of Assessment Spread Since the improvements are to be funded by the levying of assessments, the "Municipal Improvement Act of 1913" and Article XIIID of the State Constitution require that assessments must be based on the special benefit that the properties receive from the works of improvement. In addition, Section 4 of Article XIIID of the State Constitution requires that a parcel's assessment may not exceed the reasonable cost of the proportional special benefit conferred on that parcel. Section 4 provides that only special benefits are assessable and the local agency levying the assessment must separate the general benefits from the special benefits. It also provides that parcels within a district that are owned or used by any public agency, the State of California, or the United States shall not be exempt from assessment unless the agency can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. Neither the Act nor the State Constitution specifies the method or formula that should be used to apportion the costs to properties in any special assessment district proceedings. The responsibility for recommending an apportionment of the costs to properties which specially benefit ftom the improvements rests with the Assessment Engineer, who is appointed for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. In order to apportion the assessments to each parcel in direct proportion with the special benefit which it will receive from the improvements, an analysis has been completed and is used as the basis for apportioning costs to each property within the Assessment District. Based upon an analysis of the special benefit to be received by each parcel from the construction of the works of improvement, the Assessment Engineer recommends the apportionment of costs as outlined below. The final authority and action rests with the City Council after hearing all testimony and evidence presented at a public hearing, and tabulating the assessment ballots previously mailed to all record owners of property within the Assessment District. Upon the conclusion of the public hearing, the City Council must make the final determination whether or not the assessment spread has been made in direct proportion to the special benefits received by each parcel within the Assessment District. Ballot tabulation will be done at that time and, if a majority of the returned ballots weighted by assessment amount are not in opposition to the Assessment District, the City Council may form the Assessment District. The following sections set forth the methodology used to apportion the costs of the improvements to each parcel. SPECIAL BENEFITS In further making the analysis, it is necessary that the properties receive a special benefit distinguished from general benefits conferred on real property located in the District or to the public at large. The purpose of this Assessment District is to provide the financing to underground existing overhead electrical, telephone and cable facilities as well as rehabilitate- the affected portions of streets and alleys within the District. These facilities are the direct source of service to the properties within the Assessment District. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 13 The proposed replacement of existing overhead utility facilities (power, telephone and cable facilities) with underground facilities and removal of the existing utility poles and the overhead wires will provide a special benefit to the parcels connected to and adjacent to, or in near proximity of, the facilities as follows: Improved Aesthetics Benefit. This benefit relates to the improved aesthetics of the streetscape due to the removal of overhead wires and utility poles. For the purposes of this report, a street is deigned as either a street or alley. The removal of guy wires and other support structures related to the overhead facilities are included in the definition of improved aesthetics. Properties that are directly adjacent to overhead facilities receive an aesthetic benefit. This benefit is based on the area of the parcel. Additional Safety Benefit. This benefit relates to the additional safety of having the overhead distribution wires placed underground and having the power poles removed, which eliminates the threat of downed utility lines and poles due to wind, rain and other unforeseeable events. Falling facilities can lead to personal injuries and damage to structures, including fire. Properties immediately adjacent to the facilities usually have a greater risk. Furthermore, in compact communities like the Balboa Peninsula, the negative effects of falling lines and poles are more widespread including blocked roadways and alleys, and property damage due to impact. Properties that are adjacent to, or in proximity of, overhead facilities receive a safety benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the Assessment District boundary. Connection Benefit. This benefit relates to the enhanced reliability of service from the utilities being underground, due to having all new wires and equipment and having that equipment underground, which reduces the threat of service interruption from downed lines. When compared to overhead systems, fewer outages occur due to various acts of nature, traffic collisions and obstructions (such as trees). Properties that are connected to, or have the ability to connect to, the facilities proposed to be undergrounded receive a connection benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the assessment district boundary. By virtue of such special benefits, the proposed improvements will provide a higher level of service, increase the desirability of the properties and will specifically enhance the values of the properties within the Assessment District. In addition, properties will receive easier access to garage parking within the residential alleyways. Therefore, the proposed improvements are of direct and special benefit to these properties. GENERAL BENEFITS Section 4 of Article XIIID requires that the general benefits imparted by the utility undergrounding project be separated from the special benefits and that only the special benefit portion of the costs of the project be assessed against those parcels which are identified as receiving special benefits. Separating the general from the special benefits requires an examination of the facts and circumstances of the project and the property being assessed. In this particular assessment district, the streets and alleys along which the existing overhead utility facilities are being undergrounded function as local and collector streets. No other roadways are designated as an arterial, a major arterial or a scenic corridor in the Transportation Element of the City's General Plan. Furthermore, the City has an established network of arterial streets which Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 14 appear to function as intended to provide for the movement of traffic around and through the community at large without the need to utilize local collector streets for such purposes. Under these circumstances, any use of the streets within the Assessment District as "through" streets is incidental. The properties situated within the Assessment District are used almost exclusively as residential. Under this circumstance, the impacts, both visual and safety, are largely isolated to those properties (and the persons who inhabit them) which front on these local streets and alleys, with only incidental impacts on those who visit homes within the Assessment District or who pass through the Assessment District on trips originating outside the boundary and having a destination outside the boundary. Based on these facts and circumstances, any general benefits to the property within the Assessment District, to the surrounding community and to the public at large from the project of undergrounding these local overhead utility facilities on the local streets and alleys, such as to the general public visiting in cars, on bikes or on foot, are incidental and do not exceed five percent (5%) of the estimated project costs. This general benefit portion of the cost is more than offset by the estimated 20 percent (20%) utility company contribution. Therefore, the remainder of the project design and construction costs represents the local and special benefits to the parcels within the Assessment District. Because only the net amount of $1,925,000 is apportioned to the parcels within the District, no parcel is assessed more than its proportional share of the special benefits from the improvements. METHODOLOGY Based upon the findings described above, the special benefit received by the properties within the boundaries of the Assessment District is the conversion from an overhead to an underground utility system resulting in additional safety, enhanced reliability, and improved aesthetics to the adjacent properties. Based on these conditions, it is our conclusion that the improvements specially benefit all assessed properties in the Assessment District. To establish the benefit to the individual parcels within the Assessment District, the highest and best use of each property is considered. For example, a vacant property is considered developed to its highest potential and connected to the system. The more a property is developed, the more it benefits from the proposed improvements. Most of properties within this Assessment District are zoned residential and some have one or two dwelling units on them. There is a direct correlation between the size of a property and the extent to which a property may develop. Because parcel size is one of the main limiting factors for what can be built on a property, or the extent the property is developed, the size of each parcel is used as the base unit for measuring benefit. Consideration was given to reducing the amount of area assigned to parcels based upon the building setbacks applicable to each parcel. Due to the combined factors of (a) significant variations in the setback requirements, including front, side and rear setbacks, (b) availability of future variances from currently applicable setback requirements as well as existing variances already in place, and (c) significant variations in the ratios between building size and lot size, it was concluded that adjustments to parcel areas on account of setback requirements would not improve upon the assessment methodology. Accordingly, no reductions have been made to parcel area based upon applicable setback requirements or the existence of easements within those setbacks. HI Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 15 The area of a condominium is calculated by taking the area of the base parcel and dividing by the number of condominiums. The special benefits from the undergrounding of overhead utilities are categorized into the three (3) distinct benefits identified above. All parcels within the District, except for any exceptions identified below, receive 3 of the 3 benefits. For the Improved Aesthetics Benefit the parcel area is multiplied by 1 to calculate the "Aesthetics Benefit Area". For the "Additional Safety Benefit", each parcel is considered to receive 1 unit of benefit. For condominiums, each unit is assigned a 0.5 safety benefit unit. The average parcel size, 2,674 square feet, is multiplied by the safety benefit factor to calculate the "Safety Benefit Area". For the Connection Benefit, each lot is assigned 1 benefit unit. For condominiums, each unit is assigned a 0.5 connection benefit. The average parcel area, 2,674 square feet, within the district is multiplied by the benefit unit for each parcel to determine "Connection Benefit Area". The Assessed Benefit Area per parcel is equal to the Aesthetics Benefit Area plus the Safety Benefit Area plus the Connection Benefit Area, divided by 3. See Appendix A for the assessment calculations for each parcel within the District. Exceptions There are no exceptions to the above methodology. ASSESSMENT APPORTIONMENT Each parcel will be apportioned its fair share of the construction costs based on the Assessed Benefit Area calculated for each property. Incidental Expenses and Financial Costs have been assessed to the entire Assessment District on a prorata basis relative to the total construction cost allocations. The individual assessment calculations are provided in Appendix A. For particulars to the Assessment Roll, reference is made to Table 1 in Part III of this report. In conclusion, it is my opinion that the assessments for the referenced Assessment District have been spread in direct accordance with the special benefits that each parcel receives from the works of improvement. DATED: December 22, 2015 HARRIS & ASSOCIATES �pFESS1Qyy Q M. '9C 60 ��� ALISON M. BOULEY, Pt. .c, R.C.E. No. C61383 NO. C61383 ' ASSESSMENT ENGINEER CITY OF NEWPORT BEACH A Ctvt1. �COUNTY OF ORANGE, CA1-�F� STATE OF CALIFORNIA 0 1 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 16 I, WL4% I- 5QO� as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was filed in my office on the Z U day of .3 R ra , 201 V � SEW PORT O ' ITY LERK U CITY OF NEWPORT BEACH STATE OF CALIFORNIA cgCl FORN�P I, Lkw( I. L4 0 as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was preliminarily approved by the City Council of the CITY OF NEWPORT BEACH, CALIFORNIA, on thel�_ day of N Oy , 20 1 S� �EvvPO CITY LERK m CITY OF NEWPORT BEACH U n STATE OF CALIFORNIA �� fiORN� as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was approved and confinned by the City Council of said City on the 1 L day of Jp, 20 V PODOMRE c CITY CLERK } n CITY OF NEWPORT BEACH H , tV STATE OF CALIFORNIA L'y1-/ FOR I, , as SUPERINTENDENT OF STREETS of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Asspssment, together with the Diagram attachcd thercto, was rccordcd in my officc on the day of , 20 SUPERI ENDENT OF STREETS CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 17 Part IV Annual Administrative Assessment A proposed maximum annual administrative assessment shall be levied on each parcel of land and subdivision of land within the Assessment District to pay for necessary costs and expenses incurred by the CITY OF NEWPORT BEACH, and not otherwise reimbursed, resulting from the administration and collection of assessments, from the administration or registration of any bonds and reserve or other related funds, or both. The maximum assessment is authorized pursuant to the provisions of Section 10204(f) of the Streets and Highways Code and shall not exceed fifty dollars ($50) per parcel per year, subject to an annual increase based on the Consumer Price Index (CPI), during the preceding year ending in January, for all Urban Consumers in the Los Angeles, Riverside, and Orange County areas. The exact amount of the administration charge will be established each year by the Superintendent of Streets. The annual administrative assessment will be collected in the same manner and in the same installments as the assessment levied to pay for the cost of the works of improvement. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St 1 Balboa Blvd and 44th St) Final Engineer's Report Page 18 Part V Diagram of Assessment A reduced copy of the Assessment Diagram is attached hereto. Full-sized copies of the Boundary Map and Assessment Diagram are on file in the Office of the City Clerk, of the City of Newport Beach. As required by the Act, the Assessment Diagram shows the exterior boundaries of the Assessment District and the assessment number assigned to each parcel of land corresponding to its number as it appears in the Assessment Roll contained in Part III Table 1. The Assessor's Parcel Number is also shown for each parcel as they existed at the time of the passage of the Resolution of Intention and reference is hereby made to the Assessor's Parcel Maps of the County of Orange for the boundaries and dimensions of each parcel of land. Harris & Associates ASSESSMENT DIAGRAM FOR ASSESSMENT DISTRICT NO. 116 (CHANNEL RD 144TH ST I BALBOA BLVD 138TH ST) CITY OF NEWPORT BEACH, COUNTY OF ORANG: STATE OF CALIFORNIA OItt OF NEWPCRTfIEhCH mluFsm BOOTTnKH— umalt(NTvTH— ENTA_NCMAM 011MEASSEMEOFFICEI—THER— ECOFRAD—I— oCTV OR%NQS OF OF LWORNIEROFTNE CDUN7YOF GTATEA& tfjGHNGuym ,mcoRUCK By: oepLny DaNPT REcoRDm PER a.cmal MOOROW IN THC OFF= Of TM GLIF-CRIMMOCHT OF WRWM MY OF NMPORT MACH. 11113 — MY cr— DI_. Assessor'sM CH)NiNELANASSESOMENT WAUEYEDar THE OFFICOUNC[LONTHE LOMPIEMANCIPARCE1.30 LANDANDMONTHIS '30t OF go Na In 4 PASKMA58OWN OWTHISASSIESPARRUCIA0� OP T R RNFIRAVE, C'" r LEIBt p C4 F.. . THE CFFICE OF THE CM CLEW OF THE CITY OF Z90 1943 NEWPORT BEACH INTO—DAY OF— 2q- 04 u row 0 a, m fom r.'om cm"m IAK3X a) 5i Ls" /I t; two iE II MID I t M LEGEND :t ft-, WU=T00CFQ340VClD AMSBON1 FMCCII. LINE AsecaffiENT DISTRICT BDOIMRY SAL130A BLVD POMTOBERVIlam ASM8301" PARCCL NA— ANZ1060"PAGESINTI-ION AmomAExr mmmIE,t Hafff; & Amclates. THE 01 TIAL -PZ'050 ASSE5514E'4t US-R]IT Ull,CUESTMIP 'HE ASSM,0W'S PAnO�i-S V7,11 T4E 5.41.OAR1SIlGffI CfI 71$5 VAR. IT7R PAR -ICU -ARS 7 LI-, AM 0,hiE!1SCt4S OF ASSCSSOP SPARC E.SP07DE-ICE IS KIKES- 7-, 7- E 11AP5 OF 711E OlAhG, C3JTATf AMSSOR. SPE09COU?. BOOK i; P,%G--_Q A._ s 29, M A 36, � -VELSMS S470. HERD1 ARE PER - E ASSESSOR'S PACEL HAPS. AF, 9111115 SNEET I—OF I 20 0 CL l< CD 0 CD CD 0-0 'L a ;:L cl) ;o CD CD 0 m O >0 cn =r U) CD cn cn ER CD 0 CD m cn 0 a! CD C, 00 U) 0 m CL 4C, CD 0 CD cn CD CD_ cil City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St I Balboa Blvd and 44th St) Final Engineer's Report Page 20 Part VI Description of Facilities Section 10100 of the Act provides for the legislative. body of any municipality to finance certain capital facilities and services within or along its streets or any public way or easement. The following is a list of proposed improvements as allowed under the Act to be installed, or improved under the provisions of the Act, including the acquisition of required right-of-way and/or property. For the general location of the improvements to be constructed referenced is hereby made to the Plans and Specifications described in Part I of this report. The following improvements are proposed to be constructed and installed in the general location referred to as Assessment District No. 116. 1. Acquisition of any required easements or rights-of-way. 2. Removal of existing utility poles. 3. Removal of overhead resident service drops. 4. Construction of mainline underground power, telephone and cable conduit, with appurtenant manholes and pullboxes, and installation of cabling, wiring and other facilities. 5. Construction of service conduit and appurtenances. The improvements will be designed by the Southern California Edison Company, AT&T and Time Warner- Cable. The utility companies will be responsible for inspecting the work for their facilities and the City of Newport Beach will inspect the work to ensure conformance to City standards and specifications where applicable. The City will also construct additional pavement rehabilitation as needed for the project. Once completed, the underground facilities will become the property and responsibility of Southern California Edison Company, AT&T, and Time Warner Cable. Each owner of property located within the Assessment District will be responsible for arranging for and paying for work on his or her property necessary to connect facilities constructed by the public utilities in the public streets and alleys to the points of connection on the private property. Conversion of individual service connections on private property is not included in the work done by the Assessment District. The estimated time for completion of the undergrounding of the utilities is 36 months after the sale of bonds. Property owners will be required to provide necessary underground connections within 120 days of the completion of the underground facilities. Failure to convert individual service connections on private property may result in a recommendation to the City Council that the public utilities be directed to discontinue service to that property pursuant to Section 15.32 of the Municipal Code. Overhead facilities cannot be removed until all overhead service has been discontinued. Harris & Associates City of Newport Beach Uecember 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 21 Right -of -Way Certificate STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned hereby CERTIFIES UNDER PENALTY OF PERJURY that the following is all true and correct. That at all time herein mentioned, the undersigned was, and now is, the authorized representative of the duly appointed SUPERINTENDENT OF STREETS of the CITY OF NEWPORT BEACH, CALIFORNIA. That there have now been instituted proceedings under the provisions of Article XIIID of the California Constitution, and the "Municipal Improvements Act of 1913," being Division 12 of the Streets and Highways Code of the State of C;alitbrnia, for the construction of certain public improvements in a special assessment district known and designated as ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"). THE UNDERSIGNED STATES AND CERTIFIES AS FOLLOWS: All easements or right-of-way necessary for the construction and installation of the public improvement-, of the Assessment District either have been obtained or are in process of being obtained and will be obtained and in the possession of the affected utility company, the City, the County of Orange or the State of California prior to commencement of the construction and installation of such publi�Qcy improvements. j EXECUTED this"! day of 2015, at CITY OF NEWPORT BEACH, CALIFORNIA. SUPERINTENDENT OF STREETS CITY OF NEWPORT BEACH STATE OF CALIFORNIA By: DAVID WEBB, PE Harris & Associates City of Newport BeaCh december 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 22 Certificate of Completion of Environmental Proceedings STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned, under penalty of perjury, CERTIFIES as follows: 1. That l am the person who authorized to prepare and process all environmental documentation as needed as it relates to the formation of the special Assessment District being fonned pursuant to the provisions of the "Municipal Improvement Act of 1913" being Division 12 of the Streets and Highways Code of the State of California, said special Assessment District known and designated as UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"). 2. The specific environmental proceedings relating to this Assessment District that have been completed are as follows: CEQA compliance review: The proposed project is Categorically Exempt (Class 2) fiom the provisions cf CEQA (replacement or reconstructions). 3. I do hereby certify that all environmental evaluation proceedings necessary for the formation of the Assessment District have been completed to my satisfaction, and that no fun-ther environmental proceedings are necessary. EXECUTED this day of � U V�i�'1 � , 2015, at CITY Or, NEWPORT DEACII, CALIFORNIA. By: DAVID WE -BB, P.E. CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) Final Engineer's Report Appendix A - Page 1 Appendix A - Assessment Calculations Property Address Asmt No. Assessor's Parcel Number Parcel Area (st Aesthetics Benefit Area Safety Benefit Area Connection Benefit Area Assessed Benefit Area Total Construction Costs Incidental Expenses Financial Costs Final Total Assessment 204 A&B 44TH ST 1 42329505 3,131 3,131 2,674 2,674 2,826 $17,577.13 $2,505.52 $1,563.06 $21,646.71 206 44TH ST 2 93984035 1,288 1,288 1,337 1,337 1,321 $8,213.25 $1,171.22 $730.37 $10,114.84 206 1/2 44TH ST 3 93984036 1,288 1,288 1,337 1,337 1,321 $8,213.25 $1,171.22 $730.37 $10,114.84 208 44TH ST 4 42329503 2,550 2,550 2,674 2,674 2,632 $16,372.58 $2,334.75 $1,455.94 $20,163.27 210 44TH ST 5 42329502 1,913 1,913 2,674 2,674 2,420 $15,051.93 $2,145.42 $1,338.50 $18,536.85 4313 CHANNEL RD G 42329501 2,497 2,497 2,674 2,674 2,615 $16,262.70 $2,319.08 $1,446.17 $20,027.95 303 43RD ST 7 42329201 3,480 3,480 2,674 2,674 2,942 $18,300.69 $2,609.70 $1,627.40 $22,537.79 213 43RD ST 8 42329512 2,429 2,429 2,674 2,674 2,592 $16,121.72 $2,293.98 $1,433.64 $19,854.34 211 A43RD ST 9 93984029 1,214 1,214 1,337 1,337 1,296 $8,059.83 $1,149.34 $716.73 $9,925.90 211 B 43RD ST 10 93984030 1,214 1,214 1,337 1,337 1,296 $8,059.83 $1,149.34 $716.73 $9,925.90 209 43RD ST 11 42329510 2,428 2,428 2,674 2,674 2,592 $16,119.64 $2,293.68 $1,433.45 $19,851.77 207 43RD ST 12 42329509 2,909 2,909 2,674 2,674 2,752 $17,116.87 $2,440.89 $1,522.13 $21,079.89 205 A&B 43RD ST 13 42329508 2,432 2,432 2,674 2,674 2,593 $16,127.93 $2,299.87 $1,434.19 $19,861.99 204 A 43RD ST 14 93984015 1,220 1,220 1,337 1,337 1,298 $8,072.26 $1,151.12 $717.83 $9,941.21 204 B 43RD ST 15 93984016 1,220 1,220 1,337 1,337 1,298 $8,072.26 $1,151.11 $717.84 $9,941.21 206 Urit 1 43RD ST 16 93984008 1,215 1,215 1,337 1,337 1,296 $8,061.89 $1,149.64 $716.92 $9,928.45 206 Urit 2 43RD ST 17 93984009 1,215 11215 1,337 1,337 1,296 $8,061.89 $1,149.64 $716.92 $9,928.45 208 43RD ST 18 42329603 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.46 $19,851.77 210 43RD ST 19 42329602 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.46 $19,851.77 212 &212 1/2 43RD ST 20 42329601 2,429 2,429 2,674 2,674 2,592 $16,121.71 $2,293.98 $1,433.65 $19,854.34 4210 &4210 112 RIVER AVE 21 42329301 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.92 $21,31223 4208 &4208 1/2 RIVER AVE 22 42329302 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.92 $21,312.23 4206 RIVER AVE 23 42329303 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.92 $21,312.23 4204 &4204 1/2 RIVER AVE 24 42329304 4,500 4,500 2,674 2,674 3,282 $20,415.38 $2,911.26 $1,815.46 $25,142.10 4200 RIVER AVE 25 42329305 4,500 4,500 2,674 2,674 3,282 $20,415.38 $2,911.26 $1,815.46 $25,142.10 213 &213 1/2 42ND ST 26 42329614 2,429 2,429 2,674 2,674 2,592 $16,121.71 $2,293.98 $1,433.64 211 &21111242ND ST 27 42329615 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 _$19,854.33 $19,851.76 209 A&B 42ND ST 28 42329610 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 $19,851.76 207 A&B 42ND ST 29 42329609 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.b8 $1,433.45 $19,851.76 205 42ND ST 30 42329608 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 $19,851.76 204 42ND ST 31 42330505 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 $19,851.76 206 42ND ST 32 42330504 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 $19,851.76 208 A&B 42ND ST 33 42330503 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 210 A&B 42ND ST 34 42330502 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 $19,851.76 212 &212 1/2 42ND ST 35 42330501 2,429 2,429 2,674 2,674 2,592 $16,121.71 $2,293.98 $1,433.64 $19,854.33 4110 RIVER AVE 36 93394072 1,500 1,500 1,337 1,337 1,391 $8,652.76 $1,233.89 $769.45 $10,656.10 4110 1/2 RIVER AVE 37 93394073 1,500 1,500 1,337 1,337 1,391 $8,652.76 $1,233.89 $769.45 $10,656.10 4108 RIVER AVE 38 42330102 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4106 RIVER AVE 39 42330103 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4104 RIVER AVE 40 42330104 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4102 RIVER AVE 41 42330105 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4100 RIVER AVE 42 42330106 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 213 A&B 41ST ST 43 42330512 2,429 2,429 2,674 2,674 2,592 $16,121.71 $2,293.98 $1,433.64 $19,854.33 211 A&D 41ST ST 44 42330511 2,420 2,426 2,G74 2,674 2,592 $16,119.03 $2,293.00 $1,433.45 $19,051.7G 209 A&B 41ST ST 45 42330510 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,293.68 $1,433.45 $19,851.76 MI Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) Final Engineer's Report Appendix A - Page 2 Appendix A - Assessment Calculations Property Address Asmt No. Assessor's Parcel Number Parcel Area (A Aesthetics Benefit Area Safety Benefit Area Connection Benefit Area Assessed Benefit Area Total Construction Costs Incidental Expenses Financial Costs Final Total Assessment 207 41STST 46 42330509 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 205 41ST ST 47 42330508 3,010 3,010 2,674 2,674 2,786 $17,326.26 $2,470.75 $1,540.75 $21,337.76 204 41 ST ST 48 42330604 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 206 41ST ST 49 42330603 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 208 &208 1/2 41ST ST 50 42330614 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 210 &210 112 41ST ST 51 42330613 2,420 2,420 2,674 2,674 2,592 $16,119.03 $2,290.G0 $1,453.45 $19,051.76 212 A 41ST ST 52 93394130 1,204 1,204 1,337 1,337 1,292 $8,038.05 $1,146.24 $714.79 $9,899.08 212 B 41ST ST 53 93394131 1,204 1,204 1,337 1,337 1,292 $8,038.05 $1,146.24 $714.79 $9,899.08 4010 A&B RIVER AVE 54 42330201 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4008 A&B RIVER AVE 55 42330202 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4006 RIVER AVE 56 42330203 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4004 A&B RIVER AVE 57 42330204 3,000 3,000 2,674 2,674 2,782 $17,305.52 $2,467.79 $1,538.91 $21,312.22 4002 A&B RIVER AVE 4000 &4000 1/2 RIVER AVE 58 59 42330205 42330206 3,000 3,000 3,000 3,000 2,674 2,674 2,674 2,674 2,782 2,782 $17,305.52 $17,305.52 $2,467.79 $2,467.79 $1,538.91 $1,538.91 $21,312.22 $21,312.22 213 40TH ST 60 42330611 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 211 A&B 40TH ST 61 42330610 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 209 A&B 40TH ST 62 42330609 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 207 A 40TH ST 63 93394017 1,214 1,214 1,337 1,337 1,296 $8,059.82 $1,149.34 $716.73 $9,925.89 207 B 40TH ST 64 93394018 1,214 1,214 1,337 1,337 1,296 $8,059.82 $1,149.34 $716.73 $9,925.89 205 40TH ST 65 42330607 2,428 2,428 2,674 2,674 2,592 $16,119.63 $2,298.68 $1,433.45 $19,851.76 204 A&B MOTH ST 66 42330705 2,666 2,666 2,674 2,674 2,671 $16,613.06 $2,369.04 $1,477.33 $20,459.43 206 40TH ST 67 42330704 2,714 2,714 2,674 2,674 2,687 $16,712.58 $2,383.23 $1,486.18 $20,581.99 208 A&B 40TH ST 68 42330703 2,714 2,714 2,674 2,674 2,687 $16,712.58 $2,383.23 $1,486.18 $20,581.99 210 40TH ST 69 42330702 2,714 2,714 2,674 2,674 2,687 $16,712.58 $2,383.23 $1,486.18 $20,581.99 212 A&B 40TH ST 70 42330701 2,715 2,715 2,674 2,674 2,687 $16,714.65 $2,383.53 $1,486.36 $20,584.54 3912 &3912 1/2 RIVER AVE 71 42330301 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 3910 &3910 1/2 RIVER AVE 72 42330302 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 3908 &3908 1/2 RIVER AVE 73 42330303 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 3906 RIVER AVE 74 42330304 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 3904 RIVER AVE 75 42330305 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 3902 RIVER AVE 76 42330306 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 3900 RIVER AVE 77 42330307 2,858 2,858 2,674 2,674 2,735 $17,011.13 $2,425.81 $1,512.73 $20,949.67 213 39TH ST 78 42330711 2,714 2,714 2,674 2,674 2,687 $16,712.58 $2,383.23 $1,486.18 $20,581.99 211 39TH ST 79 42330710 2,714 2,714 2,674 2,674 2,687 $16,712.58 $2,383.23 $1,486.18 $20,581.99 209 &209 1/2 39TH ST 80 42330709 2,714 2,714 2,674 2,674 2,687 $16,712.58 $2,383.23 $1,486.18 $20,581.99 207 39TH ST 81 42330708 2,714 2,714 2,674 2,674 2,687 $16,71258 $2,3Fn 23 $1,486.18 $20,581 99 205 A 39TH ST 82 93394010 1,121 1,121 1,337 1,337 1,265 $7,867.01 $1,121.84 $699.58 $9,688.43 205 B 39TH ST 83 93394011 1,121 1,121 1,337 1,337 1,265 $7,867.01 $1,121.84 $699.58 $9,688.43 3810 BALBOA BLVD 84 42330806 1,800 1,800 2,674 2,674 2,382 $14,817.64 $2,113.01 $1,317.67 $18,248.32 206 A&B 39TH ST 85 42330805 2,950 2,950 2,674 2,674 2,766 $17,201.86 $2,453.01 $1,529.69 $21,184.56 208 &208 1/2 39TH ST 86 42330804 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 210 39TH ST 87 42330803 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 212 39TH ST 88 42330802 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 3811 RIVER AVE 89 42330801 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 3812 RIVER AVE 90 42330401 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.10 Harris & Associates City of Newport Beach 95 42330406 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) 2,058 2,674 2,674 Final Engineer's Report $17,011.13 $2,425.81 $1,512.73 $20,949.67 215 38TH ST 97 42330814 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 Appendix A - Assessment Calculations $19,716.44 213 38TH ST 98 42330813 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 Assessor's 99 Aesthetics Safety Connection Assessed Total 2,574 $16,009.75 Property Asmt Parcel Parcel Benefit Benefit Benefit Benefit Construction Incidental Financial Address No. Number Area (A Area Area Area Area Costs Expenses Costs 3810 RIVER AVE 91 42330402 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 3808 RIVER AVE 92 42330403 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 3806 RIVER AVE 93 42330404 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 3804 RIVER AVE 94 42330405 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 December 22, 2015 Appendix A - Page 3 Final Tota I Assessment 947.10 3802 RIVER AVE 95 42330406 2,857 2,857 2,674 2,674 2,735 $17,009.05 $2,425.51 $1,512.54 $20,947.1O- 3300 A&B RIVER AVE 96 42330407 2,858 2,058 2,674 2,674 2,735 $17,011.13 $2,425.81 $1,512.73 $20,949.67 215 38TH ST 97 42330814 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 213 38TH ST 98 42330813 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 211 38TH ST 99 42330812 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 209 38TH ST 100 93394109 1,188 1,188 1,337 1,337 1,287 $8,005.91 $1,141.65 $711.93 $9,859.49 209 1/2 38TH ST 101 93394110 1,188 1,188 1,337 1,337 1,287 $8,005.91 $1,141.65 $711.93 $9,859.49 207 38TH ST 102 42330810 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 205 &205 1/2 38TH ST 103 42330809 2,375 2,375 2,674 2,674 2,574 $16,009.75 $2,283.01 $1,423.68 $19,716.44 Total 251,314 $251,314.00 $1,563,100.00 $222,900.00 $139,000.00 $1,925,000.00 Harris & Associates $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CERTIFICATE OF WILLDAN FINANCIAL SERVICES The undersigned, on behalf of Willdan Financial Services ("Willdan") was retained by the City of Newport Beach (the "City") in connection with the administration of the City's Assessment District No. 116 (the "Assessment District") and the issuance of the above -captioned bonds therefor, and I hereby certify that: The statements in the Official Statement relating to the above -captioned bonds provided by Willdan and all information supplied by it for use in such Official Statement, were, to the best of our knowledge, as of the date of such Official Statement and are as of the date hereof true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Bond Purchase Agreement dated July 9, 2019, by and between the City and Stifel, Nicolaus & Company, Incorporated, as Underwriter. Dated: July 23, 2019 WILLDAN FINANCIAL SERVICES i By: Aut rized Representative $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CERTIFICATE OF ASSESSMENT ENGINEER The undersigned, on behalf of Harris & Associates, Inc. (the "Assessment Engineer") relating to the City of Newport Beach Assessment District No. 116 (the "Assessment District"), do hereby declare as follows: 1. 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. 2. In the opinion of the Assessment Engineer, 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) (the "Act"). 3. The method of apportioning and levying the assessments within the Assessment District as described in the Engineer's Report, are authorized by and conform to all applicable requirements of the Act and Article XIIID of the California Constitution. 4. Appendices A and B of the Official Statement contain true and correct copies of the Assessment Diagram of the Assessment District and the Engineer's Report, respectively. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4820-7609-9996v5/022459-0025 All capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Bond Purchase Agreement dated July 9, 2019, by and between the City of Newport Beach and Stifel, Nicolaus & Company, Incorporated, as Underwriter. Dated: July 23, 2019 HARRIS &ZASS INC. By: Authorized Signatory 2 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS BOND PURCHASE AGREEMENT July 9, 2019 City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Ladies and Gentlemen: Stifel, Nicolaus & Company, Incorporated (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. 116 (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. Capitalized terms that are used in this Purchase Agreement and not otherwise defined herein shall have the respective meanings ascribed to them in the Fiscal Agent Agreement (as hereinafter defined). The City acknowledges and agrees that: (i) the purchase and sale of the Bonds (as such term is defined below) pursuant to this Purchase Agreement is an arm's-length commercial transaction between the City and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as a principal and is not and has not been acting as a "municipal advisor" (as such term is defined in Section 15B of the Securities Exchange Act of 1934, as amended) to the City; (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); (iv) the Underwriter has financial interests that may differ from and be adverse to those of the City; and (v) the City has consulted its own legal, financial and other advisors to the extent that it has deemed appropriate for this transaction. The Underwriter has provided to the City prior disclosures under Rule G-17 of the Municipal Securities Rulemaking Board which have been received by the City. Purchase, Sale and Delivea 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 fi-om the City, and the City agrees to sell to the Underwriter, all (but not less than all) of $1,575,000 aggregate principal amount of the City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A (the "Bonds"), bearing interest (payable semiannually on March 2 and September 2 in each year, commencing September 2, 2019) at the rates per annum and maturing on the dates and in the amounts set forth in Appendix A attached hereto and incorporated herein. (b) The purchase price for the Bonds shall be $1,540,537.27 (representing a price of par, less a net original issue discount of $9,028.90 and less an Underwriter's discount of $25,433.83). (c) The Bonds are being issued to (i) fund the Reserve Fund for the Bonds, (ii) finance capitalized interest on the Bonds through approximately September 2, 2019, (iii) pay costs of issuance, (iv) reimburse for the costs of forming the Assessment District, and (v) pay the costs for the design and undergrounding of certain utilities. (d) 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 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. (e) 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. Appendix A also sets forth, identified under the column "Subject to Hold the Offering Price Rule," as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) 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 shall promptly advise the City when 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, if that occurs prior to the close of the fifth (5th) business day after the sale date. (f) The Underwriter confirms that: (1) 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 2 that is a party to such third -party distribution agreement, as applicable: (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. (2) 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. (g) The City acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (1) 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 (2) 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. (h) 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: (1) "public" means any person other than an underwriter or a related party; 3 (2) "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 parry to a third -party distribution agreement participating in the initial sale of the Bonds to the public); (3) 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 (4) "sale date" means the date of execution of this Purchase Agreement by all parties. (i) 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 July 1, 2019 (the "Fiscal Agent Agreement"), approved by a resolution (the "Resolution"), adopted by the City Council of the City (the "City Council") on June 25, 2019. (j) Pursuant to the authorization of the City, the Underwriter has distributed copies of the Preliminary Official Statement, dated June 27, 2019, 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 July 23, 2019 (the "Disclosure Agreement"), by and between the City and Digital Assurance Certification, LLC, as dissemination agent, 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. (k) 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 4 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12"). Terms defined in the Official Statement are used herein as so defined. (1) 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. (m) At approximately 8:30 a.m., Pacific Time, on July 23, 2019, 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 10, 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 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 RI 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 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 inforination therein, in light of the circumstances under which it was presented, not misleading; (j) 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 Preliminary Official Statement and 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 Oficial 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 fi•om 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 7 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 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. Except as described in the Preliminary Official Statement and the Official Statement, the City has not failed to comply, in any material respects, with any continuing disclosure undertaking previously entered into by it pursuant to the provisions of Rule 15c2-12 for each of the past five (5) years; (r) The Official Statement (except the portions thereof relating to DTC or its book -entry only system and the information under the sections 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 Yocca Carlson & 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: (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, 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 that 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 underlying 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; M (4) any event occurring, or information becoming known, which, in the reasonable 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 declaration of war or the escalation of, or engagement in, military hostilities by the United States or the occurrence of any other national or international emergency or calamity relating to the effective operation of the government of, or the financial community in, the United States which, in the judgment of the Underwriter, makes it impracticable or inadvisable to proceed with the offering or the delivery of the Bonds on the terms and in the manner contemplated in the Official Statement; (6) the declaration of a general banking moratorium by federal, State of New York or State of California authorities, or the general suspension of trading on any national securities exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange or other national securities exchange, whether by virtue of determination by that exchange or by order of the Securities and Exchange Commission (the "SEC") or any other governmental authority having jurisdiction that, in the Underwriter's reasonable judgment, makes it impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the Bonds; (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 requirements of, the Underwriter; (8) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; (9) there shall have been any material adverse change in the affairs of the City that in the Underwriter's reasonable judgment will materially adversely affect the market for the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; (10) there shall be established any new restriction on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a change to the net capital requirements of, underwriters established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; or (11) any proceeding shall have been commenced or be threatened in writing by the SEC against the City; or (12) the commencement of any action of the character described in Section 2(r); or (13) a stop order, release, regulation, or no -action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made to the effect that the issuance, offering, or sale of the Bonds, including all the underlying obligations 10 as contemplated hereby or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Exchange Act, and the Trust Indenture Act of 1939, as amended. (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, substantially in the form set forth in Appendix D to the Official Statement and a reliance letter dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was 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," "THE 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; and (iii) the Fiscal Agent Agreement, the Purchase Agreement and the Disclosure 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 Oficial 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, 11 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 in connection with such representation which caused such firm to believe that the Preliminary Official Statement as of its date and the Official Statement as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state any material fact necessary to snake 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) 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, (iv) 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 12 that no opinion is expressed regarding compliance with "blue sky" or other securities laws or regulations whatsoever; (v) 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; (vi) 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 (vii) the Purchase Agreement, the Disclosure 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; (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 Harris & Associates, 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 Harris & Associates, 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); 13 (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) An opinion of Kutak Rock LLP, counsel to the Underwriter, addressed to the Underwriter and in form and substance acceptable to the Underwriter; 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 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 Ci '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. Expenses. 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 14 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. 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 Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104. 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. 15 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. ATTEST: By: City Clerk APPROVED AS TO FORM: Office of the City Attorney By: Assistant City Attorney 16 Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED rM FV W, r, WENd, •40,11 a g Ain``'°_o ACCEPTED: CITY OF NEWPORT BEACH IM Authorized Officer Time of Execution: p.m. California time Signature Page of Bond Purchase Agreement relating to City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A 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, STIFEL, NICOLAUS & COMPANY, INCORPORATED Managing Director ACCEPTED: CITY OF NEWPORT BEACH By:aGi JX�e,' Authorized Officer Time of Execution: p.m. California time ATTEST: City Clerk APPROVED AS TO FORM: CgCr p�P Office of the City Attorney By: Jno�� A istant City Attorney LC Signature Page of Bond Purchase Agreement relating to City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A APPENDIX A MATURITY SCHEDULE $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A Maturity Principal Interest 10% Test (September 2) Amount Rate Yield Price Satisfied* 2020 $65,000 2.000% 1.200% 100.877% X 2021 65,000 2.000 1.390 101.262 X 2022 65,000 2.000 1.500 101.512 X 2023 65,000 2.000 1.610 101.543 X 2024 70,000 2.000 1.730 101.313 X 2025 70,000 2.000 1.860 100.804 X 2026 70,000 2.000 1.970 100.197 X 2027 75,000 2.000 2.090 99.331 X 2028 75,000 2.000 2.210 98.275 X 2029 75,000 2.250 2.330 99.282 X 2030 80,000 2.250 2.450 98.064 2031 80,000 2.500 2.590 99.068 X 2032 80,000 2.625 2.700 99.175 X 2033 85,000 2.750 2.800 99.418 X 2034 85,000 2.750 2.900 98.173 X 2035 90,000 2.750 2.940 97.574 X 2036 90,000 2.750 2.980 96.933 X 2037 95,000 3.000 3.000 100.000 X 2038 95,000 3.000 3.040 99.421 X 2039 100,000 3.000 3.080 98.805 X 10% Test Not Satisfied M Subject to Hold -The- Offering - Price Rule ` At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. A-1 APPENDIX B FORM OF ISSUE PRICE CERTIFICATE $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (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. 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 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 Stradling Yocca Carlson & Rauth, a Professional Corporation 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. I� STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Name: By:_ Name: Dated: July 23, 2019 a o PRELIMINARY OFFICIAL STATEMENT DATED JUNE 27, 2619 _ o Z76 NEW ISSUE - BOOK ENTRY ONLY NOT RATED �U _N .� In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, a L subject to certain qualifications described in the Oficial Statement, under existing statutes, regulations, rules and judicial decisions, E,2) and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in the U)Official Statement, the interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax 0 U) purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. In the 'UL jF -0 further opinion of Bond Counsel, such interest (and original issue discount) is exempt from State of California personal income 3 taxes. See "CONCLUDING INFORMATION—Tax Matters" herein. v ��WPp�T $1,575,668* CITY OF NEWPORT BEACH o i ASSESSMENT DISTRICT NO. 116 Dr.. Bond e� LIMITED OBLIGATION IMPROVEMENT BONDS Q 2619 SERIES A 0 0 Datedc Date of Delivery Duec September 2, as shown inside cover Co a) -0 a) The City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2619 Series A (the `Bonds") are limited Obligations of the City Of Newport Beach (the "City") secured by special assessments to be levied on real property located within o the City of Newport Beach Assessment District No. 116 (the "Assessment District"). a) o CZ The design and undergrounding of certain utilities within the Assessment District (the "Improvements") being financed by the a Assessment District and the levy of special assessments will be undertaken as provided by the Municipal Improvement Act of 1913. The o a) Bonds are issued pursuant to provisions of the Improvement Band Act of 1915 and a Fiscal Agent Agreement dated as of July 1, 2019 (the E "Fiscal Agent Agreement") by and between the City and U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent") to (i) fund o the Reserve Fund for the Bonds, (ii) finance capitalized interest On the Bonds through approximately September 2, 2019, (111) pay costs of - Co issuance, (iv) reimburse for the costs of farming the Assessment District, and (v) pay the costs of the Improvements. See "ESTIMATED o i SOURCES AND USES ,OF FUNDS" and "THE ASSESSMENT DISTRICT" herein. oThe Bonds are being issued in fully registered book -entry only farm, initially registered in the name of Cede & Co., as nominee of a:3 The Depositary Trust Company, New York, New York ("DTC") in the denomination of $5,000 or any integral multiple thereof. Interest is E o payable semiannually on March 2 and September 2 of each year, commencing September 2, 2619. Purchasers will not receive certificates U) o representing their interest in the Bands. 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 0 its nominee, DTC is to remit ca a o such principal and interest tai DTC Participants (as defined herein) far subsequent disbursement to the beneficial owners of such Bonds. o See APPENDIX E—"B00K-ENTRY ONLY SYSTEM." o� The Bonds are subject to redemption prior to maturity as described under "THE BONDS—Redemption of Bonds" herein. } o Under the provisions of the Improvement Bond Act of 1915, installments of principal and interest sufficient to meet annual Bond debt o service will be levied by the City and billed by the County of Orange (the "County") to owners Of property within the Assessment District Ea� against which there are unpaid assessments. Upon receipt by the City from the County, these annual assessment installments are to be I 0 W 0 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 o be secured by a pledge and lien on the assessments and moneys on deposit in the Assessment Fund. Q C Unpaid assessments censtitute fixed liens en the parcels assessed within the Assessment District and de net canstitute a 2 personal indebtedness of the respective owners of such parcels. Accerdingly, in the event of a delinquency, proceedings may o - be taken only against the real preperty securing the delinquent assessment. Thus, the value of land within the Assessment o District is a critical factar in determining the investment quality of the Bends. See "THE ASSESSMENT DISTRICT—Value- te-Assessment Lien Ratios" and `BONDOWNERS' RISKS—Land Values" herein. Cn E The Fiscal Agent will establish a Reserve Fund and depesit therein Bend proceeds in the amount of the Reserve Requirement to provide funds for payment of principal and interest en the Bands in the event of any delinquent assessment U) installments. The City's ebli atien to advance funds to the Redem tion Fund as a result of delinquent installments is limited -00 as Y g P q to the balance in the Reserve Fund. The City has covenanted to initiate judicial fereclesure in the event of a delinquency as .� o described herein. See "SECURITY FOR THE BONDS—Covenant to Fereclese and Ceurt Ferecle sure Proceedings." o CZ U S NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF NEWPORT BEACH, THE COUNTY CZ .0 = OF ORANGE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT E a OF THE BONDS. THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE SOURCES DESCRIBED IN THE FISCAL AGENT AGREEMENT. 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 informed investment decision. a> V _ZD E The Bonds are offered when, as and if issued and delivered to the Underwriter subject to the approval of Stradling Yocca Carlson & as it Rauth, Newport Beach California Bond Counsel and Disclosure Counsel. Certain matters will be passed upon for the City by the .L o -�j City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California. It C9isanticipated that the Bonds will be available for delivery to The Depository Trust Company in New York, New York on or about co July _2019. as a) E� STIFEL (1-76 3 Datedc , 21)19 V c a) c 12 * Prehminary{ subject to change. Maturity Date (September 2) 2626 2621 2622 2623 2624 2625 2626 2627 2628 2629 2636 2631 2632 2633 2634 2635 2636 2637 2638 2639 $1,575,666* CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2619 SERIES A BASE CUSIPtc MATURITY SCHEDULE Principal Interest Amount Rate Yield CUSIP' * Preliminary, subject to change. t CUSIP® Copyright 2019, American Bankers Association. CUSIP® data in this Official Statement is provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers' Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. Neither the City nor the Underwriter takes any responsibility for the accuracy of CUSIP data in this Official Statement. The CUSIP® number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. CITY OF NEWPORT BEACH COUNTY OF ORANGE, CALIFORNIA CITY COUNCIL Diane Dixon, Mayor Will O'Neill, Mayor Pro Tem Duffy Duffield, Councilmember Brad Avery, Councilmember Jeff Herdman, Councilmember Joy Brenner, Councilmember Kevin Muldoon, Councilmember CITY OFFICIALS Grace Leung, 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 KNN Public Finance Los Angeles, California FISCAL AGENT U.S. Bank National Association Los Angeles, California ASSESSMENT ENGINEER Harris & Associates, Inc. Irvine, California 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. 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. TABLE OF CONTENTS INTRODUCTION.......................................................... 1 Purpose....................................................................... 1 Forward Looking Statements ...................................... 1 The Assessment District ............................................. 2 Property Values and Value -to -Assessment Lien FDIC/Federal Government Interests in Parcels ........ Ratios...................................................................... 2 No Additional Bonds .................................................. 2 The Improvements...................................................... 2 Professionals Involved in the Offering ....................... 3 Continuing Disclosure ................................................ 3 Bond Owners' Risks ................................................... 3 Other Information....................................................... 3 ESTIMATED SOURCES AND USES OF FUNDS ...... 4 THEBONDS.................................................................. 4 General........................................................................ 4 Redemption of Bonds ................................................. 5 Purchase of Bonds ...................................................... 6 Notice of Redemption.................................................6 TaxMatters............................................................... Selection of Bonds for Redemption ............................ 6 Refunding Bonds ........................................................ 6 Registration, Exchange or Transfer ............................ 7 Annual Debt Service ................................................... 8 SECURITY FOR THE BONDS ..................................... 8 Limited Obligation...................................................... 8 Assessment Liens and Installments ............................. 9 Limited Obligation Upon Delinquency ....................... 9 ReserveFund............................................................ 10 Covenant to Foreclose and Court Foreclosure Proceedings........................................................... 11 Priority of Assessment Lien ...................................... 11 No Additional Bonds ................................................ 12 THE ASSESSMENT DISTRICT ................................. 12 Description of the Assessment District ..................... 12 Description of Improvements ................................... 12 Formation Proceedings ............................................. 13 Allocation of Assessments ........................................ 13 Maximum Annual Assessment for Administrative Costs and Expenses ............................................... 14 Value -to -Assessment Lien Ratios ............................. 14 Property Owners with Largest Assessments ............. 17 Historical Assessed Values ....................................... 18 Direct and Overlapping Indebtedness ....................... 19 Delinquency History ................................................. 19 BONDOWNERS' RISKS ............................................ 20 General...................................................................... 20 Risks of Real Estate Secured Investments Generally............................................................... 20 Limited Obligations .................................................. 20 Delinquency Resulting in Ultimate or Temporary Loss on Bonds ....................................................... 21 Non -Cash Payments of Assessments ........................ 21 Potential Early Redemption of Bonds from Prepayments or Other Sources .............................. 21 Limited City Obligation Upon Delinquency ............. 21 Disclosures to Future Purchasers .............................. 21 Payment of the Assessments is not a Personal ASSESSMENT DIAGRAM........ Obligation of the Owners ...................................... 22 Property Values........................................................ 22 Bankruptcy and Foreclosure ..................................... 22 FDIC/Federal Government Interests in Parcels ........ 23 No Acceleration Provision ........................................ 24 Limitation on Remedies ............................................ 24 Natural Disasters....................................................... 24 Hazardous Substances .............................................. 25 Limited Secondary Market ....................................... 25 Future Debt Issuance ................................................ 25 Ballot Initiatives....................................................... 26 Constitutional Amendment — Articles IIIC and FORM OF CONTINUING IIID....................................................................... 26 CONCLUDING INFORMATION ............................... 27 Continuing Disclosure .............................................. 27 LegalOpinion........................................................... 27 TaxMatters............................................................... 27 Litigation.................................................................. 29 Financial Interests..................................................... 29 NoRating.................................................................. 29 Underwriting............................................................. 29 Miscellaneous........................................................... 30 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 ASSESSMENT DISTRICT AERIAL --•.moo - -a�. - '1 4. AVE - �s.,,�.�, :_, ...� •�. � � ��^1'.'�r .1 ti ,� ,mow v • - �^ � � � HOgG DR N;. � �F •., � �- COAST fjwY W _ �T�.' - , - � i �.� �;, �_• �. � � 9 Lp ~tip �,�o e 0 175 350 Feet p Assessment District 1 16 NEWPORT City of Newport Beach GIS Division May 15, 2019 Ml 1A mYrl $1,575,000' CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 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 $1,575,000* City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 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, 2019, (iii) pay costs of issuance, (iv) reimburse the City for the costs of forming 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. 116 (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, 2019 (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 * Preliminary; subject to change. 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. The Assessment District The Assessment District is located in the southern portion of the City on the Balboa Peninsula in an area generally bounded by 44th Street, the channel east of River Avenue, 38th Street and Balboa Boulevard. There are 82 parcels in the Assessment District with unpaid assessments securing the Bonds. The property in the Assessment District is zoned residential and all 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. 2015-97 on November 10, 2015, declaring its intention to form the Assessment District. Harris & Associates, 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. 2015-94 adopted on November 10, 2015 (the "Engineer's Report"). On January 12, 2016, 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 January 12, 2016 the City Council adopted its resolution confirming the proposed assessments. The City Council confirmed a total assessment of $1,925,000 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 103 assessed parcels with Assessments totaling $1,925,000. During the cash prepayment period, 21 parcels fully prepaid their Assessments. There remains $1,578,596 of unpaid Assessments securing the Bonds (the "Assessments"). 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 2018-19, was $77,763,314. The ratio of the assessed value of such parcels to the total amount of the unpaid Assessments, is approximately 49.26 to 1. See "THE ASSESSMENT DISTRICT—Value-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. The Improvements Bond proceeds will primarily be used to provide financing to underground overhead power, telephone and cable facilities in the Assessment District. The proposed underground utility improvements will provide conversion to an upgraded utility system and are expected to enhance neighborhood aesthetics, safety and reliability. See APPENDIX B—"ENGINEER'S REPORT." 2 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. KNN Public Finance, Los Angeles, 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, Kutak Rock LLP, Irvine, California. Other professional services have been performed by Harris & Associates, Inc., Irvine, California, as Assessment Engineer, and Willdan Financial Services, as Assessment District Consultant. For information concerning financial or other interests which certain of the above-mentioned professionals, advisors, counsel and agents may have in the offering of the Bonds, see "CONCLUDING INFORMATION—Financial 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, 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] [Net] Original Issue [Discount] Less Underwriter's Discount Total Sources $ USES: Improvement Fund') $ Costs of Issuance Fund (2) Interest Account 3) Reserve Fund Total Uses $ `'' Amounts to be used to finance the construction of the Improvements. (Z) Includes costs of issuance, such as Fiscal Agent, Municipal Advisor, 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, 2019. THE BONDS General The $1,575,000 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, 2019. 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 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, if any, 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 Preliminary, subject to change. 4 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, 2026 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 the following redemption prices (expressed as a percentage of the principal amount being redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Prices September 2, 2026 through September 1, 2027 103% September 2, 2027 through September 1, 2028 102 September 2, 2028 through September 1, 2029 101 September 2, 2029 and any date 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: Bonds Maturing on September 2, Sinking Fund Redemption Date (September 2) (Maturity) Sinking Payments The amounts in the foregoing schedule 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. 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, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and thereafter 100 Mandatory redemption from prepayments of Assessments could reduce the otherwise expected yield on the Bonds. See `BONDOWNERS' RISKS — Potential Early Redemption of Bonds from Prepayments or Other Sources." 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 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. M 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. 7 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. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A Annualized Debt Service Year Ending September 2 Principal Interest Total 2019 $ $ $ 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Total $ $ $ Source: Underwriter. 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, if any, 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 parcels assessed, they do not constitute a personal indebtedness of the respective owners of such 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 Annual Installments will also nclude 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 parcels in the Assessment District each year represent a pro rata share of the total principal, including mandatory sinking fund payments, if any, 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 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. 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 Redemption from 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 0 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, as of any date of calculation, 50% of the then maximum annual debt service due on the Bonds. Upon issuance of the Bonds, the Reserve Requirement shall be $ . 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, if any, 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 connection with an Assessment prepayment, 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, if any, 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 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. 10 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. 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 DISTRICT—Direct and Overlapping Indebtedness" and `BONDOWNERS' RISKS— FDIC/Federal Government Interests in Parcels." 11 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 BONDS—Refunding Bonds" above. THE ASSESSMENT DISTRICT Description of the Assessment District The property in the Assessment District is zoned residential and consists of a variety of completed structures. Originally, there were 103 assessed parcels with Assessments totaling $1,925,000. During the cash prepayment period, 21 parcels fully prepaid their Assessments. There remains $1,578,596 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 2019-20. The Assessment District is located in the southern portion of the City on the Balboa Peninsula in an area generally bounded by 44th Street, the channel east of River Avenue, 38th Street and Balboa Boulevard. The aggregate assessed value of parcels in the Assessment District with unpaid Assessments was $77,763,314 for Fiscal Year 2018-19. 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 are estimated to be $1,563,100. 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 within the Assessment District. The proposed underground utility improvements will provide conversion to an upgraded utility system and will enhance neighborhood aesthetics, safety and reliability. The undergrounding project is expected to be completed by the end of 2021 and each parcel will be responsible for connecting to the undergrounded utilities after project completion at its owner's expense. 12 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. TABLE 2 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 ENGINEER'S ESTIMATE OF COSTS AND EXPENSES UTILITY ENGINEERING & CONSTRUCTION Southern California Edison AT&T Time Warner Contingency 10% INCIDENTAL EXPENSES(') FINANCIAL COSTS") Total Construction: Total Incidental Expenses: Total Construction and Incidental Expenses: Total Financial Costs (3): TOTAL ESTIMATE: $ 850,000.00 416,000.00 155,000.00 142.100.00 $ 1,563,100.00 $ 222,900.00 $ 1,786,000.00 $ 139,000.00 �yoliZiaiZi "' 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 January 12, 2016 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 $1,578,596. 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. 13 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 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 $25,142.10 to a low of $9,688.43 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 2019-20. 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 $77,763,314 for fiscal year 2018-19. As a result of Proposition 13, assessed values generally increase by no more than two percent annually. See `BONDOWNERS' RISKS – Property Values." Based on fiscal year 2018-19 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 49.26 to 1. Table 3 below categorizes the parcels with unpaid Assessments within the Assessment District by value -to -lien range. 14 TABLE 3 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 VALUE -TO -ASSESSMENT LIEN RATIOS M Assessed Value and Ownership as of January 1, 2018 as provided by the County of Orange Assessor. (2) Overlapping Debt provided by California Municipal Statistics, Inc. (3) Totals may not tie due to rounding. (4) These parcels have low value -to -lien ratios because they have been owned by the same owners for several decades and the assessed values have generally increased by no more than two percent annually since 1978. See `BONDOWNERS' RISKS — Property Values." Source: Orange County Assessor's Offices compiled by Willdan Financial Services. 15 Fiscal Year 2018-19 Assessed Value(]) Number Value to of Assessment Overlapping Percent of Lien Ratio Parcels Land Structure Total Lien Debt« Lien Greater than 49.99:1 36 S 46,070,554 $ 9,360,359 S 55,430,913 $ 656,648 S 497,250 41.60% 40.00:1 to 49.99:1 11 6,725,614 2,367,218 9,092,832 206,696 81,568 13.09 30.00:1 to 39.99:1 6 2,993,834 1,381,508 4,375,342 123,747 39,250 7.84 20.00:1 to 29.99:1 9 2,836,159 1,693,941 4,530,100 182,343 40,638 11.55 10.00:1 to 19.99:1 9 1,786,842 1,001,261 2,788,103 183,183 25,011 11.60 5.00:1 to 9.99:1 8 916,076 399,137 1,315,213 165,384 11,798 10.48 Less than 5.00:1 3(4) 175,713 55,098 230,811 60,597 2,071 3.84 Totals (3) 82 $ 61,504,792 $ 16,258,522 $ 77,763,314 $ 1,578,596 $ 697,586 100.00% M Assessed Value and Ownership as of January 1, 2018 as provided by the County of Orange Assessor. (2) Overlapping Debt provided by California Municipal Statistics, Inc. (3) Totals may not tie due to rounding. (4) These parcels have low value -to -lien ratios because they have been owned by the same owners for several decades and the assessed values have generally increased by no more than two percent annually since 1978. See `BONDOWNERS' RISKS — Property Values." Source: Orange County Assessor's Offices compiled by Willdan Financial Services. 15 O / �U\ 222■ ■fob x/22 ?k$ W$� U�� $� \�a /}? q§Af\e j2m Go!) \ G%i §Q zein f m 1 60.1, 2�- A% k %%G e 1- m 1 6M, f Iz x�a ao3 E.,V�yO W A QI FzzC) � O FSI W O U � F 1 'n 'IT 'IT 'IT D1 C� O It N 7v'1 �O MSO ti 0 N N l� \O O 7 00 00 C t` 01 M M N 01 IQ M�07a,MP V 0 0 0 d r -I o0 O w � N 00 00 N N N N N `O O �O N M M Q 69 60) 69 � �00IMO N� 00 O O S C\ In r- oo e�-1 \O � 00 t` 00 O � 00 M d ti Oi N N ,-, ,-, — — — — — — N p oNo N O 0000000000 a zzzzzzzzzz 0 wwww-- 00000000000 FO� F ".. ^, v'1 C1 C� O^�MMNO NCS �OMN�ON 00O v'1� MM OHO W) 00 7 N l— O M 00 O 00 00 d, r - N N N O*o 0�0 r ti 69 69 69 d h y Cl) 00 O QOM NtnNCl ON X00 N 00 l— 'n g 'n �O 00 N l— ti \o 00 p� kn 00 00 01 O 00 l— M N P 00 kn ti C1 N — M 00 N C1 N cc c N 69 69 4A. 69 C N 00 V1 41 kn C1 N M �--� N �1 w M w 00 00 W) 5 Mo v'l-,:i-oorvl---too �o� N N v)w MO �O N 00 O tl lr� M �c In N N C n O W O� 6n --� M �--� N �--� N It �o T-0 O 69 619 619 d ti Oi N N ,-, ,-, — — — — — — N p oNo N O 0000000000 a zzzzzzzzzz 0 wwww-- 00000000000 FO� F ".. Historical Assessed Values The following table summarizes the historical and current assessed values of parcels with unpaid Assessments within the Assessment District over the past 5 Fiscal Years. TABLE 6 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 HISTORIC ASSESSED VALUE Increase/(Decrease) Fiscal Aggregate in Property Year Assessed Value Assessed Value 2014-15 $58,174,471 N/A 2015-16 61,725,812 6.10% 2016-17 64,996,580 5.30 2017-18 70,779,463 8.90 2018-19 77,763,314 9.87 Sources: Orange County Assessor's office as compiled by Willdan Financial Services. 18 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. 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, 2019. 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. TABLE 7 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 DIRECT AND OVERLAPPING ASSESSMENT INDEBTEDNESS 2018-19 Local Secured Assessed Valuation: $77,763,314 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District General Obligation Bonds Coast Community College District General Obligation Bonds Newport Mesa Unified School District General Obligation Bonds City of Newport Beach Assessment District No. 116 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT Ratios to 2018-19 Assessed Valuation: Direct Debt ($1,578,596) Total Direct and Overlapping Tax and Assessment Debt I" Original Assessment. Source: California Municipal Statistics, Inc. Delinquency History % Applicable Debt 5/1/19 0.003% $ 1,281 0.055 415,931 0.109 280,374 100.000 1,578,5961"' 2 $ 2,276,182 2.03% 2.93% Historically, the parcels within the Assessment District have had a low property tax delinquency rate. Table 8 below summarizes the three year delinquency history of the parcels within the Assessment District as of May 29, 2019 based on the annual property tax levy. TABLE 8 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 PROPERTY TAX DELINQUENCY HISTORY Fiscal Year Number of Parcels 2016-17 82 2017-18 82 2018-19 82 Parcels Delinquent % of Parcels as of May 29, 2019 Delinquent 0 0.00% 0 0.00 2 2.44 Sources: Orange County Tax Collector as compiled by Willdan Financial Services. 19 BONDOWNERS' RISKS General In order to pay debt service on the Bonds, it is necessary that unpaid Assessment Installments on parcels within the District 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 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, 20 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 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. Potential Early Redemption of Bonds from Prepayments or Other Sources Property owners within the Assessment District are permitted to prepay their Assessments at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in an extraordinary redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting extraordinary redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption "THE BONDS—Redemption of Bonds—Mandatory Redemption From Assessment Prepayments." 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 21 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, sea level rise, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the assessments. See "THE ASSESSMENT DISTRICT—Value-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 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. 22 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 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. 23 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, tsunami or other natural disasters. Southern California is a seismically active area. Seismic 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 Newport -Inglewood fault. On August 15, 2016, the Federal Emergency Management Agency ("FEMA") released proposed modified flood elevation determinations (the "Proposed Determinations") affecting the Flood Insurance Rate Map (the "FIR Map") and Flood Insurance Study report for Orange County and Incorporated Areas. Under the Proposed Determinations, many parcels of property located within the City, including a portion of the parcels within the Assessment District, were found to be in designated areas most prone to flooding or affected by waves from the coastline, and required to purchase flood insurance. After appeals from the City and several of the affected parcel owners, FEMA issued a letter of final determination on September 21, 2018 that revised the Proposed Determinations and reduced the number of affected parcels. The revised FIR Map became effective on March 21, 2019. Under the final FIR Map, all or a portion of the structures on eight parcels and several of the roadways located within the Assessment District were determined to be at higher risks of flooding. These parcels represent approximately 10.32% of the total Assessments. No assurance can be provided regarding the 24 likelihood of flooding within the Assessment District or the decision of the owners of any affected parcels to purchase or not purchase the required flood insurance In the event of a severe earthquake, fire, flood, tsunami 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 DISTRICT—Direct and Overlapping Indebtedness" herein. 25 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 January 12, 2016 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 2019-20, 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. M, 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") commencing April 1, 2020 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 Certification, 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 APPENDIX F—"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' RISKS—Limited 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, Kutak Rock LLP, Irvine, 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 to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield 27 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 any person, whether any such actions or events are taken or do occur. The Fiscal Agent Agreement and the 28 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 Stifel, Nicolaus & Company, Incorporated (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. 29 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 LN 30 City Manager APPENDIX A ASSESSMENT DIAGRAM [THIS PAGE INTENTIONALLY LEFT BLANK] Z�Z �yLL NH Z ON ZO a0 �y yy O r NO. Uy (yyy9��� O�O p qQ '�cz LL N Uzw O H c �p z ° •� m y o �� w w w `, w gw �e WI;=: o�� F��B� iso$ 6=3 �� i •��.. .-'[=J g ion who wUc�oN �F Z p)' 'm ys z LLQ y o N"d F iW w � � LLz J N,u u '1S H19E of -so ®(O� ; o, co ' '--'- - ----rod J ®Oi (D0000 ----0E G 07s.! ®®®m ®n� l,o M ®,o F— DOI V coo ©C�� ®®®®® 1S H.o4 �Iz�z O 0 m O � ® ® ® a ® zo ¢ Z Q Q nnc�y��� z V m Z. l0� 001 i road i¢ v }oa 0 !� m = O z (n N W Z ~ 0 1S 1SL4 a Lij 2 CO 2~ 0 a io ®U LU C/) Lu zLL ww Q W ✓ ®(�' NNz Qo ®OO ®��o = awn Ci is mil J N ��� ¢w 4o- 5M N ' is aME4 w w 0 Dp W ago 'c ) QO a o m �ODU C� NJ © 0 p y 2a. 1S Hl" Q a °- p z Q zoo Q N A-1 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B ENGINEER'S REPORT [THIS PAGE INTENTIONALLY LEFT BLANK] Final Engineer's Report for Underground Utility Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Prepared under the provisions of the Municipal Improvement Act of 1913 For the City of Newport Beach County of Orange, California December 22, 2015 City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report TABLE OF CONTENTS Page Introduction and Certifications............................................................................................ 1 PART I Plans and Specifications................................................................................... 4 PARTII Cost Estimate..................................................................................................... 5 PART III Assessment Roll and Method of Assessment Spread ..................................... 6 Table1 Assessment Roll.................................................................................. 8 DebtLimit Valuation........................................................................................ 11 Exhibit 1 — Method and Formula of Assessment Spread .................................. 12 PART IV Annual Administrative Assessment............................................................... 17 PART V Diagram of Assessment District..................................................................... 18 PART VI Description of Facilities.................................................................................. 20 Right -of -Way Certificate.................................................................................. 21 Certification of Completion of Environmental Proceedings ............................ 22 APPENDIX A. Assessment Calculations Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 1 AGENCY: CITY OF NEWPORT BEACH PROJECT: ASSESSMENT DISTRICT NO. 116 TO: CITY COUNCIL ENGINEER'S "REPORT" PURSUANT TO THE PROVISIONS OF SECTIONS 2961 AND 10204 OF THE STREETS AND HIGHWAYS CODE The purposes of this Assessment District is to provide financing to underground power, telephone and cable facilities in the area generally bounded by 44th Street, the channel east of River Avenue, 38th Street, and Balboa Boulevard. The proposed underground utility improvements will provide conversion to an upgraded utility system and will enhance neighborhood aesthetics, safety and reliability. The construction of these improvements will conform to existing City of Newport Beach, Southern California Edison, AT&T and Time Warner Cable standards. The proposed improvements are of special and direct benefit to the properties within the boundary of the proposed assessment district. Pursuant to the provisions of Article XIIID of the State Constitution, Part 7.5 of the "Special Assessment Investigation, Limitation and Majority Protest Act of 1931", being Division 4 of the Streets and Highways Code of the State of California, and the "Municipal Improvement Act of 1913", being Division 12 of said Code, and the Resolution of Intention, adopted by the City Council of the CITY OF NEWPORT BEACH, State of California, in connection with the proceedings for Underground Utility Assessment District No. 116 (hereinafter referred to as the "Assessment District"), 1, Alison M. Bouley, P.E., a Registered Professional Engineer and authorized representative of Harris & Associates, the duly appointed Engineer of Work, herewith submits the "Report" for the Assessment District, consisting of six (6) parts as stated below. PART I This part contains the plans and specifications which describe the general nature, location and extent for the proposed improvements to be constructed, and are filed herewith and made a part hereof. Said plans and specifications are on file in the Office of the Superintendent of Streets. PART II This part contains an estimate of the cost of the proposed improvements, including capitalized interest, if any, incidental costs and expenses in connection therewith as set forth herein and attached hereto. PART III This part consists of the following information: A. A proposed assessment of the total amount of the costs and expenses of the proposed improvements upon the several subdivisions of land within the Assessment District, in proportion to the special benefits to be received by such subdivisions from said improvements, which is set forth upon the assessment roll filed herewith and made a part hereof. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 2 B. The total amount, as near as may be determined, of the total principal sum of all unpaid special assessments and special assessments required or proposed to be levied under any completed or pending assessment proceedings, other than that contemplated for the Assessment District, which would require an investigation and report under the "Special Assessment Investigation, Limitation and Majority Protest Act of 1931" against the total area proposed to be assessed. C. The total true value, determined from the latest Assessor's roll, of the parcels of land and improvements which are proposed to be assessed. PART IV This part contains the proposed maximum annual administrative assessment to be levied upon each subdivision or parcel of land within the Assessment District to pay the costs incurred by the CITY OF NEWPORT BEACH, and not otherwise reimbursed, resulting from the administration and collection of assessments, from the administration and registration of any associated bonds and reserve or other related funds, or both. PART V This part contains a map showing the boundaries of the Assessment District, and a diagram showing the Assessment District, the boundaries and the dimensions of the subdivisions of land within said Assessment District, as the same existed at the time of the passage of the Resolution of Intention. The Boundary Map and Assessment Diagram are filed herewith and made a part hereof, and part of the assessment. PART VI This part shall consist of the following information: A. Description of facilities B. Right -of -Way Certificate C. Environmental Certificate This report is submitted on December 22, 2015. HARRIS & ASSOCIATES ALISON M. BOULE , P.E. R.C.E. No. C61383 ENGINEER OF WORK CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No.115 (Channel east of River Ave 138th 5t I Balhaa Blvd and 44th 5t) Final Engineer's Report Page 3 Preliminary approval by the CITY COUNCIL of the CITY OF NEWPORT BEACH, CALIFORNIA, on the 1 D day of ND%J , 2415. PO r d& 4 Nwt�'� 0 5 CITY CLERK 2 CITY OF NEWPORT BEACH tiJ STATE OF CALIFORNIA �qLI FORS Final approval by the CITY COUNCIL of the CITY OF NEWPORT BEACH, CALIFORNIA, on the day of, j�gtA , 2016. ej- ` PO 21 CITY CLERK O� CITY OF NEWPORT BEACH > ry STATE OF CALIFORNIA X og�`r Mf Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) Final Engineer's Report Page 4 Part I Plans and Specifications The plans and specifications to construct the utility undergrounding improvements, and any ancillary improvements thereof, for the area generally described as Underground Utility Assessment District No. 116, (Channel east of River Ave / 38th St / Balboa Blvd and 44th St), describe the general nature, location and extent of the improvements for this Assessment District are referenced herein and incorporated as if attached and a part of this Report. Said Plans and Specifications for the improvements are shown on the assessment diagram. Final plans and specifications will be prepared by the City in conjunction with the utility companies and will be on file in the office of the Superintendent of Streets when completed. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 5 Part II Cost Estimate CALCULATION Final Estimate Length in ft. Cost per ft. Utility Engineering & Construction Southern California Edison 2,830 $300 $850,000.00 AT&T 2,830 $147 $416,000.00 Time Warner 2,830 $55 $155,000.00 $1,421,000.00 Contingecy 10% $142,100.00 TOTAL CONSTRUCTION $1,563,100.00 INCIDENTIAL EXPENSES: Assessment Engineering $50,000.00 Contract Inspection $30,000.00 City Administration $30,000.00 Financial Advisor $20,000.00 Bond and Disclosure Counsel $55,000.00 Underwriter's Counsel $15,000.00 Paying Agent $2,500.00 Credit Rating Fee $15,000.00 Printing, Advertising, Notices $2,500.00 Miscellaneous $2,900.00 Subtotal Incidential Expenses $222,900.00 Construction $1,563,100.00 Subtotal Incidental & Construction $1,786,000.00 FINANCIAL COSTS Underwriter's Discount 1.0% $19,000.00 Bond Reserve 5.0% $96,000.00 Capitalized Interest - 5% for 3 months 1.3% $24,000.00 Subtotal & Financial Costs 7.3% $139,000.00 TOTAL ESTIMATE $1,925,000.00 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 6 Part III Assessment Roll and Method of Assessment Spread WHEREAS, on November 10, 2015 the City Council of the CITY OF NEWPORT BEACH, State of California, did, pursuant to the provisions of the 1913 Act "Municipal Improvement Act of 1913", being Division 12 of the Streets and Highways Code, of the State of California, adopt its Resolution of Intention No. 2015-97, for the installation and construction of certain public improvements, together with appurtenances and appurtenant work in connection therewith, in a special assessment district known and designated as ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"); and WHEREAS, said Resolution of Intention, as required by law, did direct the Engineer of Work to make and file a "Report", consisting of the following as required by Section 10204 of the Act: a. Plans and Specifications; b. A general description of works or appliances already installed and any other property necessary or convenient for the operation of the improvement, if the works, appliances, or property are to be acquired as part of the improvement; c. Cost Estimates; d. Assessment Diagram showing the Assessment District and the subdivisions of land therein; e. A proposed assessment of the costs and expenses of the works of improvement levied upon the parcels within the boundaries of the Assessment District; f. The proposed maximum annual assessment to be levied upon each subdivision or parcel of land within the Assessment District to pay the costs incurred by the City and not otherwise reimbursed resulting from the administration and collection of assessments or from the administration and registration of any associated bonds and reserve or other related funds. For particulars, reference is made to the Resolution of Intention as previously adopted. NOW, THEREFORE, I, Alison M. Bouley, P.E., the authorized representative of HARRIS & ASSOCIATES, pursuant to Article XIIID of the California Constitution and the "Municipal Improvement Act of 1913", do hereby submit the following: Pursuant to the provisions of law and the Resolution of Intention, I have assessed the costs and expenses of the works of improvement to be performed in the Assessment District upon the parcels of land in the Assessment District specially benefited thereby in direct proportion and relation to the special benefits to be received by each of said parcels. For particulars as to the identification of said parcels, reference is made to the Assessment Diagram, a copy of which is attached hereto and incorporated herein. 2. As required by law, a Diagram is hereto attached, showing the Assessment District, as well as the boundaries and dimensions of the respective parcels and subdivisions of land within said District as the same existed at the time of the passage of said Resolution of Intention, each of which subdivisions of land or parcels or lots respectively have been given a separate number upon said Diagram and in said Assessment Roll. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 7 The subdivisions and parcels of land the numbers therein as shown on the respective Assessment Diagram as attached hereto correspond with the numbers as appearing on the Assessment Roll as contained herein. 4. NOTICE IS HEREBY GIVEN that bonds will be issued in accordance with Division 10 of the Streets and Highways Code of the State of California (the "Improvement Bond Act of 1915"), to represent all unpaid assessments, which bonds shall be issued in one or more series, each with a term not to exceed the legal maximum term as authorized by law, THIRTY-NINE (39) YEARS from the 2nd day of September next succeeding twelve (12) months from their date. Said bonds shall bear interest at a rate not to exceed the current legal maximum rate of 12% per annum. 5. By virtue of the authority contained in said "Municipal Improvement Act of 1913", and by further direction and order of the legislative body, I hereby recommend the following Assessment to cover the costs and expenses of the works of improvement for the Assessment District based on the costs and expenses as set forth below: For particulars as to the individual assessments and their descriptions, reference is made to Table 1 (Assessment Roll) attached hereto. 6. The Method of Spread of Assessment is as set forth in the exhibit identified as Part III (Exhibit 1), which is attached hereto, referenced and so incorporated. Harris & Associates As Preliminarily Approved As Confirmed Estimated Cost of Design and Construction: $1,563,100 $1,563,100 Estimated Incidental Expenses: $222,900 $222,900 Estimated Financial Costs: $139,000 $139,000 Estimated Contribution: $0 $0 Estimated Total to Assessment: $1,925,000 $1,925,000 For particulars as to the individual assessments and their descriptions, reference is made to Table 1 (Assessment Roll) attached hereto. 6. The Method of Spread of Assessment is as set forth in the exhibit identified as Part III (Exhibit 1), which is attached hereto, referenced and so incorporated. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 8 Asmt No. Assessor's Parcel Number Total True Value Table 1 Assessment Roll Assessments as Existing Preliminarily Liens Approved Assessments as Confirmed and Recorded Value to Lien Ratio 1 42329505 $1,705,600 $0 $21,646.71 $ 21,646.71 79 2 93984035 $1,075,841 $0 $10,114.84 $ 10,114.84 106 3 93984036 $599,396 $0 $10,114.84 $ 10,114.84 59 4 42329503 $52,509 $0 $20,163.27 $ 20,163.27 3 5 42329502 $132,495 $0 $18,536.85 $ 18,536.85 7 6 42329501 $304,903 $0 $20,027.95 $ 20,027.95 15 7 42329201 $208,875 $0 $22,537.79 $ 22,537.79 9 8 42329512 $966,141 $0 $19,854.34 $ 19,854.34 49 9 93984029 $1,065,000 $0 $9,925.90 $ 9,925.90 107 10 93984030 $1,050,000 $0 $9,925.90 $ 9,925.90 106 11 42329510 $450,026 $0 $19,851.77 $ 19,851.77 23 12 42329509 $553,132 $0 $21,079.89 $ 21,079.89 26 13 42329508 $519,158 $0 $19,861.99 $ 19,861.99 26 14 93984015 $474,371 $0 $9,941.21 $ 9,941.21 48 15 93984016 $429,113 $0 $9,941.21 $ 9,941.21 43 16 93984008 $485,648 $0 $9,928.45 $ 9,928.45 49 17 93984009 $527,776 $0 $9,928.45 $ 9,928.45 53 18 42329603 $764,985 $0 $19,851.77 $ 19,851.77 39 19 42329602 $1,611,568 $0 $19,851.77 $ 19,851.77 81 20 42329601 $1,097,357 $0 $19,854.34 $ 19,854.34 55 21 42329301 $950,372 $0 $21,312.23 $ 21,312.23 45 22 42329302 $2,200,000 $0 $21,312.23 $ 21,312.23 103 23 42329303 $835,778 $0 $21,312.23 $ 21,312.23 39 24 42329304 $214,297 $0 $25,142.10 $ 25,142.10 9 25 42329305 $1,622,174 $0 $25,142.10 $ 25,142.10 65 26 42329614 $899,653 $0 $19,854.33 $ 19,854.33 45 27 42329615 $1,181,431 $0 $19,851.76 $ 19,851.76 60 28 42329610 $392,922 $0 $19,851.76 $ 19,851.76 20 29 42329609 $846,470 $0 $19,851.76 $ 19,851.76 43 30 42329608 $247,015 $0 $19,851.76 $ 19,851.76 12 31 42330505 $753,176 $0 $19,851.76 $ 19,851.76 38 32 42330504 $1,115,000 $0 $19,851.76 $ 19,851.76 56 33 42330503 $976,119 $0 $19,851.76 $ 19,851.76 49 34 42330502 $498,149 $0 $19,851.76 $ 19,851.76 25 35 42330501 $389,259 $0 $19,854.33 $ 19,854.33 20 36 93394072 $997,500 $0 $10,656.10 $ 10,656.10 94 37 93394073 $640,557 $0 $10,656.10 $ 10,656.10 60 38 42330102 $635,207 $0 $21,312.22 $ 21,312.22 30 39 42330103 $126,777 $0 $21,312.22 $ 21,312.22 6 40 42330104 $636,403 $0 $21,312.22 $ 21,312.22 30 41 42330105 $2,700,692 $0 $21,312.22 $ 21,312.22 127 42 42330106 $342,850 $0 $21,312.22 $ 21,312.22 16 43 42330512 $1,290,087 $0 $19,854.33 $ 19,854.33 65 44 42330511 $192,661 $0 $19,851.76 $ 19,851.76 10 45 42330510 $122,018 $0 $19,851.76 $ 19,851.76 6 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 9 Asmt No. Assessor's Parcel Number Total True Value Existing Liens Assessments as Preliminarily Approved Assessments as Confirmed and Recorded Value to Lien Ratio 46 42330509 $1,357,695 $0 $19,851.76 $19,851.76 68 47 42330508 $720,904 $0 $21,337.76 $21,337.76 34 48 42330604 $79,874 $0 $19,851.76 $19,851.76 4 49 42330603 $725,923 $0 $19,851.76 $19,851.76 37 50 42330614 $2,282,697 $0 $19,851.76 $19,851.76 115 51 42330613 $2,270,617 $0 $19,851.76 $19,851.76 114 52 93394130 $566,158 $0 $9,899.08 $9,899.08 57 53 93394131 $582,472 $0 $9,899.08 $9,899.08 59 54 42330201 $807,117 $0 $21,312.22 $21,312.22 38 55 42330202 $895,191 $0 $21,312.22 $21,312.22 42 56 42330203 $127,742 $0 $21,312.22 $21,312.22 6 57 42330204 $886,223 $0 $21,312.22 $21,312.22 42 58 42330205 $692,944 $0 $21,312.22 $21,312.22 33 59 42330206 $841,471 $0 $21,312.22 $21,312.22 39 60 42330611 $1,407,572 $0 $19,851.76 $19,851.76 71 61 42330610 $1,408,839 $0 $19,851.76 $19,851.76 71 62 42330609 $1,008,523 $0 $19,851.76 $19,851.76 51 63 93394017 $120,013 $0 $9,925.89 $9,925.89 12 64 93394018 $158,990 $0 $9,925.89 $9,925.89 16 65 42330607 $96,400 $0 $19,851.76 $19,851.76 5 66 42330705 $559,533 $0 $20,459.43 $20,459.43 27 67 42330704 $81,079 $0 $20,581.99 $20,581.99 4 68 42330703 $86,137 $0 $20,581.99 $20,581.99 4 69 42330702 $1,342,437 $0 $20,581.99 $20,581.99 65 70 42330701 $423,577 $0 $20,584.54 $20,584.54 21 71 42330301 $503,045 $0 $20,947.10 $20,947.10 24 72 42330302 $153,777 $0 $20,947.10 $20,947.10 7 73 42330303 $139,359 $0 $20,947.10 $20,947.10 7 74 42330304 $2,150,000 $0 $20,947.10 $20,947.10 103 75 42330305 $128,426 $0 $20,947.10 $20,947.10 6 76 42330306 $301,410 $0 $20,947.10 $20,947.10 14 77 42330307 $184,967 $0 $20,949.67 $20,949.67 9 78 42330711 $157,967 $0 $20,581.99 $20,581.99 8 79 42330710 $205,557 $0 $20,581.99 $20,581.99 10 80 42330709 $684,218 $0 $20,581.99 $20,581.99 33 81 42330708 $1,020,328 $0 $20,581.99 $20,581.99 50 82 93394010 $436,358 $0 $9,688.43 $9,688.43 45 83 93394011 $459,714 $0 $9,688.43 $9,688.43 47 84 42330806 $902,265 $0 $18,248.32 $18,248.32 49 85 42330805 $1,541,008 $0 $21,184.56 $21,184.56 73 86 42330804 $181,801 $0 $19,716.44 $19,716.44 9 87 42330803 $1,325,974 $0 $19,716.44 $19,716.44 67 88 42330802 $398,085 $0 $19,716.44 $19,716.44 20 89 42330801 $903,814 $0 $19,716.44 $19,716.44 46 90 42330401 $1,818,478 $0 $20,947.10 $20,947.10 87 91 42330402 $922,752 $0 $20,947.10 $20,947.10 44 92 42330403 $783,933 $0 $20,947.10 $20,947.10 37 93 42330404 $1,527,043 $0 $20,947.10 $20,947.10 73 94 42330405 $302,345 $0 $20,947.10 $20,947.10 14 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 10 Asmt No. Assessor's Parcel Number Total True Value Existing Liens Assessments as Preliminarily Approved Assessments as Confirmed and Recorded Value to Lien Ratio 95 42330406 $392,681 $0 $20,947.10 $20,947.10 19 96 42330407 $790,927 $0 $20,949.67 $20,949.67 38 97 42330814 $589,797 $0 $19,716.44 $19,716.44 30 98 42330813 $292,316 $0 $19,716.44 $19,716.44 15 99 42330812 $240,188 $0 $19,716.44 $19,716.44 12 100 93394109 $943,000 $0 $9,859.49 $9,859.49 96 101 93394110 $751,533 $0 $9,859.49 $9,859.49 76 102 42330810 $270,242 $0 $19,716.44 $19,716.44 14 103 42330809 $71,723 $0 $19,716.44 $19,716.44 4 Total $75,885,620 $1,925,000.00 $1,925,000.00 39 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) Final Engineer's Report Page 11 Table 2 Debt Limit Valuation A. ESTIMATED BALANCE TO ASSESSMENT $1,925,000 B. UNPAID SPECIAL ASSESSMENTS $0 TOTAL A & B $1,925,000 C. TRUE VALUE OF PARCELS $75,885,620 ** AVERAGE VALUE TO LIEN RATIO 39:1 Unpaid Special Assessments shall consist of the total principal sum of all unpaid special assessments previously levied or proposed to be levied other than in the instant proceedings. ** True Value of Parcels means the total value of the land and improvements as estimated and shown on the last equalized roll of the County or as otherwise reasonably calculated. This report does not represent a recommendation of parcel value, economic viability or financial feasibility, as that is not the responsibility of the Assessment Engineer. CERTIFICATION I, the undersigned Assessment Engineer, do hereby certify that (i) the total amount of the principal sum of the special assessments proposed to be levied, together with the principal amount of previously levied special assessments, as set forth above, do not exceed one-half (1/2) the total true value of the parcels proposed to be assessed, and (ii) the amount proposed to be assessed upon any parcel does not exceed one-half of the true value of the parcel. EXECUTED on December 22, 2015. M:/:11INNe`.Y.Y�Zy/IN1111 .y '21", ALISON M. BOULEY, P.E. R.C.E. NO. C61383 ASSESSMENT ENGINEER CITY OF NEWPORT BEACH COUNTY OF ORANGE, STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 12 Exhibit 1 Method and Formula of Assessment Spread Since the improvements are to be funded by the levying of assessments, the "Municipal Improvement Act of 1913" and Article XIIID of the State Constitution require that assessments must be based on the special benefit that the properties receive from the works of improvement. In addition, Section 4 of Article XIIID of the State Constitution requires that a parcel's assessment may not exceed the reasonable cost of the proportional special benefit conferred on that parcel. Section 4 provides that only special benefits are assessable and the local agency levying the assessment must separate the general benefits from the special benefits. It also provides that parcels within a district that are owned or used by any public agency, the State of California, or the United States shall not be exempt from assessment unless the agency can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. Neither the Act nor the State Constitution specifies the method or formula that should be used to apportion the costs to properties in any special assessment district proceedings. The responsibility for recommending an apportionment of the costs to properties which specially benefit from the improvements rests with the Assessment Engineer, who is appointed for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. In order to apportion the assessments to each parcel in direct proportion with the special benefit which it will receive from the improvements, an analysis has been completed and is used as the basis for apportioning costs to each property within the Assessment District. Based upon an analysis of the special benefit to be received by each parcel from the construction of the works of improvement, the Assessment Engineer recommends the apportionment of costs as outlined below. The final authority and action rests with the City Council after hearing all testimony and evidence presented at a public hearing, and tabulating the assessment ballots previously mailed to all record owners of property within the Assessment District. Upon the conclusion of the public hearing, the City Council must make the final determination whether or not the assessment spread has been made in direct proportion to the special benefits received by each parcel within the Assessment District. Ballot tabulation will be done at that time and, if a majority of the returned ballots weighted by assessment amount are not in opposition to the Assessment District, the City Council may form the Assessment District. The following sections set forth the methodology used to apportion the costs of the improvements to each parcel. SPECIAL BENEFITS In further making the analysis, it is necessary that the properties receive a special benefit distinguished from general benefits conferred on real property located in the District or to the public at large. The purpose of this Assessment District is to provide the financing to underground existing overhead electrical, telephone and cable facilities as well as rehabilitate the affected portions of streets and alleys within the District. These facilities are the direct source of service to the properties within the Assessment District. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 13 The proposed replacement of existing overhead utility facilities (power, telephone and cable facilities) with underground facilities and removal of the existing utility poles and the overhead wires will provide a special benefit to the parcels connected to and adjacent to, or in near proximity of, the facilities as follows: Improved Aesthetics Benefit. This benefit relates to the improved aesthetics of the streetscape due to the removal of overhead wires and utility poles. For the purposes of this report, a street is defined as either a street or alley. The removal of guy wires and other support structures related to the overhead facilities are included in the definition of improved aesthetics. Properties that are directly adjacent to overhead facilities receive an aesthetic benefit. This benefit is based on the area of the parcel. Additional Safety Benefit. This benefit relates to the additional safety of having the overhead distribution wires placed underground and having the power poles removed, which eliminates the threat of downed utility lines and poles due to wind, rain and other unforeseeable events. Falling facilities can lead to personal injuries and damage to structures, including fire. Properties immediately adjacent to the facilities usually have a greater risk. Furthermore, in compact communities like the Balboa Peninsula, the negative effects of falling lines and poles are more widespread including blocked roadways and alleys, and property damage due to impact. Properties that are adjacent to, or in proximity of, overhead facilities receive a safety benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the Assessment District boundary. Connection Benefit. This benefit relates to the enhanced reliability of service from the utilities being underground, due to having all new wires and equipment and having that equipment underground, which reduces the threat of service interruption from downed lines. When compared to overhead systems, fewer outages occur due to various acts of nature, traffic collisions and obstructions (such as trees). Properties that are connected to, or have the ability to connect to, the facilities proposed to be undergrounded receive a connection benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the assessment district boundary. By virtue of such special benefits, the proposed improvements will provide a higher level of service, increase the desirability of the properties and will specifically enhance the values of the properties within the Assessment District. In addition, properties will receive easier access to garage parking within the residential alleyways. Therefore, the proposed improvements are of direct and special benefit to these properties. GENERAL BENEFITS Section 4 of Article XIIID requires that the general benefits imparted by the utility undergrounding project be separated from the special benefits and that only the special benefit portion of the costs of the project be assessed against those parcels which are identified as receiving special benefits. Separating the general from the special benefits requires an examination of the facts and circumstances of the project and the property being assessed. In this particular assessment district, the streets and alleys along which the existing overhead utility facilities are being undergrounded function as local and collector streets. No other roadways are designated as an arterial, a major arterial or a scenic corridor in the Transportation Element of the City's General Plan. Furthermore, the City has an established network of arterial streets which Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 14 appear to function as intended to provide for the movement of traffic around and through the community at large without the need to utilize local collector streets for such purposes. Under these circumstances, any use of the streets within the Assessment District as "through" streets is incidental. The properties situated within the Assessment District are used almost exclusively as residential. Under this circumstance, the impacts, both visual and safety, are largely isolated to those properties (and the persons who inhabit them) which front on these local streets and alleys, with only incidental impacts on those who visit homes within the Assessment District or who pass through the Assessment District on trips originating outside the boundary and having a destination outside the boundary. Based on these facts and circumstances, any general benefits to the property within the Assessment District, to the surrounding community and to the public at large from the project of undergrounding these local overhead utility facilities on the local streets and alleys, such as to the general public visiting in cars, on bikes or on foot, are incidental and do not exceed five percent (5%) of the estimated project costs. This general benefit portion of the cost is more than offset by the estimated 20 percent (20%) utility company contribution. Therefore, the remainder of the project design and construction costs represents the local and special benefits to the parcels within the Assessment District. Because only the net amount of $1,925,000 is apportioned to the parcels within the District, no parcel is assessed more than its proportional share of the special benefits from the improvements. METHODOLOGY Based upon the findings described above, the special benefit received by the properties within the boundaries of the Assessment District is the conversion from an overhead to an underground utility system resulting in additional safety, enhanced reliability, and improved aesthetics to the adjacent properties. Based on these conditions, it is our conclusion that the improvements specially benefit all assessed properties in the Assessment District. To establish the benefit to the individual parcels within the Assessment District, the highest and best use of each property is considered. For example, a vacant property is considered developed to its highest potential and connected to the system. The more a property is developed, the more it benefits from the proposed improvements. Most of properties within this Assessment District are zoned residential and some have one or two dwelling units on them. There is a direct correlation between the size of a property and the extent to which a property may develop. Because parcel size is one of the main limiting factors for what can be built on a property, or the extent the property is developed, the size of each parcel is used as the base unit for measuring benefit. Consideration was given to reducing the amount of area assigned to parcels based upon the building setbacks applicable to each parcel. Due to the combined factors of (a) significant variations in the setback requirements, including front, side and rear setbacks, (b) availability of future variances from currently applicable setback requirements as well as existing variances already in place, and (c) significant variations in the ratios between building size and lot size, it was concluded that adjustments to parcel areas on account of setback requirements would not improve upon the assessment methodology. Accordingly, no reductions have been made to parcel area based upon applicable setback requirements or the existence of easements within those setbacks. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 15 The area of a condominium is calculated by taking the area of the base parcel and dividing by the number of condominiums. The special benefits from the undergrounding of overhead utilities are categorized into the three (3) distinct benefits identified above. All parcels within the District, except for any exceptions identified below, receive 3 of the 3 benefits. For the Improved Aesthetics Benefit the parcel area is multiplied by 1 to calculate the "Aesthetics Benefit Area". For the "Additional Safety Benefit", each parcel is considered to receive 1 unit of benefit. For condominiums, each unit is assigned a 0.5 safety benefit unit. The average parcel size, 2,674 square feet, is multiplied by the safety benefit factor to calculate the "Safety Benefit Area". For the Connection Benefit, each lot is assigned 1 benefit unit. For condominiums, each unit is assigned a 0.5 connection benefit. The average parcel area, 2,674 square feet, within the district is multiplied by the benefit unit for each parcel to determine "Connection Benefit Area". The Assessed Benefit Area per parcel is equal to the Aesthetics Benefit Area plus the Safety Benefit Area plus the Connection Benefit Area, divided by 3. See Appendix A for the assessment calculations for each parcel within the District. Exceptions There are no exceptions to the above methodology. ASSESSMENT APPORTIONMENT Each parcel will be apportioned its fair share of the construction costs based on the Assessed Benefit Area calculated for each property. Incidental Expenses and Financial Costs have been assessed to the entire Assessment District on a prorata basis relative to the total construction cost allocations. The individual assessment calculations are provided in Appendix A. For particulars to the Assessment Roll, reference is made to Table 1 in Part III of this report. In conclusion, it is my opinion that the assessments for the referenced Assessment District have been spread in direct accordance with the special benefits that each parcel receives from the works of improvement. DATED: December 22, 2015 pFESS( p� N0. C61383 9 OF C HARRIS & ASSOCIATES �4clx - ALISON M. BOULEY, Of. R.C.E. No. C61383 ASSESSMENT ENGINEER CITY OF NEWPORT BEACH COUNTY OF ORANGE, STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No.116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 16 I, r LVVQq( I , as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was filed in my office on the Z lA day of r-! , 201 V SEW PO O d' F ITY LERK U CITY OF NEWPORT BEACH STATE OF CALIFORNIA F0 WOP. I, VQW( 1. ppoo , as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was preliminarily approved by the City Council of the CITY OF NEWPORT BEACH, CALIFORNIA, on thelR day of NOV , 20 1 &- CITY LERK m CITY OF NEWPORT BEACH r? STATE OF CALIFORNIA I, [,�,tutnli - Q of as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was approved and confirmed by the City Council of said City on the 1 '- day of r]A, 20AU PO�� c CITY CLERK } n CITY OF NEWPORT BEACH STATE OF CALIFORNIA �qL! FOR�-; I, , as SUPERINTENDENT OF STREETS of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing As ssment, together with the Diagram attached thereto, was recorded in my office on the day of , 20_ SUPERI ENDENT OF STREETS CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 17 Part IV Annual Administrative Assessment A proposed maximum annual administrative assessment shall be levied on each parcel of land and subdivision of land within the Assessment District to pay for necessary costs and expenses incurred by the CITY OF NEWPORT BEACH, and not otherwise reimbursed, resulting from the administration and collection of assessments, from the administration or registration of any bonds and reserve or other related funds, or both. The maximum assessment is authorized pursuant to the provisions of Section 10204(f) of the Streets and Highways Code and shall not exceed fifty dollars ($50) per parcel per year, subject to an annual increase based on the Consumer Price Index (CPI), during the preceding year ending in January, for all Urban Consumers in the Los Angeles, Riverside, and Orange County areas. The exact amount of the administration charge will be established each year by the Superintendent of Streets. The annual administrative assessment will be collected in the same manner and in the same installments as the assessment levied to pay for the cost of the works of improvement. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 18 Part V Diagram of Assessment A reduced copy of the Assessment Diagram is attached hereto. Full-sized copies of the Boundary Map and Assessment Diagram are on file in the Office of the City Clerk, of the City of Newport Beach. As required by the Act, the Assessment Diagram shows the exterior boundaries of the Assessment District and the assessment number assigned to each parcel of land corresponding to its number as it appears in the Assessment Roll contained in Part III Table 1. The Assessor's Parcel Number is also shown for each parcel as they existed at the time of the passage of the Resolution of Intention and reference is hereby made to the Assessor's Parcel Maps of the County of Orange for the boundaries and dimensions of each parcel of land. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 19 a � LL �fil';I M ®� d HIM! gg s g� � 61 9i u L ---j .n KM ®4 too ao! o� �s RM + no CO. �. ce ®o; e���� ®mI R®�� � is Kim + lL I + Fn La Z -W ,1s tti e W =�� i{{ r��ff11W����� 4 r/Z Of _ a LL Samoa zu P a�0 (h� rL 19 FUM �4� MHarris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 20 Part VI Description of Facilities Section 10100 of the Act provides for the legislative body of any municipality to finance certain capital facilities and services within or along its streets or any public way or easement. The following is a list of proposed improvements as allowed under the Act to be installed, or improved under the provisions of the Act, including the acquisition of required right-of-way and/or property. For the general location of the improvements to be constructed referenced is hereby made to the Plans and Specifications described in Part I of this report. The following improvements are proposed to be constructed and installed in the general location referred to as Assessment District No. 116. 1. Acquisition of any required easements or rights-of-way. 2. Removal of existing utility poles. 3. Removal of overhead resident service drops. 4. Construction of mainline underground power, telephone and cable conduit, with appurtenant manholes and pullboxes, and installation of cabling, wiring and other facilities. 5. Construction of service conduit and appurtenances. The improvements will be designed by the Southern California Edison Company, AT&T and Time Warner Cable. The utility companies will be responsible for inspecting the work for their facilities and the City of Newport Beach will inspect the work to ensure conformance to City standards and specifications where applicable. The City will also construct additional pavement rehabilitation as needed for the project. Once completed, the underground facilities will become the property and responsibility of Southern California Edison Company, AT&T, and Time Warner Cable. Each owner of property located within the Assessment District will be responsible for arranging for and paying for work on his or her property necessary to connect facilities constructed by the public utilities in the public streets and alleys to the points of connection on the private property. Conversion of individual service connections on private property is not included in the work done by the Assessment District. The estimated time for completion of the undergrounding of the utilities is 36 months after the sale of bonds. Property owners will be required to provide necessary underground connections within 120 days of the completion of the underground facilities. Failure to convert individual service connections on private property may result in a recommendation to the City Council that the public utilities be directed to discontinue service to that property pursuant to Section 15.32 of the Municipal Code. Overhead facilities cannot be removed until all overhead service has been discontinued. Harris & Associates City of Newport Beach Uecember 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 21 Right -of -Way Certificate STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned hereby CERTIFIES UNDER PENALTY OF PERJURY that the following is all true and correct_ That at all time herein mentioned, the undersigned was, and now is, the authorized representative of the duly appointed SUPERINTENDENT OF STREETS of the CITY OF NEWPORT BEACH, CALIFORNIA. That there have now been instituted proceedings under the provisions of Article XIIID of the California Constitution, and the "Municipal Improvements Act of 1913," being Division 12 of the Streets and Highways Code of the State of California, for the construction of certain public improvements in a special assessment district known and designated as ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"). THE UNDERSIGNED STATES AND CERTIFIES AS FOLLOWS: All casements or right-of-way necessary for the construction and installation of the public improvements of the Assessment District either have been obtained or are in process of being obtained and will be obtained and in the possession of the affected utility company, the City, the C'niinhi of Oranvr nr tl-ic. Ctntp of falifnrnia rwinr to r-nmmpnrpmant of the consmiction and installation of such public improvements. j EXECUTED this day of I V l)Ve•yt �e—K 2015, at CITY OF NEWPORT BEACH CALIFORNIA. SUPERINTENDENT OF STREETS CITY OF NEWPORT BEACH STATE OF CALIFORNIA DAVID WEBB, Harris & Associates City of Newport Beach December 22, 2415 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th 5t) Final Engineer's Report Page 22 Certificate of Completion of Environmental Proceedings STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned, under penalty of perjury, CERTIFIES as follows: 1. That l am the person who authorized to prepare and process all environmental documentation as needed as it relates to the formation of the special Assessment District being fonned pursuant to the provisions of the "Municipal Improvement Act of 1913" being Division 12 of the Streets and Highways Code of the State of California, said special Assessment District known and designated as UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"). 2. The specific environmental proceedings relating to this Assessment District that have been completed are as follows: CEQA compliance review: The proposed project is Categorically Exempt (Class 2) fiom the provisions of CEQA (replacement or reconstructions). 3. I do hereby certify that all environmental evaluation proceedings necessary for the formation of the Assessment District have been completed to my satisfaction, and that no further environmental proceedings are necessary, EXECUTED this �� day of , 2015, at CITY OF NEWPORT BEACH, CALIFORNIA. By: DAVID WEBB, P.E. 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Unless the context otherwise requires, the following terms have the meanings set forth in the Fiscal Agent Agreement: "Administrative Expense Fund" means the City of Newport Beach Assessment District No. 116 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 under the Agreement (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 under the Agreement and, in the case of the City, in any way related to the administration of the Assessment District. "Agreement" means the Fiscal Agent Agreement, dated as of July 1, 2019, by and between the City and the Fiscal Agent, as amended or supplemented pursuant to the terms thereof. "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. 116. "Assessment Fund" means the City of Newport Beach Assessment District No. 116 Assessment Fund established and held by the City pursuant to the Agreement. "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 C-1 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) (except those described in 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 will 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 will be responsible for making any market value determinations, and the security interest will 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 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 City" 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 Stifel, Nicolaus & Company, Incorporated, as the initial purchaser of the 2019A Bonds. "Bond Register" means the books which the Fiscal Agent keeps or causes to be kept pursuant to the Agreement, on which the registration and transfer of the Bonds will 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 2019A 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. C-2 "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. "County" means the County of Orange. "Costs of Issuance Fund" means the City of Newport Beach Assessment District No. 116 Costs of Issuance Fund established with the Fiscal Agent pursuant to the Agreement. "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 Harris & Associates, as preliminarily approved by the City on November 10, 2015, and approved in final form by the City on January 12, 2016, 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 the Agreement and any successor thereto. "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period 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. 116 Improvement Fund established pursuant to the 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 Payment Date" means each March 2 and September 2, commencing September 2, 2019. C-3 "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 Assessment" means the Notice of Assessment recorded in the Office of the County Recorder of the County of Orange on May 11, 2016, as Document No. 2016000210856. "Outstanding Bonds" or "Outstanding" means all Bonds theretofore issued by the City, except: (1) Bonds theretofore canceled or surrendered for cancellation in accordance with the Agreement; (2) Bonds for the payment or redemption of which moneys will 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 will have been given as provided in the Agreement; and (3) Bonds defeased pursuant to the Agreement. "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 the Agreement in which there are established the accounts described in the Agreement. "Rebate Regulations" means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code. "Rebate Requirement" has 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. 116 Redemption Fund established with the Fiscal Agent pursuant the Agreement. "Reserve Fund" means the City of Newport Beach Assessment District No. 116 Reserve Fund established with the Fiscal Agent pursuant to the Agreement. "Reserve Requirement" means, as of any date of calculation, 50% of the then maximum annual debt service due on the Bonds. C-4 "Resolution of Formation" means Resolution No. 2016-6, adopted by the City Council on November January 12, 2016, 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. 2015-97, adopted by the City Council of the City on November 10, 2015, stating the City's intention, among other things, to issue the Bonds. "Resolution of Issuance" means Resolution No. 2019-62, adopted by the City Council of the City on June 25, 2019, authorizing the issuance of the Bonds and approving the terms and provisions of the 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 the Agreement. "Term Bonds" means those 2019A Bonds maturing on September 2, 20_ "Tax Certificate" means the Tax Certificate delivered upon the issuance of the 2019A Bonds. "Treasurer" means the City Treasurer or the City Manager, or his or her designee. "2019A Bonds" means City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A issued pursuant to the Resolution of Issuance and the Agreement. "Yield on the Bonds" has the meaning as described in the Tax Certificate. Equality of Bonds; Pledge of Assessments; No Obligation to Cure Deficiency. Pursuant to the 1913 Act, the 1915 Act and the Agreement, the Bonds are equally secured by a first pledge of and will 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 will be exclusively paid from the Assessments. The Bonds will also be secured by a first pledge of moneys on deposit in the Assessment Fund, Redemption Fund and the Reserve Fund which are set aside for the payment of the Bonds. The Assessments, the amounts in the foregoing funds and any interest earned on such amounts will 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 will not be used for any other purpose, except as permitted by the 1913 Act, the 1915 Act, the Agreement or any Supplemental Fiscal Agent Agreement. AUTHORIZATION AND ISSUANCE OF BONDS 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 C-5 forth in said unpaid list and upon which Assessments remain unpaid, reference has been 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 will cease in the event sufficient moneys are available to redeem the Bonds as provided in the Agreement. Type and Nature of Bonds; Limited Liability. Notwithstanding anything contained in the Agreement, 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 the Agreement are a special obligation of the City, and the City will 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 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, are liable personally on the Bonds or 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. TERMS AND PROVISIONS OF BONDS Terms of Bonds. (a) The interest on and principal of, including mandatory sinking fund payments, and redemption premiums, if any, on the Bonds are 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 will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. (b) All Bonds will be initially issued in the form of a separate single certificated fully registered Bond for each maturity date, and the ownership of each Bond will 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 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 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 will 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 will 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 will 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 the 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 C-6 provisions in the Agreement with respect to record dates, the word "Cede & Co." in the Agreement refers to such new nominee of DTC. (d) The delivery of a representation letter by the City and the Fiscal Agent does not in any way limit the provisions of clause (b) above 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 will 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 clause (e)(ii)(B) above, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to clause (e)(i) or clause (e)(ii)(A) above after which no substitute securities depository willing to undertake the functions of DTC under the Agreement 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 the Agreement and the Bonds will 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 designates to the Fiscal Agent in writing, in accordance with the provisions of the Agreement. (f) Notwithstanding any other provisions of the 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 will be made and given, respectively, in the manner provided in the DTC representation letter for the Bonds. (g) Each Bond will 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 will 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 will 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 will 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 will 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 will 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 C-7 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 will 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 will 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 will 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 to the Agreement is conclusive evidence of their validity and of the regularity of their issuance and all Bonds will be incontestable from and after their issuance. Bonds will be deemed to be issued, within the meaning of the Agreement, whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) have been delivered to the purchaser thereof and the purchase price thereof received. Bond Re ig ster. 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 will 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 will, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds as provided in the Agreement. 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 will 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 is 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. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond becomes mutilated, the City will execute, and the Fiscal Agent will 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 will be handled in accordance with the Agreement. If any Bond is 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 is given, the City, at the expense of the Bondowner, will execute and the Fiscal Agent will authenticate and deliver, a new Bond of like tenor and maturity, numbered and dated as such Fiscal Agent determines 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 will be equally and proportionately entitled to the benefits of the Agreement with all other Bonds issued thereunder. The Fiscal Agent may 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 under the Agreement, but both the original and replacement bond will be treated as one and the same. Notwithstanding any other provision of the Agreement, 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. 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 will be substantially in the form provided in the Agreement. Until definitive Bonds are prepared, the City may cause to be executed and delivered, in lieu of such defmitive 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 C-8 temporary Bonds will be entitled and subject to the same benefits and provisions of the 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 will be canceled by the Fiscal Agent and will not be reissued. REDEMPTION OF BONDS Selection of Bonds for Redemption. If less than all of the Outstanding Bonds are to be redeemed, the City will 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 will be approximately the same in each maturity of the Bonds insofar as possible, and the Fiscal Agent will 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 will 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 provided in the Agreement. 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 will disburse moneys in the Prepayment Account for such purpose upon written direction of the City. Notice of Redemption. When Bonds are to be called for redemption under the Agreement and the Fiscal Agent has received the required notice from the City, the Fiscal Agent will give notice, in the name of the City, of the redemption of such Bonds. Such notice of redemption will (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 will further state that on the date fixed for redemption, there will 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 will 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 will 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 will not be a condition precedent thereto, and failure to receive such notice will 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 provided in the Agreement will be conclusive as against all parties. A notice of redemption for a redemption pursuant to clause (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 will not occur and the Bonds will remain Outstanding under the Agreement. If any redemption is cancelled due to a lack of sufficient funds, the Fiscal Agent will 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. W The Fiscal Agent will 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 affects 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 will 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. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the City will execute and the Fiscal Agent will 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. Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Agreement, 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 will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Agreement, anything in the 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 will be paid to the Owner thereof, (c) from and after the redemption date the Bonds or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds or portions thereof will 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 will be entitled to any of the benefits of the 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. CREATION OF FUNDS AND ACCOUNTS; APPLICATION OF PROCEEDS AND ASSESSMENTS Funds and Accounts. There have been created and established the following funds and accounts, which funds and accounts the City has agreed and covenanted to maintain with the Fiscal Agent so long as any Bonds are Outstanding under the Agreement: (a) the City of Newport Beach Assessment District No. 116 Costs of Issuance Fund (the "Costs of Issuance Fund"); (b) the City of Newport Beach Assessment District No. 116 Redemption Fund (the "Redemption Fund"), in which there will be established and created a Principal Account, an Interest Account and a Prepayment Account; (c) the City of Newport Beach Assessment District No. 116 Reserve Fund (the "Reserve Fund"); and (d) the City of Newport Beach Assessment District No. 116 Improvement Fund (the "Improvement Fund"). The City has covenanted and agreed to establish with the Treasurer the City of Newport Beach Assessment District No. 116 Administrative Expense Fund (the "Administrative Expense Fund") and the City of Newport Beach Assessment District No. 116 Assessment Fund (the "Assessment Fund"). C-10 Except for the Administrative Expense Fund, all moneys in the funds and accounts established under the Agreement will be held by the Fiscal Agent and the Treasurer for the benefit of the Bondowners (other than the Improvement Fund), will be accounted for separately and apart from all other accounts, funds, money or other resources of the City held by the Fiscal Agent and will be allocated, applied and disbursed solely to the uses and purposes set forth in the Agreement. 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 the Agreement or any Supplemental Fiscal Agent Agreement and will establish any additional funds, accounts or subaccounts which the City directs it to establish. Assessment Fund. Upon receipt of Assessment Installments, the Treasurer will 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, 2019, the City will 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; and (c) the Reserve Fund, the amount needed to restore the Reserve Fund to the Reserve Requirement; (d) the Rebate Fund, the amount, if any, as specified in a written direction of the City. Any moneys remaining in the Assessment Fund after the deposits described above will be transferred by the Treasurer to the Prepayment Account of the Redemption Fund to redeem Bonds as provided in the Agreement. To the extent that the amounts in the Assessment Fund are insufficient to redeem Bonds in an authorized denomination, such moneys will be used for the payment of interest or principal, including mandatory sinking fund payments, on the next Interest Payment Date. The City will 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 will be paid to the City. Redemption Fund. The principal of, including mandatory sinking fund payments, and interest on the Bonds until maturity will 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 will be transferred to the Assessment Fund. (a) On or prior to the first day of March or September of each year, commencing September 1, 2019, the Fiscal Agent will 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 will be equal to the installment of interest due on the Bonds on said Interest Payment Date. Moneys in the Interest Account will 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, 2020, the Fiscal Agent will 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 will 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-11 (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, will be transferred to the Assessment Fund. (d) Moneys set aside in the Prepayment Account of the Redemption Fund will be used solely for the purpose of redeeming Bonds and will 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 will 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 the Agreement to the Prepayment Account, will be used to redeem Bonds pursuant to the Agreement or any Supplemental Fiscal Agent Agreement on the next Interest Payment Date for which proper notice pursuant to the Agreement 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 will transfer that portion, if any, of the prepayment representing accrued interest owing on the Bonds to the Interest Account of the 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, will be used to redeem Bonds as provided in the Agreement 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, will be deposited in the Prepayment Account and used to redeem Bonds as provided in the Agreement 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 will be transferred to the Assessment Fund. Reserve Fund. The Fiscal Agent will initially deposit into the Reserve Fund the amount specified in the Agreement. Thereafter, the Treasurer will transfer sufficient funds from the Assessment Fund as provided in the Agreement 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 will determine whether the amount on deposit in the Reserve Fund equals the Reserve Requirement. Moneys in the Reserve Fund will 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 will 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 will be reduced by the amount transferred from the Reserve Fund pursuant to the Agreement to the Prepayment Account of the Redemption Fund. The amount transferred will 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 will notify, or 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 will 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 will be credited toward said Assessment Installments as set forth in the Agreement: C-12 On or prior to July 1 st 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 will determine the amount remaining in the Reserve Fund, and will 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 and are payable in installments, the amount apportioned to each parcel will 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 will be credited against the next to last of such Assessment Installments. Notwithstanding any provisions in the Agreement to the contrary, moneys in the Reserve Fund in excess of the Reserve Requirement will be withdrawn from the Reserve Fund by the Fiscal Agent on or before each February 15 and August 15, and will 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 will be transferred to the Redemption Fund and will be used as provided in the Agreement. Rebate Fund. (a) The Fiscal Agent will establish and maintain a fund separate from any other fund established and maintained under the Agreement designated as the Rebate Fund and will 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 will 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 will be governed by the Agreement 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 will be satisfied with respect to the Rebate Account: (A) Annual Computation. Within 55 days of the end of each Bond Year, the City will 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'/z% 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 will obtain expert advice as to the amount of the Rebatable Arbitrage to comply with the Agreement. (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 will 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 will equal the amount of Rebatable Arbitrage so calculated by or on behalf of the City in accordance with clause (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 instructions from an Authorized Representative of the City, the Fiscal Agent will withdraw the excess from the Rebate Account and then credit the excess to the Assessment Fund. (C) Payment to the Treasury. The Fiscal Agent will pay, as directed in writing by an Authorized Representative of the City, to the United States Treasury, out of amounts in the Rebate Account, C-13 (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 will 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 clause (a)(i)(C) will be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and will be accompanied by Internal Revenue Service Form 8038-T, or will be made in such other manner as provided under the Code. (ii) Alternative Penalty Account. (A) Six -Month Computation. If the 1'h% Penalty has been elected for the Bonds, within 85 days of each particular Six -Month Period, the City will 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 will 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, will deposit an amount in the Alternative Penalty Account from any source of funds held by the Fiscal Agent pursuant to the 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 clause (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 clause (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 will 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 -Month Period the 1'/2% 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 will 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 clause (a)(ii)(C) will be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and will be accompanied by Internal Revenue Service Form 8038-T or will 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 clause (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-14 (c) Survival of Defeasance and Final Pam. Notwithstanding anything in the Agreement to the contrary, the obligation to comply with the requirements related to the Rebate Fund will 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. The provisions related to the Rebate Fund 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. Improvement Fund. The moneys in the Improvement Fund will be applied to pay the costs of the Improvements and will 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. 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 will 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. Investments. Moneys held in any of the funds and accounts under the Agreement will be invested at the written direction of an Authorized Representative of the City only in Authorized Investments which will be deemed at all times to be a part of such funds and accounts. The Fiscal Agent will provide monthly statements or reports of the principal balances and investment earnings thereon in each fund and account maintained by the Fiscal Agent under the Agreement. Authorized Investments will 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 rely upon the written instructions of the Authorized Representative as to both the suitability and legality of directed investments. Directions as to the purchase of all Authorized Investments will be subject to the limitations set forth in the Agreement 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 will 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 the Agreement. Moneys in the Reserve Fund will 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 the Agreement will be retained therein, except as transfers from such funds or accounts are authorized in the Agreement. For investment purposes only, the Fiscal Agent may commingle the funds and accounts established under the Agreement, and administered by the Fiscal Agent, but will account for each separately. Notwithstanding anything to the contrary contained in the Agreement, 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 will 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 will be valued at the lower of the cost or the market value thereof, exclusive of accrued interest. Amounts in the Reserve Fund will 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 will not be responsible for the accuracy thereof. C-15 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 will sell, or present for redemption, any Authorized Investment so purchased whenever it is 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 the Agreement, the Fiscal Agent will 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 the 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 will invest solely in Authorized Investments set forth in clause (3) of the definition thereof. The Fiscal Agent may 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 the Agreement and will 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 existence, validity and perfection of security interests in collateral), the Fiscal Agent will 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 the Agreement, the Fiscal Agent will not be liable to pay interest on any moneys received by it, but will be liable only to account to the City for earnings derived from funds that have been invested. The City has acknowledged 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 under the Agreement as they occur. The City has specifically waived the right to receive such confirmation to the extent permitted by applicable law and has agreed that it will instead receive periodic cash transaction statements which include detail for the investment transactions effected by the Fiscal Agent under the Agreement; provided, however, that the City retains its right to receive brokerage confirmation on any investment transaction requested by the City. 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 to the Bondowners, the Treasurer will transfer moneys on deposit in the Reassessment Fund to the Fiscal Agent and will 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 will be made before the principal of any Bonds is paid. (2) Interest on Bonds of earlier maturity will be paid before interest on Bonds of later maturity. (3) Within a single maturity, interest on lower -numbered Bonds will be paid before interest on higher -numbered Bonds. (4) The principal of Bonds will be paid in the order in which the Bonds are presented for payment. Any Bond which is presented but not paid will be assigned a serial number according to the order of presentment and will be returned to the Bondowner. When funds become available for the payment of any Bond which was not paid upon presentment, the Treasurer will 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 will cease to run on such Bond. C-16 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 will fix a date for a hearing upon such notice. At the hearing the City Council must determine whether in its judgment 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 will 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 will 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 will cause the Fiscal Agent to notify all Bondowners to surrender their Bonds to the Treasurer for cancellation. Upon cancellation of the Bonds, the Bondowner will be credited with the principal amount of the Bond so canceled. The Treasurer will 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 will cease on principal payments made from the date of such payment, but interest will continue to accrue on the unpaid principal at the rate specified on the Bonds until payment thereof is made. No premiums will be paid on payments of principal on Bonds made pursuant to the Agreement in advance of the maturity date thereon. If a Bond is not surrendered for registration and payment, the Treasurer will cause the Fiscal Agent to give notice at the 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 will 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 will 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 Agreement. ISSUANCE OF BONDS Authorization and Designation of Bonds. The City has reviewed all proceedings taken relative to the authorization of the Bonds and has found, as a result of such review, that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the 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 the Agreement, to issue the 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 in the Agreement, which Bonds are entitled to the benefit, protection and security of the provisions of the Agreement. Form of 2019A Bonds. The 2019A Bonds will be in substantially the form set forth in the Agreement. COVENANTS AND WARRANTY Warran . The City will preserve and protect the security of the Bonds and the rights of the Owners against all claims and demands of all persons. Covenants. So long as any of the Bonds are Outstanding and unpaid, the City has made the following covenants with the Owners under the provisions of the 1913 Act, the 1915 Act and the Agreement (to be performed by the City or its proper officers, agents or employees), which covenants are necessary, convenient and desirable to C-17 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 has covenanted that it will receive all Assessment Installments in trust and will, consistent with the Agreement, deposit the Assessment Installments in the Assessment Fund, and the City will have no beneficial right or interest in the amounts so deposited except as provided by the Agreement. All such Assessment Installments, whether received by the City in trust or deposited with the Fiscal Agent, all as provided in the Agreement, will nevertheless be disbursed, allocated and applied solely to the uses and purposes set forth in the Agreement, and will be accounted for separately and apart from all other money, funds, accounts or other resources of the City. The City has covenanted that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond issued under the Agreement, 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 the 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 the Agreement, and that it will faithfully observe and perform all of the conditions, covenants and requirements of the Agreement and all Supplements and of the Bonds issued under the Agreement. If at any time the total balance in the Redemption Fund and the Reserve Fund is sufficient to redeem all Outstanding Bonds pursuant to the Agreement, the Treasurer may direct the Fiscal Agent to effect such redemption on the earliest date on which all Outstanding Bonds may be redeemed. 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 Lew. 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 has covenanted 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 will be made of all transactions made by its Fiscal Agent under the Agreement. Such books of record and accounts will 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 the 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 has covenanted 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. C-18 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. 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 in the Agreement. Without limiting the generality of the foregoing, the City has agreed that there will 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 will direct the Fiscal Agent to transfer to the Rebate Fund amounts sufficient to pay and will instruct the Fiscal Agent to pay to the United States Treasury any amounts required to be paid as set forth in the Agreement. (f) Collection of the Administrative Expense Requirements. The City has covenanted that it will collect annually an amount specified by the Treasurer to be the Administrative Expense Requirement to pay for Administrative Expenses. The Administrative Expense Requirement so collected will not exceed the amount specified in the Engineer's Report. Continuing Disclosure Agreement. The City has covenanted and agreed 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 the Agreement, failure of the City to comply with the Continuing Disclosure Agreements will 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 the Continuing Disclosure Agreement. `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). AMENDMENTS TO AGREEMENT 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 to the Agreement for any of the following purposes: (a) to cure any ambiguity or to correct or supplement any provisions in the Agreement provided that such action does 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 the Agreement, other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with the Agreement as theretofore in effect; (c) to modify, amend or supplement the Agreement in such manner as to permit the qualification of the Agreement under the Trust Indenture Act of 1939, as amended, or any similar federal statute later in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which will not, materially adversely affect the interests of the Owners of the Bonds; or (d) to modify, alter, amend or supplement the Agreement in any other respect which is not materially adverse to the Bondowners. C-19 Amendments Requiring Bondowner Consent. Exclusive of the Supplements described in the Agreement, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding have the right to consent to and approve such Supplements as are deemed necessary or desirable by the City for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Agreement; provided, however, that nothing in the Agreement permits, (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 desires to enter into a Supplement, which pursuant to the terms of the Agreement requires the consent of the Bondowners, the City will so notify the Fiscal Agent and deliver to the Fiscal Agent a copy of the proposed Supplement. The Fiscal Agent will, 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 will briefly set forth the nature of the proposed Supplement and 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 will 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 the Agreement. Whenever at any time within one year after the date of the first mailing of such notice the Fiscal Agent will 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 will refer to the proposed Supplement described in such notice, and will 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, will 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, will be disregarded and treated as though they were not Outstanding for the purpose of any such determination. Upon request, the City will designate to the Fiscal Agent those Bonds disqualified by the Agreement. 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 the Agreement, the Agreement will be, and will be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under the Agreement of the City, the Fiscal Agent and all Owners of Bonds then Outstanding will thereafter be determined, exercised and enforced under the Agreement, subject in all respects to such modifications and amendments. No Supplement pursuant to the Agreement may modify or amend any of the rights or obligations of the Fiscal Agent without its written consent thereto. The Fiscal Agent will be provided an opinion of counsel, at the expense of the City, that any such Supplement complies with the provisions of the Agreement and the Fiscal Agent may conclusively rely upon such opinion. Notation of Bonds; Delivery of Amended Bonds. After the effective date of any action taken as provided in the Agreement, 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 will be made on such Bonds. If the City so determines, new Bonds so modified as, in the opinion of the City, are necessary to conform to such action will be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds will be exchanged at the office of the Fiscal Agent without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds. C-20 FISCAL AGENT Fiscal Agent. U.S. Bank National Association has been appointed Fiscal Agent for the City for the purpose of receiving all money which the City is required to deposit with the Fiscal Agent under the Agreement and to allocate, use and apply the same as provided in the Agreement. The Fiscal Agent has been authorized to and will mail by first-class mail, postage prepaid, interest payments to the Bondowners, select Bonds for redemption, and maintain the Bond Register. The Fiscal Agent has been 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 will perform all other duties assigned to or imposed on it as provided in the Agreement. The Fiscal Agent will keep accurate records of all funds administered by it and all Bonds paid and discharged by it. The Fiscal Agent has been authorized to pay the Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Fiscal Agent will cancel all Bonds upon payment thereof or upon the surrender thereof by the City pursuant to the Agreement. The Fiscal Agent will 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 will supply information regarding investments made under the Agreement 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 will 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 will 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. The City will 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 under the Agreement, 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 under the Agreement, which indemnity will 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 is 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 is eligible under the Agreement, will be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything in the Agreement to the contrary notwithstanding. 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 is 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 the Agreement the combined capital and surplus C-21 will be as set forth in its most recent report of condition so published. The City will notify the Bondowners in writing of any such removal of the Fiscal Agent and appointment of a successor thereto. 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 will 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 will 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. Liability of Fiscal Agent. The recitals of fact and all promises, covenants and agreements contained in the Agreement and in the Bonds will 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 the Agreement or of the Bonds, and will incur no responsibility in respect thereof other than in connection with its duties or obligations in the Agreement or in the Bonds or in the certificate of authentication assigned to or imposed upon the Fiscal Agent. The Fiscal Agent will have no duties or obligations other than as specifically set forth in the Agreement and no implied duties, covenants or obligations may be read into the Agreement against the Fiscal Agent. The Fiscal Agent is under no responsibility or duty with respect to the issuance of the Bonds for value. The Fiscal Agent is not liable in connection with the performance of its duties under the Agreement, except for its own negligence or willful misconduct. The Fiscal Agent has 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 the Agreement, or with respect to the investment of any moneys in any fund or account established, held or maintained by the City pursuant to the Agreement or otherwise. The Fiscal Agent will 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 will be full and complete authorization and protection in respect of any action taken or suffered under the Agreement and in accordance therewith. The Fiscal Agent is not 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 the Agreement the Fiscal Agent deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Agreement, such matter (unless other evidence in respect thereof is specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, will be conclusively proved and established by a written certificate of the City, and such certificate will be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of the 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 has no duty or obligations whatsoever to enforce the collection of Assessments or other funds to be deposited with it under the Agreement, or as to the correctness of any amounts received, but its liability is limited to the proper accounting for such funds as it actually receives. The Fiscal Agent has no duty or obligation to monitor the City's compliance with the 1913 Act or the 1915 Act. No provision in the Agreement requires the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Agreement, or in the exercise of its rights or powers, if it has 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 is entitled to interest on all amounts advanced by it at the maximum rate permitted by law. C-22 The Fiscal Agent has 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 also extend to its officers, directors, employees and agents. The Fiscal Agent's rights to indemnification under the Agreement and to payment of its fees and expenses will 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 represents the Owners of the majority in principal amount of the Bonds then Outstanding. The Fiscal Agent may execute any of the trusts or powers of the Agreement and perform the duties required of it thereunder by or through attorneys, agents, or receivers, will not be responsible for the actions or omissions of such attorneys, agents or receivers if appointed by it with reasonable care, and will be entitled to advice of counsel concerning all matters of trust and its duty under the Agreement. The Fiscal Agent is not liable in connection with the performance of its duties under the Agreement, except for its own negligence or willful misconduct. The Fiscal Agent will only perform those duties specifically set forth in the Agreement and no implied duties, covenants or obligations whatsoever will be read into the Agreement. In the event of and during the continuance of an event of default, the Fiscal Agent will exercise such care in performing its duties under the Agreement as a prudent person would exercise under the circumstances in the conduct of its own affairs. No action by the Fiscal Agent will be construed or deemed to expand the limitations on the scope of the Fiscal Agent's duties. The Fiscal Agent will not be considered in breach of or in default in its obligations under the Agreement 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 created by the Agreement, 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 will look only to the funds and accounts held by the Fiscal Agent thereunder for payment, except as otherwise provided thereunder or where the Fiscal Agent has breached its standard of care as described therein. Under no circumstances will the Fiscal Agent be liable in its individual capacity for the obligations evidenced by the Bonds. The Fiscal Agent will 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 under the Agreement. In the event of conflicting instructions under the Agreement, the Fiscal Agent will have the right to decide the appropriate course of action and be protected in so doing. The Fiscal Agent has 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. C-23 The Fiscal Agent will not to be deemed to have knowledge of any event of default under the Agreement unless it has actual knowledge thereof at its Principal Office. 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. Aizents. The Fiscal Agent may execute any of its duties or powers or perform its duties through attorneys, agents or receivers and the Fiscal Agent will not be answerable for the default or misconduct of any such attorney, agent or receiver selected by it with reasonable care. EVENTS OF DEFAULT; REMEDIES Event of Default. Any one or more of the following events will 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 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 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 the Agreement or in the Bonds contained, and the continuation of such default for a period of thirty (30) days after the City has 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 will be extended to permit such default to be eliminated. Remedies of Owners. Following the occurrence of an event of default, any Owner has 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 the Agreement; (b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or (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 the Agreement, or in the Bonds, affects or impairs 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 provided in the Agreement, out of the Assessments pledged for such payment, or affects or impairs 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 the Agreement. A waiver of any default of breach of duty or contract by any Owner will 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 will impair any such right or power or will 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 the Agreement may be enforced and exercised from time to time and as often as will be deemed expedient by the Owners. C-24 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 will be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy is cumulative and is in addition to every other remedy given under the Agreement or now or later 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 will the Fiscal Agent have any responsibility to cure or cause the City or any other person or entity to cure an event of default under the Agreement. DEFEASANCE Defeasance. If the City pays or causes to be paid, or there is otherwise 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 the Agreement, then the Owners of such Bonds will cease to be entitled to the pledge of Assessments and other amounts under the Agreement, and all covenants, agreements and other obligations of the City to the Owners of such Bonds under the Agreement will thereupon cease, terminate and become void and be discharged and satisfied except for the City's covenant under the Agreement. In such event, the Fiscal Agent will execute and deliver to the City all such instruments as may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent will pay over or deliver to the City after payment of any amounts due the Fiscal Agent under the Agreement all money or securities held by it pursuant to the Agreement which are not required for the payment of the interest due on, and the principal of, such Bonds. Any Outstanding Bond will be deemed to have been paid within the meaning expressed in the Agreement if such Bond is paid in any one or more of the following ways: (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 will become due and payable; or (c) by depositing with the Fiscal Agent Federal Securities in such amount as an Independent Financial Consultant determines 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 become due and payable; then, notwithstanding that such Bond has not been surrendered for payment, all obligations of the City under the Agreement with respect to such Bond ceases and terminates, 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 the Agreement. Any money or securities deposited with the Fiscal Agent to defease any Bond or Bonds will 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 under the Agreement will be paid over to the City. MISCELLANEOUS Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent for payment upon maturity or for redemption will upon payment therefor, and any Bond purchased by the City as authorized in the Agreement will be, cancelled forthwith and will not be reissued. The Fiscal Agent will destroy such Bonds as provided by law and furnish to the City a certificate of destruction. C-25 Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by the 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 will be sufficient for the purposes of the Agreement (except as otherwise provided therein), 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 will also constitute sufficient proof of his authority. (b) As to any Bond, the person in whose name the same is registered in the Bond Register will 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, will be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments will 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 will not be affected by any notice to the contrary. Nothing contained in the Agreement will be construed as limiting the Fiscal Agent to such proof, it being intended that the Fiscal Agent may accept other evidence of the matters stated in the Agreement which the Fiscal Agent may deem sufficient. Any request or consent of the Owner of any Bond will 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. Unclaimed Moneys. Anything in the 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, will be repaid by the Fiscal Agent to the City, as its absolute property and free from trust, and the Fiscal Agent will thereupon be released and discharged with respect thereto and the Owners will 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 will, 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 will 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. Provisions Constitute Contract; Successors. The provisions of the Agreement constitute a contract between the City and the Bondowners and the provisions of the Agreement will 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 is brought or taken and the Fiscal Agent prevails, the Fiscal Agent is 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 will 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 the Agreement will be irrepealable, but will be subject to modifications to the extent and in the manner provided in the Agreement, but to no greater extent and in no other manner. The Agreement will be binding upon and inure to the benefit of the City and the Fiscal Agent, and their respective successors and assigns. C-26 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 the Agreement, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in the Agreement. After the sale and delivery of the Bonds by the City, the Bonds will be incontestable by the City. Severability. If any covenant, agreement or provision, or any portion thereof, contained in the Agreement, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of the Agreement and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, will be deemed severable and will not be affected thereby, and the Agreement and the Bonds will remain valid and the Bondowners will retain all valid rights and benefits accorded to them under the laws of the State of California. General Authorization. Authorized Representatives of the City are respectively authorized to do and perform from time to time any and all acts and things consistent with the Agreement necessary or appropriate to carry the same into effect. Liberal Construction. The Agreement will be liberally construed to the end that its purpose may be effected. No error, irregularity, informality and no neglect or omission in the Agreement or in any proceeding had pursuant thereto which does not directly affect the jurisdiction of the City Council will void or invalidate the Agreement or such proceeding or any part thereof, or any act or determination made pursuant thereto. 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 the 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 the Agreement. C-27 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D OPINION OF BOND COUNSEL Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form: , 2019 City Council City of Newport Beach Newport Beach, California Re: $ City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A 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. 116 Limited Obligation Improvement Bonds, 2019 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. 2019-62 and are issued pursuant to a resolution adopted by the City on June 25, 2019 (the "Resolution of Issuance") and a fiscal agent agreement (the "Fiscal Agent Agreement") dated as of July 1, 2019, 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, 2019, 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. D-1 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. 5. 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 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, D-2 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. E-1 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. E-2 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. 116 Limited Obligation Improvement Bonds 2019 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 June 25, 2019 and a Fiscal Agent Agreement dated as of July 1, 2019 (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 Stifel, Nicolaus & Company, Incorporated. "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, 2020, 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). F-1 (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 as of the preceding September 1; (ii) Balance in the Prepayment Account of Redemption Fund as of the preceding September 1; (ii) Balance in the Redemption Fund as of the preceding September 1; (iv) Balance in the Reserve Fund and a statement of the Reserve Requirement as of the preceding September 1; (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 as of the preceding September 1, if available. (c) An update of the value -to -lien information set forth in Table 3 for the most recently completed fiscal year but only based on the Assessment Lien column and excluding the Overlapping Debt column. (d) A statement regarding the number of parcels that prepaid Assessments, and the amounts so prepaid, since the filing of the last Annual Report. (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 F-2 necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. 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. Renortine of Sianificant 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; 9. bankruptcy, insolvency, receivership or similar proceedings; and 10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation, any of which reflect financial difficulties. 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; F-3 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; 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; 7. release, substitution or sale of property securing repayment of the Bonds; and 8. incurrence of a financial obligation, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation, any of which affect Bondholders. (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. (f) For purposes of the events identified in subparagraphs (a)(10) and (b)(8), the term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. Section 6. Termination of Reporting Obli ag tion. 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: F-4 (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 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 F-5 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: 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: 12019 CITY OF NEWPORT BEACH City Manager DIGITAL ASSURANCE CERTIFICATION, LLC as Dissemination Agent By: Its: MR, 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. 116 LIMITED OBLIGATION IMPROVEMENT BONDS, 2019 SERIES A Date of Issuance: 12019 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, 2019, 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 F-7 [THIS PAGE INTENTIONALLY LEFT BLANK] 141:0 Mixed Sources P.dudgroup fromwell md anage forests,..1.11ed..—,and recyded wood or fiber. Printed by: ImageMaster, LLC w imagemaster.com NEW ISSUE - BOOK ENTRY ONLY NOT RATED In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, subject to certain qualifications described in the Official Statement, under existing statutes, regulations, rules and judicial decisions, and assuming the 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 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" herein. ��EWPp�T $1,575,666 o m CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 "^� Bond' s LIMITED OBLIGATION IMPROVEMENT BONDS 2619 SERIES A Dated: Date of Delivery Due: September 2, as shewn inside caver The City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A (the "Bonds") are limited obligations of the City of Newport Beach (the "City") secured by special assessments to be levied on real property located within the City of Newport Beach Assessment District No. 116 (the "Assessment District"). 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, 2019 (the "Fiscal Agent Agreement") by and between the City and U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent") to (i) fund the Reserve Fund for the Bonds, (ii) finance capitalized interest on the Bonds through approximately September 2, 2019, (iii) pay costs of issuance, (iv) reimburse for the costs of forming 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, 2019. 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 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." The Bonds are subject to redemption prior to maturity as described under "THE BONDS—Redemption of Bonds" herein. 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 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. Unpaid assessments constitute fixed liens en the parcels assessed within the Assessment District and da net constitute a persenal indebtedness of the respective awners of such parcels. Accerdingly, in the event of a delinquency, proceedings may be taken enly against the real preperty securing the delinquent assessment. Thus, the value of land within the Assessment District is a critical facter in determining the investment quality of the Bonds. See "THE ASSESSMENT DISTRICT—Value-te-Assessment Lien Ratios" and "BONDOWNERS' RISKS—Land Values" herein. The Fiscal Agent will establish a Reserve Fund and depesft therein Bond proceeds in the aineunt of the Reserve Requirement to previde funds fer payment of principal and interest en the Bends in the event of any delinquent assessment installments. The City's ebligatien to advance funds to the Redemption Fund as a result of delinquent installments is limited to the balance in the Reserve Fund. The City has covenanted to initiate judicial fsreclesure in the event of a delinquency as described herein. See "SECURITY FOR THE BONDS—Cevenant to Fereclese and Court Fereclesure Proceedings." 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. 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 informed investment decision. The Bonds are offered when, as and if issued and delivered to the Underwriter subject to the approval of Stradling Yocca Carlson & Rauth, Newport Beach, California, Bond Counsel and Disclosure Counsel. Certain matters will be passed upon for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California. It is anticipated that the Bonds will be available for delivery to The Depository Trust Company in New York, New York on or about July 23, 2019. STIFEL Datedc July 9, 2019 $1,575,666 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2619 SERIES A BASE CUSIPtc 651784 MATURITY SCHEDULE Maturity Date Principal Interest (September 2) Amount Rate Yield CUSIPt 2020 $ 65,000 2.0001. 1.2001. RM4 2021 65,000 2.601) 1.396 RN2 2022 65,JJ0 2.600 1.500 RP7 2023 65,000 2.600 1.616 RQ5 2024 70,000 2.600 1.730 RR3 2025 70,000 2.600 1.860 RS1 2026 70,000 2.600 1.970 RT9 2027 75,JJ0 2.000 2.090 RU6 2028 75,JJ0 2.000 2.210 RV4 2029 75,000 2.250 2.330 RW2 2030 80,000 2.250 2.450 RXJ 2031 80,000 2.500 2.590 RY8 2032 80,000 2.625 2.700 RZ5 2033 85,JJ0 2.750 2.800 SA9 2034 85,000 2.750 2.900 SB7 2035 90,000 2.750 2.940 SC5 2036 90,000 2.750 2.980 SD3 2037 95,0J0 3.000 3.000 SE1 2038 95,JJ0 3.600 3.040 SF8 2039 100'JJ0 3.000 3.080 SG6 t CUSIP® Copyright 2019, American Bankers Association. CUSIP® data in this Oficial Statement is provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers' Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. Neither the City nor the Underwriter takes any responsibility for the accuracy of CUSIP data in this Official Statement. The CUSIP® number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. CITY OF NEWPORT BEACH COUNTY OF ORANGE, CALIFORNIA CITY COUNCIL Diane Dixon, Mayor Will O'Neill, Mayor Pro Tem Duffy Duffield, Councilmember Brad Avery, Councilmember Jeff Herdman, Councilmember Joy Brenner, Councilmember Kevin Muldoon, Councilmember CITY OFFICIALS Grace Leung, 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 KNN Public Finance Los Angeles, California FISCAL AGENT U.S. Bank National Association Los Angeles, California ASSESSMENT ENGINEER Harris & Associates, Inc. Irvine, California 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. 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. TABLE OF CONTENTS INTRODUCTION.......................................................... 1 Purpose....................................................................... 1 Forward Looking Statements ...................................... 1 The Assessment District ............................................. 2 Property Values and Value -to -Assessment Lien FDIC/Federal Government Interests in Parcels ........ Ratios...................................................................... 2 No Additional Bonds .................................................. 2 The Improvements...................................................... 2 Professionals Involved in the Offering ....................... 3 Continuing Disclosure ................................................ 3 Bond Owners' Risks ................................................... 3 Other Information....................................................... 3 ESTIMATED SOURCES AND USES OF FUNDS ...... 4 THEBONDS.................................................................. 4 General........................................................................ 4 Redemption of Bonds ................................................. 5 Purchase of Bonds ...................................................... 5 Notice of Redemption.................................................5 TaxMatters............................................................... Selection of Bonds for Redemption ............................ 6 Refunding Bonds ........................................................ 6 Registration, Exchange or Transfer ............................ 6 Annual Debt Service ................................................... 7 SECURITY FOR THE BONDS ..................................... 7 Limited Obligation...................................................... 7 Assessment Liens and Installments ............................. 8 Limited Obligation Upon Delinquency ....................... 8 ReserveFund.............................................................. 9 Covenant to Foreclose and Court Foreclosure Proceedings........................................................... 10 Priority of Assessment Lien ...................................... 10 No Additional Bonds ................................................ 11 THE ASSESSMENT DISTRICT ................................. 11 Description of the Assessment District ..................... 11 Description of Improvements ................................... 11 Formation Proceedings ............................................. 12 Allocation of Assessments ........................................ 12 Maximum Annual Assessment for Administrative Costs and Expenses ............................................... 13 Value -to -Assessment Lien Ratios ............................. 13 Property Owners with Largest Assessments ............. 16 Historical Assessed Values ....................................... 17 Direct and Overlapping Indebtedness ....................... 18 Delinquency History ................................................. 18 BONDOWNERS' RISKS ............................................ 19 General...................................................................... 19 Risks of Real Estate Secured Investments Generally............................................................... 19 Limited Obligations .................................................. 19 Delinquency Resulting in Ultimate or Temporary Loss on Bonds ....................................................... 20 Non -Cash Payments of Assessments ........................ 20 Potential Early Redemption of Bonds from Prepayments or Other Sources .............................. 20 Limited City Obligation Upon Delinquency ............. 20 Disclosures to Future Purchasers .............................. 20 Payment of the Assessments is not a Personal ASSESSMENT DIAGRAM........ Obligation of the Owners ...................................... 21 Property Values........................................................ 21 Bankruptcy and Foreclosure ..................................... 21 FDIC/Federal Government Interests in Parcels ........ 22 No Acceleration Provision ........................................ 23 Limitation on Remedies ............................................ 23 Natural Disasters....................................................... 23 Hazardous Substances .............................................. 24 Limited Secondary Market ....................................... 24 Future Debt Issuance ................................................ 24 Ballot Initiatives....................................................... 25 Constitutional Amendment — Articles IIIC and FORM OF CONTINUING IIID....................................................................... 25 CONCLUDING INFORMATION ............................... 26 Continuing Disclosure .............................................. 26 LegalOpinion........................................................... 26 TaxMatters............................................................... 26 Litigation.................................................................. 28 Financial Interests..................................................... 28 NoRating.................................................................. 28 Underwriting............................................................. 28 Miscellaneous........................................................... 29 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 ASSESSMENT DISTRICT AERIAL --•.moo - -a�. - '1 4. AVE - Vis. „�.�, :_, • ..� •�. � � ��^1•.'�r N;. - � Feet km Assessment District 116 �NBG�S City of Newport Beach GIS Division May 15, 2019 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 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 $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 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, 2019, (iii) pay costs of issuance, (iv) reimburse the City for the costs of forming 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. 116 (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, 2019 (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 REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. The Assessment District The Assessment District is located in the southern portion of the City on the Balboa Peninsula in an area generally bounded by 44th Street, the channel east of River Avenue, 38th Street and Balboa Boulevard. There are 82 parcels in the Assessment District with unpaid assessments securing the Bonds. The property in the Assessment District is zoned residential and all 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. 2015-97 on November 10, 2015, declaring its intention to form the Assessment District. Harris & Associates, 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. 2015-94 adopted on November 10, 2015 (the "Engineer's Report"). On January 12, 2016, 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 January 12, 2016 the City Council adopted its resolution confirming the proposed assessments. The City Council confirmed a total assessment of $1,925,000 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 103 assessed parcels with Assessments totaling $1,925,000. During the cash prepayment period, 21 parcels fully prepaid their Assessments. There remains $1,578,596 of unpaid Assessments securing the Bonds (the "Assessments"). 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 2018-19, was $77,763,314. The ratio of the assessed value of such parcels to the total amount of the unpaid Assessments, is approximately 49.26 to 1. See "THE ASSESSMENT DISTRICT—Value-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. The Improvements Bond proceeds will primarily be used to provide financing to underground overhead power, telephone and cable facilities in the Assessment District. The proposed underground utility improvements will provide conversion to an upgraded utility system and are expected to enhance neighborhood aesthetics, safety and reliability. See APPENDIX 13 ----"ENGINEER'S REPORT." 2 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. KNN Public Finance, Los Angeles, 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, Kutak Rock LLP, Irvine, California. Other professional services have been performed by Harris & Associates, Inc., Irvine, California, as Assessment Engineer, and Willdan Financial Services, as Assessment District Consultant. For information concerning financial or other interests which certain of the above-mentioned professionals, advisors, counsel and agents may have in the offering of the Bonds, see "CONCLUDING INFORMATION—Financial 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, 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 $ 1,575,000.00 Less Net Original Issue Discount (9,028.90) Less Underwriter's Discount (25,433.83) Total Sources 1.540.537.27 USES: Improvement Fund') $ 1,312,893.25 Costs of Issuance Fund (2) 171,381.00 Interest Account 3) 4,150.52 Reserve Fund 52,112.50 Total Uses S 1,540.537.27 `'' Amounts to be used to finance the construction of the Improvements. (Z) Includes costs of issuance, such as Fiscal Agent, Municipal Advisor, 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, 2019. THE BONDS General The $1,575,000 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, 2019. 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 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, if any, 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 4 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 Interest Payment Date on and after September 2, 2026 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 the following redemption prices (expressed as a percentage of the principal amount being redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Prices September 2, 2026 and March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date thereafter 100 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, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date thereafter 100 Mandatory redemption from prepayments of Assessments could reduce the otherwise expected yield on the Bonds. See `BONDOWNERS' RISKS – Potential Early Redemption of Bonds from Prepayments or Other Sources." 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 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. M 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. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A Annualized Debt Service Year Ending September 2 Principal Interest Total 2019 $ 0.00 $ 4,150.52 $ 4,150.52 2020 65,000.00 38,312.50 103,312.50 2021 65,000.00 37,012.50 102,012.50 2022 65,000.00 35,712.50 100,712.50 2023 65,000.00 34,412.50 99,412.50 2024 70,000.00 33,112.50 103,112.50 2025 70,000.00 31,712.50 101,712.50 2026 70,000.00 30,312.50 100,312.50 2027 75,000.00 28,912.50 103,912.50 2028 75,000.00 27,412.50 102,412.50 2029 75,000.00 25,912.50 100,912.50 2030 80,000.00 24,225.00 104,225.00 2031 80,000.00 22,425.00 102,425.00 2032 80,000.00 20,425.00 100,425.00 2033 85,000.00 18,325.00 103,325.00 2034 85,000.00 15,987.50 100,987.50 2035 90,000.00 13,650.00 103,650.00 2036 90,000.00 11,175.00 101,175.00 2037 95,000.00 8,700.00 103,700.00 2038 95,000.00 5,850.00 100,850.00 2039 100,000.00 3,000.00 103,000.00 Total 1.575.000.00 $ 470,738.02 $ 2,045,738.02 Source: Underwriter. 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. 7 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, if any, 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 parcels assessed, they do not constitute a personal indebtedness of the respective owners of such 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 Annual Installments will also nclude 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 parcels in the Assessment District each year represent a pro rata share of the total principal, including mandatory sinking fund payments, if any, 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 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. 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 Redemption from 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, as of any date of calculation, 50% of the then maximum annual debt service due on the Bonds. Upon issuance of the Bonds, the Reserve Requirement shall be $52,112.50. 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, if any, 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 connection with an Assessment prepayment, 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, if any, 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 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. 0 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. 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 DISTRICT—Direct and Overlapping Indebtedness" and `BONDOWNERS' RISKS— FDIC/Federal Government Interests in Parcels." 10 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 BONDS—Refunding Bonds" above. THE ASSESSMENT DISTRICT Description of the Assessment District The property in the Assessment District is zoned residential and consists of a variety of completed structures. Originally, there were 103 assessed parcels with Assessments totaling $1,925,000. During the cash prepayment period, 21 parcels fully prepaid their Assessments. There remains $1,578,596 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 2019-20. The Assessment District is located in the southern portion of the City on the Balboa Peninsula in an area generally bounded by 44th Street, the channel east of River Avenue, 38th Street and Balboa Boulevard. The aggregate assessed value of parcels in the Assessment District with unpaid Assessments was $77,763,314 for Fiscal Year 2018-19. 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 are estimated to be $1,563,100. 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 within the Assessment District. The proposed underground utility improvements will provide conversion to an upgraded utility system and will enhance neighborhood aesthetics, safety and reliability. The undergrounding project is expected to be completed by the end of 2021 and each parcel will be responsible for connecting to the undergrounded utilities after project completion at its owner's expense. 11 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. TABLE 2 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 ENGINEER'S ESTIMATE OF COSTS AND EXPENSES UTILITY ENGINEERING & CONSTRUCTION Southern California Edison AT&T Time Warner Contingency 10% INCIDENTAL EXPENSES(') FINANCIAL COSTS") Total Construction: Total Incidental Expenses: Total Construction and Incidental Expenses: Total Financial Costs (3): TOTAL ESTIMATE: $ 850,000.00 416,000.00 155,000.00 142.100.00 $ 1,563,100.00 $ 222,900.00 $ 1,786,000.00 $ 139,000.00 �yoliZiaiZi "' 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 January 12, 2016 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 $1,578,596. 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. 12 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 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 $25,142.10 to a low of $9,688.43 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 2019-20. 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 $77,763,314 for fiscal year 2018-19. As a result of Proposition 13, assessed values generally increase by no more than two percent annually. See `BONDOWNERS' RISKS – Property Values." Based on fiscal year 2018-19 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 49.26 to 1. Table 3 below categorizes the parcels with unpaid Assessments within the Assessment District by value -to -lien range. 13 TABLE 3 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 VALUE -TO -ASSESSMENT LIEN RATIOS M Assessed Value and Ownership as of January 1, 2018 as provided by the County of Orange Assessor. (2) Overlapping Debt provided by California Municipal Statistics, Inc. (3) Totals may not tie due to rounding. (4) These parcels have low value -to -lien ratios because they have been owned by the same owners for several decades and the assessed values have generally increased by no more than two percent annually since 1978. See `BONDOWNERS' RISKS — Property Values." Source: Orange County Assessor's Offices compiled by Willdan Financial Services. 14 Fiscal Year 2018-19 Assessed Value(]) Number Value to of Assessment Overlapping Percent of Lien Ratio Parcels Land Structure Total Lien Debt« Lien Greater than 49.99:1 36 S 46,070,554 $ 9,360,359 S 55,430,913 $ 656,648 S 497,250 41.60% 40.00:1 to 49.99:1 11 6,725,614 2,367,218 9,092,832 206,696 81,568 13.09 30.00:1 to 39.99:1 6 2,993,834 1,381,508 4,375,342 123,747 39,250 7.84 20.00:1 to 29.99:1 9 2,836,159 1,693,941 4,530,100 182,343 40,638 11.55 10.00:1 to 19.99:1 9 1,786,842 1,001,261 2,788,103 183,183 25,011 11.60 5.00:1 to 9.99:1 8 916,076 399,137 1,315,213 165,384 11,798 10.48 Less than 5.00:1 3(4) 175,713 55,098 230,811 60,597 2,071 3.84 Totals (3) 82 $ 61,504,792 $ 16,258,522 $ 77,763,314 $ 1,578,596 $ 697,586 100.00% M Assessed Value and Ownership as of January 1, 2018 as provided by the County of Orange Assessor. (2) Overlapping Debt provided by California Municipal Statistics, Inc. (3) Totals may not tie due to rounding. (4) These parcels have low value -to -lien ratios because they have been owned by the same owners for several decades and the assessed values have generally increased by no more than two percent annually since 1978. See `BONDOWNERS' RISKS — Property Values." Source: Orange County Assessor's Offices compiled by Willdan Financial Services. 14 O / �U\ 222■ ■fob x/22 ?k$ W$� U�� $� \�a /}? q§Af\e j2m Go!) \ G%i §Q zein f m 1 60.1, 2�- A% k %%G e 1- m 1 6M, % Iz x�a ao3 E.,V�yO W A QI FzzC) � O FSI W O U � F 1 'n 'IT 'IT 'IT D1 C� O It N 7v'1 �O MSO ti 0 N N l� \O O 7 00 00 C t` 01 M M N 01 IQ M�07a,MP V 0 0 0 d r -I o0 O w � N 00 00 N N N N N `O O �O N M M Q 69 60) 69 � �00IMO N� 00 O O S C\ In r- oo e�-1 \O � 00 t` 00 O � 00 M d ti Oi N N ,-, ,-, — — — — — — N p oNo N O 0000000000 a zzzzzzzzzz 0 wwww-- 00000000000 FO� F ".. ^, v'1 C1 C� O^�MMNO NCS �OMN�ON 00O v'1� MM OHO W) 00 7 N l— O M 00 O 00 00 d, r - N N N O*o 0�0 r ti 69 69 69 d h y Cl) 00 O QOM NtnNCl ON X00 N 00 l— 'n g 'n �O 00 N l— ti \o 00 p� kn 00 00 01 O 00 l— M N P 00 kn ti C1 N — M 00 N C1 N cc c N 69 69 4A. 69 C N 00 V1 41 kn C1 N M �--� N �1 w M w 00 00 W) 5 Mo v'l-,:i-oorvl---too �o� N N v)w MO �O N 00 O tl lr� M �c In N N C n O W O� 6n --� M �--� N �--� N It �o T-0 O 69 619 619 d ti Oi N N ,-, ,-, — — — — — — N p oNo N O 0000000000 a zzzzzzzzzz 0 wwww-- 00000000000 FO� F ".. Historical Assessed Values The following table summarizes the historical and current assessed values of parcels with unpaid Assessments within the Assessment District over the past 5 Fiscal Years. TABLE 6 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 HISTORIC ASSESSED VALUE Increase/(Decrease) Fiscal Aggregate in Property Year Assessed Value Assessed Value 2014-15 $58,174,471 N/A 2015-16 61,725,812 6.10% 2016-17 64,996,580 5.30 2017-18 70,779,463 8.90 2018-19 77,763,314 9.87 Sources: Orange County Assessor's office as compiled by Willdan Financial Services. 17 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. 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, 2019. 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. TABLE 7 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 DIRECT AND OVERLAPPING ASSESSMENT INDEBTEDNESS 2018-19 Local Secured Assessed Valuation: $77,763,314 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District General Obligation Bonds Coast Community College District General Obligation Bonds Newport Mesa Unified School District General Obligation Bonds City of Newport Beach Assessment District No. 116 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT Ratios to 2018-19 Assessed Valuation: Direct Debt ($1,578,596) Total Direct and Overlapping Tax and Assessment Debt I" Original Assessment. Source: California Municipal Statistics, Inc. Delinquency History % Applicable Debt 5/1/19 0.003% $ 1,281 0.055 415,931 0.109 280,374 100.000 1,578,5961"' 2 $ 2,276,182 2.03% 2.93% Historically, the parcels within the Assessment District have had a low property tax delinquency rate. Table 8 below summarizes the three year delinquency history of the parcels within the Assessment District as of May 29, 2019 based on the annual property tax levy. TABLE 8 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 PROPERTY TAX DELINQUENCY HISTORY Fiscal Year Number of Parcels 2016-17 82 2017-18 82 2018-19 82 Parcels Delinquent % of Parcels as of May 29, 2019 Delinquent 0 0.00% 0 0.00 2 2.44 Sources: Orange County Tax Collector as compiled by Willdan Financial Services. 18 BONDOWNERS' RISKS General In order to pay debt service on the Bonds, it is necessary that unpaid Assessment Installments on parcels within the District 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 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, 19 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 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. Potential Early Redemption of Bonds from Prepayments or Other Sources Property owners within the Assessment District are permitted to prepay their Assessments at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in an extraordinary redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting extraordinary redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption "THE BONDS—Redemption of Bonds—Mandatory Redemption From Assessment Prepayments." 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 20 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, sea level rise, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the assessments. See "THE ASSESSMENT DISTRICT—Value-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 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. 21 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 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. 22 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, tsunami or other natural disasters. Southern California is a seismically active area. Seismic 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 Newport -Inglewood fault. On August 15, 2016, the Federal Emergency Management Agency ("FEMA") released proposed modified flood elevation determinations (the "Proposed Determinations") affecting the Flood Insurance Rate Map (the "FIR Map") and Flood Insurance Study report for Orange County and Incorporated Areas. Under the Proposed Determinations, many parcels of property located within the City, including a portion of the parcels within the Assessment District, were found to be in designated areas most prone to flooding or affected by waves from the coastline, and required to purchase flood insurance. After appeals from the City and several of the affected parcel owners, FEMA issued a letter of final determination on September 21, 2018 that revised the Proposed Determinations and reduced the number of affected parcels. The revised FIR Map became effective on March 21, 2019. Under the final FIR Map, all or a portion of the structures on eight parcels and several of the roadways located within the Assessment District were determined to be at higher risks of flooding. These parcels represent approximately 10.32% of the total Assessments. No assurance can be provided regarding the 23 likelihood of flooding within the Assessment District or the decision of the owners of any affected parcels to purchase or not purchase the required flood insurance In the event of a severe earthquake, fire, flood, tsunami 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 DISTRICT—Direct and Overlapping Indebtedness" herein. 24 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 January 12, 2016 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 2019-20, 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. 25 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") commencing April 1, 2020 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 Certification, 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 APPENDIX F—"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' RISKS—Limited 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, Kutak Rock LLP, Irvine, 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 to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield C 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 any person, whether any such actions or events are taken or do occur. The Fiscal Agent Agreement and the 27 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 Stifel, Nicolaus & Company, Incorporated (the "Underwriter"). The Underwriter has agreed to purchase the Bonds at a price of $1,540,537.27 ($1,575,00.00 principal amount, less net original issue discount in the amount of $9,028.90 and less an Underwriter's discount of $25,433.83). The Bond Purchase Agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof. The offering prices may be changed from time to time by the Underwriter. 28 Miscellaneous All quotations from, and summaries and explanations of, the Fiscal Agent Agreement, the Continuing Disclosure Agreement and other statutes and documents contained herein do not purport to be complete, and reference is made to said documents and statutes for full and complete statements of their provisions. This Official Statement is submitted only in connection with the sale of the Bonds by the City. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the City or the Underwriter. The information contained herein should not be construed as representing all conditions affecting the City or the Bonds. The execution and delivery of this Official Statement have been authorized by the City. CITY OF NEWPORT BEACH By: /s/ Grace Leung City Manager 29 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A ASSESSMENT DIAGRAM [THIS PAGE INTENTIONALLY LEFT BLANK] Z�Z �yLL NH Z ON ZO a0 �y yy O r NO. Uy (yyy9��� O�O p qQ '�cz LL N Uzw O H c �p z ° •� m y o �� w w w `, w gw �e WI;=: o�� F��B� iso$ 6=3 �� i •��.. .-'[=J g ion who wUc�oN �F Z p)' 'm ys z LLQ y o N"d F iW w � � LLz J N,u u '1S H19E of -so ®(O� ; o, co ' '--'- - ----rod J ®Oi (D0000 ----0E G 07s.! ®®®m ®n� l,o M ®,o F— DOI V coo ©C�� ®®®®® 1S H.o4 �Iz�z O 0 m O � ® ® ® a ® zo ¢ Z Q Q nnc�y��� z V m Z. l0� 001 i road i¢ v }oa 0 !� m = O z (n N W Z ~ 0 1S 1SL4 a Lij 2 CO 2~ 0 a io ®U LU C/) Lu zLL ww Q W ✓ ®(�' NNz Qo ®OO ®��o = awn Ci is mil J N ��� ¢w 4o- 5M N ' is aME4 w w 0 Dp W ago 'c ) QO a o m �ODU C� NJ © 0 p y 2a. 1S Hl" Q a °- p z Q zoo Q N A-1 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B ENGINEER'S REPORT [THIS PAGE INTENTIONALLY LEFT BLANK] Final Engineer's Report for Underground Utility Assessment District No. 116 (Channel east of River Avenue / 38th St / Balboa Boulevard and 44th Street) Prepared under the provisions of the Municipal Improvement Act of 1913 For the City of Newport Beach County of Orange, California December 22, 2015 City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report TABLE OF CONTENTS Page Introduction and Certifications............................................................................................ 1 PART I Plans and Specifications................................................................................... 4 PARTII Cost Estimate..................................................................................................... 5 PART III Assessment Roll and Method of Assessment Spread ..................................... 6 Table1 Assessment Roll.................................................................................. 8 DebtLimit Valuation........................................................................................ 11 Exhibit 1 — Method and Formula of Assessment Spread .................................. 12 PART IV Annual Administrative Assessment............................................................... 17 PART V Diagram of Assessment District..................................................................... 18 PART VI Description of Facilities.................................................................................. 20 Right -of -Way Certificate.................................................................................. 21 Certification of Completion of Environmental Proceedings ............................ 22 APPENDIX A. Assessment Calculations Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 1 AGENCY: CITY OF NEWPORT BEACH PROJECT: ASSESSMENT DISTRICT NO. 116 TO: CITY COUNCIL ENGINEER'S "REPORT" PURSUANT TO THE PROVISIONS OF SECTIONS 2961 AND 10204 OF THE STREETS AND HIGHWAYS CODE The purposes of this Assessment District is to provide financing to underground power, telephone and cable facilities in the area generally bounded by 44th Street, the channel east of River Avenue, 38th Street, and Balboa Boulevard. The proposed underground utility improvements will provide conversion to an upgraded utility system and will enhance neighborhood aesthetics, safety and reliability. The construction of these improvements will conform to existing City of Newport Beach, Southern California Edison, AT&T and Time Warner Cable standards. The proposed improvements are of special and direct benefit to the properties within the boundary of the proposed assessment district. Pursuant to the provisions of Article XIIID of the State Constitution, Part 7.5 of the "Special Assessment Investigation, Limitation and Majority Protest Act of 1931", being Division 4 of the Streets and Highways Code of the State of California, and the "Municipal Improvement Act of 1913", being Division 12 of said Code, and the Resolution of Intention, adopted by the City Council of the CITY OF NEWPORT BEACH, State of California, in connection with the proceedings for Underground Utility Assessment District No. 116 (hereinafter referred to as the "Assessment District"), 1, Alison M. Bouley, P.E., a Registered Professional Engineer and authorized representative of Harris & Associates, the duly appointed Engineer of Work, herewith submits the "Report" for the Assessment District, consisting of six (6) parts as stated below. PART I This part contains the plans and specifications which describe the general nature, location and extent for the proposed improvements to be constructed, and are filed herewith and made a part hereof. Said plans and specifications are on file in the Office of the Superintendent of Streets. PART II This part contains an estimate of the cost of the proposed improvements, including capitalized interest, if any, incidental costs and expenses in connection therewith as set forth herein and attached hereto. PART III This part consists of the following information: A. A proposed assessment of the total amount of the costs and expenses of the proposed improvements upon the several subdivisions of land within the Assessment District, in proportion to the special benefits to be received by such subdivisions from said improvements, which is set forth upon the assessment roll filed herewith and made a part hereof. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 2 B. The total amount, as near as may be determined, of the total principal sum of all unpaid special assessments and special assessments required or proposed to be levied under any completed or pending assessment proceedings, other than that contemplated for the Assessment District, which would require an investigation and report under the "Special Assessment Investigation, Limitation and Majority Protest Act of 1931" against the total area proposed to be assessed. C. The total true value, determined from the latest Assessor's roll, of the parcels of land and improvements which are proposed to be assessed. PART IV This part contains the proposed maximum annual administrative assessment to be levied upon each subdivision or parcel of land within the Assessment District to pay the costs incurred by the CITY OF NEWPORT BEACH, and not otherwise reimbursed, resulting from the administration and collection of assessments, from the administration and registration of any associated bonds and reserve or other related funds, or both. PART V This part contains a map showing the boundaries of the Assessment District, and a diagram showing the Assessment District, the boundaries and the dimensions of the subdivisions of land within said Assessment District, as the same existed at the time of the passage of the Resolution of Intention. The Boundary Map and Assessment Diagram are filed herewith and made a part hereof, and part of the assessment. PART VI This part shall consist of the following information: A. Description of facilities B. Right -of -Way Certificate C. Environmental Certificate This report is submitted on December 22, 2015. HARRIS & ASSOCIATES ALISON M. BOULE , P.E. R.C.E. No. C61383 ENGINEER OF WORK CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No.115 (Channel east of River Ave 138th 5t I Balhaa Blvd and 44th 5t) Final Engineer's Report Page 3 Preliminary approval by the CITY COUNCIL of the CITY OF NEWPORT BEACH, CALIFORNIA, on the 1 D day of ND%J , 2415. PO r d& 4 Nwt�'� 0 5 CITY CLERK 2 CITY OF NEWPORT BEACH tiJ STATE OF CALIFORNIA �qLI FORS Final approval by the CITY COUNCIL of the CITY OF NEWPORT BEACH, CALIFORNIA, on the day of, j�gtA , 2016. ej- ` PO 21 CITY CLERK O� CITY OF NEWPORT BEACH > ry STATE OF CALIFORNIA X og�`r Mf Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) Final Engineer's Report Page 4 Part I Plans and Specifications The plans and specifications to construct the utility undergrounding improvements, and any ancillary improvements thereof, for the area generally described as Underground Utility Assessment District No. 116, (Channel east of River Ave / 38th St / Balboa Blvd and 44th St), describe the general nature, location and extent of the improvements for this Assessment District are referenced herein and incorporated as if attached and a part of this Report. Said Plans and Specifications for the improvements are shown on the assessment diagram. Final plans and specifications will be prepared by the City in conjunction with the utility companies and will be on file in the office of the Superintendent of Streets when completed. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 5 Part II Cost Estimate CALCULATION Final Estimate Length in ft. Cost per ft. Utility Engineering & Construction Southern California Edison 2,830 $300 $850,000.00 AT&T 2,830 $147 $416,000.00 Time Warner 2,830 $55 $155,000.00 $1,421,000.00 Contingecy 10% $142,100.00 TOTAL CONSTRUCTION $1,563,100.00 INCIDENTIAL EXPENSES: Assessment Engineering $50,000.00 Contract Inspection $30,000.00 City Administration $30,000.00 Financial Advisor $20,000.00 Bond and Disclosure Counsel $55,000.00 Underwriter's Counsel $15,000.00 Paying Agent $2,500.00 Credit Rating Fee $15,000.00 Printing, Advertising, Notices $2,500.00 Miscellaneous $2,900.00 Subtotal Incidential Expenses $222,900.00 Construction $1,563,100.00 Subtotal Incidental & Construction $1,786,000.00 FINANCIAL COSTS Underwriter's Discount 1.0% $19,000.00 Bond Reserve 5.0% $96,000.00 Capitalized Interest - 5% for 3 months 1.3% $24,000.00 Subtotal & Financial Costs 7.3% $139,000.00 TOTAL ESTIMATE $1,925,000.00 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 6 Part III Assessment Roll and Method of Assessment Spread WHEREAS, on November 10, 2015 the City Council of the CITY OF NEWPORT BEACH, State of California, did, pursuant to the provisions of the 1913 Act "Municipal Improvement Act of 1913", being Division 12 of the Streets and Highways Code, of the State of California, adopt its Resolution of Intention No. 2015-97, for the installation and construction of certain public improvements, together with appurtenances and appurtenant work in connection therewith, in a special assessment district known and designated as ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"); and WHEREAS, said Resolution of Intention, as required by law, did direct the Engineer of Work to make and file a "Report", consisting of the following as required by Section 10204 of the Act: a. Plans and Specifications; b. A general description of works or appliances already installed and any other property necessary or convenient for the operation of the improvement, if the works, appliances, or property are to be acquired as part of the improvement; c. Cost Estimates; d. Assessment Diagram showing the Assessment District and the subdivisions of land therein; e. A proposed assessment of the costs and expenses of the works of improvement levied upon the parcels within the boundaries of the Assessment District; f. The proposed maximum annual assessment to be levied upon each subdivision or parcel of land within the Assessment District to pay the costs incurred by the City and not otherwise reimbursed resulting from the administration and collection of assessments or from the administration and registration of any associated bonds and reserve or other related funds. For particulars, reference is made to the Resolution of Intention as previously adopted. NOW, THEREFORE, I, Alison M. Bouley, P.E., the authorized representative of HARRIS & ASSOCIATES, pursuant to Article XIIID of the California Constitution and the "Municipal Improvement Act of 1913", do hereby submit the following: Pursuant to the provisions of law and the Resolution of Intention, I have assessed the costs and expenses of the works of improvement to be performed in the Assessment District upon the parcels of land in the Assessment District specially benefited thereby in direct proportion and relation to the special benefits to be received by each of said parcels. For particulars as to the identification of said parcels, reference is made to the Assessment Diagram, a copy of which is attached hereto and incorporated herein. 2. As required by law, a Diagram is hereto attached, showing the Assessment District, as well as the boundaries and dimensions of the respective parcels and subdivisions of land within said District as the same existed at the time of the passage of said Resolution of Intention, each of which subdivisions of land or parcels or lots respectively have been given a separate number upon said Diagram and in said Assessment Roll. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 7 The subdivisions and parcels of land the numbers therein as shown on the respective Assessment Diagram as attached hereto correspond with the numbers as appearing on the Assessment Roll as contained herein. 4. NOTICE IS HEREBY GIVEN that bonds will be issued in accordance with Division 10 of the Streets and Highways Code of the State of California (the "Improvement Bond Act of 1915"), to represent all unpaid assessments, which bonds shall be issued in one or more series, each with a term not to exceed the legal maximum term as authorized by law, THIRTY-NINE (39) YEARS from the 2nd day of September next succeeding twelve (12) months from their date. Said bonds shall bear interest at a rate not to exceed the current legal maximum rate of 12% per annum. 5. By virtue of the authority contained in said "Municipal Improvement Act of 1913", and by further direction and order of the legislative body, I hereby recommend the following Assessment to cover the costs and expenses of the works of improvement for the Assessment District based on the costs and expenses as set forth below: For particulars as to the individual assessments and their descriptions, reference is made to Table 1 (Assessment Roll) attached hereto. 6. The Method of Spread of Assessment is as set forth in the exhibit identified as Part III (Exhibit 1), which is attached hereto, referenced and so incorporated. Harris & Associates As Preliminarily Approved As Confirmed Estimated Cost of Design and Construction: $1,563,100 $1,563,100 Estimated Incidental Expenses: $222,900 $222,900 Estimated Financial Costs: $139,000 $139,000 Estimated Contribution: $0 $0 Estimated Total to Assessment: $1,925,000 $1,925,000 For particulars as to the individual assessments and their descriptions, reference is made to Table 1 (Assessment Roll) attached hereto. 6. The Method of Spread of Assessment is as set forth in the exhibit identified as Part III (Exhibit 1), which is attached hereto, referenced and so incorporated. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 8 Asmt No. Assessor's Parcel Number Total True Value Table 1 Assessment Roll Assessments as Existing Preliminarily Liens Approved Assessments as Confirmed and Recorded Value to Lien Ratio 1 42329505 $1,705,600 $0 $21,646.71 $ 21,646.71 79 2 93984035 $1,075,841 $0 $10,114.84 $ 10,114.84 106 3 93984036 $599,396 $0 $10,114.84 $ 10,114.84 59 4 42329503 $52,509 $0 $20,163.27 $ 20,163.27 3 5 42329502 $132,495 $0 $18,536.85 $ 18,536.85 7 6 42329501 $304,903 $0 $20,027.95 $ 20,027.95 15 7 42329201 $208,875 $0 $22,537.79 $ 22,537.79 9 8 42329512 $966,141 $0 $19,854.34 $ 19,854.34 49 9 93984029 $1,065,000 $0 $9,925.90 $ 9,925.90 107 10 93984030 $1,050,000 $0 $9,925.90 $ 9,925.90 106 11 42329510 $450,026 $0 $19,851.77 $ 19,851.77 23 12 42329509 $553,132 $0 $21,079.89 $ 21,079.89 26 13 42329508 $519,158 $0 $19,861.99 $ 19,861.99 26 14 93984015 $474,371 $0 $9,941.21 $ 9,941.21 48 15 93984016 $429,113 $0 $9,941.21 $ 9,941.21 43 16 93984008 $485,648 $0 $9,928.45 $ 9,928.45 49 17 93984009 $527,776 $0 $9,928.45 $ 9,928.45 53 18 42329603 $764,985 $0 $19,851.77 $ 19,851.77 39 19 42329602 $1,611,568 $0 $19,851.77 $ 19,851.77 81 20 42329601 $1,097,357 $0 $19,854.34 $ 19,854.34 55 21 42329301 $950,372 $0 $21,312.23 $ 21,312.23 45 22 42329302 $2,200,000 $0 $21,312.23 $ 21,312.23 103 23 42329303 $835,778 $0 $21,312.23 $ 21,312.23 39 24 42329304 $214,297 $0 $25,142.10 $ 25,142.10 9 25 42329305 $1,622,174 $0 $25,142.10 $ 25,142.10 65 26 42329614 $899,653 $0 $19,854.33 $ 19,854.33 45 27 42329615 $1,181,431 $0 $19,851.76 $ 19,851.76 60 28 42329610 $392,922 $0 $19,851.76 $ 19,851.76 20 29 42329609 $846,470 $0 $19,851.76 $ 19,851.76 43 30 42329608 $247,015 $0 $19,851.76 $ 19,851.76 12 31 42330505 $753,176 $0 $19,851.76 $ 19,851.76 38 32 42330504 $1,115,000 $0 $19,851.76 $ 19,851.76 56 33 42330503 $976,119 $0 $19,851.76 $ 19,851.76 49 34 42330502 $498,149 $0 $19,851.76 $ 19,851.76 25 35 42330501 $389,259 $0 $19,854.33 $ 19,854.33 20 36 93394072 $997,500 $0 $10,656.10 $ 10,656.10 94 37 93394073 $640,557 $0 $10,656.10 $ 10,656.10 60 38 42330102 $635,207 $0 $21,312.22 $ 21,312.22 30 39 42330103 $126,777 $0 $21,312.22 $ 21,312.22 6 40 42330104 $636,403 $0 $21,312.22 $ 21,312.22 30 41 42330105 $2,700,692 $0 $21,312.22 $ 21,312.22 127 42 42330106 $342,850 $0 $21,312.22 $ 21,312.22 16 43 42330512 $1,290,087 $0 $19,854.33 $ 19,854.33 65 44 42330511 $192,661 $0 $19,851.76 $ 19,851.76 10 45 42330510 $122,018 $0 $19,851.76 $ 19,851.76 6 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 9 Asmt No. Assessor's Parcel Number Total True Value Existing Liens Assessments as Preliminarily Approved Assessments as Confirmed and Recorded Value to Lien Ratio 46 42330509 $1,357,695 $0 $19,851.76 $19,851.76 68 47 42330508 $720,904 $0 $21,337.76 $21,337.76 34 48 42330604 $79,874 $0 $19,851.76 $19,851.76 4 49 42330603 $725,923 $0 $19,851.76 $19,851.76 37 50 42330614 $2,282,697 $0 $19,851.76 $19,851.76 115 51 42330613 $2,270,617 $0 $19,851.76 $19,851.76 114 52 93394130 $566,158 $0 $9,899.08 $9,899.08 57 53 93394131 $582,472 $0 $9,899.08 $9,899.08 59 54 42330201 $807,117 $0 $21,312.22 $21,312.22 38 55 42330202 $895,191 $0 $21,312.22 $21,312.22 42 56 42330203 $127,742 $0 $21,312.22 $21,312.22 6 57 42330204 $886,223 $0 $21,312.22 $21,312.22 42 58 42330205 $692,944 $0 $21,312.22 $21,312.22 33 59 42330206 $841,471 $0 $21,312.22 $21,312.22 39 60 42330611 $1,407,572 $0 $19,851.76 $19,851.76 71 61 42330610 $1,408,839 $0 $19,851.76 $19,851.76 71 62 42330609 $1,008,523 $0 $19,851.76 $19,851.76 51 63 93394017 $120,013 $0 $9,925.89 $9,925.89 12 64 93394018 $158,990 $0 $9,925.89 $9,925.89 16 65 42330607 $96,400 $0 $19,851.76 $19,851.76 5 66 42330705 $559,533 $0 $20,459.43 $20,459.43 27 67 42330704 $81,079 $0 $20,581.99 $20,581.99 4 68 42330703 $86,137 $0 $20,581.99 $20,581.99 4 69 42330702 $1,342,437 $0 $20,581.99 $20,581.99 65 70 42330701 $423,577 $0 $20,584.54 $20,584.54 21 71 42330301 $503,045 $0 $20,947.10 $20,947.10 24 72 42330302 $153,777 $0 $20,947.10 $20,947.10 7 73 42330303 $139,359 $0 $20,947.10 $20,947.10 7 74 42330304 $2,150,000 $0 $20,947.10 $20,947.10 103 75 42330305 $128,426 $0 $20,947.10 $20,947.10 6 76 42330306 $301,410 $0 $20,947.10 $20,947.10 14 77 42330307 $184,967 $0 $20,949.67 $20,949.67 9 78 42330711 $157,967 $0 $20,581.99 $20,581.99 8 79 42330710 $205,557 $0 $20,581.99 $20,581.99 10 80 42330709 $684,218 $0 $20,581.99 $20,581.99 33 81 42330708 $1,020,328 $0 $20,581.99 $20,581.99 50 82 93394010 $436,358 $0 $9,688.43 $9,688.43 45 83 93394011 $459,714 $0 $9,688.43 $9,688.43 47 84 42330806 $902,265 $0 $18,248.32 $18,248.32 49 85 42330805 $1,541,008 $0 $21,184.56 $21,184.56 73 86 42330804 $181,801 $0 $19,716.44 $19,716.44 9 87 42330803 $1,325,974 $0 $19,716.44 $19,716.44 67 88 42330802 $398,085 $0 $19,716.44 $19,716.44 20 89 42330801 $903,814 $0 $19,716.44 $19,716.44 46 90 42330401 $1,818,478 $0 $20,947.10 $20,947.10 87 91 42330402 $922,752 $0 $20,947.10 $20,947.10 44 92 42330403 $783,933 $0 $20,947.10 $20,947.10 37 93 42330404 $1,527,043 $0 $20,947.10 $20,947.10 73 94 42330405 $302,345 $0 $20,947.10 $20,947.10 14 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 10 Asmt No. Assessor's Parcel Number Total True Value Existing Liens Assessments as Preliminarily Approved Assessments as Confirmed and Recorded Value to Lien Ratio 95 42330406 $392,681 $0 $20,947.10 $20,947.10 19 96 42330407 $790,927 $0 $20,949.67 $20,949.67 38 97 42330814 $589,797 $0 $19,716.44 $19,716.44 30 98 42330813 $292,316 $0 $19,716.44 $19,716.44 15 99 42330812 $240,188 $0 $19,716.44 $19,716.44 12 100 93394109 $943,000 $0 $9,859.49 $9,859.49 96 101 93394110 $751,533 $0 $9,859.49 $9,859.49 76 102 42330810 $270,242 $0 $19,716.44 $19,716.44 14 103 42330809 $71,723 $0 $19,716.44 $19,716.44 4 Total $75,885,620 $1,925,000.00 $1,925,000.00 39 Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave / 38th St / Balboa Blvd and 44th St) Final Engineer's Report Page 11 Table 2 Debt Limit Valuation A. ESTIMATED BALANCE TO ASSESSMENT $1,925,000 B. UNPAID SPECIAL ASSESSMENTS $0 TOTAL A & B $1,925,000 C. TRUE VALUE OF PARCELS $75,885,620 ** AVERAGE VALUE TO LIEN RATIO 39:1 Unpaid Special Assessments shall consist of the total principal sum of all unpaid special assessments previously levied or proposed to be levied other than in the instant proceedings. ** True Value of Parcels means the total value of the land and improvements as estimated and shown on the last equalized roll of the County or as otherwise reasonably calculated. This report does not represent a recommendation of parcel value, economic viability or financial feasibility, as that is not the responsibility of the Assessment Engineer. CERTIFICATION I, the undersigned Assessment Engineer, do hereby certify that (i) the total amount of the principal sum of the special assessments proposed to be levied, together with the principal amount of previously levied special assessments, as set forth above, do not exceed one-half (1/2) the total true value of the parcels proposed to be assessed, and (ii) the amount proposed to be assessed upon any parcel does not exceed one-half of the true value of the parcel. EXECUTED on December 22, 2015. M:/:11INNe`.Y.Y�Zy/IN1111 .y '21", ALISON M. BOULEY, P.E. R.C.E. NO. C61383 ASSESSMENT ENGINEER CITY OF NEWPORT BEACH COUNTY OF ORANGE, STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 12 Exhibit 1 Method and Formula of Assessment Spread Since the improvements are to be funded by the levying of assessments, the "Municipal Improvement Act of 1913" and Article XIIID of the State Constitution require that assessments must be based on the special benefit that the properties receive from the works of improvement. In addition, Section 4 of Article XIIID of the State Constitution requires that a parcel's assessment may not exceed the reasonable cost of the proportional special benefit conferred on that parcel. Section 4 provides that only special benefits are assessable and the local agency levying the assessment must separate the general benefits from the special benefits. It also provides that parcels within a district that are owned or used by any public agency, the State of California, or the United States shall not be exempt from assessment unless the agency can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. Neither the Act nor the State Constitution specifies the method or formula that should be used to apportion the costs to properties in any special assessment district proceedings. The responsibility for recommending an apportionment of the costs to properties which specially benefit from the improvements rests with the Assessment Engineer, who is appointed for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. In order to apportion the assessments to each parcel in direct proportion with the special benefit which it will receive from the improvements, an analysis has been completed and is used as the basis for apportioning costs to each property within the Assessment District. Based upon an analysis of the special benefit to be received by each parcel from the construction of the works of improvement, the Assessment Engineer recommends the apportionment of costs as outlined below. The final authority and action rests with the City Council after hearing all testimony and evidence presented at a public hearing, and tabulating the assessment ballots previously mailed to all record owners of property within the Assessment District. Upon the conclusion of the public hearing, the City Council must make the final determination whether or not the assessment spread has been made in direct proportion to the special benefits received by each parcel within the Assessment District. Ballot tabulation will be done at that time and, if a majority of the returned ballots weighted by assessment amount are not in opposition to the Assessment District, the City Council may form the Assessment District. The following sections set forth the methodology used to apportion the costs of the improvements to each parcel. SPECIAL BENEFITS In further making the analysis, it is necessary that the properties receive a special benefit distinguished from general benefits conferred on real property located in the District or to the public at large. The purpose of this Assessment District is to provide the financing to underground existing overhead electrical, telephone and cable facilities as well as rehabilitate the affected portions of streets and alleys within the District. These facilities are the direct source of service to the properties within the Assessment District. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 13 The proposed replacement of existing overhead utility facilities (power, telephone and cable facilities) with underground facilities and removal of the existing utility poles and the overhead wires will provide a special benefit to the parcels connected to and adjacent to, or in near proximity of, the facilities as follows: Improved Aesthetics Benefit. This benefit relates to the improved aesthetics of the streetscape due to the removal of overhead wires and utility poles. For the purposes of this report, a street is defined as either a street or alley. The removal of guy wires and other support structures related to the overhead facilities are included in the definition of improved aesthetics. Properties that are directly adjacent to overhead facilities receive an aesthetic benefit. This benefit is based on the area of the parcel. Additional Safety Benefit. This benefit relates to the additional safety of having the overhead distribution wires placed underground and having the power poles removed, which eliminates the threat of downed utility lines and poles due to wind, rain and other unforeseeable events. Falling facilities can lead to personal injuries and damage to structures, including fire. Properties immediately adjacent to the facilities usually have a greater risk. Furthermore, in compact communities like the Balboa Peninsula, the negative effects of falling lines and poles are more widespread including blocked roadways and alleys, and property damage due to impact. Properties that are adjacent to, or in proximity of, overhead facilities receive a safety benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the Assessment District boundary. Connection Benefit. This benefit relates to the enhanced reliability of service from the utilities being underground, due to having all new wires and equipment and having that equipment underground, which reduces the threat of service interruption from downed lines. When compared to overhead systems, fewer outages occur due to various acts of nature, traffic collisions and obstructions (such as trees). Properties that are connected to, or have the ability to connect to, the facilities proposed to be undergrounded receive a connection benefit. This benefit is equal for all parcels receiving this benefit and is therefore based on the average parcel area within the assessment district boundary. By virtue of such special benefits, the proposed improvements will provide a higher level of service, increase the desirability of the properties and will specifically enhance the values of the properties within the Assessment District. In addition, properties will receive easier access to garage parking within the residential alleyways. Therefore, the proposed improvements are of direct and special benefit to these properties. GENERAL BENEFITS Section 4 of Article XIIID requires that the general benefits imparted by the utility undergrounding project be separated from the special benefits and that only the special benefit portion of the costs of the project be assessed against those parcels which are identified as receiving special benefits. Separating the general from the special benefits requires an examination of the facts and circumstances of the project and the property being assessed. In this particular assessment district, the streets and alleys along which the existing overhead utility facilities are being undergrounded function as local and collector streets. No other roadways are designated as an arterial, a major arterial or a scenic corridor in the Transportation Element of the City's General Plan. Furthermore, the City has an established network of arterial streets which Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 14 appear to function as intended to provide for the movement of traffic around and through the community at large without the need to utilize local collector streets for such purposes. Under these circumstances, any use of the streets within the Assessment District as "through" streets is incidental. The properties situated within the Assessment District are used almost exclusively as residential. Under this circumstance, the impacts, both visual and safety, are largely isolated to those properties (and the persons who inhabit them) which front on these local streets and alleys, with only incidental impacts on those who visit homes within the Assessment District or who pass through the Assessment District on trips originating outside the boundary and having a destination outside the boundary. Based on these facts and circumstances, any general benefits to the property within the Assessment District, to the surrounding community and to the public at large from the project of undergrounding these local overhead utility facilities on the local streets and alleys, such as to the general public visiting in cars, on bikes or on foot, are incidental and do not exceed five percent (5%) of the estimated project costs. This general benefit portion of the cost is more than offset by the estimated 20 percent (20%) utility company contribution. Therefore, the remainder of the project design and construction costs represents the local and special benefits to the parcels within the Assessment District. Because only the net amount of $1,925,000 is apportioned to the parcels within the District, no parcel is assessed more than its proportional share of the special benefits from the improvements. METHODOLOGY Based upon the findings described above, the special benefit received by the properties within the boundaries of the Assessment District is the conversion from an overhead to an underground utility system resulting in additional safety, enhanced reliability, and improved aesthetics to the adjacent properties. Based on these conditions, it is our conclusion that the improvements specially benefit all assessed properties in the Assessment District. To establish the benefit to the individual parcels within the Assessment District, the highest and best use of each property is considered. For example, a vacant property is considered developed to its highest potential and connected to the system. The more a property is developed, the more it benefits from the proposed improvements. Most of properties within this Assessment District are zoned residential and some have one or two dwelling units on them. There is a direct correlation between the size of a property and the extent to which a property may develop. Because parcel size is one of the main limiting factors for what can be built on a property, or the extent the property is developed, the size of each parcel is used as the base unit for measuring benefit. Consideration was given to reducing the amount of area assigned to parcels based upon the building setbacks applicable to each parcel. Due to the combined factors of (a) significant variations in the setback requirements, including front, side and rear setbacks, (b) availability of future variances from currently applicable setback requirements as well as existing variances already in place, and (c) significant variations in the ratios between building size and lot size, it was concluded that adjustments to parcel areas on account of setback requirements would not improve upon the assessment methodology. Accordingly, no reductions have been made to parcel area based upon applicable setback requirements or the existence of easements within those setbacks. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 15 The area of a condominium is calculated by taking the area of the base parcel and dividing by the number of condominiums. The special benefits from the undergrounding of overhead utilities are categorized into the three (3) distinct benefits identified above. All parcels within the District, except for any exceptions identified below, receive 3 of the 3 benefits. For the Improved Aesthetics Benefit the parcel area is multiplied by 1 to calculate the "Aesthetics Benefit Area". For the "Additional Safety Benefit", each parcel is considered to receive 1 unit of benefit. For condominiums, each unit is assigned a 0.5 safety benefit unit. The average parcel size, 2,674 square feet, is multiplied by the safety benefit factor to calculate the "Safety Benefit Area". For the Connection Benefit, each lot is assigned 1 benefit unit. For condominiums, each unit is assigned a 0.5 connection benefit. The average parcel area, 2,674 square feet, within the district is multiplied by the benefit unit for each parcel to determine "Connection Benefit Area". The Assessed Benefit Area per parcel is equal to the Aesthetics Benefit Area plus the Safety Benefit Area plus the Connection Benefit Area, divided by 3. See Appendix A for the assessment calculations for each parcel within the District. Exceptions There are no exceptions to the above methodology. ASSESSMENT APPORTIONMENT Each parcel will be apportioned its fair share of the construction costs based on the Assessed Benefit Area calculated for each property. Incidental Expenses and Financial Costs have been assessed to the entire Assessment District on a prorata basis relative to the total construction cost allocations. The individual assessment calculations are provided in Appendix A. For particulars to the Assessment Roll, reference is made to Table 1 in Part III of this report. In conclusion, it is my opinion that the assessments for the referenced Assessment District have been spread in direct accordance with the special benefits that each parcel receives from the works of improvement. DATED: December 22, 2015 pFESS( p� N0. C61383 9 OF C HARRIS & ASSOCIATES �4clx - ALISON M. BOULEY, Of. R.C.E. No. C61383 ASSESSMENT ENGINEER CITY OF NEWPORT BEACH COUNTY OF ORANGE, STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No.116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 16 I, r LVVQq( I , as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was filed in my office on the Z lA day of r-! , 201 V SEW PO O d' F ITY LERK U CITY OF NEWPORT BEACH STATE OF CALIFORNIA F0 WOP. I, VQW( 1. ppoo , as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was preliminarily approved by the City Council of the CITY OF NEWPORT BEACH, CALIFORNIA, on thelR day of NOV , 20 1 &- CITY LERK m CITY OF NEWPORT BEACH r? STATE OF CALIFORNIA I, [,�,tutnli - Q of as CITY CLERK of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing Assessment, together with the Diagram attached thereto, was approved and confirmed by the City Council of said City on the 1 '- day of r]A, 20AU PO�� c CITY CLERK } n CITY OF NEWPORT BEACH STATE OF CALIFORNIA �qL! FOR�-; I, , as SUPERINTENDENT OF STREETS of the CITY OF NEWPORT BEACH, CALIFORNIA do hereby certify that the foregoing As ssment, together with the Diagram attached thereto, was recorded in my office on the day of , 20_ SUPERI ENDENT OF STREETS CITY OF NEWPORT BEACH STATE OF CALIFORNIA Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 17 Part IV Annual Administrative Assessment A proposed maximum annual administrative assessment shall be levied on each parcel of land and subdivision of land within the Assessment District to pay for necessary costs and expenses incurred by the CITY OF NEWPORT BEACH, and not otherwise reimbursed, resulting from the administration and collection of assessments, from the administration or registration of any bonds and reserve or other related funds, or both. The maximum assessment is authorized pursuant to the provisions of Section 10204(f) of the Streets and Highways Code and shall not exceed fifty dollars ($50) per parcel per year, subject to an annual increase based on the Consumer Price Index (CPI), during the preceding year ending in January, for all Urban Consumers in the Los Angeles, Riverside, and Orange County areas. The exact amount of the administration charge will be established each year by the Superintendent of Streets. The annual administrative assessment will be collected in the same manner and in the same installments as the assessment levied to pay for the cost of the works of improvement. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 18 Part V Diagram of Assessment A reduced copy of the Assessment Diagram is attached hereto. Full-sized copies of the Boundary Map and Assessment Diagram are on file in the Office of the City Clerk, of the City of Newport Beach. As required by the Act, the Assessment Diagram shows the exterior boundaries of the Assessment District and the assessment number assigned to each parcel of land corresponding to its number as it appears in the Assessment Roll contained in Part III Table 1. The Assessor's Parcel Number is also shown for each parcel as they existed at the time of the passage of the Resolution of Intention and reference is hereby made to the Assessor's Parcel Maps of the County of Orange for the boundaries and dimensions of each parcel of land. Harris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 19 a � LL �fil';I M ®� d HIM! gg s g� � 61 9i u L ---j .n KM ®4 too ao! o� �s RM + no CO. �. ce ®o; e���� ®mI R®�� � is Kim + lL I + Fn La Z -W ,1s tti e W =�� i{{ r��ff11W����� 4 r/Z Of _ a LL Samoa zu P a�0 (h� rL 19 FUM �4� MHarris & Associates City of Newport Beach December 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 20 Part VI Description of Facilities Section 10100 of the Act provides for the legislative body of any municipality to finance certain capital facilities and services within or along its streets or any public way or easement. The following is a list of proposed improvements as allowed under the Act to be installed, or improved under the provisions of the Act, including the acquisition of required right-of-way and/or property. For the general location of the improvements to be constructed referenced is hereby made to the Plans and Specifications described in Part I of this report. The following improvements are proposed to be constructed and installed in the general location referred to as Assessment District No. 116. 1. Acquisition of any required easements or rights-of-way. 2. Removal of existing utility poles. 3. Removal of overhead resident service drops. 4. Construction of mainline underground power, telephone and cable conduit, with appurtenant manholes and pullboxes, and installation of cabling, wiring and other facilities. 5. Construction of service conduit and appurtenances. The improvements will be designed by the Southern California Edison Company, AT&T and Time Warner Cable. The utility companies will be responsible for inspecting the work for their facilities and the City of Newport Beach will inspect the work to ensure conformance to City standards and specifications where applicable. The City will also construct additional pavement rehabilitation as needed for the project. Once completed, the underground facilities will become the property and responsibility of Southern California Edison Company, AT&T, and Time Warner Cable. Each owner of property located within the Assessment District will be responsible for arranging for and paying for work on his or her property necessary to connect facilities constructed by the public utilities in the public streets and alleys to the points of connection on the private property. Conversion of individual service connections on private property is not included in the work done by the Assessment District. The estimated time for completion of the undergrounding of the utilities is 36 months after the sale of bonds. Property owners will be required to provide necessary underground connections within 120 days of the completion of the underground facilities. Failure to convert individual service connections on private property may result in a recommendation to the City Council that the public utilities be directed to discontinue service to that property pursuant to Section 15.32 of the Municipal Code. Overhead facilities cannot be removed until all overhead service has been discontinued. Harris & Associates City of Newport Beach Uecember 22, 2015 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th St) Final Engineer's Report Page 21 Right -of -Way Certificate STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned hereby CERTIFIES UNDER PENALTY OF PERJURY that the following is all true and correct_ That at all time herein mentioned, the undersigned was, and now is, the authorized representative of the duly appointed SUPERINTENDENT OF STREETS of the CITY OF NEWPORT BEACH, CALIFORNIA. That there have now been instituted proceedings under the provisions of Article XIIID of the California Constitution, and the "Municipal Improvements Act of 1913," being Division 12 of the Streets and Highways Code of the State of California, for the construction of certain public improvements in a special assessment district known and designated as ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"). THE UNDERSIGNED STATES AND CERTIFIES AS FOLLOWS: All casements or right-of-way necessary for the construction and installation of the public improvements of the Assessment District either have been obtained or are in process of being obtained and will be obtained and in the possession of the affected utility company, the City, the C'niinhi of Oranvr nr tl-ic. Ctntp of falifnrnia rwinr to r-nmmpnrpmant of the consmiction and installation of such public improvements. j EXECUTED this day of I V l)Ve•yt �e—K 2015, at CITY OF NEWPORT BEACH CALIFORNIA. SUPERINTENDENT OF STREETS CITY OF NEWPORT BEACH STATE OF CALIFORNIA DAVID WEBB, Harris & Associates City of Newport Beach December 22, 2415 Underground Utility Assessment District No. 116 (Channel east of River Ave 138th St I Balboa Blvd and 44th 5t) Final Engineer's Report Page 22 Certificate of Completion of Environmental Proceedings STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH The undersigned, under penalty of perjury, CERTIFIES as follows: 1. That l am the person who authorized to prepare and process all environmental documentation as needed as it relates to the formation of the special Assessment District being fonned pursuant to the provisions of the "Municipal Improvement Act of 1913" being Division 12 of the Streets and Highways Code of the State of California, said special Assessment District known and designated as UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 116 (hereinafter referred to as the "Assessment District"). 2. The specific environmental proceedings relating to this Assessment District that have been completed are as follows: CEQA compliance review: The proposed project is Categorically Exempt (Class 2) fiom the provisions of CEQA (replacement or reconstructions). 3. I do hereby certify that all environmental evaluation proceedings necessary for the formation of the Assessment District have been completed to my satisfaction, and that no further environmental proceedings are necessary, EXECUTED this �� day of , 2015, at CITY OF NEWPORT BEACH, CALIFORNIA. By: DAVID WEBB, P.E. 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Unless the context otherwise requires, the following terms have the meanings set forth in the Fiscal Agent Agreement: "Administrative Expense Fund" means the City of Newport Beach Assessment District No. 116 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 under the Agreement (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 under the Agreement and, in the case of the City, in any way related to the administration of the Assessment District. "Agreement" means the Fiscal Agent Agreement, dated as of July 1, 2019, by and between the City and the Fiscal Agent, as amended or supplemented pursuant to the terms thereof. "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. 116. "Assessment Fund" means the City of Newport Beach Assessment District No. 116 Assessment Fund established and held by the City pursuant to the Agreement. "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 C-1 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) (except those described in 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 will 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 will be responsible for making any market value determinations, and the security interest will 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 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 City" 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 Stifel, Nicolaus & Company, Incorporated, as the initial purchaser of the 2019A Bonds. "Bond Register" means the books which the Fiscal Agent keeps or causes to be kept pursuant to the Agreement, on which the registration and transfer of the Bonds will 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 2019A 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. C-2 "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. "County" means the County of Orange. "Costs of Issuance Fund" means the City of Newport Beach Assessment District No. 116 Costs of Issuance Fund established with the Fiscal Agent pursuant to the Agreement. "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 Harris & Associates, as preliminarily approved by the City on November 10, 2015, and approved in final form by the City on January 12, 2016, 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 the Agreement and any successor thereto. "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period 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. 116 Improvement Fund established pursuant to the 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 Payment Date" means each March 2 and September 2, commencing September 2, 2019. C-3 "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 Assessment" means the Notice of Assessment recorded in the Office of the County Recorder of the County of Orange on May 11, 2016, as Document No. 2016000210856. "Outstanding Bonds" or "Outstanding" means all Bonds theretofore issued by the City, except: (1) Bonds theretofore canceled or surrendered for cancellation in accordance with the Agreement; (2) Bonds for the payment or redemption of which moneys will 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 will have been given as provided in the Agreement; and (3) Bonds defeased pursuant to the Agreement. "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 the Agreement in which there are established the accounts described in the Agreement. "Rebate Regulations" means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code. "Rebate Requirement" has 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. 116 Redemption Fund established with the Fiscal Agent pursuant the Agreement. "Reserve Fund" means the City of Newport Beach Assessment District No. 116 Reserve Fund established with the Fiscal Agent pursuant to the Agreement. "Reserve Requirement" means, as of any date of calculation, 50% of the then maximum annual debt service due on the Bonds. C-4 "Resolution of Formation" means Resolution No. 2016-6, adopted by the City Council on November January 12, 2016, 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. 2015-97, adopted by the City Council of the City on November 10, 2015, stating the City's intention, among other things, to issue the Bonds. "Resolution of Issuance" means Resolution No. 2019-62, adopted by the City Council of the City on June 25, 2019, authorizing the issuance of the Bonds and approving the terms and provisions of the 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 the Agreement. "Tax Certificate" means the Tax Certificate delivered upon the issuance of the 2019A Bonds. "Treasurer" means the City Treasurer or the City Manager, or his or her designee. "2019A Bonds" means City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A issued pursuant to the Resolution of Issuance and the Agreement. "Yield on the Bonds" has the meaning as described in the Tax Certificate. Equality of Bonds; Pledge of Assessments; No Oblijzation to Cure Deficiency. Pursuant to the 1913 Act, the 1915 Act and the Agreement, the Bonds are equally secured by a first pledge of and will 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 will be exclusively paid from the Assessments. The Bonds will also be secured by a first pledge of moneys on deposit in the Assessment Fund, Redemption Fund and the Reserve Fund which are set aside for the payment of the Bonds. The Assessments, the amounts in the foregoing funds and any interest earned on such amounts will 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 will not be used for any other purpose, except as permitted by the 1913 Act, the 1915 Act, the Agreement or any Supplemental Fiscal Agent Agreement. AUTHORIZATION AND ISSUANCE OF BONDS 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 has been made to the Notice of Assessment and to the diagram recorded in the office of the Superintendent of Streets after confirmation of the C-5 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 will cease in the event sufficient moneys are available to redeem the Bonds as provided in the Agreement. Type and Nature of Bonds; Limited Liability. Notwithstanding anything contained in the Agreement, 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 the Agreement are a special obligation of the City, and the City will 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 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, are liable personally on the Bonds or 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. TERMS AND PROVISIONS OF BONDS Terms of Bonds. (a) The interest on and principal of, including mandatory sinking fund payments, and redemption premiums, if any, on the Bonds are 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 will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. (b) All Bonds will be initially issued in the form of a separate single certificated fully registered Bond for each maturity date, and the ownership of each Bond will 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 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 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 will 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 will 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 will 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 the 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 in the Agreement with respect to record dates, the word "Cede & Co." in the Agreement refers to such new nominee of DTC. C-6 (d) The delivery of a representation letter by the City and the Fiscal Agent does not in any way limit the provisions of clause (b) above 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 will 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 clause (e)(ii)(B) above, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to clause (e)(i) or clause (e)(ii)(A) above after which no substitute securities depository willing to undertake the functions of DTC under the Agreement 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 the Agreement and the Bonds will 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 designates to the Fiscal Agent in writing, in accordance with the provisions of the Agreement. (f) Notwithstanding any other provisions of the 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 will be made and given, respectively, in the manner provided in the DTC representation letter for the Bonds. (g) Each Bond will 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 will 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 will 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 will 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 will 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 will 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. C-7 (h) The Bonds will 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 will 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 will 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 to the Agreement is conclusive evidence of their validity and of the regularity of their issuance and all Bonds will be incontestable from and after their issuance. Bonds will be deemed to be issued, within the meaning of the Agreement, whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) have been delivered to the purchaser thereof and the purchase price thereof received. Bond Re ig ster. 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 will 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 will, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds as provided in the Agreement. 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 will 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 is 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. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond becomes mutilated, the City will execute, and the Fiscal Agent will 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 will be handled in accordance with the Agreement. If any Bond is 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 is given, the City, at the expense of the Bondowner, will execute and the Fiscal Agent will authenticate and deliver, a new Bond of like tenor and maturity, numbered and dated as such Fiscal Agent determines 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 will be equally and proportionately entitled to the benefits of the Agreement with all other Bonds issued thereunder. The Fiscal Agent may 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 under the Agreement, but both the original and replacement bond will be treated as one and the same. Notwithstanding any other provision of the Agreement, 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. 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 will be substantially in the form provided in the Agreement. Until definitive Bonds are 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 will be entitled and subject to the same benefits and provisions of the 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 C-8 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 will be canceled by the Fiscal Agent and will not be reissued. REDEMPTION OF BONDS Selection of Bonds for Redemption. If less than all of the Outstanding Bonds are to be redeemed, the City will 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 will be approximately the same in each maturity of the Bonds insofar as possible, and the Fiscal Agent will 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 will 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 provided in the Agreement. 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 will disburse moneys in the Prepayment Account for such purpose upon written direction of the City. Notice of Redemption. When Bonds are to be called for redemption under the Agreement and the Fiscal Agent has received the required notice from the City, the Fiscal Agent will give notice, in the name of the City, of the redemption of such Bonds. Such notice of redemption will (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 will further state that on the date fixed for redemption, there will 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 will 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 will 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 will not be a condition precedent thereto, and failure to receive such notice will 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 provided in the Agreement will be conclusive as against all parties. A notice of redemption for a redemption pursuant to clause (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 will not occur and the Bonds will remain Outstanding under the Agreement. If any redemption is cancelled due to a lack of sufficient funds, the Fiscal Agent will 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. The Fiscal Agent will 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 affects 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 will 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. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the City will execute and the Fiscal Agent will 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. Effect of Notice and Availability of Redemption MoneX. Notice of redemption having been duly given, as provided in the Agreement, 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 will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Agreement, anything in the 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 will be paid to the Owner thereof; (c) from and after the redemption date the Bonds or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds or portions thereof will 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 will be entitled to any of the benefits of the 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. CREATION OF FUNDS AND ACCOUNTS; APPLICATION OF PROCEEDS AND ASSESSMENTS Funds and Accounts. There have been created and established the following funds and accounts, which funds and accounts the City has agreed and covenanted to maintain with the Fiscal Agent so long as any Bonds are Outstanding under the Agreement: (a) the City of Newport Beach Assessment District No. 116 Costs of Issuance Fund (the "Costs of Issuance Fund"); (b) the City of Newport Beach Assessment District No. 116 Redemption Fund (the "Redemption Fund"), in which there will be established and created a Principal Account, an Interest Account and a Prepayment Account; (c) the City of Newport Beach Assessment District No. 116 Reserve Fund (the "Reserve Fund"); and (d) the City of Newport Beach Assessment District No. 116 Improvement Fund (the "Improvement Fund"). The City has covenanted and agreed to establish with the Treasurer the City of Newport Beach Assessment District No. 116 Administrative Expense Fund (the "Administrative Expense Fund") and the City of Newport Beach Assessment District No. 116 Assessment Fund (the "Assessment Fund"). Except for the Administrative Expense Fund, all moneys in the funds and accounts established under the Agreement will be held by the Fiscal Agent and the Treasurer for the benefit of the Bondowners (other than the Improvement Fund), will be accounted for separately and apart from all other accounts, funds, money or other resources of the City held by the Fiscal Agent and will be allocated, applied and disbursed solely to the uses and purposes set forth in the Agreement. C-10 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 the Agreement or any Supplemental Fiscal Agent Agreement and will establish any additional funds, accounts or subaccounts which the City directs it to establish. Assessment Fund. Upon receipt of Assessment Installments, the Treasurer will 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, 2019, the City will 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; and (c) the Reserve Fund, the amount needed to restore the Reserve Fund to the Reserve Requirement; (d) the Rebate Fund, the amount, if any, as specified in a written direction of the City. Any moneys remaining in the Assessment Fund after the deposits described above will be transferred by the Treasurer to the Prepayment Account of the Redemption Fund to redeem Bonds as provided in the Agreement. To the extent that the amounts in the Assessment Fund are insufficient to redeem Bonds in an authorized denomination, such moneys will be used for the payment of interest or principal, including mandatory sinking fund payments, on the next Interest Payment Date. The City will 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 will be paid to the City. Redemption Fund. The principal of, including mandatory sinking fund payments, and interest on the Bonds until maturity will 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 will be transferred to the Assessment Fund. (a) On or prior to the first day of March or September of each year, commencing September 1, 2019, the Fiscal Agent will 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 will be equal to the installment of interest due on the Bonds on said Interest Payment Date. Moneys in the Interest Account will 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, 2020, the Fiscal Agent will 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 will 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, will be transferred to the Assessment Fund. (d) Moneys set aside in the Prepayment Account of the Redemption Fund will be used solely for the purpose of redeeming Bonds and will be applied on or after the redemption date to the payment of principal of, C-11 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 will 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 the Agreement to the Prepayment Account, will be used to redeem Bonds pursuant to the Agreement or any Supplemental Fiscal Agent Agreement on the next Interest Payment Date for which proper notice pursuant to the Agreement 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 will transfer that portion, if any, of the prepayment representing accrued interest owing on the Bonds to the Interest Account of the 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, will be used to redeem Bonds as provided in the Agreement 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, will be deposited in the Prepayment Account and used to redeem Bonds as provided in the Agreement 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 will be transferred to the Assessment Fund. Reserve Fund. The Fiscal Agent will initially deposit into the Reserve Fund the amount specified in the Agreement. Thereafter, the Treasurer will transfer sufficient funds from the Assessment Fund as provided in the Agreement 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 will determine whether the amount on deposit in the Reserve Fund equals the Reserve Requirement. Moneys in the Reserve Fund will 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 will 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 will be reduced by the amount transferred from the Reserve Fund pursuant to the Agreement to the Prepayment Account of the Redemption Fund. The amount transferred will 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 will notify, or 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 will 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 will be credited toward said Assessment Installments as set forth in the Agreement: On or prior to July 1 st 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 will determine the amount remaining in the Reserve Fund, and will 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 and are payable in installments, the amount apportioned to each parcel will be credited against the last of such unpaid Assessment Installments and, if the amount apportioned to G12 each parcel exceeds the amount of said last installment, then such excess will be credited against the next to last of such Assessment Installments. Notwithstanding any provisions in the Agreement to the contrary, moneys in the Reserve Fund in excess of the Reserve Requirement will be withdrawn from the Reserve Fund by the Fiscal Agent on or before each February 15 and August 15, and will 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 will be transferred to the Redemption Fund and will be used as provided in the Agreement. Rebate Fund. (a) The Fiscal Agent will establish and maintain a fund separate from any other fund established and maintained under the Agreement designated as the Rebate Fund and will 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 will 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 will be governed by the Agreement 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 will be satisfied with respect to the Rebate Account: (A) Annual Computation. Within 55 days of the end of each Bond Year, the City will 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'/z% 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 will obtain expert advice as to the amount of the Rebatable Arbitrage to comply with the Agreement. (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 will 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 will equal the amount of Rebatable Arbitrage so calculated by or on behalf of the City in accordance with clause (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 instructions from an Authorized Representative of the City, the Fiscal Agent will withdraw the excess from the Rebate Account and then credit the excess to the Assessment Fund. (C) Payment to the Treasury. The Fiscal Agent will 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 C-13 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 will 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 clause (a)(i)(C) will be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and will be accompanied by Internal Revenue Service Form 8038-T, or will be made in such other manner as provided under the Code. (ii) Alternative Penalty Account. (A) Six -Month Computation. If the 1'/2% Penalty has been elected for the Bonds, within 85 days of each particular Six -Month Period, the City will determine or cause to be determined whether the 1'V2% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six -Month Period. The City will 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, will deposit an amount in the Alternative Penalty Account from any source of funds held by the Fiscal Agent pursuant to the 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'/2% Penalty due and payable to the United States Treasury determined as provided in clause (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 clause (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 will 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 -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 will 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 clause (a)(ii)(C) will be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and will be accompanied by Internal Revenue Service Form 8038-T or will 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 clause (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 the Agreement to the contrary, the obligation to comply with the requirements related to the Rebate Fund will 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. The provisions related to the Rebate Fund 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. C-14 Improvement Fund. The moneys in the Improvement Fund will be applied to pay the costs of the Improvements and will 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. 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 will 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. Investments. Moneys held in any of the funds and accounts under the Agreement will be invested at the written direction of an Authorized Representative of the City only in Authorized Investments which will be deemed at all times to be a part of such funds and accounts. The Fiscal Agent will provide monthly statements or reports of the principal balances and investment earnings thereon in each fund and account maintained by the Fiscal Agent under the Agreement. Authorized Investments will 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 rely upon the written instructions of the Authorized Representative as to both the suitability and legality of directed investments. Directions as to the purchase of all Authorized Investments will be subject to the limitations set forth in the Agreement 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 will 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 the Agreement. Moneys in the Reserve Fund will 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 the Agreement will be retained therein, except as transfers from such funds or accounts are authorized in the Agreement. For investment purposes only, the Fiscal Agent may commingle the funds and accounts established under the Agreement, and administered by the Fiscal Agent, but will account for each separately. Notwithstanding anything to the contrary contained in the Agreement, 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 will 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 will be valued at the lower of the cost or the market value thereof, exclusive of accrued interest. Amounts in the Reserve Fund will 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 will 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 will sell, or present for redemption, any Authorized Investment so purchased whenever it is 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 the Agreement, the Fiscal Agent will 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 the Agreement. C-15 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 will invest solely in Authorized Investments set forth in clause (3) of the definition thereof. The Fiscal Agent may 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 the Agreement and will 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 existence, validity and perfection of security interests in collateral), the Fiscal Agent will 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 the Agreement, the Fiscal Agent will not be liable to pay interest on any moneys received by it, but will be liable only to account to the City for earnings derived from funds that have been invested. The City has acknowledged 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 under the Agreement as they occur. The City has specifically waived the right to receive such confirmation to the extent permitted by applicable law and has agreed that it will instead receive periodic cash transaction statements which include detail for the investment transactions effected by the Fiscal Agent under the Agreement; provided, however, that the City retains its right to receive brokerage confirmation on any investment transaction requested by the City. 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 to the Bondowners, the Treasurer will transfer moneys on deposit in the Reassessment Fund to the Fiscal Agent and will 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 will be made before the principal of any Bonds is paid. (2) Interest on Bonds of earlier maturity will be paid before interest on Bonds of later maturity. (3) Within a single maturity, interest on lower -numbered Bonds will be paid before interest on higher -numbered Bonds. (4) The principal of Bonds will be paid in the order in which the Bonds are presented for payment. Any Bond which is presented but not paid will be assigned a serial number according to the order of presentment and will be returned to the Bondowner. When funds become available for the payment of any Bond which was not paid upon presentment, the Treasurer will 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 will 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 will fix a date for a hearing upon such notice. At the hearing the City Council must determine whether in its judgment there will ultimately be insufficient money in the Assessment Fund to pay the principal of the unpaid Bonds and interest thereon. If the City C-16 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 will 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 will 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 will cause the Fiscal Agent to notify all Bondowners to surrender their Bonds to the Treasurer for cancellation. Upon cancellation of the Bonds, the Bondowner will be credited with the principal amount of the Bond so canceled. The Treasurer will 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 will cease on principal payments made from the date of such payment, but interest will continue to accrue on the unpaid principal at the rate specified on the Bonds until payment thereof is made. No premiums will be paid on payments of principal on Bonds made pursuant to the Agreement in advance of the maturity date thereon. If a Bond is not surrendered for registration and payment, the Treasurer will cause the Fiscal Agent to give notice at the 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 will 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 will 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 Agreement. ISSUANCE OF BONDS Authorization and Designation of Bonds. The City has reviewed all proceedings taken relative to the authorization of the Bonds and has found, as a result of such review, that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the 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 the Agreement, to issue the 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 in the Agreement, which Bonds are entitled to the benefit, protection and security of the provisions of the Agreement. Form of 2019A Bonds. The 2019A Bonds will be in substantially the form set forth in the Agreement. COVENANTS AND WARRANTY Warran . The City will preserve and protect the security of the Bonds and the rights of the Owners against all claims and demands of all persons. Covenants. So long as any of the Bonds are Outstanding and unpaid, the City has made the following covenants with the Owners under the provisions of the 1913 Act, the 1915 Act and the 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 has covenanted that it will receive all Assessment Installments in trust and will, consistent with the Agreement, deposit the Assessment Installments in the Assessment Fund, and the City will have no beneficial right or interest in the amounts so deposited except as provided by the Agreement. All such Assessment Installments, whether received by the City in trust or deposited with the Fiscal Agent, all as provided in the Agreement, will nevertheless be disbursed, allocated and applied solely C-17 to the uses and purposes set forth in the Agreement, and will be accounted for separately and apart from all other money, funds, accounts or other resources of the City. The City has covenanted that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond issued under the Agreement, 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 the 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 the Agreement, and that it will faithfully observe and perform all of the conditions, covenants and requirements of the Agreement and all Supplements and of the Bonds issued under the Agreement. If at any time the total balance in the Redemption Fund and the Reserve Fund is sufficient to redeem all Outstanding Bonds pursuant to the Agreement, the Treasurer may direct the Fiscal Agent to effect such redemption on the earliest date on which all Outstanding Bonds may be redeemed. 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 Lew. 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 has covenanted 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 will be made of all transactions made by its Fiscal Agent under the Agreement. Such books of record and accounts will 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 the 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 has covenanted 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. C-18 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. 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 in the Agreement. Without limiting the generality of the foregoing, the City has agreed that there will 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 will direct the Fiscal Agent to transfer to the Rebate Fund amounts sufficient to pay and will instruct the Fiscal Agent to pay to the United States Treasury any amounts required to be paid as set forth in the Agreement. (f) Collection of the Administrative Expense Requirements. The City has covenanted that it will collect annually an amount specified by the Treasurer to be the Administrative Expense Requirement to pay for Administrative Expenses. The Administrative Expense Requirement so collected will not exceed the amount specified in the Engineer's Report. Continuing Disclosure Agreement. The City has covenanted and agreed 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 the Agreement, failure of the City to comply with the Continuing Disclosure Agreements will 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 the Continuing Disclosure Agreement. `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). AMENDMENTS TO AGREEMENT 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 to the Agreement for any of the following purposes: (a) to cure any ambiguity or to correct or supplement any provisions in the Agreement provided that such action does 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 the Agreement, other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with the Agreement as theretofore in effect; (c) to modify, amend or supplement the Agreement in such manner as to permit the qualification of the Agreement under the Trust Indenture Act of 1939, as amended, or any similar federal statute later in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which will not, materially adversely affect the interests of the Owners of the Bonds; or (d) to modify, alter, amend or supplement the Agreement in any other respect which is not materially adverse to the Bondowners. Amendments Requiring Bondowner Consent. Exclusive of the Supplements described in the Agreement, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding have the right to consent to and approve such Supplements as are deemed necessary or desirable by the City for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Agreement; provided, however, that nothing in the Agreement permits, (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 C-19 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 desires to enter into a Supplement, which pursuant to the terms of the Agreement requires the consent of the Bondowners, the City will so notify the Fiscal Agent and deliver to the Fiscal Agent a copy of the proposed Supplement. The Fiscal Agent will, 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 will briefly set forth the nature of the proposed Supplement and 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 will 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 the Agreement. Whenever at any time within one year after the date of the first mailing of such notice the Fiscal Agent will 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 will refer to the proposed Supplement described in such notice, and will 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, will 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, will be disregarded and treated as though they were not Outstanding for the purpose of any such determination. Upon request, the City will designate to the Fiscal Agent those Bonds disqualified by the Agreement. 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 the Agreement, the Agreement will be, and will be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under the Agreement of the City, the Fiscal Agent and all Owners of Bonds then Outstanding will thereafter be determined, exercised and enforced under the Agreement, subject in all respects to such modifications and amendments. No Supplement pursuant to the Agreement may modify or amend any of the rights or obligations of the Fiscal Agent without its written consent thereto. The Fiscal Agent will be provided an opinion of counsel, at the expense of the City, that any such Supplement complies with the provisions of the Agreement and the Fiscal Agent may conclusively rely upon such opinion. Notation of Bonds, Delivery of Amended Bonds. After the effective date of any action taken as provided in the Agreement, 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 will be made on such Bonds. If the City so determines, new Bonds so modified as, in the opinion of the City, are necessary to conform to such action will be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds will be exchanged at the office of the Fiscal Agent without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds. FISCAL AGENT Fiscal Agent. U.S. Bank National Association has been appointed Fiscal Agent for the City for the purpose of receiving all money which the City is required to deposit with the Fiscal Agent under the Agreement and to allocate, use and apply the same as provided in the Agreement. The Fiscal Agent has been authorized to and will mail by first-class mail, postage prepaid, interest payments to the Bondowners, select Bonds for redemption, and maintain the Bond Register. The Fiscal Agent has been authorized to pay the principal of and premium, if any, on the Bonds when the same are duly presented to it for C-20 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 will perform all other duties assigned to or imposed on it as provided in the Agreement. The Fiscal Agent will keep accurate records of all funds administered by it and all Bonds paid and discharged by it. The Fiscal Agent has been authorized to pay the Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Fiscal Agent will cancel all Bonds upon payment thereof or upon the surrender thereof by the City pursuant to the Agreement. The Fiscal Agent will 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 will supply information regarding investments made under the Agreement 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 will 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 will 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. The City will 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 under the Agreement, 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 under the Agreement, which indemnity will 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 is 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 is eligible under the Agreement, will be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything in the Agreement to the contrary notwithstanding. 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 is 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 the Agreement the combined capital and surplus will be as set forth in its most recent report of condition so published. The City will notify the Bondowners in writing of any such removal of the Fiscal Agent and appointment of a successor thereto. 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 will 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 will become effective only upon the written C-21 acceptance of appointment by the successor Fiscal Agent, and notice to the Bondowners of the Fiscal Agent's identity and address. Liability of Fiscal Agent. The recitals of fact and all promises, covenants and agreements contained in the Agreement and in the Bonds will 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 the Agreement or of the Bonds, and will incur no responsibility in respect thereof other than in connection with its duties or obligations in the Agreement or in the Bonds or in the certificate of authentication assigned to or imposed upon the Fiscal Agent. The Fiscal Agent will have no duties or obligations other than as specifically set forth in the Agreement and no implied duties, covenants or obligations may be read into the Agreement against the Fiscal Agent. The Fiscal Agent is under no responsibility or duty with respect to the issuance of the Bonds for value. The Fiscal Agent is not liable in connection with the performance of its duties under the Agreement, except for its own negligence or willful misconduct. The Fiscal Agent has 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 the Agreement, or with respect to the investment of any moneys in any fund or account established, held or maintained by the City pursuant to the Agreement or otherwise. The Fiscal Agent will 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 will be full and complete authorization and protection in respect of any action taken or suffered under the Agreement and in accordance therewith. The Fiscal Agent is not 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 the Agreement the Fiscal Agent deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Agreement, such matter (unless other evidence in respect thereof is specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, will be conclusively proved and established by a written certificate of the City, and such certificate will be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of the 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 has no duty or obligations whatsoever to enforce the collection of Assessments or other funds to be deposited with it under the Agreement, or as to the correctness of any amounts received, but its liability is limited to the proper accounting for such funds as it actually receives. The Fiscal Agent has no duty or obligation to monitor the City's compliance with the 1913 Act or the 1915 Act. No provision in the Agreement requires the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Agreement, or in the exercise of its rights or powers, if it has 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 is entitled to interest on all amounts advanced by it at the maximum rate permitted by law. The Fiscal Agent has 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 also extend to its officers, directors, employees and agents. The Fiscal Agent's rights to indemnification under the Agreement and to payment of its fees and expenses will survive its resignation or removal and the final payment or defeasance of the Bonds. C-22 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 represents the Owners of the majority in principal amount of the Bonds then Outstanding. The Fiscal Agent may execute any of the trusts or powers of the Agreement and perform the duties required of it thereunder by or through attorneys, agents, or receivers, will not be responsible for the actions or omissions of such attorneys, agents or receivers if appointed by it with reasonable care, and will be entitled to advice of counsel concerning all matters of trust and its duty under the Agreement. The Fiscal Agent is not liable in connection with the performance of its duties under the Agreement, except for its own negligence or willful misconduct. The Fiscal Agent will only perform those duties specifically set forth in the Agreement and no implied duties, covenants or obligations whatsoever will be read into the Agreement. In the event of and during the continuance of an event of default, the Fiscal Agent will exercise such care in performing its duties under the Agreement as a prudent person would exercise under the circumstances in the conduct of its own affairs. No action by the Fiscal Agent will be construed or deemed to expand the limitations on the scope of the Fiscal Agent's duties. The Fiscal Agent will not be considered in breach of or in default in its obligations under the Agreement 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 created by the Agreement, 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 will look only to the funds and accounts held by the Fiscal Agent thereunder for payment, except as otherwise provided thereunder or where the Fiscal Agent has breached its standard of care as described therein. Under no circumstances will the Fiscal Agent be liable in its individual capacity for the obligations evidenced by the Bonds. The Fiscal Agent will 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 under the Agreement. In the event of conflicting instructions under the Agreement, the Fiscal Agent will have the right to decide the appropriate course of action and be protected in so doing. The Fiscal Agent has 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 will not to be deemed to have knowledge of any event of default under the Agreement unless it has actual knowledge thereof at its Principal Office. 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. C-23 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 will not be answerable for the default or misconduct of any such attorney, agent or receiver selected by it with reasonable care. EVENTS OF DEFAULT; REMEDIES Event of Default. Any one or more of the following events will 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 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 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 the Agreement or in the Bonds contained, and the continuation of such default for a period of thirty (30) days after the City has 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 will be extended to permit such default to be eliminated. Remedies of Owners. Following the occurrence of an event of default, any Owner has 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 the Agreement; (b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or (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 the Agreement, or in the Bonds, affects or impairs 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 provided in the Agreement, out of the Assessments pledged for such payment, or affects or impairs 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 the Agreement. A waiver of any default of breach of duty or contract by any Owner will 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 will impair any such right or power or will 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 the Agreement may be enforced and exercised from time to time and as often as will 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 will be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy is cumulative and is in addition to every other remedy given under the Agreement or now or later 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. C-24 In no event will the Fiscal Agent have any responsibility to cure or cause the City or any other person or entity to cure an event of default under the Agreement. DEFEASANCE Defeasance. If the City pays or causes to be paid, or there is otherwise 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 the Agreement, then the Owners of such Bonds will cease to be entitled to the pledge of Assessments and other amounts under the Agreement, and all covenants, agreements and other obligations of the City to the Owners of such Bonds under the Agreement will thereupon cease, terminate and become void and be discharged and satisfied except for the City's covenant under the Agreement. In such event, the Fiscal Agent will execute and deliver to the City all such instruments as may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent will pay over or deliver to the City after payment of any amounts due the Fiscal Agent under the Agreement all money or securities held by it pursuant to the Agreement which are not required for the payment of the interest due on, and the principal of, such Bonds. Any Outstanding Bond will be deemed to have been paid within the meaning expressed in the Agreement if such Bond is paid in any one or more of the following ways: (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 will become due and payable; or (c) by depositing with the Fiscal Agent Federal Securities in such amount as an Independent Financial Consultant determines 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 become due and payable; then, notwithstanding that such Bond has not been surrendered for payment, all obligations of the City under the Agreement with respect to such Bond ceases and terminates, 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 the Agreement. Any money or securities deposited with the Fiscal Agent to defease any Bond or Bonds will 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 under the Agreement will be paid over to the City. MISCELLANEOUS Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent for payment upon maturity or for redemption will upon payment therefor, and any Bond purchased by the City as authorized in the Agreement will be, cancelled forthwith and will not be reissued. The Fiscal Agent will destroy such Bonds as provided by law and furnish to the City a certificate of destruction. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by the 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 will be sufficient for the purposes of the Agreement (except as otherwise provided therein), if made in the following manner: C-25 (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 will also constitute sufficient proof of his authority. (b) As to any Bond, the person in whose name the same is registered in the Bond Register will 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, will be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments will 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 will not be affected by any notice to the contrary. Nothing contained in the Agreement will be construed as limiting the Fiscal Agent to such proof, it being intended that the Fiscal Agent may accept other evidence of the matters stated in the Agreement which the Fiscal Agent may deem sufficient. Any request or consent of the Owner of any Bond will 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. Unclaimed Moneys. Anything in the 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, will be repaid by the Fiscal Agent to the City, as its absolute property and free from trust, and the Fiscal Agent will thereupon be released and discharged with respect thereto and the Owners will 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 will, 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 will 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. Provisions Constitute Contract; Successors. The provisions of the Agreement constitute a contract between the City and the Bondowners and the provisions of the Agreement will 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 is brought or taken and the Fiscal Agent prevails, the Fiscal Agent is 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 will 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 the Agreement will be irrepealable, but will be subject to modifications to the extent and in the manner provided in the Agreement, but to no greater extent and in no other manner. The Agreement will be binding upon and inure to the benefit of the City and the Fiscal Agent, and their respective successors and assigns. 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 the Agreement, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in the Agreement. After the sale and delivery of the Bonds by the City, the Bonds will be incontestable by the City. C-26 Severability. If any covenant, agreement or provision, or any portion thereof, contained in the Agreement, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of the Agreement and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, will be deemed severable and will not be affected thereby, and the Agreement and the Bonds will remain valid and the Bondowners will retain all valid rights and benefits accorded to them under the laws of the State of California. General Authorization. Authorized Representatives of the City are respectively authorized to do and perform from time to time any and all acts and things consistent with the Agreement necessary or appropriate to carry the same into effect. Liberal Construction. The Agreement will be liberally construed to the end that its purpose may be effected. No error, irregularity, informality and no neglect or omission in the Agreement or in any proceeding had pursuant thereto which does not directly affect the jurisdiction of the City Council will void or invalidate the Agreement or such proceeding or any part thereof, or any act or determination made pursuant thereto. 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 the 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 the Agreement. C-27 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D OPINION OF BOND COUNSEL Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form: July 23, 2019 City Council City of Newport Beach Newport Beach, California Re: $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A 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. 116 Limited Obligation Improvement Bonds, 2019 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. 2019-62 and are issued pursuant to a resolution adopted by the City on June 25, 2019 (the "Resolution of Issuance") and a fiscal agent agreement (the "Fiscal Agent Agreement") dated as of July 1, 2019, 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, 2019, 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. D-1 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. 5. 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 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, D-2 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. E-1 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. E-2 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. 116 Limited Obligation Improvement Bonds 2019 Series A in the aggregate principal amount of $1,575,000 (the "Bonds"). The Bonds are being issued pursuant to a Resolution adopted by the City Council of the Issuer on June 25, 2019 and a Fiscal Agent Agreement dated as of July 1, 2019 (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 Stifel, Nicolaus & Company, Incorporated. "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, 2020, 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). F-1 (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 as of the preceding September 1; (ii) Balance in the Prepayment Account of Redemption Fund as of the preceding September 1; (ii) Balance in the Redemption Fund as of the preceding September 1; (iv) Balance in the Reserve Fund and a statement of the Reserve Requirement as of the preceding September 1; (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 as of the preceding September 1, if available. (c) An update of the value -to -lien information set forth in Table 3 for the most recently completed fiscal year but only based on the Assessment Lien column and excluding the Overlapping Debt column. (d) A statement regarding the number of parcels that prepaid Assessments, and the amounts so prepaid, since the filing of the last Annual Report. (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 F-2 necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. 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. Renortine of Sianificant 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; 9. bankruptcy, insolvency, receivership or similar proceedings; and 10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation, any of which reflect financial difficulties. 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; F-3 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; 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; 7. release, substitution or sale of property securing repayment of the Bonds; and 8. incurrence of a financial obligation, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation, any of which affect Bondholders. (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. (f) For purposes of the events identified in subparagraphs (a)(10) and (b)(8), the term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. Section 6. Termination of Reporting Obli ag tion. 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: F-4 (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 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 F-5 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: 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: July 23, 2019 CITY OF NEWPORT BEACH City Manager DIGITAL ASSURANCE CERTIFICATION, LLC as Dissemination Agent By: Its: MR, 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: $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS, 2019 SERIES A Date of Issuance: July 23, 2019 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, 2019, 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 F-7 [THIS PAGE INTENTIONALLY LEFT BLANK] 141:0 Mixed Sources P.dudgroup fromwell md anage forests,..1.11ed..—,and recyded wood or fiber. Printed by: ImageMaster, LLC w imagemaster.com $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A UNDERWRITER'S RECEIPT FOR THE BONDS The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (the "Underwriter") hereby certifies that, on the date of this receipt, the Underwriter received from U.S. Bank National Association, as fiscal agent, the City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A, dated July 23, 2019, in the aggregate principal amount of $1,575,000. The Underwriter hereby further acknowledges the receipt of, or waives the requirement for, each opinion, document and certificate required by Section 3(c) of the Bond Purchase Agreement dated July 9, 2019, by and between the Underwriter and the City of Newport Beach, and agrees that each such opinion, document and certificate, to the extent received, is satisfactory to the Underwriter as to form and substance. Dated: July 23, 2019 STIFEL, NICOLAUS & COMPANY, INCORPORATED, as Underwriter By: 44A,414 'L4 Aut ori ed Of(cyl- 4820-7609-9996/022459-0025 FISCAL AGENT AGREEMENT By and Between CITY OF NEWPORT BEACH and U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent Relating to $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A Dated as of July 1, 2019 4824-7688-1811v9/022459-0025 TABLE OF CONTENTS ARTICLE I DEFINITIONS Section101. Definitions........................................................................................ Section102. Interpretation.................................................................................... Section 103. Equality of Bonds; Pledge of Assessments; No Obligation to Cure Deficiency........................................................................................ Section 201. Section 202. Section 203. Section 301. Section 302. Section 303. Section 304. Section 305. Section 306. ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS Assessments................................................................................................... Type and Nature of Bonds; Limited Liability ................................................ Authorization and Purpose of Bonds............................................................. ARTICLE III TERMS AND PROVISIONS OF BONDS ......... 7 7 7 8 Termsof Bonds..........................................................................................................8 Execution and Authentication.................................................................................. l l Registration, Exchange or Transfer.........................................................................1 I BondRegister...........................................................................................................11 Mutilated, Lost, Destroyed or Stolen Bonds............................................................12 Form of Bonds; Temporary Bonds..........................................................................12 ARTICLE IV REDEMPTION OF BONDS Section 401. Provisions for the Redemption of 2019A Bonds.....................................................13 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 Section503. Assessment Fund.....................................................................................................16 Section504. 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 4824-7688-1811v9/022459-0025 ARTICLE VI ISSUANCE OF 2019A BONDS Section 601. Authorization and Designation of 2019A Bonds.....................................................24 Section 602. Denominations of 2019A Bonds..............................................................................24 Section 603. Interest Payment Date of 2019A Bonds...................................................................26 Section604. Form of 2019A Bonds..............................................................................................26 Section 605. Application of Proceeds of the Sale of 2019A Bonds and of the Prepaid Amounts................................................................................................................... 32 ARTICLE VII COVENANTS AND WARRANTY Section701. Warranty..................................................................................................................32 Section702. Covenants.................................................................................................................32 37 Section 703. Continuing Disclosure Agreement...........................................................................34 Section 904. ARTICLE VIII Section 905. 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 902. Removal of Fiscal Agent.......................................................................................... 37 Section 903. Resignation of Fiscal Agent .................................... Section 904. Liability of Fiscal Agent..........................................................................................37 Section 905. Interested Transactions............................................................................................40 Section906. Agents......................................................................................................................40 ARTICLE X EVENTS OF DEFAULT; REMEDIES Section1001. Event of Default.......................................................................................................40 Section 1002. Remedies of Owners................................................................................................40 ARTICLE XI DEFEASANCE Section1101. Defeasance...............................................................................................................41 ARTICLE XII MISCELLANEOUS Section 1201. Cancellation of Bonds..............................................................................................42 Section 1202. Execution of Documents and Proof of Ownership..................................................42 Section 1203. Unclaimed Moneys..................................................................................................43 Section 1204. Provisions Constitute Contract; Successors.............................................................43 Section 1205. Further Assurances; Incontestability........................................................................44 ii 4824-7688-181 lv9/022459-0025 Section1206. Severability..............................................................................................................44 Section 1207. General Authorization..............................................................................................44 Section 1208. Liberal Construction................................................................................................44 Section1209. Notice.......................................................................................................................44 Section 1210. Action on Next Business Day..................................................................................44 Signatures................................................................................................................................ S-1 EXHIBIT A Form of Written Delivery Requisition — [Costs of Issuing Bonds] [Improvement Fund]..............................................................................................A-1 111 4824-7688-1811v9/022459-0025 FISCAL AGENT AGREEMENT This Fiscal Agent Agreement, dated as of July 1, 2019 (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. 116 (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. 116 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 "2019A 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. 116 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. 4824-7688-1811v9/022459-0025 "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. 116. "Assessment Fund" means the City of Newport Beach Assessment District No. 116 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 4824-7688-1811v9/022459-0025 Agent or its affiliates) fully insured by the Federal 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 City" 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 Stifel, Nicolaus & Company, Incorporated, as the initial purchaser of the 2019A 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 2019A 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 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. 4824-7688-1811v9/022459-0025 ".County" means the County of Orange. "Costs of Issuance Fund" means the City of Newport Beach Assessment District No. 116 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 Harris & Associates, Inc., as preliminarily approved by the City on November 10, 2015 and approved in final form by the City on January 12, 2016, 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. "Improvement Fund" means the City of Newport Beach Assessment District No. 116 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. 4 4824-7688-1811v9/022459-0025 "Interest Payment Date" means each March 2 and September 2, commencing September 2, pill IL•9 "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 Sei vices 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 Assessment" means the Notice of Assessment recorded in the Office of the County Recorder of the County of Orange on May 11, 2016, as Document No. 2016000210856. "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. 5 4824-7688-1811v9/022459-0025 "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. 116 Redemption Fund established with the Fiscal Agent pursuant to Section 501 hereof. "Reserve Fund" means the City of Newport Beach Assessment District No. 116 Reserve Fund established with the Fiscal Agent pursuant to Section 501 hereof. "Reserve Requirement" means, as of any date of calculation, 50% of the then maximum annual debt service due on the Bonds. "Resolution of Formation" means Resolution No. 2016-6, adopted by the City Council on January 12, 2016, 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. 2015-97, adopted by the City Council of the City on November 10, 2015, stating the City's intention, among other things, to issue the Bonds. "Resolution of Issuance" means Resolution No. 2019-62, adopted by the City Council of the City on June 25, 2019, 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. "Tax Certificate" means the Tax Certificate delivered upon the issuance of the 2019A Bonds. "Treasurer" means the City Treasurer or the City Manager, or his or her designee. "2019A Bonds" means City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 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. 4824-7688-1811v9/022459-0025 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 7 4824-7688-1811v9/022459-0025 or after the City acquires title to any such lot or parcel whether through foreclosure or otherwise) be obligated to 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. 116 Limited Obligation Improvement Bonds 2019 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. 116 Limited Obligation Improvement Bonds 2019 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 8 4824-7688-1811v9/022459-0025 interest in the Bonds, (ii) the delivery to any DTC Participant or any other person of any notice with 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 (if delivery by the Fiscal Agent is required by DTC) 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 9 4824-7688-1811v9/022459-0025 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. (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 10 4824-7688-1811v9/022459-0025 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 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 11 4824-7688-1811v9/022459-0025 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. 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. 12 4824-7688-1811v9/022459-0025 ARTICLE IV Section 401. Provisions for the Redemption of 2019A 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 2019A Bonds shall be called for redemption as provided in Part 11.1 of the 1915 Act. Each 2019A 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 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, together with a redemption premium (expressed as percentages of the principal amount of the 2019A Bonds to be redeemed) at the following redemption prices: Redemption Date Price Interest Payment Dates on or prior to March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date thereafter 100 (b) Optional Redemption of 2019A Bonds from Other Funds Excluding Assessment Prepayments. The 2019A Bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on and after September 2, 2026 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 the following redemption prices (expressed as a percentage of the principal amount being redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Prices September 2, 2026 and March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date 100 thereafter 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 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 13 4824-7688-181lv9/022459-0025 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 Redemption Fund 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. 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. 14 4824-7688-1811 v9/022459-0025 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. 116 Costs of Issuance Fund (the "Costs of Issuance Fund"); (b) the City of Newport Beach Assessment District No. 116 Redemption Fund (the "Redemption Fund"), in which there shall be established and created a Principal Account, an Interest Account and a Prepayment Account; (c) the City of Newport Beach Assessment District No. 116 Reserve Fund (the "Reserve Fund"); and (d) the City of Newport Beach Assessment District No. 116 Improvement Fund (the "Improvement Fund"). 15 4824-7688-1811v9/022459-0025 The City covenants and agrees to establish with the Treasurer the City of Newport Beach Assessment District No. 116 Administrative Expense Fund (the "Administrative Expense Fund") and the City of Newport Beach Assessment District No. 116 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, 2019, 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. 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 16 4824-7688-181lv9/022459-0025 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, 2019, the Fiscal Agent shall transfer from the Redemption Fund 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, 2020, the Fiscal Agent shall transfer from the Redemption Fund 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, if any, and interest payments due on the prior September 2 have been paid, shall be remitted to the City for deposit into 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 Redemption Fund and that portion representing principal, including mandatory sinking fund payments, if any, 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 17 4824-7688-181lv9/022459-0025 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 City for deposit 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 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 18 4824-7688-1811v9/022459-0025 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, 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(1)(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 "11/2% 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 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 Rebate Account exceeds the amount required to be on deposit therein, upon written 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. 19 4824-7688-1811v9/022459-0025 (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. The Fiscal Agent shall be deemed conclusively to have complied with such provisions, if it follows the written directions of the City, and shall have no liability or responsibility to enforce compliance by the City with the terms of the Tax Certificate. (ii) Alternative Penalty Account. (A) Six -Month Computation. If the 11/2% 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 %2% 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'/2% Penalty due and payable to the United States Treasury detennined 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 20 4824-7688-1811v9/022459-0025 the Alternative Penalty Account, not later than 90 days after the close of each Six -Month Period the 1'/2% 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), shall 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. 21 4824-7688-181lv9/022459-0025 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 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 22 4824-7688-1811v9/022459-0025 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 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 Assessment 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 23 4824-7688-1811v9/022459-0025 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 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 at the 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 2019A BONDS Section 601. Authorization and Designation of 2019A Bonds. The City has reviewed all proceedings heretofore taken relative to the authorization of the 2019A 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 2019A 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 2019A 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 2019A Bonds shall be entitled to the benefit, protection and security of the provisions hereof. Section 602. Denominations of 2019A Bonds. The 2019A Bonds shall be issued as fully registered 2019A Bonds in the denomination of $5,000 or any increment of $5,000 in excess thereof. 24 4824-7688-1811v9/022459-0025 25 4824-7688-181lv9/022459-0025 Section 603. Interest Payment Date of 2019A Bonds. The 2019A 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: Maturity Date (September 2) Principal Amount Interest Rate 2020 $ 65,000 2.000% 2021 65,000 2.000 2022 65,000 2.000 2023 65,000 2.000 2024 70,000 2.000 2025 70,000 2.000 2026 70,000 2.000 2027 75,000 2.000 2028 75,000 2.000 2029 75,000 2.250 2030 80,000 2.250 2031 80,000 2.500 2032 80,000 2.625 2033 85,000 2.750 2034 85,000 2.750 2035 90,000 2.750 2036 90,000 2.750 2037 95,000 3.000 2038 95,000 3.000 2039 100,000 3.000 Section 604. Form of 2019A Bonds. The 2019A 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: 26 4824-7688-1811v9/022459-0025 [FORM OF 2019A BOND] R- $ 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. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BOND 2019 SERIES A INTEREST RATE MATURITY DATE DATED DATE CUSIP NUMBER % September 2, July 23, 2019 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: 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. 2019-62 (the "Resolution of Issuance") adopted by the City Council of the City of Newport Beach (the "City") on June 25, 2019, 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. 2015-97 (the "Resolution of Intention") adopted by the City Council of the City on the 10th day of November, 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, 2019 (the "Fiscal Agent Agreement"), by and between U.S. Bank National Association, as fiscal agent (the "Fiscal Agent") 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 has been paid or made available for payment. Such 27 4824-7688-1811v9/022459-0025 interest shall be payable on March 2 and September 2 of each year, commencing September 2, 2019 (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. 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, this bond shall be called for redemption as provided in Part 11.1 of the Act. This bond, or any portion 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 in any year pro rata among maturities, by giving notice to the owner hereof and by paying the principal amount hereof, 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 bond to be redeemed) at the following redemption prices: Redemption Date Price Interest Payment Dates on or prior to March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date thereafter 100 The bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on and after September 2, 2026 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 the following redemption prices (expressed as a percentage of the principal amount being redeemed), together with accrued interest to the date of redemption: 28 4824-7688-1811v9/022459-0025 Redemption Date Redemption Prices September 2, 2026 and March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date 100 thereafter 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. 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. 29 4824-7688-1811v9/022459-0025 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 July 23, 2019. U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent Authorized Signatory 30 4824-7688-1811v9/022459-0025 [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. 31 4824-7688-1811 v9/022459-0025 Section 605. Application of Proceeds of the Sale of 2019A Bonds and of the Prepaid Amounts. Proceeds from the sale of the 2019A Bonds shall be used as follows: (i) $52,112.50 shall be deposited by the Fiscal Agent into the Reserve Fund equaling the Reserve Requirement; Fund; Fund. (ii) $171,381.00 shall be deposited by the Fiscal Agent in the Costs of Issuance (iii) $4,150.52 shall be deposited by the Fiscal Agent in the Interest Account; and (iv) $1,312,893.25 shall be deposited by the Fiscal Agent in the Improvement 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. 32 4824-7688-1811v9/022459-0025 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. Inforination 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. 33 4824-7688-1811v9/022459-0025 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 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 34 4824-7688-1811 v9/022459-0025 (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 twist 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. 35 4824-7688-1811v9/022459-0025 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 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 36 4824-7688-1811 v9/022459-0025 of all Nonpurpose Investments and the amount of such earnings assuming a rate of return equal to the Yield on the Bonds. 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 37 4824-7688-1811 v9/022459-0025 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 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 parry 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. 38 4824-7688-1811v9/022459-0025 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 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 duties 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. 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 duties 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 39 4824-7688-1811v9/022459-0025 any right 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 40 4824-7688-1811v9/022459-0025 (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: 41 4824-7688-1811v9/022459-0025 (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 42 4824-7688-181lv9/022459-0025 partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his authority. (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. 43 4824-7688-1811v9/022459-0025 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 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. 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. 44 4824-7688-1811v9/022459-0025 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 By: � "/ Z,,/, /,"77", — Finance Director4reas re U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent S-1 4824-7688-1811/022459-0025 Authorized Officer 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 Finance Director/Treasurer U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent By: Authorized/Officer 71) S-1 4824-7688-1811/022459-0025 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, 2019 (the "Fiscal Agent Agreement"), by and between the City of Newport Beach ("City") and the Fiscal Agent, in connection with the issuance of $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A (the "Bonds"). REQUISITION NO. 1 You are hereby instructed to pay to the parties listed on Schedule I attached hereto the amounts set forth on Schedule I, such amounts being [costs of issuing the Bonds as provided in Section 502] [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 Finance Director/Treasurer A-1 4824-7688-1811 v9/022459-0025 SCHEDULEI Party Purpose Amount Schedule I 4824-7688-1811v9/022459-0025 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. 116 Limited Obligation Improvement Bonds 2019 Series A in the aggregate principal amount of $1,575,000 (the "Bonds"). The Bonds are being issued pursuant to a Resolution adopted by the City Council of the Issuer on June 25, 2019 and a Fiscal Agent Agreement dated as of July 1, 2019 (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 Stifel, Nicolaus & Company, Incorporated. "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, 2020, 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 4843-1294-2749/022459-0025 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). (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 as of the preceding September 1; (ii) Balance in the Prepayment Account of Redemption Fund as of the preceding September 1; (ii) Balance in the Redemption Fund as of the preceding September 1; (iv) Balance in the Reserve Fund and a statement of the Reserve Requirement as of the preceding September 1; (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 4843-1294-2749/022459-0025 (vi) Status of foreclosure proceedings and summary of results of foreclosure sales as of the preceding September 1, if available. (c) An update of the value -to -lien information set forth in Table 3 for the most recently completed fiscal year but only based on the Assessment Lien column and excluding the Overlapping Debt column. (d) A statement regarding the number of parcels that prepaid Assessments, and the amounts so prepaid, since the filing of the last Annual Report. (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. 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: I. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 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; ratings changes; 9. bankruptcy, insolvency, receivership or similar proceedings; and 4843-1294-2749/022459-0025 10. default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation, any of which reflect financial difficulties. 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; 3. appointment of a successor or additional trustee or the change of the name of a trustee; 4. nonpayment related defaults; modifications to the rights of Owners of the Bonds; notices of redemption; release, substitution or sale of property securing repayment of the Bonds; and incurrence of a financial obligation, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation, any of which affect Bondholders. (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 4843-1294-2749/022459-0025 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. (f) For purposes of the events identified in subparagraphs (a)(10) and (b)(8), the term "financial obligation" means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with 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 A ent. 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 amended operating data or financial information shall explain, in narrative 5 4843-1294-2749/022459-0025 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 perfoi7nance 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. 4843-1294-2749/022459-0025 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: 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: July 23, 2019 CITY OF WPORT BEACH By: inane D' t r DIGITAL ASSURANCE CERTIFICATION, LLC as Dissemination Agent 4843-1294-2749/022459-0025 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: 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: July 23, 2019 CITY OF NEWPORT BEACH Finance Director DIGITAL ASSURANCE CERTIFICATION, LLC as Dissemination Agent By:a•�� Its: Senior Vice President 4843-1294-2749/022459-0025 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: $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS, 2019 SERIES A Date of Issuance: July 23, 2019 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, 2019, 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 4843-1294-2749/022459-0025 REPORT OF PROPOSED DEBT ISSUANCE California Debt and Investment Advisory Conunission 915 Capitol Mall, Room 400, Sacramento, CA 95814 Submitted: Tuesday, May 21, 2019 P.O. Box 942809, Sacramento, CA 94209-0001 12:09:24PM Tel: (916) 653-3269 Fax: (916) 654-7440 Your completion and submittal of this on-line form assures your compliance with existing California State law and will assist in the maintenance of a complete database of public debt in California. Thank you for your cooperationt ISSUER NAME: City of Newport Beach ISSUE NAME: Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A PROJECT NAME: PROPOSED SALE DATE: 7/9/2019 WILL A VALIDATION ACTION BE PURSUED: ® No IS DEBT REPAYABLE IN NON -US CURRENCY: © No Issuance Authorization #1 Oriqinal Amount: $1,925,000.00 Authorization Date: 6/25/2019 Name: Resolution of Issuance Reduced: $1,925,000.00 Replenished $0.00 Net ($1,925,000.00) PRINCIPAL TO BE SOLD: $1,925,000.00 ❑ Yes ❑ Unknown ❑ Yes ❑ Unknown Issuance Authorization #2 Oriqinal Amount: $0.00 Authorization Date: Name: Reduced: $0.00 Replenished $0.00 Statutory Code Under which this debt will be issued (1): Improvement Bond Act of 1915 Statutory Code Under which this debt will be issued (2): 2 IS ANY PORTION OF THE DEBT TO REFUND? MNo ❑ Yes --- Amount proposed for refunding $0.00 IS ANY PORTION OF THE DEBT TO REDEEM, PAYDOWN, OR REFINANCE OUTSTANDING DEBT? X❑ No ❑ Yes --- Amount proposed for redemption, paydown, or refinancing $0.00 Issuer Contact Net: $0.00 Name: Dan Matusiewicz E -Mail: dmatusiewicz@newportbeachca.gov Title: Finance Director Address: 100 Civic Center Drive City: Newport Beach, CA 92660 Phone: 949 6443123 ISSUER LOCATED IN Orange COUNTY Filing Contact Name of Individual representing Bond Counsel who completed this form and maybe contacted for information: Name: Brian Forbath E -Mail: bforbath@sycr.com Firm/ Agency: Stradling Yocca Carlson & Rauth Address: 660 Newport Center Drive, Suite 1600 City: Dm54060ch, CA 92660 Sen? acknowledgement to: Quang Le E -Mail: qle@sycr.com Financing Participants BOND COUNSEL: Stradling Yocca Carlson & Rauth BORROWER COUNSEL (LOAN) (Not Obligor Counsel): FINANCIAL ADVISOR: KNN Public Finance UNDERWRITER: Stifel, Nicolaus & Company, Incorporated DISCLOSURE COUNSEL: Stradling Yocca Carlson & Rauth PURCHASER: LENDER: LESSOR: IS THE INTEREST ON THE DEBT TAXABLE? Under State Law: ❑ YES (taxable) ❑ NO (tax-exempt) Under Federal Law: ❑ YES (taxable) 0 NO (tax-exempt) If the issue is federally tax-exempt, is interest a specific preference item for the purpose of alternative minimum TYPE OF SALE Com ❑ Competitive E]Negotiated ❑ YES, preference item ❑X NO, not a preference item IS THIS FINANCING A PRIVATE PLACEMENT? No X❑ ❑ Yes ISSUER CERTIFIES THAT IT HAS COMPLIED WITH GC SECTION 8855 (I) WITH RESPECT No ©Yes N/A RESPECT TO LOCAL DEBT POLICIES: CDIAC Report of Proposed Debt Issuance Page 2 TYPE OF DEBT INSTRUMENT Bond proceeds (BDPR) ❑ NOTE Bond fund of issuing jurisdiction (GNFD) ❑ Bond anticipation (BAN) enterprise revenues (PER) Conduit revenue (CRB) Grant anticipation (GAN) ❑ General obligation (GOB) ❑ Loan from bank / other institution (LOAN) ❑ Limited tax obligation (LTOB) ❑ Other note (Please specify below.) (OTHN) ❑ Other bond (Please specify below.) (OTHB) ❑ Revenue anticipation (RAN) ❑ Pension Obligation (POB) ❑ Tax allocation (TALN) ❑ Public lease revenue (PLRB) ❑ Tax and revenue anticipation (TRAN) ❑ Rate Reduction (GC 6588.7) (RRB) ❑ Tax anticipation (TAN) ❑ ❑Marks Revenue (RB) Revenue (Public enterprise) (PERB) ❑ -Roos Authority Loan (MKRL) ❑ Commercial paper (CP) Sales tax revenue (STRB) ❑ Conduit Revenue Note (Private Obligor) (CRN) X❑ Special assessment (SAB) ❑ Certificates of Participation (COPL) ❑ Tax allocation (TAB) ❑ Capital Lease (CL) ❑ State Agency Loan (STAL) ❑ Other (Please specify below.) (OTH) Please specify if "Other Note/ Other Bond/ Other" was checked. SOURCE(S) OF REPAYMENT ❑ Bond proceeds (BDPR) ❑ Property tax revenues (PRTX) fund of issuing jurisdiction (GNFD) F]Public enterprise revenues (PER) ®General Grants (GRNT) ❑ Sales tax revenues (SATR) F] Intergovernmental transfers other than grants (ITGV) ❑X Special assessments (SA) F] Local obligor (LOB) ❑ Special tax revenues (SPTR) Private obligor payments (POP) ❑ Tax -increment (TI) ❑ Other (OTHS) Utility Project Charges (UPC) Please specify if "Other" was checked PURPOSE(S) OF FINANCING Percent Showing 1 st 5: MCAP 100 Please specify type/name of project if different from above. 1 Section 8855(1) of the California Government Code requires the issuer of any proposed new public debt issue to give written notice of the proposed sale to CDIAC no later than 30 days prior to the sale. Under California Government Code Section 88556), the issuer of any debt issue shall, not later than 21 days after the sale of the debt, submit a report of final sale and the official statement (or alternate financing documents) to the Commission. The Commission may require information to be submitted in the report that it considers appropriate. 2 Section 53583(c)(2)(B) of the California Government Code requires that any local agency selling refunding bonds at private sale or on a negotiated basis shall send a written statement, within two weeks after the bonds are sold, to CDIAC explaining the reasons why the local agency determined to sell the bonds at private sale or on a negotiated basis instead of at public sale. 3 In accordance with 8855(1) of the California Government code. STATE OF CALIFORNIA Fiona Ma, CPA State Treasurer and Chair CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION 915 CAPITOL MALL ROOM 400 PO BOX 942809 SACRAMENTO, CA 94209-0001 TELEPHONE: (916) 653-3269 FAX: (916) 654-7440 May 21, 2019 TO: Quang Le Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660 FROM: Mark Campbell, Executive Director RE: ACKNOWLEDGEMENT OF REPORT OF PROPOSED DEBT ISSUANCE California Government Code Section 8855(i) requires written notice to be given to the California Debt and Investment Advisory Commission (CDIAC) no later than 30 days prior to the proposed sale of any debt issue. CDIAC acknowledges receipt of your notice of the following proposed debt issuance: CDIAC Number: Issuer: Project: Proposed Amount: Proposed Sale Date: Date Notice Received: 2019-1019 Newport Beach Multiple Capital Improvements, Public Works $1,925,000 July 09, 2019 May 21, 2019 Issuers may electronically file the Report of Final Sale (RFS) through CDIAC's website, using the following CDIAC number and password, which are unique to this filing and must be used for any subsequent reporting under this CDIAC number. CDIAC Number: 2019-1019 Password: 38700 In accordance with Government Code Section 88550), the RFS for this issue must be submitted not later than 21 days after the sale of the debt. The RFS may be submitted electroncially at http://www.treasurer.ca.gov/cdiac/reporting.asp. An official statement or other financing documents must accompany the RFS. Any questions regarding reporting requirements may be directed to CDIAC's Data Unit by email at CDIAC—Issuance@treasurer.ca.gov or by telephone at (916) 653-3269. Cc: Dan Matusiewicz Finance Officer REPORT OF FINAL SALE California Debt and Investment Advisory Commission Submitted: Monday, August 12, 2019 915 Capitol Mall, Room 400, Sacramento, CA 95814 10:30:33AM P.O. Box 942809, Sacramento, CA 94209-0001 CDIAC # 2019-1019 Tel: (916) 653-3269 Fax: (916) 654-7440 Under California Government Code Section 88550), the issuer of any debt issue shall, not later than 21 days after the sale of the debt, submit a report of final sale and the official statement (or alternate financing documents) to the Commission. The Commission may require information to be submitted in the report that it considers appropriate. ISSUER NAME City of Newport Beach (if pool bond, list participants) ISSUE NAME Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A PROJECT NAME WILL A VALIDATION ACTION BE PURSUED Q No ❑ Yes ❑ Unknown IS DEBT REPAYABLE IN NON -US CURRENCY ® No ❑ Yes ❑ Unknown ORIGINAL AUTHORIZED AMOUNT $1,925,000.00 AUTHORIZATION DATE 6/25/2019 AUTHORIZATION NAME Please Select Other and Enter a Specific Resolution su AMOUNT AUTHORITY REDUCED BY $1,575,000.00 AMOUNT AUTHORIZATION REPLENISHED $0.00 ORIGINAL AUTHORIZED AMOUNT $0.00 AUTHORIZATION DATE AUTHORIZATION NAME 2nd Authorization Not Selected AMOUNT AUTHORITY REDUCED BY $0.00 AMOUNT AUTHORIZATION REPLENISHED $0.00 STATUTORY CODE UNDER WHICH THIS DEBT WILL BE ISSUED (1) Improvement Bond Act of 1915 STATUTORY CODE UNDER WHICH THIS DEBT WILL BE ISSUED (2) (If necessary) ACTUAL SALE DATE (Date Debt Contract Signed): 7/9/2019 PRINCIPAL SOLD: $1,575,000.00 Dated Date (Date Interest Begins to Accrue): 7/23/2019 Settlement Date (Date assets or rights to use are transferred) 7/23/2019 IS ANY PORTION OF THE DEBT FOR REFUNDING?1 QX No Yes, refunding amount (including costs) $0.00 IS ANY PORTION OF THE DEBT TO REFUND, REDEEM, PAYDOWN, or REFINANCE OUTSTANDING DEBT? © No ❑ Yes, amount proposed for refunding, redemption, paydown, or refinancing $0.00 of outstanding debt Issuer Contact: Name: Dan Matusiewicz Title : Finance Officer Address : 100 Civic Center Drive City/ State/ Zip Newport Beach, CA 92660 Phone: (949)644-3123 E -Mail: dmatusiewicz@newportbeachca.gov Filing Contact: Name of Individual representing Name: Bradley Neal Firm/ Agency: Stradling Yocca Carlson & Rauth Address : 660 Newport Center Drive, Suite 1600 City/ State/ Zip Newport Beach, CA 92660 Phone: (949) 725-4000 E -Mail: bneal@sycr.com Send acknowledgement/ copies to: Quang Le E -Mail: qle@sycr.com TYPE OF SALE: X❑ Negotiated TYPE OF DEBT INSTRUMENT: Please specify if "Other" was checked. ISSUER LOCATED IN Orange COUNTY Bond Counsel who completed this form and may be contacted for information. ❑ Competitive IS THIS FINANCING A PRIVATE PLACEMENT?2 X❑ No Yes Special assessment bond CDIAC: Report of Final Sale Page 2 SOURCE(S) OF REPAYMENT ❑ Bond proceeds (BDPR) General fund of issuing jurisdiction (GNFD) Grants (GRNT) ❑ Intergovernmental transfers other than grants (ITGV) Local obligor (LOB) ❑ Private obligor payments (POP) R Other (OTHS) Please specify if "Other" was checked. PURPOSE(S) OF FINANCING (show the first 5) Percent Please specify type/name of project if different from above. Name of individual to whom an invoice for the CDIAC issue fee should be sent: Name: Sara Brown Firm/ Agency Stifel, Nicolaus & Company, Incorporated Address : One Montgomery Street, 35th Floor City/ State/ Zip San Francisco, CA 94104 Phone: (415) 364-6872 E -Mail: sbrown@stifel.com FINANCING PARTICIPANTS (Firm Name) Financial Advisor: Lead Underwriter: Borrower Counsel (Loan) (Not obligor Counsel): Bond Counsel : Co -Bond Counsel Trustee/ Paying Agent Placement Agent: Disclosure Counsel: Purchaser: Lender: Lessor: KNN Public Finance Stifel Nicolaus & Company Inc Stradling Yocca Carlson & Rauth U.S. Bank National Association Stradling Yocca Carlson & Rauth MATURITY SCHEDULE ❑ Attached X❑ Included in Official Statement MATURITY STRUCTURE X❑ Serial (S) ❑ Term (T) F] Serial and term bonds (B) FINAL MATURITY DATE: 9/2/2039 FIRST OPTIONAL CALL DATE: 9/2/2026 SENIOR STRUCTURE: ❑ Yes SUBORDINATE STRUCTURE: ❑ Yes ❑ Property tax revenues (PRTX) ❑ Public enterprise revenues (PER) ❑ Sales tax revenues (SATR) ❑X Special assessments (SA) RSpecial tax revenues (SPTR) Tax -increment (TI) F] Utility Project Charges (UPC) Office Location (City/ State) Oakland, CA San Francisco, CA Newport Beach, CA Los Angeles, CA Newport Beach, CA IS THE INTEREST ON THE DEBT TAXABLE? Under State Law: ❑ Yes (taxable) 0 No (tax-exempt) Under Federal Law: F] Yes (taxable) ❑X No (tax-exempt) If the issue is federally tax-exempt, is interest a specific preference item for the purpose of alternative minimum tax? n Yes ❑X No INTEREST TYPE (Please provide both NIC & TIC if available) : XX NIC Int. Cost 2.816% ❑X No ❑X TIC Int. Cost 2837% X❑ No ❑ Variable ❑ Other (index/Rate) OFFICIAL STATEMENT/ OFFERING MEMORANDUM: CAPITAL APPRECIATION DEBT: ❑ Yes ❑X No ❑ X Enclosed ❑ None prepared RATE REDUCTION SAVINGS: $0.00 (In accordance with Government Code Section 6588.7) CDIAC: Report of Final Sale WAS THE ISSUE INSURED OR GUARANTEED? ISSUANCE COSTS AND FEES: riNo A. Management Fee $0.00 ❑ Bond Insurance (1) B. Total Takedown $0.00 ❑ Letter of Credit (L) C. Underwriter Expenses $25,433.83 El State Intercept Program (T) Underwriter Spread or Discount $25,433.83 ❑ Other D. Bond Counsel $50,000.00 GUARANTOR: E. Borrower Counsel (Loan) $0.00 ENHANCEMENT EXPIRATION DATE: F. Co -Bond Counsel $0.00 INDICATE CREDIT RATING: (For example, "AAA" or "Aaa") G. Disclosure Counsel $0.00 0 Not Rated ❑ Rated H. Financial Advisor $10,750.00 Standard & Poor's I. Rating Agency $0.00 Fitch J. Credit Enhancement $0.00 Moody's K. Trustee Fee $4,345.00 Other L. Placement Agent $0.00 REASON FOR NEGOTIATED REFUNDINGS M. Other Expenses $106,286.00 If the issue is a negotiated refunding, indicate the reason(s) why the N. Purchaser Fee $0.00 bonds were issued at a private or negotiated versus a competitive O. Lender Fee $0.00 (1) Timing of the sale provided more flexibility than a public sale. Total Issuance Costs $196,814.83 (2) More cost savings were expected to be realized than a public sale Original Issue Premium $0.00 ❑(3) More flexibility in debt structure was available than a public sale. Original Issue Discount $9,028.90 ❑(4) Issuer able to work with participants familiar with issue(r) than a Net Original Premium/ Discount ($9,028.90) public sale. ❑(5) All of the above. Net Original Premium used to ❑(6) Other (please specify) Refund, Redeem, Pay -Down, or $0.00 Refinance 3 REASON FOR NEGOTIATED REVENUE BONDS If the issue is a negotiated revenue bonds, indicate the reason(s) why the bonds were issued at a private or negotiated versus a competitive sale. ❑ (1) Timing of the sale provided more flexibility than a public sale. (2) More cost savings were expected to be realized than a public sale F] (3) More flexibility in debt structure was available than a public sale. (4) Issuer able to work with participants familiar with issue(r) than a public sale. ❑ (5) All of the above. ❑ (6) Other (please specify) j Section 53583(c)(2)(B) of the California Government Code requires that any local agency selling refunding bonds at private sale or on a negotiated basis shall send a written statement, within nvo weeks after the bonds are sold, to CDIAC explaining the reasons why the local agency determined to sell the bonds at a private sale or on a negotiated basis instead ofal public sale. z This fee is authorized by Section 8856 of the California Government Code and is charged to the lead underwriter, the purchaser or the lender in an amount equal to one fa9ieth of I perces of the principal annount of the issue, but not to exceed five thousand dollars (55000) for any one issue. 3 Section 54418 of the California Government Code requires that any local agency selling revenue bards at a private sale rather than a public sale shall 3 $1,575,000* CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CERTIFICATE AS TO NEAR FINALITY OF THE PRELIMINARY OFFICIAL STATEMENT I, Dan Matusiewicz, hereby certify that I am the duly appointed Finance Director of the City of Newport Beach (the "City"), and, as such, I am authorized to execute this Certificate on behalf of the City. I hereby further certify that there has been delivered to Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), the Underwriter for the above -captioned bonds (the "Bonds"), a Preliminary Official Statement relating to the Bonds dated June 27, 2019, which the City deems to be final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), except for the information permitted by Rule 15c2-12 to be omitted therefrom. The City hereby approves of the use and distribution by the Underwriter of the Preliminary Official Statement. IN WITNESS WHEREOF, I hereunto set my hand this 27th day of June, 2019. CITY OF NEWPORT BEACH Dan Matusiewicz, Finance Director * Preliminary, subject to change. NG-U9ZQVMF2/4834-6238-4283v 1/022459-0025 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A INCUMBENCY AND SIGNATURE CERTIFICATE OF THE CITY The undersigned hereby states and certifies: 1. She is the City Clerk of the City of Newport Beach (the "City") and, as such, is familiar with the facts herein certified and is authorized to certify the same. 2. At all times pertinent to the sale, issuance and delivery of the above -captioned bonds (the "Bonds"), the City Council of the City (the "City Council") and certain Officials of the City are and have been as follows: Name Diane Dixon Will O'Neill Duffy Duffield Brad Avery Jeff Herdman Joy Brenner Kevin Muldoon Name Grace K. Leung Dan Matusiewicz Leilani Brown Aaron Harp, Esq. 4820-7609-9996v5/022459-0025 CITY COUNCIL Title Mayor Mayor Pro Tem Councilmember Councilmember Councilmember Councilmember Councilmember OFFICL4LS Title City Manager Finance Director/Treasurer City Clerk City Attorney 3. Dan Matusiewicz, Finance Director/Treasurer (the "Treasurer") and the undersigned, Leilani Brown, City Clerk (the "City Clerk"), further certify that they were duly authorized to execute the Bonds pursuant to Section 302 of the Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the City and U.S. Bank National Association, as Fiscal Agent, and that, pursuant to such authority, the Bonds have been executed by the facsimile signatures of the Treasurer and the City Clerk, each of whom hereby adopts their respective facsimile signature thereon. The Treasurer and the City Clerk hereby further certify that each of them has filed with the Secretary of State of the State of California their manual signatures, certified by each of them under oath as provided by the Uniform Facsimile Signatures of Public Officials Act (Government Code Section 5550 et seq.). 4. Each of the undersigned officials of the City further certify that pursuant to Resolution No. 2019-62 adopted on June 25, 2019 (the "Resolution of Issuance") authorizing the issuance of the Bonds they were duly authorized to execute documents on behalf of the City in connection with the issuance, sale and delivery of the Bonds and the signatures set forth below are true and correct specimens of their genuine signatures: Name Title Dan Matusiewicz Finance Director/Treasurer Leilani Brown City Clerk 5. The Resolution of Issuance has not been amendea, moainea or rescmaeu since ILS date of adoption and is in full force and effect as of the date hereof. Dated: July 23, 2019 CITY OF NEWPORT BEACH By: NA—" City Clerk I hereby certify that the above signature of the City Clerk of the City of Newport Beach is a true and correct specimen of her signature. finance Director/Treasurer ity of Newport Beach 4820-7609-9996/022459-0025 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CLOSING CERTIFICATE OF THE CITY The undersigned, Finance Director/Treasurer of the City of Newport Beach (the "City"), hereby certifies, represents, warrants and covenants in connection with the sale, issuance and delivery of $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A (the "Bonds") as follows: 1. The City hereby ratifies the use and distribution by Stifel, Nicolaus & Company, Incorporated (the "Underwriter) of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds. 2. The representations and warranties of the City contained in the Bond Purchase Agreement dated July 9, 2019 (the "Purchase Agreement"), by and between the City and the Underwriter are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof. 3. To the best knowledge of the undersigned, no event affecting the City has occurred since the date of the Official Statement affecting the matters contained in the Official Statement which should be disclosed in the Official Statement or in any supplement or amendment thereto for the purposes for which it is to be used in order to make the statements and information contained therein, in light of the circumstances under which they were made 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. 4. The City has complied with all the agreements and satisfied all of the conditions on its part to be performed or satisfied under the City Documents at or prior to the date hereof. 5. The City Documents are valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditor's rights generally. 6. Except as disclosed in the Official Statement, no litigation is pending or, to the best of my knowledge, threatened (either in state or federal courts): (a) seeking to restrain or enjoin the issuance, sale or delivery of any of the Bonds; (b) in any way contesting or affecting the validity or enforceability of the Bonds or the City Documents, or the powers of the City to enter into, adopt or perform its obligations under any of the foregoing; (c) in any way contesting the completeness, accuracy or fairness of the Official Statement; (d) in any way contesting the existence or powers of the City or challenging the titles of its officers to their respective offices; or (e) which if decided adversely to the City would have a material adverse effect on the ability of the City to make interest and principal payments on the Bonds. 4820-7609-9996v5/022459-0025 7. There was filed in the office of the Superintendent of Streets of the City the Assessment Diagram in the proceedings for the Assessment District, which was confirmed and approved by Resolution No. 2016-6 of the City Council of the City adopted on January 12, 2016. Said Assessment Diagram was so filed pursuant to Section 10401 of the California Streets and Highways Code. 2 4820-7609-9996v5/022459-0025 All capitalized terms not defined herein shall have the meaning set forth in the Purchase Agreement. Dated: July 23, 2019 4820-7609-9996/022459-0025 CITY OF NEWPORT BEACH M- $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A INSTRUCTIONS TO THE FISCAL AGENT The undersigned, Finance Director/Treasurer of the City of Newport Beach (the "City"), hereby states and certifies to U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), under that certain Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the City and the Fiscal Agent, in connection with the issuance of the $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A (the "Bonds") as follows: 1. The Fiscal Agent, is hereby authorized and directed to authenticate the Bonds and to hold the Bonds as FAST Agent on behalf of The Depository Trust Company for the account of Stifel, Nicolaus & Company, Incorporated, as Underwriter (the "Underwriter") and to deliver the Bonds to the Underwriter. 2. The Fiscal Agent is instructed to apply the proceeds from the sale of the Bonds received by the Fiscal Agent of $1,540,537.27 (consisting of the principal amount of $1,575,000.00, less net Original Issue Discount of $9,028.90, less Underwriter's Discount of $25,433.83), as follows: $ 171,381.00 shall be deposited in the Costs of Issuance Fund 52,112.50 shall be deposited in the Reserve Fund 4,150.52 shall be deposited in the Interest Account 1,312,893.25 shall be deposited in the Improvement Fund 1,540,537.27 TOTAL PROCEEDS RECEIVED [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4820-7609-9996v5/022459-0025 All capitalized terms not defined herein shall have the meaning set forth in the Fiscal Agent Agreement. Dated: July 23, 2019 CIT' 2 4820-7609-9996/022459-0025 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A WRITTEN DELIVERY REQUISITION — COSTS OF ISSUING BONDS TO: U.S. Bank National Association, as fiscal agent (the "Fiscal Agent") RE: Disbursement from the Costs of Issuance Fund pursuant to Section 502 of the Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the City of Newport Beach (the "City") and the Fiscal Agent, in connection with the issuance of $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A (the `Bonds"). REQUISITION NO. 1 You are hereby instructed to pay to the parties listed on Schedule I attached hereto the amounts set forth on Schedule I, such amounts being costs of issuing the bonds as provided in Section 502 of the Fiscal Agent Agreement. These costs have been properly incurred, are a proper charge against the Costs of Issuance 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. CITYOF NEWPORT B ACH By: ance Director/Treasure 4820-7609-9996/022459-0025 SCHEDULE I ESTIMATED COSTS OF ISSUANCE $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A Party Purpose Amount Stradling Yocca Carlson & Rauth Bond & Disclosure Counsel $46,742.72 Fees and Estimated Expenses City of Newport Beach Reimbursement of Costs 100,809.71 Advanced KNN Public Finance Municipal Advisor Fee and 10,750.00 Expenses Imagemaster Posting POS; Printing Official 2,133.57 Statement U.S. Bank National Association Fiscal Agent Fee and Expenses 4,345.00 and Legal Counsel Fee DAC Disclosure Agent 1,000.00 Willdan Financial Services District Administrator 5,600.00 Contingency 0.00 TOTAL $171,381.00 SCHEDULE 1-1 4820-7609-9996v5/022459-0025 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A WRITTEN DELIVERY REQUISITION — IMPROVEMENT FUND U.S. Bank National Association, as Fiscal Agent (the "Fiscal Agent") RE: Disbursement from the Improvement Fund pursuant to Section 507 of the Fiscal Agent Agreement, dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the City of Newport Beach ("City") and the Fiscal Agent, in connection with the issuance of $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A (the "Bonds"). REQUISITION NO. 1 You are hereby instructed to pay to the parties listed on Schedule I attached hereto the amounts set forth on Schedule I, such amounts being 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 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 By: finance Director/Treasure 4820-7609-9996/022459-0025 SCHEDULEI $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A Party Purpose Amount City of Newport Beach Reimbursement of Costs $128,177.60 Advanced SCHEDULE I-1 4820-7609-9996v5/022459-0025 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A TAX CERTIFICATE City of Newport Beach (the "Issuer") hereby makes the following representations of facts and expectations and covenants to comply with the requirements of this Tax Certificate in connection with the $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A (the "Obligations"). These representations and covenants are in furtherance of the covenants contained in Section 702 of the Fiscal Agent Agreement dated as of July 1, 2019 (the "Issuance Document"), by and between the Issuer and U.S. Bank, National Association, as Fiscal Agent (the "Issuance Document"), and in part are made pursuant to Section 1.141-2(d)(2) and Section 1.148-2(b)(2) of the Treasury Regulations. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings set forth in the Issuance Document. I. General Matters. (a) Authority for Issuance. The undersigned and other officers and members of the Issuer are charged with the responsibility of authorizing and requesting the issuance of the Obligations. The obligations are being issued pursuant to the Improvement Act of 1915. (b) Sale of Obligations. The Obligations are being delivered to Stifel, Nicolaus & Company, Incorporated, as underwriter (the "Underwriter") on the date hereof. (c) Purpose of Obligations. The Obligations are being sold and delivered for the purpose of (a) financing the cost and expense of the acquisition and construction of certain public facilities of the Issuer as described in Exhibit A attached hereto (the "Project"), including providing for capitalized interest (the "Capitalized Interest"), (b) paying costs of issuance with respect to the Obligations (the "Issuance Costs"), and (c) funding a reasonably required reserve fund with respect to the Obligations. (d) Nature of Issue. All the Obligations are being sold and issued at the same time, have been sold pursuant to the same plan of financing, and are reasonably expected to be paid from substantially the same source of funds. Accordingly, the Obligations are a single issue of obligations for certain federal income tax purposes relating to the exclusion from gross income of interest on the Obligations. On the date hereof, the Issuer is also issuing its Assessment District No. 116B Limited Obligation Improvement Bonds 2019 Series B (the "Other Bonds"); the Other Bonds will be treated as a separate issue from the Obligations. No other governmental obligations which are reasonably expected to be paid from substantially the same source of funds are being sold or issued at substantially the same time and sold pursuant to the same plan of financing as the Obligations. 4819-7183-9900v1/022459-0025 II. Private Activity. (a) Governmental Use of Proceeds. Absent an opinion of nationally -recognized bond counsel that the exclusion from gross income of interest on the Obligations will not be adversely affected for federal income tax purposes, and except as provided below, the Issuer will not allow any of the proceeds of the Obligations, or any refinanced obligations thereof, or any of the facilities financed or refinanced with such obligations to be used in the trade or business of any nongovernmental persons (other than in their roles as members of the general public) and will not loan any of the proceeds of the Obligations or any refinanced obligations to any nongovernmental persons. In furtherance of the foregoing, the Issuer represents the following with respect to the use of proceeds of the Obligations and the facilities financed and refinanced therewith. (b) In General. No more than 10% of the proceeds of the Obligations or the Project (based on the cost of the components of the Project or, with respect to a unitary structure, on the relative fair rental value of such components) has been or will be used in the aggregate for any activities that constitute a "Private Use" (as such term is defined in Section (e) below). No more than 10% of the principal of or interest on the Obligations, under the terms thereof or any underlying arrangement, has been or will be secured by any interest in property (whether or not the Project) used for a Private Use or in payments in respect of property used for a Private Use, or will be derived from payments in respect of property used for a Private Use. (c) No Private Loan Financing. No more than the lesser of 5% of the proceeds of the Obligations or $5,000,000 will be used to make or finance loans to any person other than to a state or local governmental unit (other than loans to finance any governmental tax or assessment of general application for a specific essential governmental function or loans that are used to acquire or carry Nonpurpose Investments (as such term is defined below)). (d) No Disproportionate or Unrelated Use. No more than 5% of the proceeds of the Obligations or the Project has been or will be used for a Private Use that is unrelated or disproportionate to the governmental use of the proceeds of the Obligations (an "Unrelated or Disproportionate Use"), and no more than 5% of the principal of or interest on any of the Obligations has been or will be, under the terms of the Obligations or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for a Private Use that is an Unrelated or Disproportionate Use or in payments in respect of property used or to be used for a Private Use that is an Unrelated or Disproportionate Use. (e) Definition of Private Use. For purposes of this Tax Certificate, the term "Private Use" means any activity that constitutes a trade or business that is carried on by persons or entities other than a "governmental person," which is defined within Treasury Regulation Section 1.141-1(b) as a state or local governmental unit or any instrumentality thereof. "Governmental person" does not include the United States or any agency or instrumentality thereof. The leasing of property financed or refinanced with proceeds of the Obligations or the use by or the access of a person or entity other than a governmental unit to property or services on a basis other than as a member of the general public shall constitute a Private Use. Private Use may also result from certain management and service contracts; certain exceptions are described in paragraphs (f) and (g) below. 2 4819-7183-9900v1/022459-0025 (0 Short -Term Incidental or Agency -type Arrangements. For purposes of Section II of this Tax Certificate, Private Use of the Project does not include the following: (i) Contracts for services that are solely incidental to the primary governmental function or functions of a bond financed property (e.g., contracts for janitorial, office equipment repair, billing, or similar services). (ii) Contracts to provide for services, if the only compensation is the reimbursement of the service provider for actual and direct expenses paid by the service provider to unrelated parties. (iii) Arrangements, including renewal options, the term of which is not greater than two hundred (200) days. For purposes of this provision, a right of first refusal to renew will not be treated as a renewal option if (A) the compensation for the use under the arrangement is predetermined at generally applicable, fair market value rates that are in effect at the time of renewal, and (B) the use of the financed property under the same or similar arrangements is predominately by natural persons who are not engaged in a trade or business. (iv) Arrangements (other than an arrangement that results in the ownership of financed property) (A) the term of which, including all renewal options, as described in Subsection (iii) above, is not longer than one hundred (100) days, (B) that would be treated as general public use, except that the bond financed property is not available for use on the same basis by natural persons that are not engaged in a trade or business because generally applicable and uniform rates are not reasonably available to natural persons not engaged in a trade or business, and (C) wherein the property is not financed for a principal purpose of providing such property for use by a non-governmental unit. (v) Arrangements (other than an arrangement resulting in ownership of the property) (A) the term of which, including all renewal options as described above, is not longer than fifty (50) days, (B) that are negotiated at arm's length and the compensation is at fair market value, and (C) wherein the property is not financed for a principal purpose of providing such property for use by a non-governmental unit. The term limits described in each of the three foregoing contractual arrangements (i.e., clauses (iii), (iv) and (v) above) are not required to relate to consecutive days; that is, if the contract provides for use of bond financed property for fifteen (15) days per year for four (4) years, the contract would have to comply with the requirements applicable to contractual arrangements set forth in paragraph (iv) above, because the term of the contract would exceed fifty (50) days. (vi) Incidental use of bond -financed property is disregarded, to the extent that such use(s) do not exceed two and one-half percent (2-1/2%) of the proceeds of the issue and the use (with the exception of vending machines, pay telephones, kiosks and similar uses) does not involve the transfer to non-exempt persons of possession and control of the space that is separated from other areas of the facility by walls, partitions, or other physical barriers, such as a night gate affixed to a structural component of a building (a nonpossessory use); the nonpossessory use is not functionally related to any other use of the facility by the same person (other than a 4819-7183-9900v1/022459-0025 different nonpossessory use); and all nonpossessory uses of the facility do not, in the aggregate, involve the use of more than two and one-half percent (2-1/2%) of the facility. (vii) Qualified improvements, that is improvements to a building (including its structural components and land functionally related and subordinate to the building) owned by a state or local governmental unit are not used for private business use if. (A) the building was placed in service more than one year before the construction or acquisition of the improvement has begun; (B) the improvement is not an enlargement of the building or an improvement of interior space occupied exclusively for any private business use; (C) no more than fifteen percent (15%) of the improved building is used for private business use; and (D) no portion of the improved building or any payment in respect of the improved building is taken into account as security for the payment of debt service on the tax exempt bond issue, including a mortgage on the property for the benefit of the bondholders. (g) Management and Service Contract Safe -Harbors. With respect to management and service contracts, the determination of whether a particular use constitutes Private Use under this Tax Certificate shall be determined on the basis of applying the relevant sections of the Treasury Regulations and Revenue Procedure 2017-13 which includes the following restrictions: (A) the compensation is reasonable for the services rendered, (B) no portion of the compensation is based upon a share of net profits, (C) the service provider does not bear the burden of net losses from the operation of the managed property, (D) the Issuer has a significant degree of control over the managed property, (E) the Issuer must bear the risk of loss upon damage or destruction of the managed property, (F) the service provider cannot take a tax position inconsistent with merely being a service provider, (G) not more than 20 percent of the voting power of the governing body of the Issuer is vested in the service provider, and (H) the term of the contract is not in excess of the lesser of 80 percent of the weighted average reasonably expected economic life of the managed property and 30 years. As of the date hereof, no portion of the proceeds derived from the sale of the Obligations is being used to provide property subject to contracts or other arrangements with persons or entities engaged in a trade or business (other than governmental units) that involve the management of property or the provision of services with respect to property financed or refinanced by proceeds of the Obligations. (h) $15,000,000 Limit and Multipurpose Election. Absent an opinion of bond counsel, in no event will the amount of Private Use allocable to each multipurpose component of the Project exceed $15,000,000; the Issuer expressly does not elect, as of the date hereof, to make a multipurpose election pursuant to Treasury Regulation Section 1.141-13(d) to divide the issue of Obligations. (i) Use Pursuant to Leases Licenses and Joint Ventures. The Issuer does not currently lease, license, sublease or sublicense, nor will the Issuer lease, license, sublease or sublicense during the period the Obligations are outstanding, any portion of the Project to a non-governmental unit such that the Obligations will be considered "private activity bonds" within the meaning of Section 141 of the Code. The Issuer is not currently engaged in any joint venture, nor will the Issuer engage in any joint venture, with any non-governmental unit, during the period the Obligations are outstanding, in which any portion of the Project will be used by a non-governmental unit. Bond Counsel has advised the Issuer that any arrangement that is properly characterized as a lease for federal income tax purposes is treated as a lease. Consequently, an arrangement that is referred to as 4 4819-7183-9900v1/022459-0025 a management or service contract may nevertheless be treated as a lease, and in detennining whether a management contract is properly characterized as a lease, it is necessary to consider all of the facts and circumstances, including the following factors: (i) the degree of control over property that is exercised by a non-governmental unit; and (ii) whether a non-governmental unit bears risk of loss of the bond -financed property. III. Arbitrage Certifications. The following states the expectations of the Issuer with respect to the amount and uses of the proceeds of the Obligations and certain other monies or property: (a) Source and Use of Funds. The total proceeds to be derived by the Issuer from the sale of the Obligations, in the aggregate amount of $1,540,537.27 (representing $1,575,000.00 face amount of the Obligations, less net original issue discount of $9,028.90, and less an Underwriter's discount of $25,433.83) are expected to be needed and fully expended as follows: (i) $52,112.50 of such proceeds will be transferred to Assessment District No. 116 Reserve Fund to fund the Reserve Requirement; (ii) $1,312,893.25 of such proceeds shall be transferred to Assessment District No. 116 Improvement Fund; (iii) $171,381.00 of such proceeds will be transferred to the Assessment District No. 116 Costs of Issuance Fund and will be expended to pay Issuance Costs and certain other costs within one year of the date hereof, and (iv) $4,150.52 of such proceeds will be transferred to the Interest Account of the Assessment District No. 116 Redemption Fund and used for Capitalized Interest. (b) Reimbursement. Other than $228,987.31 of preliminary costs paid prior to construction, no costs paid prior to the date hereof are being reimbursed by proceeds of the Obligations. (c) Over -Issuance. The total proceeds to be received by the Issuer from the sale of the Obligations, together with anticipated investment earnings thereon, do not exceed the total amount necessary for the purposes described above. (d) Temporary Period. The Issuer has entered into a binding obligation to expend at least five percent (5%) of the principal amount of the Obligations (less amounts deposited in the Assessment District No. 116 Reserve Fund) on the Project within 6 months of the date hereof. Work on the construction and acquisition of the Project will proceed with due diligence to the completion thereof, and at least eighty-five percent (85%) of the proceeds derived from the sale of the Obligations, other than those held in the Reserve Fund, will be expended within three years of the date hereof on the Project. (e) Working Capital. Any working capital expenditures do not exceed five percent (5%) of the proceeds derived from the sale of the Obligations and are directly related to the Project. 4819-7183-9900v 1/022459-0025 (f) Funds and Accounts. The Issuance Document (or other document) creates and establishes the following funds and accounts with respect to the Obligations: (i) the Assessment District No. 116 Redemption Fund, and within such fund, (A) the Interest Account, (B) the Principal Account, and (C) the Prepayment Account; (ii) the Assessment District No. 116 Reserve Fund; (iii) the Assessment District No. 116 Improvement Fund; (iv) the Assessment District No. 116 Rebate Fund; (v) the Assessment District No. 116 Costs of Issuance Fund; (vi) the Assessment District No. 116 Administrative Expense Fund; and (vii) the Assessment District No. 116 Assessment Fund. (g) SinkingFunds. unds. (i) Bona Fide Debt Service Funds. The Interest Account, the Principal Account, and the Prepayment Account of the Assessment District No. 116 Redemption Fund and the Assessment District No. 116 Assessment Fund (to the extent such accounts are expected to be depleted at least once each year) (collectively, the "Bona Fide Debt Service Funds"), will be used primarily to achieve a proper matching of revenues (and certain other monies) and payments of principal and interest with respect to the Obligations within each year. Amounts deposited in the Bona Fide Debt Service Funds will be depleted at least once a year except for a reasonable carryover amount, if any, which, in the aggregate, will not exceed the greater of (i) one year's earnings on such funds for the immediately preceding bond year, or (ii) one -twelfth of the annual debt service with respect to the Obligations for the immediately preceding bond year. (ii) Reasonably Required Reserve. Proceeds derived from the sale of the Obligations deposited in the Assessment District No. 116 Reserve Fund will not be greater than the least of (i) maximum annual debt service with respect to the Obligations, (ii) 125% of average annual debt service with respect to the Obligations, or (iii) 10% of the face amount of Obligations (less original issue discount if in excess of two percent (2%) of the stated redemption amount at maturity) (the "Tax Reserve Limit"). The Underwriter has represented (with respect to the Obligations) that the funding of the Assessment District No. 116 Reserve Fund was reasonably required, was a vital factor in marketing the Obligations, facilitated marketing the Obligations at an interest rate comparable to bonds and other obligations of a similar type and is not in excess of the amount necessary for such purpose. (iii) No Other Proceeds. Other than the Bona Fide Debt Service Funds, 4819-7183-9900v1/022459-0025 Capitalized Interest, and the Assessment District No. 116 Reserve Fund, there are no funds or accounts of the Issuer established pursuant to the Issuance Document, or otherwise, that are reasonably expected to be used for the payment of principal and interest with respect to the Obligations or that are pledged as collateral for the Obligations and for which there is a reasonable assurance that amounts on deposit therein will be available for the payment of principal and interest with respect to the Obligations if the Issuer encounters financial difficulties. There are no amounts held under any agreement to maintain amounts at a particular level for the direct or indirect benefit of the holders of the Obligations or guarantor of the Obligations, if any, excluding for this purpose amounts in which the Issuer (or a substantial beneficiary) may grant rights that are superior to the rights of the holders of the Obligations or guarantor of the Obligations, if any, and amounts that do not exceed reasonable needs for which they are maintained and as to which the required level is tested no more frequently than every six months and that may be spent without any substantial restriction other than a requirement to replenish the amount by the next testing date. The term of the Obligations is not longer than is reasonably necessary for the governmental purpose of the issue, and the weighted average maturity of the Obligations does not exceed 120 percent of the average reasonably expected economic life of the Project. (h) Rebate Liability Account. Amounts deposited in the Rebate Fund are to assist the Issuer with compliance of Section 148(f) of the Code. (i) Investment. The proceeds derived from the sale of the Obligations and the amounts on deposit in the aforementioned funds and accounts may be invested as follows: (i) Amounts held in the Assessment District No. 116 Reserve Fund not in excess of the Tax Reserve Limit may be invested at an unrestricted yield. (ii) Amounts deposited in the Bona Fide Debt Service Funds may be invested at an unrestricted yield for a period not in excess of 13 months from the date of deposit of such amounts to such funds. Amounts described in the previous sentence that may not be invested at an unrestricted yield pursuant to this Subparagraph shall be invested either at a yield not in excess of the yield on the Obligations or in Tax -Exempt Obligations (as defined in Section IV). (iii) Proceeds of the Obligations (including earnings thereon) held in the Assessment District No. 116 Improvement Fund, the Rebate Fund, or the Assessment District No. 116 Costs of Issuance Fund, may be invested at an unrestricted yield for a period of three years from the date hereof (and with respect to earnings thereon, additional one year periods from the date of receipt); thereafter, such monies will be invested either at a yield not in excess of the yield on the Obligations or in Tax -Exempt Obligations. (iv) Amounts held in the Assessment District No. 116 Administrative Expense Fund, and Rebate Fund (not described above), may be invested without regard to yield. (v) Amounts held in the Prepayment Account (not described above), will be invested at a yield not in excess of the yield on the Obligations or in Tax -Exempt Obligations. 0) Yield. For purposes of this Section III of this Tax Certificate, yield is calculated as 4819-7183-9900v1/022459-0025 set forth in Section 148 of the Code and Section 1.148-4 of the Treasury Regulations. Thus, yield generally means that discount rate which when used in computing the present value of all unconditionally payable payments representing principal, interest, and the fees of qualified guarantees paid and to be paid with respect to the Obligations produces an amount equal to the issue price of the Obligations. The issue price of the Obligations is $1,565,971.10 which is equal to the aggregate of, for each Maturity of the Obligations, the first price at which at least 10% of such Maturities were sold to the Public (as defined in Exhibit C), as represented by the Underwriter in Exhibit C. For purposes of the proceeding sentence, the terms "Maturity" and "Public" have the meanings ascribed in Exhibit C represented by the Underwriter in Exhibit C. Yield with respect to the obligations allocable to proceeds of the Obligations, is that discount rate which when used in computing the present worth of the payments of principal and interest with respect to the obligations produces an amount equal to the purchase price of the obligation. Absent an opinion of nationally recognized bond counsel that the exclusion from gross income of interest on the Obligations will not be adversely affected for federal income tax purposes, the Issuer or the City will not enter into any hedges (including swaps and caps) with respect to the Obligations. (k) No Artifice or Device. The Obligations are not and will not be part of a transaction or series of transactions (i) that attempts to circumvent the provisions of Section 148 of the Code, or any successor thereto, and the regulations promulgated thereunder or under any predecessor thereto, enabling the Issuer or any related person to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (ii) that increases the burden on the market for tax-exempt obligations in any manner, including, without limitation, by selling bonds that would not otherwise be sold, or selling more bonds, or issuing bonds sooner, or allowing bonds to remain outstanding longer, than otherwise would be necessary. IV. Rebate Compliance. (a) Covenants. The Issuer hereby covenants to comply with the rebate requirements of Section 148(f) of the Code. The Issuer acknowledges that the United States Department of the Treasury has issued certain regulations with respect to certain requirements relating to compliance with Section 148(f) of the Code. The Issuer covenants that they will determine precisely what is required with respect to Section 148(f) of the Code and will comply with any requirements applicable to the Obligations. The Issuer acknowledges that, to the extent that an exception to the rebate requirements of Section 148(f) of the Code is not available with respect to the Obligations, under Section 148(f) of the Code, the federal government must be paid the sum of (i) the excess of the amount earned on all "nonpurpose investments" with respect to the Obligations over the amount that would have been earned had such investments been invested at a rate equal to the yield with respect to the Obligations, plus (ii) any income attributable to the excess described in (i) (the "Rebate Requirement"). 8 4819-7183-9900v1/022459-0025 The Issuer acknowledges that currently, unless an exception to the Rebate Requirement is available, compliance with Section 148(f) of the Code generally involves a multi -step process: (1) ascertaining the funds (the "Gross Proceeds") and investments (the "Nonpurpose Investments") subject to the Rebate Requirement of Section 148(f) of the Code after applying, if applicable, a universal cap with respect to the Obligations (the "Universal Cap"), (2) creating an investment history cash flow report with respect to the investment of Gross Proceeds of the Obligations, (3) determining the yield with respect to the Obligations (the "Yield"), (4) future valuing receipts and payments in the cash flow report (including certain deemed receipts and payments) using the Yield as the discount factor, and (5) determining the amount of rebatable arbitrage with respect to the Obligations and paying the appropriate amount to the United States Treasury. See Treas. Reg. §§ 1.148-0 through 1.148-11, 1.149(d) -I, and 1.150-1 for rules with respect to rebate compliance methodology. See Subparagraph (b)(i) below for a description of Nonpurpose Investments with respect to the Obligations, Subparagraph (b)(ii) below for a description of Gross Proceeds of the Obligations, Subparagraph (b)(iii) below for the description of a Universal Cap with respect to the Obligations, Subparagraph (b)(iv) below for a description of Yield with respect to the Obligations for purposes of compliance with Section 148(f) of the Code, and Subparagraph (d) and Section V with respect to allocating Gross Proceeds, recordkeeping, and permitted investment of Gross Proceeds. The Issuer also acknowledges that additional or different requirements may be applicable to the Obligations if certain exceptions are satisfied. See Paragraph (c) herein. (b) Operative Terms. (i) Nonpurpose Investments. Subject to the limitation in Subparagraph (b)(iii) below, Nonpurpose Investments are generally securities, obligations, annuity contracts or any other investment -type property that are not acquired to carry out the governmental purpose of the Obligations that are allocated to Gross Proceeds. However, Nonpurpose Investments do not include: (A) United States Treasury - State and Local Government Series, Demand Deposit Securities; or (B) Tax -Exempt Obligations. The term "Tax -Exempt Obligations" for the purposes of this Tax Certificate includes (i) obligations the interest on which is excludable from gross income for federal income tax purposes, and not treated as an item of tax preference under Section 57(a)(5)(C) of the Code, and (ii) an interest in a regulated investment company to the extent that at least ninety-five percent (95%) of the income to the holder of the interest is excludable from gross income under Section 103 of the Code. (ii) Gross Proceeds. Subject to the limitation in Subparagraph (b)(iii) below, "Gross Proceeds" with respect to the Obligations means: (A) amounts actually or constructively received from the sale (or other disposition) of the Obligations; (B) amounts actually or constructively received from investing amounts described in (A); 9 4819-7183-9900v1/022459-0025 (C) amounts (other than proceeds derived from the sale of the Obligations) that are reasonably expected to be or are in fact used to pay debt service with respect to the Obligations; (D) amounts pledged as security for the payment of debt service with respect to the Obligations or otherwise serving as a reserve fund with respect to the Obligations; (E) "transferred proceeds" of the Obligations; and (F) any other amounts which are replacement proceeds of the Obligations within the meaning of Treasury Regulation § 1.148-1(c). (iii) Universal Cap. Except as provided below, in no event shall the value of Nonpurpose Investments allocated to Gross Proceeds of the Obligations exceed the Universal Cap of the Obligations computed in accordance with Section 1.148-6 of the Treasury Regulations. The Universal Cap of the Obligations is equal to the value of the outstanding Obligations computed in accordance with Section 1.148-4 of the Treasury Regulations. The value of a Nonpurpose Investment on a date allocated to Gross Proceeds of the Obligations for this purpose is equal to the value of such investment in accordance with Treasury Regulation § 1.148-5(d). The Universal Cap value and the value of Nonpurpose Investments are to be computed as of the first day of each bond year that commences after the second anniversary of the issue date and if the applicable obligations, are a refunding issue, as of each date that, without regard to the Universal Cap, proceeds of any refunded issue become "transferred proceeds" of the Obligations within the meaning of Section 1.148-9 of the Treasury Regulations (a "Cap Computation Date"). Amounts described in Subparagraph (c)(i) are not subject to the Universal Cap. Between Cap Computation Dates, Nonpurpose Investments cease to be allocated to the Obligations to the extent they are expended or otherwise cease to be allocated to the Obligations under Section 1.148-6 of the Treasury Regulations. To the extent Nonpurpose Investments cease to be allocated to the obligations of an Obligations, other investments become so allocated up to the amount of the unused Universal Cap, computed in accordance with Section 1.148-6 of the Treasury Regulations. If on a Cap Computation Date Nonpurpose Investments have a value in excess of the Universal Cap, an amount of such investments necessary to eliminate that excess ceases to be allocated to the Obligations. Nonpurpose Investments cease to be allocated to the Obligations in the following order, within the meaning of Section 1.148-6 of the Treasury Regulations: (1) first, amounts held in a sinking fund, pledged fund, or reserve or replacement fund for the Obligations (other than proceeds derived from the sale of the Obligations), (2) second, transferred proceeds, and (3) third, proceeds derived from the sale of the Obligations and earnings thereon, all within the meaning of Section 1.148-6 of the Treasury Regulations. 10 4819-7183-9900v1/022459-0025 (4) A failure to do a Universal Cap calculation on a Cap Computation Date will not result in noncompliance with Section 148(f) of the Code if, in the absence of that failure, the Obligations would have satisfied the Rebate Requirement. (iv) Yield. See Section III hereof. (c) Rebate Exception. (i) Bona Fide Debt Service Funds. The Issuer will be relieved of the obligation to pay the Rebate Requirement with respect to amounts earned on funds in the Bona Fide Debt Service Funds. (ii) Expenditure Exceptions. There are three expenditure exceptions from the Rebate Requirement - the "Two -Year Exception," the "Six -Month Exception," and the "Eighteen -Month Exception." The Issuer will be relieved of the obligation to pay the Rebate Requirement with respect to that portion of the proceeds of the Obligations described in each applicable Subclause (1) below of each Clause (A), (B), and (C), if the applicable requirements set forth in each applicable Subclause (2) below are satisfied of each Clause (A), (B), and (C). (A) Two -Year Exception. (1) The portion of the "available construction proceeds" (as defined below) of the Obligations at least 75 percent of which are to be used for construction expenditures (including reconstruction and rehabilitation) with respect to property that is to be owned by a governmental unit or an organization described in Section 501(c)(3) of the Code and exempt from federal income tax under Section 501(a) of the Code is described in this Subclause. The term "available construction proceeds" means an amount equal to the portion of the issue price (as defined in Section III of this Tax Certificate) of the Obligations described in this Subclause, increased by earnings thereon, and increased by the proportionate amount of earnings on the Assessment District No. 116 Reserve Fund allocable to the portion of the issue described in this Subclause earned prior to the earlier of the close of the two-year period described in Subclause (A)(2) or the date construction of the Project is substantially complete. Available construction proceeds do not include amounts to be used for refunding purposes, to pay Issuance Costs of the Obligations or proceeds derived from the sale of the Obligations in the Assessment District No. 116 Reserve Fund (other than the earnings thereon described above). The Issuer should note that earnings on the portion of the Assessment District No. 116 Reserve Fund described above earned other than during the period described in Subclause (A)(2) are subject to the Rebate Requirement. (2) This exception will be treated as being satisfied if at least 10% of the available construction proceeds of the Obligations are expended for the governmental purposes of the Obligations within the six-month period beginning on the date of issue of the Obligations, at least 45% of such 11 4819-7183-9900v1/022459-0025 amounts are expended for the governmental purposes of the Obligations within the one-year period beginning on the date of issue of the Obligations, at least 75% of such amounts are expended for the governmental purposes of the Obligations within the 18 -month period beginning on the date of issue of the Obligations, and all of such amounts are expended for the governmental purposes of the Obligations within the two-year period beginning on the date of issue of the Obligations. The requirement that 100% of the available construction proceeds of the Obligations be expended within two years may be reduced to not below 95% provided that the amount not expended is held by the Issuer for a period not exceeding one year as a "reasonable retainage" as required or permitted by construction contracts with contractors. The requirement that 100% of the Gross Proceeds be expended within two years may be reduced by an amount equal to the lesser of 3% of the issue price of the Obligations or $250,000.00 if the Issuer exercised due diligence to complete the Project. (B) Six -Month Exception. The Issuer will be relieved of the obligation to pay the Rebate Requirement with respect to the portion of the proceeds of the Obligations described in Subclause (1) below if the requirements described in Subclause (2) below are satisfied. (1) All Gross Proceeds of the Obligations (other than "transferred proceeds" of the Obligations, amounts held in the Assessment District No. 116 Reserve Fund, and amounts described in Subparagraph (c)(i) of this Section IV of this Tax Certificate), are described in this Subclause. (2) This exception will be treated as having been satisfied if all Gross Proceeds of the Obligations subject to this exception are expended for the governmental purposes of the Obligations no later than the day that is six months after the date of issue of the Obligations. (C) Eighteen -Month Exception. The Issuer will be relieved of the obligation to pay the Rebate Requirement with respect to the portion of the proceeds of the Obligations described in Subclause (1) below if the requirements described in Subclause (2) below are satisfied. (1) All Gross Proceeds of the Obligations allocable to new money purposes that may be invested at an unrestricted yield, including reasonably expected investment earnings as of the date hereof (other than amounts described in Subparagraph (c)(i) of this Tax Certificate, and amounts held in the Assessment District No. 116 Reserve Fund), are described in this Subclause. (2) This exception will be treated as being satisfied if at least 15% of such monies are expended for the governmental purposes of the Obligations within the six-month period beginning on the date of issue of the Obligations, at least 60% of such monies are expended for the governmental purposes of the Obligations within the one-year period beginning on the date of issue of the Obligations, and 100% of such monies are expended for the 12 4819-7183-9900v1/022459-0025 governmental purpose of the Obligations within the 18 -month period beginning on the date of issue of the Obligations. The requirement that 100% of the Gross Proceeds be expended within 18 months may be reduced to not below five percent (5%) of the proceeds derived from the sale of the Obligations subject to this exception that is retained for reasonable business purposes relating to the property financed with the Obligations provided such monies are expended within 30 months of the issue date of the Obligations. Additionally, the requirement that 100% of the Gross Proceeds be expended within 18 months may be reduced by an amount equal to the lesser of 3% of the issue price of the Obligations or $250,000.00 if the Issuer exercised due diligence to complete the Project. (iii) Expectations. The Issuer reasonably expects that at least seventy-five percent of the proceeds of the Obligations deposited in the Assessment District No. 116 Improvement Fund, and earnings thereon, are expected to be used for Project construction expenditures. (iv) Elections. (A) Seventy -Five Percent Test. Pursuant to Treasury Regulation § 1.148- 7(f)(1)(i), the Issuer expressly elects to satisfy the requirements of Section 148(f)(4)(C)(iv)(I) of the Code based upon its reasonable expectations. (B) Penalty in Lieu of Rebate. Pursuant to Section 148(f)(4)(C)(vii) of the Code, the Issuer may elect, on the date hereof, to pay a penalty (the "1 %2% Penalty"), with respect to each six-month period after the date the Obligations are issued, equal to 11/2 percent of the amount of available construction proceeds (as described above), which as of the close of the six-month period are not spent as required by Paragraph (c)(ii)(A)(2). The 1'/2% Penalty shall cease to apply: (A) if the available construction proceeds are expended, (B) if a special three percent penalty (the "3% Penalty") is paid in accordance with Section 148(f)(4)(C) of the Code, or (C) after the latest maturity date of any Obligation (including any refunding bond). All penalties are to be paid to the United States not later than 90 days after the period to which the penalty relates. The Issuer expressly does not elect to pay the penalty described in Section 148(f)(4)(C)(vii) of the Code in lieu of the Rebate Requirement described in Section 148(f)(2) of the Code, the 3% Penalty described in Section 148(f)(4)(C)(viii) of the Code, or to terminate the 1'/2% Penalty pursuant to Section 148(f)(4)(C)(ix) of the Code. Additionally, the Issuer expressly does not elect to exclude earnings on any reasonably required reserve fund as available construction proceeds pursuant to Section 148(f)(4)(C)(vi)(IV) of the Code. (C) Bifurcation. The Issuer expressly does not elect to treat the issue of Obligations as separate bond issues for purposes of Section 148(f)(4) of the Code. (d) Prohibited Investments and Dispositions. The Issuer acknowledges that compliance with Section 148(f) of the Code may involve taking no action to artificially reduce the Rebate Requirement by the manner of investing Gross Proceeds. The Issuer covenants that absent an opinion of nationally recognized bond counsel that the exclusion from gross income of interest with 13 4819-7183-9900v1/022459-0025 respect to the Obligations will not be adversely affected, it will comply with the rules of this Subsection to assure compliance with Section 148(f) of the Code. (i) Except to the extent imputed receipts would not arise under Section 1.148-5 of the Treasury Regulations, no Nonpurpose Investment may be acquired with Gross Proceeds for an amount in excess of the fair market value of such Nonpurpose Investment. No Nonpurpose Investment may be sold or otherwise disposed of for an amount less than the fair market value of the Nonpurpose Investment. (ii) The fair market value of any Nonpurpose Investment is the price which a willing buyer would pay to a willing seller to acquire the Nonpurpose Investment in a bona fide, arm's-length transaction, with no amounts to artificially reduce or increase the yield on the Nonpurpose Investment. Fair market value generally is determined on the date on which a contract to purchase or sell the Nonpurpose Investment becomes binding (i.e., the trade date rather than the settlement date). The purchase or sales price of a Nonpurpose Investment is not adjusted (except as provided below) to take into account any administrative costs of the Nonpurpose Investment. For calendar year 2019, a brokerage commission or similar fee for an investment contract and for investments for a yield restricted defeasance escrow is included as a receipt to the extent the commission exceeds the lesser of (A) $41,000.00 and (B) .2% of the computational base or, if more, $4,000; provided, a brokers fee or similar fee is included as a receipt to the extent all brokers fees or similar fees of the issue of Obligations exceed $115,000.00. For purposes of this Tax Certificate "computational base" means (A) for a guaranteed investment contract, the amount of Gross Proceeds to be deposited in the contract, and (B) for investments (other than guaranteed investment contracts) to be deposited in a yield restricted defeasance escrow, the amount of Gross Proceeds initially invested in those investments. For subsequent calendar years, the dollar limits described in this Subsection may be increased for cost -of -living adjustments. See Treas. Reg. § 1.148-5(e)(2)(iii). Certain administrative costs, including reasonable direct administrative costs, other than carrying costs, such as brokerage commissions or selling commissions, but not legal and accounting fees, recordkeeping, custody and similar costs, may be taken into account in computing the Rebate Requirement with respect to investments. See Treas. Reg. § 1.148-5. General overhead costs and similar indirect costs of the Issuer such as employee salaries and office expenses and costs of computing rebatable arbitrage may not be taken into account. The following provisions provide guidelines as to when the Nonpurpose Investment will be deemed to be acquired for its fair market value. Other methods may be used, however, to establish fair market value. (iii) Nonpurpose Investments that are investment contracts and investments purchased for a yield restricted defeasance escrow will be considered acquired and disposed of for an amount equal to the fair market value of such obligations if the following requirements are satisfied: (A) The Issuer makes a bona fide solicitation for the purchase of the investment. A bona fide solicitation is a solicitation that satisfies all of the following requirements: (1) The bid specifications are in writing and are timely forwarded to potential providers. 14 4819-7183-9900v1/022459-0025 (2) The bid specifications include all material terms of the bid. A term is material if it may directly or indirectly affect the yield or the cost of the investment. (3) The bid specifications include a statement notifying potential providers that submission of a bid is a representation that the potential provider did not consult with any other potential provider about its bid, that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the Issuer or any other person (whether or not in connection with the bond issue), and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for purposes of satisfying the requirements of paragraph (13)(1) or (2) below. (4) The terms of the bid specifications are commercially reasonable. A term is commercially reasonable if there is a legitimate business purpose for the term other than to increase the purchase price or reduce the yield of the investment. For example, for solicitations of investments for a yield restricted defeasance escrow, the hold firm period must be no longer than the Issuer reasonably requires. (5) For purchases of guaranteed investment contracts only, the terms of the solicitation take into account the Issuer's reasonably expected deposit and drawdown schedule for the amounts to be invested. (6) All potential providers have an equal opportunity to bid. For example, no potential provider is given the opportunity to review other bids (i.e., a last look) before providing a bid. (7) At least three reasonably competitive providers are solicited for bids. A reasonably competitive provider is a provider that has an established industry reputation as a competitive provider of the type of investments being purchased. (B) The bids received by the Issuer meet all of the following requirements: (1) The Issuer receives at least three bids from providers that the Issuer solicited under a bona fide solicitation meeting the requirements of paragraph (A) of this section and that do not have a material financial interest in the issue. A lead underwriter in a negotiated underwriting transaction is deemed to have a material financial interest in the issue until 15 days after the issue date of the issue. In addition, any entity acting as a financial advisor with respect to the purchase of the investment at the time the bid specifications are forwarded to potential providers has a material financial interest in the issue. A provider that is a related party to a provider that has a material financial interest in the issue is deemed to have a material financial interest in the issue. 15 4819-7183-9900vl/022459-0025 (2) At least one of the three bids described in paragraph (13)(1) of above is from a reasonably competitive provider, within the meaning of paragraph (A)(7) of this section. (3) If the Issuer uses an agent to conduct the bidding process, the agent did not bid to provide the investment. (C) The winning bid meets the following requirements: (1) Guaranteed investment contracts. If the investment is a guaranteed investment contract, the winning bid is the highest yielding bona fide bid (determined net of any broker's fees). (2) Other investments. If the investment is not a guaranteed investment contract, the following requirements are met: a. The winning bid is the lowest cost bona fide bid (including any broker's fees). The lowest cost bid is either the lowest cost bid for the portfolio or, if the Issuer compares the bids on an investment -by -investment basis, the aggregate cost of a portfolio comprised of the lowest cost bid for each investment. Any payment received by the Issuer from a provider at the time a guaranteed investment contract is purchased (e.g., an escrow float contract) for a yield restricted defeasance escrow under a bidding procedure meeting the requirements of paragraph (iii) is taken into account in determining the lowest cost bid. b. The lowest cost bona fide bid (including any broker's fees) is not greater than the cost of the most efficient portfolio comprised exclusively of State and Local Government Series Securities from the United States Department of the Treasury, Bureau of Public Debt. The cost of the most efficient portfolio of State and Local Government Series Securities is to be determined at the time that bids are required to be submitted pursuant to the terms of the bid specifications. C. If State and Local Government Series Securities from the United States Department of the Treasury, Bureau of Public Debt are not available for purchase on the day that bids are required to be submitted pursuant to terms of the bid specifications because sales of those securities have been suspended, the cost comparison of (C)(2)(b) is not required. (D) The provider of the investments or the obligor on the guaranteed investment contract certifies the administrative costs that it pays (or expects to pay, if any) to third parties in connection with supplying the investment. 16 4819-7183-9900v1/022459-0025 (E) The Issuer retains the following records with the bond documents until three years after the last outstanding bond is redeemed: (1) For purchases of guaranteed investment contracts, a copy of the contract, and for purchases of investments other than guaranteed investment contracts, the purchase agreement or confirmation. (2) The receipt or other record of the amount actually paid by the Issuer for the investments, including a record of any administrative costs paid by the Issuer, and the certification under paragraph (D) above. (3) For each bid that is submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results. (4) The bid solicitation form and, if the terms of the purchase agreement or the guaranteed investment contract deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. For example, if the Issuer purchases a portfolio of investments for a yield restricted defeasance escrow and, in order to satisfy the yield restriction requirements of Code Section 148, an investment in the winning bid is replaced with an investment with a lower yield, the Issuer must retain a record of the substitution and how the price of the substitute investment was determined. If the Issuer replaces an investment in the winning bid portfolio with another investment, the purchase price of the new investment is not covered by the safe harbor unless the investment is bid under a bidding procedure meeting the requirements of paragraph (iii). (5) For purchases of investments other than guaranteed investment contracts, the cost of the most efficient portfolio of State and Local Government Series Securities, determined at the time that the bids were required to be submitted pursuant to the terms of the bid specifications. (iv) Nonpurpose Investments that are certificates of deposit with a fixed interest rate, a fixed principal payment schedule, a fixed maturity, and a substantial penalty for early withdrawal, will be considered acquired for their fair market value if the following requirements are satisfied: (A) the yield on the certificate of deposit is not less than the yield on reasonably comparable direct obligations of the United States; and (B) the yield on the certificate of deposit is not less than the highest yield that is published or posted by the provider to be currently available from the provider on comparable certificates of deposit offered to the public. (v) Except as otherwise provided in paragraph (d), any Nonpurpose Investment that is not of a type traded on an established securities market, within the meaning of Code §1273, shall be rebuttably presumed to be acquired or disposed of for an amount in excess of the fair market value of the Nonpurpose Investment. 17 4819-7183-9900v1/022459-0025 (vi) The fair market value of a United States Treasury obligation that is purchased directly from the United States Treasury is its purchase price. (e) Bond Year. For purposes of this Certificate, Bond Year ends on each September 1 and begins on each September 2; provided that the first Bond Year begins on the date hereof and the last Bond Year ends on the date no Obligations are outstanding. V. Recordkeeping and Allocation. (a) Recordkeeping. The Issuer will maintain or cause to be maintained sufficient records to support compliance with the provisions of this Tax Certificate and to support the exclusion from gross income of interest on the Obligations for federal income tax purposes, including, but not limited to, the following: (i) basic records relating to the Obligations (e.g., fiscal agreement, and opinions); (ii) documentation evidencing expenditure of Obligation proceeds; (iii) documentation evidencing use of Obligation financed property (e.g., management and service contracts); (iv) documentation evidencing sources of payment and security for Obligations; and (v) documentation pertaining to the investment of Obligation proceeds (including rebate calculations). In particular, the Issuer will maintain or cause to be maintained detailed records with respect to each security, obligation, annuity contract, or another investment -type property allocated to Gross Proceeds, including: (i) purchase date, (ii) purchase price, (iii) information establishing fair market value on the date such investment is allocated to Gross Proceeds, (iv) any accrued interest paid, (v) face amount, (vi) coupon rate, (vii) periodicity of interest payments, (viii) disposition price, (ix) any accrued interest received, and (x) disposition date. The Issuer shall establish separate sub - accounts or take other accounting measures in order to account fully for all Gross Proceeds. The Issuer shall maintain books and records with respect to the allocation of Gross Proceeds in accordance with this Tax Certificate. All records required to be maintained pursuant to this Tax Certificate must be kept as long as the Obligations are outstanding plus three years after all Obligations are retired, and with respect to obligations refunded by the Obligations, for the same period required for the Obligations. (b) Allocation. The Issuer may use any reasonable, consistently applied accounting method to account for Gross Proceeds of the Obligations in accordance with Treasury Regulation § 1.148-6; for purposes of allocating Gross Proceeds to capital expenditures intended to be financed pursuant to this Tax Certificate after the date of issue of the applicable tax-exempt obligation, and paid to unrelated third parties ("Qualified Capital Expenditures"), the Issuer may use the following accounting methods: "specific tracing," "gross -proceeds -spent -first," "first -in, first -out," or a ratable allocation method. The Issuer covenants to consult with nationally recognized bond counsel with 18 4819-7183-9900v1/022459-0025 respect to the applicable method of allocation of Gross Proceeds to expenditures that are not Qualified Capital Expenditures. In addition, the accounting method applied must account uniformly for (i) Gross Proceeds commingled with other moneys in excess of $25,000 and such other commingled moneys and (ii) Gross Proceeds for each fiscal year or interim fiscal period therein during which the issue is outstanding. Another accounting method may, however, be utilized for moneys if it is for a bona fide purpose unrelated to federal income tax restrictions. If Gross Proceeds are commingled with other moneys (other than in an open-end regulated investment company) in an amount in excess of $25,000 (a "Commingled Fund"), the following additional requirements must be satisfied. First, all payments and receipts with respect to investments in the Commingled Fund must be allocated among the different moneys ratably based upon either (i) average daily balances during a "Computation Period" (as defined below) or (ii) the average of the beginning and ending balances of the amounts in the Commingled Fund for a Computation Period that does not exceed one month. A Commingled Fund may use as its Computation Period any consistent time period within its fiscal year that does not exceed three months. Not less frequently than at the end of each Computation Period, the Commingled Fund must compute and allocate to different types of moneys all payments, receipts, income, gain or losses realized, and expenditures. Second, except as provided below, the Commingled Fund must treat all of its investments as if sold at fair market value on the last day of the fiscal year or as of the last day of each Computation Period, and so allocate net gains or losses from such deemed sales (the "Mark -to -Market Requirement"). A Commingled Fund need not satisfy the Mark -to -Market Requirement if (i) the remaining weighted average maturity of all investments held by the Commingled Fund during a fiscal year does not exceed eighteen months and such investments consist exclusively of debt obligations, (ii) the Commingled Fund serves as a common reserve fund or sinking fund for two or more issues of the same Issuer or (iii) the Issuer (and any related party) do not own more than twenty-five percent of beneficial interests in the Commingled Fund. Common reserve funds or sinking funds for two or more issues must be ratably allocated (not less frequently than once every five years and on each date a new issue is added or retired (if relative original principal amounts are used to so allocate)) in accordance with (i) the value of the bonds under Treasury Regulation § 1.148-4(e), (ii) the relative amounts of the remaining maximum annual debt service payable on the issues, or (iii) the relative original stated principal amounts of the outstanding issues. Notwithstanding any other provision of this Tax Certificate, the allocation methodology applied must be consistent for all purposes of this Tax Certificate. The Issuer must account for the allocation of Gross Proceeds to expenditures not later than eighteen months after the later of the date the expenditure is paid and the date the applicable portion of the Project is placed in service and in any event, by the date sixty days after the fifth anniversary of the issue date of the Obligations or the date 60 days after the retirement of the Obligation if earlier. VI. Miscellaneous. (a) Federal Guarantee. The Issuer will not invest any of the proceeds of the Obligations in a manner which would result in the Obligations being considered "federally guaranteed" within the meaning of Section 149(b) of the Code, except as permitted therein (i.e., will not cause interest with respect to the Obligations to be included in gross income for federal income tax purposes). (b) Information Reporting. Attached as Exhibit D is a copy of the Form 8038-G filed with respect to the Obligations. 19 4819-7183-9900x1/022459-0025 (c) No Pooling. The Issuer does not expect to use and will not use the proceeds of the Obligations to make or finance loans to two or more ultimate borrowers. (d) Hedge Bonds. Not more than 50% of the proceeds of the Obligations have been or will be invested at a guaranteed rate of return for a term of four years or more. VII. Concluding Matters. (a) Reliance. The expectations of the Issuer concerning certain uses of proceeds of the Obligations and certain other moneys described herein and other matters are based in whole or in part upon representations of other parties as set forth in this Tax Certificate or the exhibits attached hereto. The Issuer is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representations made in this Tax Certificate or exhibits attached hereto. (b) Authority. The undersigned is an authorized representative of the Issuer and is acting for and on behalf of the Issuer in executing this Tax Certificate. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change the expectations as set forth herein, and said expectations are reasonable. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 20 4819-7183-9900v1/022459-0025 (c) Amendment. Notwithstanding any provision of this Tax Certificate, the Issuer may amend this Tax Certificate and thereby alter any actions allowed or required by this Tax Certificate if such amendment is based on an opinion of bond counsel that the exclusion from gross income of interest with respect to the Obligations will not be adversely affected. Dated: July 23, 2019 CIT Mot S-1 4819-7183-9900/022459-0025 EXHIBIT A DESCRIPTION OF PROJECT COSTS PAID OR TO BE PAID FROM PROCEEDS OF THE OBLIGATIONS Project Please use Description of Facilities in Final Engineer's Report, dated December 22, 2015 of Harris & Associates. Exhibit A-1 4819-7183-9900v1/022459-0025 EXHIBIT B [RESERVED] Exhibit B-1 4819-7183-9900v1/022459-0025 EXHIBIT C $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A UNDERWRITER'S CERTIFICATE The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated (the "Underwriter") hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the "Bonds"). A. Issue Price. 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. 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 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). B. Reserve Fund The establishment of the Assessment District No. 116 Reserve Fund in the amount of the Reserve Requirement was vital to the marketing of the Obligations and reasonably required to assure the payment of debt service on the Obligations. Exhibit C-1 4819-7183-9900v1/022459-0025 C. Yield. We have calculated the arbitrage yield with respect to the Obligations to be 2.66296% in accordance with the following instructions provided by Bond Counsel. Bond Counsel has advised that yield on the Obligations is the discount rate that, when used in computing the present value as of the issue date of all unconditionally payable payments of principal and interest on the Obligations, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of bonds of the issue as of the issue date. Bond Counsel has advised that the issue price is determined based on the prices of each Maturity of the Obligations listed in Schedule A as described in paragraph A.1 above. To the extent that we provided the Issuer and Bond Counsel with certain computations that show a bond yield, issue price, weighted average maturity and certain other information with respect to the Obligations, these computations are based on our understanding of directions that we have received from Bond Counsel regarding interpretation of the applicable law. We express no view regarding the legal sufficiency of any such computations or the correctness of any legal interpretation made by Bond Counsel. 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 Stradling Yocca Carlson & Rauth, a Professional Corporation 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. STIFEL, NICOLAUS & COMPANY, INCORPORATED / Bv . No4 V Dated: July 23, 2019 Exhibit C-2 4819-7183-9900/022459-0025 SCHEDULE A $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. SCHEDULE A-1 4819-7183-9900vl/022459-0025 10% Test Not Satisfied As of Sale Date But Subject to Satisfied Hold -The - Maturity Principal Interest 10% Test As of Date Offering - (September 2) Amount Rate Yield Price Satisfied* Hereof Price Rule 2020 $65,000 2.000% 1.200% 100.877% X 2021 65,000 2.000 1.390 101.262 X 2022 65,000 2.000 1.500 101.512 X 2023 65,000 2.000 1.610 101.543 X 2024 70,000 2.000 1.730 101.313 X 2025 70,000 2.000 1.860 100.804 X 2026 70,000 2.000 1.970 100.197 X 2027 75,000 2.000 2.090 99.331 X 2028 75,000 2.000 2.210 98.275 X 2029 75,000 2.250 2.330 99.282 X 2030 80,000 2.250 2.450 98.064 X 2031 80,000 2.500 2.590 99.068 X 2032 80,000 2.625 2.700 99.175 X 2033 85,000 2.750 2.800 99.418 X 2034 85,000 2.750 2.900 98.173 X 2035 90,000 2.750 2.940 97.574 X 2036 90,000 2.750 2.980 96.933 X 2037 95,000 3.000 3.000 100.000 X 2038 95,000 3.000 3.040 99.421 X 2039 100,000 3.000 3.080 98.805 X * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. SCHEDULE A-1 4819-7183-9900vl/022459-0025 SCHEDULE B PROOF OF ARBITRAGE YIELD (attached) SCHEDULE B 4819-7183-9900v1/022459-0025 STIFEL PROOF OF ARBITRAGE' YIELD City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A Present Value to 07/23/2019 Date Debt Service @ 2.6629633130% 09/02/2019 4,150.52 4,138.64 03/02/2020 19,156.25 18,850.44 09/02/2020 84,156.25 81,724.63 03102/2021 `18,506.25 17,735.39 09/02/2021 83,506.25 78,976.30 03/02/2022 17,856.25 16,665.70 09102/2022 82,856.25 76,315.77 03102/2023 17, 206.25 15,639.79 09/02/2023 82,206.25 73,740.33 03/02/2024 16, 556.25 14,656.08 09/02/2024 86,556.25 75,615.34 03/02/2025 15,856.25 13,669.97 09/02/2025 85,856.25 73,045.69 03/02/2026 15,156.25 12,725.36 09102/2026 85,156.25 70,558.67 03/02/2027 14,4 56.25 11, 820.75 09/02/2027 89,456.25 72,186.47 03/02/2028 13,706.25 10, 914.89 09/02/2028 88,706,25 69,712.48 03/02/2029 12, 956.25 10, 048.27 09/02/2029 87,956.25 67,318.47 03/02/2030 12,112.50 9,148.65 09/02/2030 92,112.50 68,658.97 03/02/2031 11,212.50 8,247.77 09/02/2031 91,212.50 66,213.16 03/02/2032 10,212.50 7,316.07 09/02/2032 90,212.50 63,777.56 03/02/2033 9,162.50 6,392.50 09/02/2033 94,162.50 64,832.14 03/02/2034 7,993.75 5,431.48 09/02/2034 92,993.75 62,355.87 03/02/2035 6,825.00 4,516.29 09/02/2035 96,825.00 63,229.87 03/0212036. 5,587.50 3,600.87 09/02/2036 95,587.50 60,792.10 03/02/2037 4,350.00 2,730.18 09/02/2037 99,350.00 61,535.41 03/0212038 2,925.00 1,787.88 09/02/2038 97,925.00 59,069.33 03/02/2039 `1,500.00 892.93 09/02/2039 101,500.00 59,627.38 2,045,738.02 1,566,215.84 Proceeds Summate Delivery date 07/23/2019 Par Value 1,575,000.00 Premium (Discount) -9,028.90 Target for yield calculation 1,565,971.10 Prepared by Stifel, Nicolaus & Company, Inc. (JKG) SCHEDULE B 4819-7183-9900v1/022459-0025 Page 11 EXHIBIT D INFORMATION REPORTING FORM 8038-G Exhibit D-1 4819-7183-9900v1/022459-0025 Form 8038-; I Information Return for Tax -Exempt Governmental Bonds ► Under Internal Revenue Code section 149(e) (Rev. September 2018) ► See separate instructions. OMB No. 1545-0720 Department of the Treasury Caution: If the issue price is under $100,000, use Form 8038 -GC. Internal Revenue Service ► Go to www.irs.gov/F8038G for instructions and the latest information. fes■ Renortina Authoritv If Amended Return, check here ► LJ 1 Issuer's name 2 Issuer's employer identification number (EIN) City of Newport Beach 95-6000751 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a Carol L. Lew, Esq. 949-725-4237 4 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 5 Report number (For IRS Use Only) 100 Civic Center Drive 14 3 1 1 6 City, town, or post office, state, and ZIP code 7 Date of issue Newport Beach, CA 92660 07/23/2019 8 Name of issue 9 CUSIP number Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A 651784SG6 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see 10b Telephone number of officer or other instructions) employee shown on 10a Dan Matusiewicz, Finance Director/Treasurer 949-644-3123 (a) Final maturity date Type of Issue (enter the issue price). See the instructions and attach schedule. (c) Stated redemption price at maturity 11 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Environment (including sewage bonds) . . . . . . . . . . . . . . . . . . . . 15 16 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 Other. Describe ► Public Infrastructure 18 1,565,971 10 19a If bonds are TANS or RANs, check only box 19a . . . . . . . . . . . . . . . ► ❑ b If bonds are BANS, check only box 19b . . . . . . . . . . . . . . . . . . ► ❑ 27 20 If bonds are in the form of a lease or installment sale, check box . ► ❑ • . r M Descrintion of Bonds. Comolete for the entire issue for which this form is being filed. 28 (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 09/02/2039 $ 1,565,971.10 $ 1,575,000 11.3353 years 2.6630 % L&EM UT Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 22 0 00 23 1,565,971 10 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . . 24 Proceeds used for bond issuance costs (including underwriters' discount) 24 196,814 83 25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 0 00 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 52,112 50 27 Proceeds used to refund prior tax-exempt bonds. Complete Part V . . . 27 0 00 28 Proceeds used to refund prior taxable bonds. Complete Part V . . . . 28 01 00 29 Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . . 29 248,927 33 30 1,317,043 77 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the tax-exempt bonds to be refunded . . . ► N/A years 32 Enter the remaining weighted average maturity of the taxable bonds to be refunded . . . . ► years 33 Enter the last date on which the refunded tax-exempt bonds will be called (MM/DD/YY" ► 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/YYYY) For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S Form 8038-G (Rev. 9-2018) Form 8038-G (Rev. 9-2018) Page 2 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . . 35 0 00 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC). See instructions . . . . . . . . . . . . . . . . . . . . . . . . . 36a 0 00 b Enter the final maturity date of the GIC ► (MM/DD/YYYY) c Enter the name of the GIC provider 0- 37 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37 01 00 38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the following information: b Enter the date of the master pool bond ► (MM/DD/YYY` ) c Enter the EIN of the issuer of the master pool bond ► d Enter the name of the issuer of the master pool bond Op - 39 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . . . ► ❑ 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . ► ❑ 41a If the issuer has identified a hedge, check here ► ❑ and enter the following information: b Name of hedge provider ► c Type of hedge ► d Term of hedge ► 42 If the issuer has superintegrated the hedge, check box . . . . . . . . . . . . . . . . . . . . . ► ❑ 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . . . . . . . . ► ❑✓ 44 If the issuer has established written procedures to monitor the requirements of section 148, check box . . . . . ► ❑✓ 45a If some portion of the proceeds was used to reimburse expenditures, check here ► ❑✓ and enter the amount of reimbursement . . . . . . . . . . . . . . ► 228,987.31 b Enter the date the official intent was adopted ► MM/DD/YY 07/23/19 Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge Signature A and belief, the are,true, correct and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary process ' . to the er n that I have aut);iorized above. to Cl" Consent ' I23I1°) 'Dan Matusiewicz, Finance Director/Treasurer ignature of issuers authorized representa ' Date Type or print name and title Paid PrintlType preparer's name P p is si ture Dat Check ❑ if PTIN Carol L. Lew, ES 2� self-employed P01259683 Preparer Use Only Firm's name ► Stradling Yocca Carlson & Rauth Firm's EIN ► Firm's address ► 660 Newport Center Dr, Ste 1600, Newport Beach, CA 92660 Phone no. 949-725-4237 Form 8038-G (Rev. 9-2018) *Preliminary Expenditures. FedE)C. Shipment Receipt Address Information Ship to: Ship from: Internal Revenue Submission Quang Le Process 1973 Rulon White Blvd. OGDEN, UT 84201 US 9497254280 STRADLING YOCCA CARLSON RAUTH 660 Newport Center Drive Suite 150 Newport Beach, CA 92660 US 9497254280 Shipment Information: Tracking no.: 775899674014 Ship date: 08/01/2019 Estimated shipping charges: 16.03 USD Package Information Service type: Standard Overnight Package type: FedEx Envelope Number of packages: 1 Total weight: 0.50 LBS Declared Value: 0.00 USD Special Services: Pickup/Drop-off: Drop off package at FedEx location Billing Information: Bill transportation to: Group B-166 Your reference: 022459-0025/0028 PO no.. Invoice no.: Department no.: Thank you for shipping online with FedEx ShipManager at fedex.com. Please Note FedEx will not be responsible for any claim in excess of $100 per package, whether the result of loss, damage, delay, non-delivery, misdelivery, or misinformation, unless you declare a higher value, pay an additional charge, document your actual loss and file a timely claim. Limitations found in the current FedEx Service Guide apply. Your right to recover from FedEx for any loss, including Intrinsic value of the package, loss of sales, income Interest, profit, attorney's fees, costs, and other forms of damage whether direct, incidental, consequential, or special is limited to the greater of $100 or the authorized declared value. Recovery cannot exceed actual documented loss. Maximum for items of extraordinary value is $1000, e.g., jewelry, precious metals, negotiable instruments and other items listed in our Service Guide. Written claims must be filed within strict time limits; Consult the applicable FedEx Service Guide for details. The estimated shipping charge may be different than the actual charges for your shipment. Differences may occur based on actual weight, dimensions, and other factors. Consult the applicable FedEx Service Guide or the FedEx Rate Sheets for details on how shipping charges are calculated. IMPORTANT! A FedEx Express National Service Disruption is in effect. Learn More Fb&x(n) 775899674014 � Delivered Monday 8/05/2019 at 10:21 am DELIVERED Signed for by: W.SNICHLER GET STATUS UPDATES OBTAIN PROOF OF DELIVERY FROM NEWPORT BEACH, CA US Shipment Facts TRACKING NUMBER SERVICE 775899674014 FedEx Standard Overnight SPECIAL HANDLING SECTION SHIP DATE Deliver Weekday (?) Fri 8/02/2019 Travel History Monday, 8/05/2019 10:21 am OGDEN, UT Delivered TO OGDEN, UT US SHIPPER REFERENCE 022459-0025/0028 ACTUAL DELIVERY Mon 8/05/2019 10:21 am Local Scan Time \'/ 0 EXHIBIT E Reserved Exhibit E-1 4819-7183-9900v1/022459-0025 EXHIBIT F $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A POST ISSUANCE COMPLIANCE The Issuer understands that post issuance compliance with the restrictions contained in the attached Tax Certificate is required to ensure that interest on the Obligations remains excluded from gross income for federal income purposes. The Issuer understands that the attached Tax Certificate, together with this exhibit, contains written post issuance procedures of the Issuer to effectuate post issuance compliance. In furtherance thereof, the Issuer hereby agrees to: 1. Assign responsible personnel of the Issuer to monitor and ensure compliance with the restrictions contained in the attached Tax Certificate. 2. Provide adequate training to responsible Issuer personnel to effectuate the purposes of this exhibit. 3. Have Issuer personnel regularly review the restrictions of the Tax Certificate and establish adequate record retention and calendaring mechanisms internally to ensure that the Issuer will be able to establish post issuance compliance with the restrictions of the attached Tax Certificate. In particular, the Issuer will maintain records detailing the investment and expenditures of proceeds of the Obligations, as provided in the Tax Certificate. The Issuer agrees to seek expert advice regarding compliance with the arbitrage rebate and yield restriction provisions of the Tax Certificate, and carefully monitor and calendar the dates by which proceeds of the Obligations should be expended to comply with yield restriction and rebate exceptions and the dates rebate must be paid. 4. Regularly consult with Bond Counsel and other Issuer advisors regarding any issues that arise regarding post issuance compliance with the attached Tax Certificate (including any failure or anticipated failure to expend proceeds of the Obligations during the periods described in the attached Tax Certificate or any changes in use of the Project). The Issuer understands that the use of the Project to be financed by the Obligations must be monitored throughout the term to maturity of the Obligations, and records must be retained regarding any contracts or other arrangements relating to such use as provided in the Tax Certificate. Exhibit F-1 4819-7183-9900v1/022459-0025 All terms not defined herein have the meanings ascribed in the attached Tax Certificate. Dated: July 23, 2019 CITY IN Exhibit F-2 4819-7183-9900/022459-0025 Blanket Issuer Letter of Representations (To be Completed by fssuerj CITY OV NEWPORT BEACH (California) [Niune of Issuerl July 7, 1;995 [Duel Attention. Underwriting Department —Eligibility The .DepositoryTrust Company 55 N titer Street; 50th. Floor New York; NY 10041-0099 Ladies and Gentlemen:. This letter sets forth our understanding with respect to all issues (the "Securities") that Issuer shall request be made eligible for deposit by The Depositgxy Trust Company ("DTC"). To induce DTC to accept the Securities as eligible for deposit at .DTC, and (:o act in accordance urith DTC's Rules with respect to the Securities, Issuer represents to DTC that Issuer MR, comply .cith the requirements stated in DTC's Operational Arrangements, as they may be amended from time to tirrie. Note. Scliedule A contains 3tafemeuts that -DTC be[leces accurateh', deseri6e_ DTC. the metal of elrecting book. entry truitfers of,se6tirities distril)uOd dir ioi DTC, and certain related nwtters Received and Amepted THE DEPOSITORY TRUST COMP B. y Very truhv yours, City of Newport Beach I Issuer) (Authorized OfIiKY(s Siglumlre) Dennis Danner Director.of Finance City of Newport Beach 3.300 Newport Boulevard Newport Beach; CA 92660 (714) 644-3123 SAMPLE OFFERING DOCUMENT LANGUAGE DESCROING BOOK ENTRY -ONLY ISSUANCE (Prepared by DTC-4racketed material may be applicable only to certain issues) 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fuIIy-registered securities registered in the name of Cede & Co. (DTCs partnership nominee)_ One fixlly-registered Security certificate will be issued for [each issue of] the Securities, [each] in the a,e princkpal amount of such issue,. and will be deposited with DTC. [i, however; the agagregate principal amount of [any] issue exceeds $200 million, one certificate will be issued with respect to each $200 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC is a limitedTurpose trust company organized under the New York Ban k3ig Law; a "long organisation" within the meaning of the New York Bailing I,aw; 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 pursuamt to the provisions of Section 17A of the Sewrities E=hm&e Act of 1934. DTC holds securities that its participants ("Fanctnpants") deposit with DTC. DTC also facilitates the settlement among Participants of securities moons, such as hmisfers and pledges, in deposited sectiones through electronic computerized book -entry changes in Panccrpants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct :Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other o banizations. DTC is owned by a number of its Direct Participants and by the New York_Stock Exchange, Inc; the American Stock Exchanage, Inc., and tine National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealer, banks, and trust comparnes that: dear or mairitain a custodial relatiansluip with a. Direct Pant, either directly or ir0rectly (" Indirect Participants"). The Rules applicable to DTC and its Partic4=ts are on fie with the Securities and Emco a Commission. 3. Purcthases of Sem under the DTC system must be made by or through Direct Partickmis, which will receive a credit for the Seciuides on DTCs records. The ownership interest of each actual pznchaser of each Security (`Beneficial Owner") is in tum to be recorded on the Direct and Indiroet Participants' records._ Beneficial Owners will not receive written. confirmation from DTC of their purchase, but Be ieficial Owners are ep�Cted to receive written confirmations pn- whng- details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Parent through which the Beneficial Owner ent ie into the tr ion. Tmnsfers ofgwnershT ink in the Securities are to be accomplished by. entries made on the books of Participants acing on behalf of Beneficial Owners. Beneficial Owners will not receive owes iepreseriting their owneuship ftftrests in Semnides, except in the event that use of the book -entry system for the des is discontinued - 4. To e subsecpuent transfers, all Securities deposed by Pardckxmft with. DTC are regist d in the name of DTCs partnersh� nominee, Cede & Co. The deposit of S with DTC and thein: registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Sees; DTCs records reflect only the identity of the Dired Parfick=its to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. S- 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. [6. Redemption notices shall be sent to Cede & Co. If less than all of the. Securities within an issue are being redeemed, DTCs practice is to determine by Iot the amount of the interest of each Direct participant in such issue to be redeemed] 7. Neither DTC nor Cede & Co. will consent or vote with respect to Securities. under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accourats the Securities are credited on the record date (ideatified In a listing attached to the Omnibus Proxy). 8. Principal and interest payments on the Securities wilt be made to DTC. DTC -s practice is to credit Direct. Participants! accaunts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to: believe that it will not receive payment on payable date_ Payments by P to Beneficial Owners will be govemect.by standing Instructions and ctiaommy pradices, as is the case with securities held for the wco mts of customers m bearer form or re&hmed in "street name,' and will be the responsibility of such Participant and not of DTC, the Agent, or the Issuer, subject to any statutory or regulatory requirements as maybe is effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial. Owners shall be the responsibility of Dired and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased) or tendered; through its Fa tieipant, to the [TenderMenarlving] Agent, and shall effect delivery of such Secmdties by cmnmg the Direct Participant to tramsfer.the Parti�s interest m the S=nities, cam :DTCs records, to the (Tenderltieznarkeiing] Agent The reTnreameni for physical delivery of Secsuitie:; is mon with a demandfor purchase or a mandatory purchase will be deemed, satisfied when the ownership. rights in the Securities are transferred by Dn ect Parents on DTC's records_] ' 10. DTC may discontinue providing its services as securities ry.wAh respect to the Securities at guy time by giving reasonable notice to the"Issuer or the Agent Under such chtumsEances, in the event that a successor securities depository is not obtained, Security des are required to be grimed ancl delivered. ll. The Issuer may decide to discontinue use of the system of boolc-entry trasufers through DTC (or a successcr sea mties depository). In that event:, Security will be printed and delivered. M The infomaation in this section concerning DTC and DTC s book -entry system has been opined from. sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) [SECRETARY OF STATE: PLEASE AFFIX STAMP BELOW THIS SPACE] ENDORSED - FILED Iii tho office of the secretary of State of the State of Cailfw1a 'JUL' 2 0 2019 In accordance with the Uniform Facsimile Signatures of Public Officials Act (Government Code Sections 5500, et seq.), I hereby file with the Secretary of State my manual signature and hereby certify under oath my manual signature as follows: Manual Signature Dan Matusiewicz Title of Office Treasurer of the City of Newport Beach I certify under penalty of perjury that the foregoing is true and correct. EXECUTED this I q* day of July, 2018, at Newport Beach, California. Signed Dan Matusiewicz DOCSOC/1897996v 1/022459-0026 [SECRETARY OF STATE: PLEASE AFFIX STAMP BELOW THIS SPACE] ENDORSED - F11 -ED In the office of the Secretary of State of the State of Callforhla STATE OF CALIFORNIA ) ]JUL' MR ss. COUNTY OF ORANGE ) In accordance with the Uniform Facsimile Signatures of Public Officials Act (Government Code Sections 5500, et seq.), I hereby file with the Secretary of State my manual signature and hereby certify under oath my manual signature as follows: Manual Signature " 1, Leilani Brown Title of Office City Clerk of the City of Newport Beach I certify under penalty of perjury that the foregoing is true and correct. EXECUTED this _ day of July, 2018, at Newport Beach, California. t Signed e� & Leilani Brown DOCSOC/1897996v 1/022459-0026 R-20 $100,000 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. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BOND 2019 SERIES A INTEREST PATE MATURITYDATE 0* TED DATE CUSIP NUMBER 3.000% September 2, 203 0� July 23, 2019 651784 SG6 REGISTERED OWNER: CED PRINCIPAL AMOUNT: ONE HUNDRED THOUSAND 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. 2019-62 (the "Resolution of Issuance") adopted by the City Council of the City of Newport Beach (the "City") on June 25, 2019, 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. 2015-97 (the "Resolution of Intention") adopted by the City Council of the City on the 10th day of November, 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, 2019 (the "Fiscal Agent Agreement"), by and between U.S. Bank National Association, as fiscal agent (the "Fiscal Agent") 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 4826-7368-6940v1/022459-0025 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 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, 2019 (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. 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, this bond shall be called for redemption as provided in Part 11.1 of the Act. This bond, or any portion 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 in any year pro rata among maturities, by giving notice to the owner hereof and by paying the principal amount hereof, 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 bond to be redeemed) at the following redemption prices: Redemption Date Price Interest Payment Dates on or prior to March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date thereafter 100 The bonds are subject to redemption prior to their stated maturity dates on any Interest Payment Date on and after September 2, 2026 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 the following redemption prices (expressed as a percentage of the principal amount being redeemed), together with accrued interest to the date of redemption: 2 4826-7368-6940vl/022459-0025 Redemption Date Redemption Prices September 2, 2026 and March 2, 2027 103% September 2, 2027 and March 2, 2028 102 September 2, 2028 and March 2, 2029 101 September 2, 2029 and any Interest Payment Date 100 thereafter 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. 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. 3 4826-7368-6940v1/022459-0025 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 23rd day of July, 2019. .r Treasurer for i of Newport ATTEST: 1 City Clerk 4 4826-7368-6940v1/022459-0025 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 July 23, 2019. U.S. BANK NATIONWSOCIATION, as Fiscal Agent n By: 5 4826-7368-6940v1/022459-0025 LEGAL OPINION The attached is a true copy of the opinion rendered by Professional Corporation, Newport Beach, California, in conn as of the date of the original delivery of, the Bonds/ -,A nedrec City 6 4826-7368-6940v1/022459-0025 9iocca Carlson & Rauth, a the issuance of, and dated file in my office. Beach For value received the undersigned do(es) hereby sell, assign and transfer unto TAX T_T)_ #: 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 names) 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. 7 4826-7368-6940v1/022459-0025 U.S. BANK NATIONAIL ASSOCIATION AUTHORIZED SIGNER(S) I hereby certify that the following is a true and exact extract of Article VI of the Bylaws presently in effect for U.S. Bank National Association, an association organized and existing under the laws of the United States: ARTICLE VI. CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or personal property shall be signed by any elected or appointed officer. All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or facsimile signature of any elected or appointed officer of the Association. All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association, and all other instruments not specifically provided for, whether to be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by any elected or appointed officer thereof. The Secretary or any Assistant Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. I further certify that Martin Meza of U.S. Bank National Association, has been duly elected and qualified and now holds the office listed herein, and that the signature of such officer is authentic: Martin Meza Vice President WILL SIGN: - IN WITNESS WHEREOF, I have hereunto set my hand to be affixed hereto this 23rd day of July, 2019. U.S. Bank National Association By: Bertha Mares `- Vice President $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A CLOSING CERTIFICATE OF THE FISCAL AGENT The undersigned, an authorized officer of U.S. Bank National Association in its capacity as "Fiscal Agent" under that certain Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the Fiscal Agent and the City of Newport Beach (the "City"), hereby certifies as follows: 1. The Fiscal Agent is a national banking association duly organized and in good standing under the laws of the United States of America and has the full power and authority to perform its duties under the Fiscal Agent Agreement. 2. The Fiscal Agent is duly authorized to execute and deliver the Fiscal Agent Agreement, to accept its obligations thereunder and to authenticate and deliver the above -captioned bonds (the "Bonds") to Stifel, Nicolaus & Company, Incorporated (the "Underwriter") pursuant to the terms of the Fiscal Agent Agreement. 3. The Bonds have been authenticated by a duly authorized officer of the Fiscal Agent and delivered to the Underwriter, upon instructions from the City pursuant to the terms of the Fiscal Agent Agreement. The Fiscal Agent has been directed to hold the Bonds as FAST Agent for The Depository Trust Company, for the account of the Underwriter. 4. To the best knowledge of the undersigned, no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court or governmental agency, public office or body that has been served on or threatened against the Fiscal Agent (a) seeking to prohibit, restrain or enjoin the authentication of the Bonds or the ability of the City to make interest and principal payments on the Bonds, or (b) in any way contesting or affecting the validity or enforceability of the Bonds or the Fiscal Agent Agreement. 5. To the best knowledge of the undersigned, no action has been served on or threatened against the Fiscal Agent affecting the existence of the Fiscal Agent, or contesting the powers of the Fiscal Agent or its authority to enter into or perform its obligations under the Fiscal Agent Agreement, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Bonds or the Fiscal Agent Agreement. 4820-7609-9996v5/022459-0025 6. To the best knowledge of the undersigned, 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. 7. 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. Dated: July 23, 2019 U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent 7 By:I - Authoriz d Officer 2 4820-7609-9996/022459-0025 $1,575,000 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 116 LIMITED OBLIGATION IMPROVEMENT BONDS 2019 SERIES A FISCAL AGENT'S RECEIPT OF PROCEEDS I hereby certify that on behalf of U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), pursuant to that certain Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the Fiscal Agent and the City of Newport Beach (the "City"), that the Fiscal Agent has received from Stifel, Nicolaus & Company, Incorporated, as underwriter (the "Underwriter") on behalf of the City the purchase price, as shown below, for the above -captioned bonds (the "Bonds") in the aggregate principal amount of $1,575,000. The total purchase price has been represented to the Fiscal Agent to be calculated as follows: Principal Amount $ 1,575,000.00 Less Net Original Issue Discount (9,028.90) Less Underwriter's Discount (25,433,83) TOTAL PURCHASE PRICE $ 1.540,537.27 The Fiscal Agent has received the Purchase Price of $1,540,537.27 to be deposited as follows: $ 171,381.00 52,112.50 4,150.52 1.312.893.25 1,540,537.27 4820-7609-9996/022459-0025 shall be deposited in the Costs of Issuance Fund shall be deposited in the Reserve Fund shall be deposited in the Interest Account shall be deposited in the Improvement Fund TOTAL All capitalized terms not defined herein shall have the meanings set forth in the Fiscal Agent Agreement. Dated: July 23, 2019 U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent By: .._— Authoriz d Officer 2 4820-7609-9996/022459-0025 STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION CALIFORNIA NEWPORT BEACH ATTORNEYS AT LAW SACRAMENTO SAN DIEGO 660 NEWPORT CENTER DRIVE, SUITE 1600 SAN FRANCISCO NEWPORT BEACH, CA 92660-6422 SANTA BARBARA SANTA MONICA TELEPHONE (949) 725-4000 COLORADO FACSIMILE (949) 725-4100 DENVER NEVADA LAS VEGAS RENO WASHINGTON SEATTLE July 23, 2019 City Council City of Newport Beach Newport Beach, California Re: $1,575, 000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A 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. 116 Limited Obligation Improvement Bonds, 2019 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. 2019-62 and are issued pursuant to a resolution adopted by the City on June 25, 2019 (the "Resolution of Issuance") and a fiscal agent agreement (the "Fiscal Agent Agreement") dated as of July 1, 2019, 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, 2019, 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 4830-7477-6989v1/022459-0025 City Council City of Newport Beach July 23, 2019 Page Two 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. 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. 5. 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 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 4830-7477-6989v1/022459-0025 City Council City of Newport Beach July 23, 2019 Page Three 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, St l -,S ( r IKU,' C"60' t 12-4� 4830-7477-6989v1/022459-0025 STRADLING YOCCA CARLSON & RAUTH July 23, 2019 U.S. Bank National Association Los Angeles, California Re: $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A Ladies and Gentlemen: In our capacity as Bond Counsel relative to the sale and issuance of the above -referenced bonds (the "Bonds"), we have this day rendered to the City Council of the City of Newport Beach, our opinion (the "Approving Opinion") as to certain matters relating to the issuance of the Bonds. You are authorized to rely on the Approving Opinion as if it were addressed to you. We have not been engaged by you and are not acting as your counsel in connection with the sale and issuance of the Bonds. Our engagement with respect to the Bonds terminates as of the date hereof and we expressly disclaim any obligation to update our Approving Opinion or this letter. This letter may be relied upon only by you, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person to whom it is not specifically addressed without our prior written consent. Respectfully submitted, Y 4820-7609-9996v5/022459-0025 CALIFORNIA A PROFESSIONAL CORPORATION NEWPORT BEACH ATTORNEYS AT LAW SACRAMENTO SAN DIEGO 660 NEWPORT CENTER DRIVE, SUITE 1600 SAN FRANCISCO NEWPORT BEACH, CA 92660-6422 SANTA BARBARA SANTA MONICA TELEPHONE (949) 725-4000 COLORADO FACSIMILE (949) 725-4100 DENVER NEVADA LAS VEGAS RENO WASHINGTON SEATTLE July 23, 2019 U.S. Bank National Association Los Angeles, California Re: $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A Ladies and Gentlemen: In our capacity as Bond Counsel relative to the sale and issuance of the above -referenced bonds (the "Bonds"), we have this day rendered to the City Council of the City of Newport Beach, our opinion (the "Approving Opinion") as to certain matters relating to the issuance of the Bonds. You are authorized to rely on the Approving Opinion as if it were addressed to you. We have not been engaged by you and are not acting as your counsel in connection with the sale and issuance of the Bonds. Our engagement with respect to the Bonds terminates as of the date hereof and we expressly disclaim any obligation to update our Approving Opinion or this letter. This letter may be relied upon only by you, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person to whom it is not specifically addressed without our prior written consent. Respectfully submitted, Y 4820-7609-9996v5/022459-0025 STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 660 NEWPORT CENTER DRIVE, SUITE 1600 NEWPORT BEACH, CA 92660-6422 TELEPHONE (949) 725-4000 FACSIMILE (949) 725-4100 July 23, 2019 Stifel, Nicolaus & Company, Incorporated San Francisco, California CALIFORNIA NEWPORT BEACH SACRAMENTO SAN DIEGO SAN FRANCISCO SANTA BARBARA SANTA MONICA COLORADO DENVER NEVADA LAS VEGAS RENO WASHINGTON SEATTLE Re: $1,575,000 City of Nelvport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A Ladies and Gentlemen: Acting in our capacity as Bond Counsel for the City of Newport Beach (the "City"), we have examined certified copies of proceedings taken for the sale and issuance of the above -referenced bonds (the "Bonds") in the aggregate principal amount of $1,575,000, and we have rendered our opinion to the City Council of the City this day regarding the validity and enforceability of such Bonds (the "Approving Opinion"). The Bonds have been issued pursuant to provisions of the Improvement Bond Act of 1915 of the State of California (the "Act"). You may rely upon the Approving Opinion as if it were addressed to you. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Bond Purchase Agreement dated July 9, 2019 (the "Purchase Agreement"), by and between the City and Stifel, Nicolaus & Company, Incorporated, as Underwriter. In connection with the preparation of this opinion, we have examined originals or copies certified or otherwise identified to our satisfaction of (i) the Purchase Agreement, (ii) the Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between U.S. Bank National Association, as Fiscal Agent, and the City, (iii) the Official Statement dated July 9, 2019 relating to the Bonds (the "Official Statement"), (iv) the Continuing Disclosure Agreement dated July 23, 2019 (the "Disclosure Agreement"), by and between the City and Digital Assurance Certification, LLC, as Dissemination Agent, (v) the letters, certificates and opinions delivered to you pursuant to the provisions of Section 3(c) of the Purchase Agreement, and (vi) such other documents, certificates, instructions and records as we have considered necessary or appropriate as a basis for our opinion. We have assumed the authenticity of all documents submitted to us as originals, the conformity with originals of all documents submitted to us as copies and the genuineness of all signatures. As to questions of fact material to our opinion, we have relied upon the representations of 4820-7609-9996v5/022459-0025 Stifel, Nicolaus & Company, Incorporated July 23, 2019 Page Two each party made in the aforesaid documents, and we have made no independent investigation of such matters. Based upon the foregoing and such other information and documents as we consider necessary to render this opinion, we are of the opinion that: 1. The Fiscal Agent Agreement, the Purchase Agreement and the Disclosure 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, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except as their enforcement may be subject to the application of equitable principles and the exercise of judicial discretion in appropriate cases if equitable remedies are sought; provided, however that we express no opinion as to the enforceability of any indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein. 2. The statements contained in the Official Statement on the cover and under the captions "INTRODUCTION," "THE 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, our Approving Opinion, and federal and State tax law, present an accurate summary of such provisions. 3. The Bonds are not subject to the registration requirements of 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. The foregoing opinions are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. The opinions are limited to matters governed by the laws of the State of California and federal securities laws, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. Except as expressly set forth in the Approving Opinion, we express no opinion regarding any tax consequences with respect to the Bonds. No opinion is expressed herein with respect to the compliance with, or applicability of, any "blue sky" laws of any state as they relate to the offer or sale of the Bonds. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or occur (or do not occur), and we expressly disclaim any responsibility to advise you as to events occurring after the date hereof with respect to the Bonds or other matters discussed in the Official Statement. 4820-7609-9996x5/022459-0025 Stifel, Nicolaus & Company, Incorporated July 23, 2019 Page Three No attorney-client relationship has existed or exists between our firm and the Underwriter in connection with the Bonds or by virtue of this letter. This letter is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to be relied upon by holders of Bonds or any beneficial interest therein. Our engagement with respect to the Bonds terminates as of the date hereof, and we have not undertaken any duty, and expressly disclaim any responsibility, to advise you as to events occurring after the date hereof with respect to the Bonds or other matters discussed herein or in the Official Statement. Respectfully submitted, 5t"'f ("', � A."A 4820-7609-9996x5/022459-0025 STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 660 NEWPORT CENTER DRIVE, SUITE 1600 NEWPORT BEACH, CA 92660-6422 TELEPHONE (949) 725-4000 FACSIMILE (949) 725-4100 July 23, 2019 Stifel, Nicolaus & Company, Incorporated San Francisco, California CALIFORNIA NEWPORT BEACH SACRAMENTO SAN DIEGO SAN FRANCISCO SANTA BARBARA SANTA MONICA COLORADO DENVER NEVADA LAS VEGAS RENO WASHINGTON SEATTLE Re: $1,575,000 City of Newport Beach Assessment City No. 116 Limited Obligation Improvement Bonds 2019 Series A Ladies and Gentlemen: We have acted as Disclosure Counsel to the City of Newport Beach (the "City") in connection with the sale and issuance of the above -referenced bonds (the "Bonds"). The Bonds are being issued pursuant to Resolution No. 2019-62 adopted on June 25, 2019, by the City Council of the City of Newport Beach and a Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the City and U.S. Bank National Association, as Fiscal Agent. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Bond Purchase Agreement dated July 9, 2019 (the "Purchase Agreement"), between the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the "Underwriter"). This letter is being delivered to you pursuant to Section 3(c) of the Purchase Agreement. We have examined the record of proceedings submitted to us relative to the sale and issuance of the Bonds and originals or copies certified or otherwise identified to our satisfaction of (i) the Fiscal Agent Agreement, (ii) the Continuing Disclosure Agreement dated July 23, 2019, by and between the City and Digital Assurance Certification, LLC, as Dissemination Agent, (iii) the Official Statement for the Bonds dated July 9, 2019 (the "Official Statement"), and (iv) such other documents, certificates, opinions of counsel, instructions and records as we have considered necessary or appropriate, including those certificates and opinions delivered pursuant to the Purchase Agreement. We have assumed, but not independently verified, that the signatures on all documents, letters, opinions, certificates and instructions which we have examined are genuine, that all documents submitted to us are authentic and were duly and properly executed by the parties thereto and that all representations made in the documents that we have reviewed are true and accurate. We are not passing upon and have not undertaken to determine independently or to verify the accuracy or completeness of the statements contained in the Official Statement and are, therefore, unable to make any representation to you in that regard. Based on our participation in conferences 4820-7609-9996x5/022459-0025 Stifel, Nicolaus & Company, Incorporated July 23, 2019 Page Two with the Underwriter and its counsel, representatives of the City, KNN Public Finance, the City's Municipal Advisor, Willdan Financial Services, the City's Assessment Administrator, and others, during which conferences the content of the Official Statement and related matters were discussed, our reliance on the oral and written statements of the City and others, our review of and reliance upon the documents, certificates, instructions and records and the opinions of counsel described above and our understanding of applicable law, and subject to the limitations on our role as Disclosure Counsel to the City, we advise you as a matter of fact but not opinion that no information has come to the attention of the attorneys in the firm representing the City as Disclosure Counsel on this matter which caused us to believe that the Official Statement as of its date contained, or as of the date hereof contains, any untrue statement of a material fact, or as of its date omitted, or as of the date hereof omits, 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 in any material respect (except that we express no view with respect to: (i) the expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts, the financial statements or other financial, numerical, economic, demographic or statistical data, assessed or appraised valuations, or environmental matters contained in the Official Statement; (ii) any CUSIP numbers or information relating thereto; (iii) any information with respect to The Depository Trust Company and its book - entry system; (iv) any information contained in the Appendices to the Official Statement; (v) any information incorporated by reference into the Official Statement; and (vi) any information with respect to the Underwriter or underwriting matters with respect to the Bonds, including but not limited to information under the caption "CONCLUDING INFORMATION — Underwriting"). Moreover, in providing such advice and assistance, we provided no independent diligence on the Municipal Securities Rulemaking Board's Electronic Municipal Market Access website, and we express no view regarding the City's compliance with any obligation to file annual reports or provide notice of events, each as described in Securities and Exchange Commission's Rule 15c2-12, as amended. Finally, we advise you that, other than reviewing the various certificates and opinions required by Section 3(c) of the Purchase Agreement regarding the Official Statement, we have not taken any steps since the date of the Official Statement to verify the accuracy of the statements contained in the Official Statement as of the date hereof. By acceptance of this letter you acknowledge that the preceding paragraph is neither a legal opinion nor a guarantee regarding the Official Statement; rather it is a statement of negative assurance regarding factual information that did not come to the attention of the attorneys in our firm working on this matter during the limited activities that we performed as Disclosure Counsel to the City. Our services did not include financial or other non -legal advice. By acceptance of this letter, the Underwriter recognizes and acknowledges that (i) the advice herein is based on certain limited activities performed by specific attorneys in our firm in our role as Disclosure Counsel; (ii) the scope of the activities performed by such attorneys in our role as Disclosure Counsel and for purposes of delivering such advice was inherently limited and does not purport to encompass all activities necessary for compliance by the Underwriter with applicable state and federal securities laws; and (iii) the activities performed by such attorneys in our role as Disclosure Counsel rely in part by representations, warranties, certifications and opinions of other parties to the transaction, including representations, warranties and certifications made by the City, the Underwriter and others. 4820-7609-9996v5/02245 9-0025 Stifel, Nicolaus & Company, Incorporated July 23, 2019 Page Three This letter is furnished by us as Disclosure Counsel to the City. No attorney-client relationship has existed or exists between our firm and the Underwriter in connection with the Bonds or by virtue of this letter. We note that the Underwriter is represented by separate counsel retained by them in connection with the transaction described in the Official Statement. This letter is delivered to you solely for your benefit and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose without our prior written consent. This letter is not intended to and may not be relied upon by owners of the Bonds or any beneficial interest therein or any other party to which it is not addressed. Our engagement with respect to the Bonds terminates as of the date hereof, and we have not undertaken any duty, and expressly disclaim any responsibility, to advise you as to events occurring after the date hereof with respect to the Bonds or other matters discussed herein or in the Official Statement. Respectfully submitted, 1C'C , (C/ �Su , '�- A 4820-7609-9996v5/022459-0025 July 23, 2019 City of Newport Beach Newport Beach, California 92660 Stifel, Nicolaus & Company, Incorporated San Francisco, California 94104 100 Civic Center Drive Newport Beach, California 92660 949 644-3131 1 949 644-3139 FAX newportbeachca.gov/cityattorney Re: $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds, 2019 Series A Ladies and Gentlemen: I am the City Attorney to the City of Newport Beach, California (the "City") in connection with the issuance of the above -referenced bonds (the "Bonds"), in the aggregate principal amount of $1,575,000. The Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of July 1, 2019 (the "Fiscal Agent Agreement"), by and between the City and U.S. Bank National Association, as Fiscal Agent, executed in connection with the sale and issuance of the Bonds. All capitalized terms not defined herein shall have the meaning set forth in the Bond Purchase Agreement dated July 9, 2019 (the "Purchase Agreement"), by and between Stifel, Nicolaus & Company, Incorporated (the "Underwriter") and the City. The Bonds are bring issued pursuant to provisions of the Improvement Bond Act of 1915 of the State of California, the Fiscal Agent Agreement and Resolution No. 2019- 62 of the City Council of the City adopted on June 25, 2019 (the "Resolution of Issuance"). I have examined and am familiar with pertinent state statutes and copies, certified and otherwise identified to my satisfaction, of such documents of the City as I have deemed necessary or appropriate for the purposes of this opinion. Based upon the foregoing, I am of the opinion that: 1. To the best of my 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 City of Newport Beach Assessment District No. 116 (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 City of Newport Beach, California Stifel, Nicolaus & Company, Incorporated July 23, 2019 Page 2 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 forming the Assessment District (the "Resolution of Formation"), the Purchase Agreement or any action of the City or which the City contemplated by any of said documents. 2. 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. 3. To the best of my 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. 4. The City Council has duly and validly adopted the resolutions relating to the Assessment District, including the Resolution of Formation and the Resolution of Issuance, at meetings of the City Council which were called and held pursuant to law and with all public notice required by law, and such resolutions are now in full force and effect and have not been amended. 5. 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. 6. The Purchase Agreement, the Disclosure 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. Respectfully submitted 10-1�1— ol�� Aaron C. Harp ff City Attorney for the City of Newport Beach KUTAKROCK Kutak Rock LLP 5 Park Plaza, Suite 1500, Irvine, CA 92614-8595 office 949.417.0999 July 23, 2019 Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th Floor San Francisco, CA 94104 $1,575,000 City of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A Ladies and Gentlemen: We have acted as counsel to you, as underwriter (the "Underwriter"), in connection with the purchase by you of the above -captioned bonds (the "Bonds") pursuant to a Bond Purchase Agreement, dated July 9, 2019 (the "Purchase Agreement"), between the City of Newport Beach (the "City") in connection with Assessment District No. 116 (the "Assessment District") and the Underwriter. The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of July 1, 2019 (the "Fiscal Agent Agreement"), between the City and U.S. Bank National Association, as fiscal agent. Capitalized terms not otherwise defined herein have the meanings set forth in the Fiscal Agent Agreement or Purchase Agreement. In our capacity as counsel to the Underwriter, we have limited our participation in the preparation of the Preliminary Official Statement and Official Statement solely to a review of certain material contained therein. In the course of such participation, we have generally reviewed information furnished to us by, and have participated in conferences and telephone conversations with, representatives of the City; Stradling Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel and as Disclosure Counsel; Harris & Associates, Inc., as Assessment Engineer; KNN Public Finance, as municipal advisor; and your representatives. We have relied upon, and assumed the correctness of, the certificates of the officials of the City, and upon certain documents, opinions and letters delivered to the Underwriter. However, we have not independently investigated or verified the accuracy, completeness or fairness of any of the statements contained in the Preliminary Official Statement or the Official Statement. In arriving at the opinions and conclusions hereinafter expressed, we have not, except as specifically identified above, made any independent review or investigation of factual or other matters, including the organization, existence, good standing, assets, business or affairs of the 4826-5429-4429.2 July 23, 2019 Page 2 City. In reviewing the aforementioned certificates, records, proceedings, documents and opinions, we have assumed the due execution of, and genuineness of all signatures on, original and certified documents and the conformity of all documents submitted to us as conformed copies or photocopies to the respective original or certified documents. By offering the opinions and conclusions hereinafter expressed, we are not expressing any opinion or view on, and are assuming and relying on, the validity, accuracy and sufficiency of the records, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein). The opinions and conclusions expressed herein are based as to matters of law solely on the federal securities laws, and we express no opinion as to any other laws, statutes, ordinances, rules or regulations (including without limitation any federal or state tax or state securities laws or regulations). Based upon, subject to and limited by the foregoing, and in reliance thereon, as of the date hereof, we are of the following conclusions and opinions: (a) We advise you that although we have made no independent investigation or verification of the accuracy, correctness, fairness or completeness of, and do not pass upon or assume any responsibility for, the statements included in the Preliminary Official Statement and the Official Statement, during the course of the activities described above no information came to the attention of the attorneys in our firm rendering legal services in connection with the issuance and delivery of the Bonds which causes us to believe that the Preliminary Official Statement, as of its date and as of the date of the Purchase Agreement, and the Official Statement, as of its date and as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, we do not assume responsibility for the accuracy, completeness or fairness of, nor do we express any belief with respect to, the information contained in the appendices thereto, any information about the Engineer's Report, the book -entry system or DTC included therein, and any CUSIP numbers, financial, accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about verification, feasibility, valuation, appraisals, absorption, real estate or environmental matters included therein, which we expressly exclude from the scope of this paragraph. (b) 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. 4826-54294429.2 KU- AKROCK July 23, 2019 Page 3 (c) The Continuing Disclosure Agreement complies with paragraph (b)(5) of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended, in effect as of the date hereof. This letter is issued to and for the sole benefit of the above addressee and is issued for the sole purpose of the transaction specifically referred to herein. No person other than the above addressee may rely upon this letter without our express prior written consent. This letter may not be utilized by the addressee for any other purpose whatsoever and may not be quoted by the addressees without our express prior written consent; provided, however, that a copy of this letter may be included in the transcript of proceedings for the Bonds. We assume no obligation to review or supplement this letter subsequent to its date, whether by reason of a change in the current laws, by legislative or regulatory action, by judicial decision or for any other reason. Our engagement with respect to the transaction referred to herein terminates upon the date of this letter. Very truly yours, X � -, � X,,/- '/ Z/' � �' 4826-5429=1429.2 Y- 1�Ajay!,, ahead July 23, 2019 City of Newport Beach Newport Beach, California Stifel, Nicolaus & Company, Incorporated San Francisco, California Re: $1,575,000 City Of Newport Beach Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A Ladies and Gentlemen: We have acted as counsel for U.S. Bank National Association, a national banking association (the "Fiscal Agent"), in connection with the Fiscal Agent Agreement, dated as of July 1, 2019 (the "Agreement"), by and between the City of Newport Beach (the "City") and the Fiscal Agent, relating to the above -captioned bonds. We are generally familiar with the Articles of Association and the Bylaws of the Fiscal Agent and are also familiar with the corporate proceedings of the Fiscal Agent with regard to its authorization, execution and delivery of the Agreement. Capitalized terms used herein shall have the respective meanings ascribed to them in the Agreement, except as otherwise defined herein. We have examined such documents and have reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In such review, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with originals of all documents submitted to us as copies. Where questions of fact material to our opinions expressed below were not established independently, we have relied upon statements of officers of the Fiscal Agent as contained in certificates of officers of the Fiscal Agent. Based upon the foregoing, we are of the opinion that: 1. The Fiscal Agent is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America. 2. The Fiscal Agent has all requisite power, authority and legal right to execute and deliver the Agreement and has authorized the execution and delivery of the Agreement. 3. The Fiscal Agent has duly authorized, executed and delivered the Agreement. Assuming the due authorization, execution and delivery thereof by the City, the Agreement is the legal, valid and binding agreement of the Fiscal Agent, enforceable in accordance with its terms against the Fiscal Agent. Dorsey & Whitney LLP 1 600 Anton Boulevard I Suite 2000 1 Costa Mesa, CA 1 92626 1 T 714.800.1400 1 F 714.800.1499 1 dorsey.com The opinions set forth above are subject to the following qualifications and exceptions: (a) The opinions are subject to the effect of any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application affecting creditors' rights; and (b) The opinions are subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing, and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). Our opinions expressed above are limited to the laws of the State of California and the federal laws of the United States of America. The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, M KNN public finance WPO T CITY OF NEWPORT BEACH v \ Assessment District No. 116 Limited Obligation Improvement Bonds 2019 Series A and Assessment District No. 116B Limited Obligation Improvement Bonds 2019 Series B Issuer Telephone Email City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Dan Matusiewicz 949.644.3126 danm@newportbeachca.gov Finance Director Steve Montano 949.644.3240 smontano@newportbeachca.gov Deputy Finance Director Michael Sinacori 949.644.3342 msinacori@newportbeachca.gov City Engineer Trevor Power 949.644.3125 tpower@newportbeachca.gov Senior Accountant Jeremiah Lim 949.644.3242 jlim@newportbeachca.gov Accountant Bond Counsel / Disclosure Counsel Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660 Brian Forbath 949.725.4193 bforbath@sycr.com Reed Glyer 949.725.4027 rglyer@sycr.com Municipal Advisor KNN Public Finance 5901 West Century Blvd., Suite 750 Los Angeles, CA 90045 Mark Young 310.348.2901 myoung@knninc.com Managing Director 1300 Clay Street, Suite 1000 1-1 Oakland, CA 94612 - \lain 510-839-8200 - Fax 510-208-8282 1451 Quail Street, Suite 200 Newport Beach, CA 92660 blain 949-346-4900 Fax 510-208-8282 5901 W. Century Boulevard, Suite 750 Los Angeles, CA 90045 Main 310-348-2901 Fax 510-208-8282 A Limited Liability Company I City of Newport Beach ADs 116 and 116B Ltd. Obligation Improvement Bonds 2019 Series A and Series B — Distribution List I pg. 2 Telephone Email KNN Public Finance 1300 Clay Street, Suite 1000 Oakland, CA 94612 Larry Lom 510.208.8208 Ilom@knninc.com Assistant Vice President Ellen Hall 510.208.8204 ehall@knninc.com Public Finance Assistant District Administrator Wilidan Financial Services 27368 Via Industria, Suite 200 Temecula, CA 92590-4856 Beatrice Medina 951.587.3554 bmedina@willdan.com Susanna Hernandez 951.587.3546 shernandez@willdan.com Jocelyne Vega 951.587.3579 jvega@willdan.com Underwriter Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th Floor San Francisco, CA 94104 Sara Oberlies Brown 415.364.6872 (office) sbrown@stifel.com Managing Director 310.508.6627 (cell) Stifel, Nicolaus & Company, Incorporated 515 South Figueroa Street, Suite 1800 Los Angeles, CA 90071 Jake Campos 213.443.5202 jcampos@stifel.com Managing Director Jordan Keny-Guyer 213.443.5233 u erj@ stifel.com Associate g y Underwriter's Counsel Kutak Rock LLP 5 Park Plaza, Suite 1500 Irvine, CA 92614 Albert Reyes 949.221.3951 Albert. Reyes@KutakRock.com Partner 1300 Clay Street, Suite 1000 f- Oakland, CA 94612 D -fain 510-839-8200 r` Fax 510-208-8282 1451 Quail Street, Suite 200 7- Newport Beach, CA 92660 A4ain 949-346-4900 Fax 510-208-8282 5901 W. Century Boulevard, Suite 750 C Los Angeles, CA 90045 ` Hain 310-348-2901 Fax 510-208-8282 A Limited Liability Company City of Newport Beach ADs 116 and 116B Ltd. Obligation Improvement Bonds 2019 Series A and Series B — Distribution List I pg. 3 Trustee U.S. Bank National Association 633 W. Fifth Street, 241h Floor Los Angeles, CA 90071 Martin Meza Trustee's Counsel Dorsey & Whitney LLP 600 Anton Boulevard, Ste. 2000 Costa Mesa, CA 92626 Dennis Wong Trustee Counsel Assessment Engineer Harris & Associates 22 Executive Park, Suite 200 Irvine, CA 92614-4705 Carol Hill Project Manager Dissemination Agent Digital Assurance Certification LLC Lauren Wooten Working Group Emails: Telephone Email 213.615.6062 martin.meza@usbank.com 714.800.1457 Wong.dennis@dorsey.com Limited Distribution (No Documents) 949.536.2555 Carol.hiII@weareharris.com Limited Distribution (No Documents) 407.515.1100 laurenw@dacbond.com damm(a).netvoortbeachca.20V; smontano0newoortbeachca.eov; msinacorincr,ne-,voortbeachca.Lyov; 1po-verta'�newTortbeachca.gov Jam@ngWortbeachca.gov; bforbath nsvcr corn. rglyer a,sycr.com; myoung@knninc.com; llorn ,knninc.com; ehaU@knninc.com; bmedina n 3Edan.com; shemandez&M illdan.com; jvegaCa xvilldan.com; sbroNvn@stifel.com; jcamgosgstifel.com; gaWer Qstifel.com; Albert.ReyesQKutakRock.com; martin.meza@usbank.com; Won�dennis&dorsey.com; 1300 Clay Street, Suite 1000 ❑ Oakland, CA 94612 ❑ Main 510-839-8200 ❑ Fax 510-208-8282 1451 Quail Street, Suite 200 ❑ Newport Beach, CA 92660 ❑ bfain 949-346-4900 ❑ Fax 510-208-8282 5901 W. Century Boulevard, Suite 750 ❑ Los Angeles, CA 90045 Alain 310-348-2901 Fax 510-208-8282 A Limited Liability Company