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Agenda Packet 2014/02/18
I declare under penaity of perjury that I am employed by the City oi Chula Vista in ihe Office of the City Clerk and that I posted this document on the bulletin board accoraing[o ��{// Clty Of ChUlB VISt�rownActrequirements. � Dated �� (� Signed ����A Agenda Cheryl Cox, Mayor Patricia Aguilar, Councilmember James D. Sandoval, City Manager Pamela Bensoussan, Councilmember Glen R. Googins, City Attomey Rudy Ramirez, Councilmember ponna R. Norris, City Clerk Mary Salas, Counciimember Tuesday, February 18, 2014 2:00 PM Council Chambers 276 4th Avenue, Building A Chula�sta, CA 91910 REGULAR MEETINGS OF THE CITY COUNCIL AND PUBLIC FINANCING AUTHORITY CALL TO ORDER ROLL CALL: Councilmembers Aguilar, Bensoussan, Ramirez, Salas and Mayor Cox PLEDGE OF ALLEGIANCE TO THE FLAG AND MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY A. 14-0023 PRESENTATION BY LIBRARY DIRECTOR BETTY WAZNIS OF LEAN PROCESSES TO RE-THINK SPACE USE AT THE CHULA VISTA CIVIC CENTER PUBLIC IIBRARY B. 14-0074 PRESENTATION BY ASSOCIATE PLANNER LYNNETTE TESSITORE-LOPEZ, DEVELOPMENT SERVICES DEPARTMENT, ADVANCE PLANNING DIVISION, OF THE GREENBELT CENTENNIAL TRAIL MARKER PROGRAM AND CENTENNIAL TRAIL MAP Ciry o/Chv/a V4tta Page f Pnnfed on 1/71/10f1 City Council Agenda February 18,2014 CONSENT CALENDAR (Items 1-14) The Council will enact the Consent Calendar staff recommendations by one motion, without discussion, unless a Councilmember, a member of the public, or staff requests that an item be removed for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed immediately following the Consent Calendar. 1. 14-0092 APPROVAL OF MINUTES of December 17, 2013. RECOMMENDED ACTION: Council approve the minutes. 2. 14-0093 WRITTEN COMMUNICATIONS Memorandum from Deputy Mayor Aguilar requesting an excused absence from the January 28, 2014 City Council meeting. RECOMMENDED ACTION: Council excuse the absence. 3. 14-0061 ORDINANCE OF THE CITY OF CHULA VISTA AUTHORIZING THE LEVY OF SPECIAL TAXES WITHIN THE IMPROVEMENT AREAS OF COMMUNITY FACILITIES DISTRICT NO. 14M (EASTERN URBAN CENTER/MILLENIA) (SECOND READING AND ADOPTION) Development Services Department - Land Development RECOMMENDED ACTION: Council adopt the ordinance. 4. 13-0183 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING REVISIONS TO COUNCIL POLICY NO. 478-01 THAT REFERS TO THE PARTICIPATION BY PRIVATE DEVELOPERS IN THE FINANCING AND/OR INSTALLATION OF TRAFFIC SIGNALS AND APPROPRIATING $16,358 TO THE FISCAL YEAR 2013-2014 TRAFFIC SIGNAL FUND (4/5 VOTE REQUIRED) Development Services Department RECOMMENDED ACTION: Council adopt the resolution. City of Chula Vista Page 2 Printed on 211312014 2014-02-18 Agenda Packet Page 2 City Council Agenda February 18,2014 5. 14-0027 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE APPLICATION FOR GRANT FUNDS FOR THE SUSTAINABLE COMMUNITIES PLANNING GRANT AND INCENTIVES PROGRAM UNDER THE SAFE DRINKING WATER, WATER QUALITY AND SUPPLY, FLOOD CONTROL, RIVER AND COASTAL PROTECTION BOND ACT OF 2006 (PROPOSITION 84) FOR THE F STREET PROMENADE STREETSCAPE MASTER PLAN AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE FUNDING AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF CONSERVATION Development Services Department RECOMMENDED ACTION: Council adopt the resolution. 6. 14-0035 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING THE CONTRACT FOR THE "TRAFFIC SIGNAL MODIFICATIONS, THIRD AVENUE/J STREET AND THIRD AVENUE/NAPLES STREET IN THE CITY OF CHULA VISTA, CA (TF382) FEDERAL NO. HSIPL 5203(038)" PROJECT TO T&M ELECTRIC, INC. DBA PERRY ELECTRIC IN THE AMOUNT OF $264,035 Public Works Department RECOMMENDED ACTION: Council adopt the resolution. 7. 14-0050 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE SUBMITTAL OF REGIONAL GRANT APPLICATIONS FOR CALRECYCLE GRANTS FOR WHICH CHULA VISTA IS THE LEAD AGENCY AND AUTHORIZING THE PUBLIC WORKS DIRECTOR OR DESIGNEE TO EXECUTE ALL GRANT DOCUMENTS AND IMPLEMENT PROJECTS FUNDED BY CALRECYCLE REGIONAL GRANTS, FOR A PERIOD OF FIVE YEARS, ON BEHALF OF THE PARTICIPATING AGENCIES Public Works Department RECOMMENDED ACTION: Council adopt the resolution City of Chula Vista Page 3 Printed on 211312014 2014-02-18 Agenda Packet Page 3 City Council Agenda February 18,2014 8. 14-0057 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A MASTER LICENSE AGREEMENT WITH VERIZON WIRELESS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, FOR THE INSTALLATION AND OPERATION OF AS MANY AS 25 WIRELESS TELECOMMUNICATIONS FACILITIES OR SUBSTANTIALLY SIMILAR FACILITIES ON CITY-OWNED AND CONTROLLED PROPERTY, SUBJECT TO ALL NECESSARY APPROVALS, FOR A PERIOD OF 5 YEARS WITH AN OPTION TO RENEW FOR AS MANY AS FOUR ADDITIONAL 5-YEAR TERMS AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT Public Works Department RECOMMENDED ACTION: Council adopt resolution. 9. 14-0040 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $120,000 FROM THE U.S. DEPARTMENT OF HOMELAND SECURITY AND APPROPRIATING SAID FUNDS TO THE POLICE GRANT FUND FOR OPERATION STONEGARDEN (4/5 VOTE REQUIRED) Police Department RECOMMENDED ACTION: Council adopt the resolution. 10. 14-0055 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $50,000 FROM THE U.S. DEPARTMENT OF JUSTICE AND APPROPRIATING SAID FUNDS TO THE POLICE GRANT FUND FOR THE ORGANIZED CRIME DRUG ENFORCEMENT TASK FORCE (4/5 VOTE REQUIRED) Police Department RECOMMENDED ACTION: Council adopt the resolution. 11. 14-0058 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $75,507 FROM THE COUNTY OF SAN DIEGO AND APPROPRIATING SAID FUNDS TO THE FISCAL YEAR 2013/2014 POLICE GRANT FUND FOR REGIONAL REALIGNMENT RESPONSE PROGRAMS (4/5 VOTE REQUIRED) Police Department RECOMMENDED ACTION: Council adopt the resolution. City of Chula Vista Page 4 Printed on 211312014 2014-02-18 Agenda Packet Page 4 City Council Agenda February 18,2014 12. 14-0051 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA (A) AUTHORIZING THE TRANSFER OF $8,017,453 IN WIRELESS TELEPHONE USERS TAX (T.U.T.) REVENUES FROM THE GENERAL FUND TO THE T.U.T. COMMON FUND AND APPROPRIATING FUNDS THEREFORE (B) APPROPRIATING $3,789,234 IN THE T.U.T. COMMON FUND FOR EXPENSES RELATED TO THE SETTLEMENT AGREEMENT IN THE MATTER OF CARLA VILLA, ET. AL., V. CITY OF CHULA VISTA (4/5THS VOTE REQUIRED) Finance Department RECOMMENDED ACTION: Council adopt the resolution. 13. 14-0056 INVESTMENT REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2013 Finance Department RECOMMENDED ACTION: Council accept the report. 14. 14-0089 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $38,750 TO FUND THE LAW OFFICE MANAGER POSITION IN THE CITY ATTORNEY'S OFFICE FOR THE REMAINDER OF FISCAL YEAR 2013/2014 TO BE OFFSET BY REVENUES FROM REIMBURSEMENTS FOR LEGAL SERVICES PROVIDED TO THE SUCCESSOR AGENCY RESULTING IN NO NET FISCAL IMPACT (4/5 VOTE REQUIRED) City Attorney & City Manager RECOMMENDED ACTION: Council adopt the Resolution. ITEMS REMOVED FROM THE CONSENT CALENDAR PUBLIC COMMENTS Persons speaking during Public Comments may address the Council on any subject matter within the Council's jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Council from discussing or taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff. Comments are limited to three minutes. City of Chula Vista Page 5 Printed on 211312014 2014-02-18 Agenda Packet Page 5 City Council Agenda February 18,2014 PUBLIC HEARINGS The following item(s) have been advertised as public hearing(s) as required by law. If you wish to speak on any item, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. 15. 14-0052 CONSIDERATION OF THE PROPOSED ASSESSMENT OF CERTAIN DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER-OCCUPIED PARCELS OF LAND AND PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING CERTAIN DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER-OCCUPIED PARCELS OF LAND AND APPROVING THE PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION Finance Department RECOMMENDED ACTION: Council conduct the public hearing and adopt the resolution. 16. 14-0054 CONSIDERATION OF THE PROPOSED ASSESSMENT OF CERTAIN DELINQUENT SOLID WASTE SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE PARCELS OF LAND AND PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING CERTAIN DELINQUENT SOLID WASTE SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE PARCELS OF LAND AND APPROVING THE PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION Finance Department RECOMMENDED ACTION: Council conduct the public hearing and adopt the resolution. City of Chula Vista Page 6 Printed on 211312014 2014-02-18 Agenda Packet Page 6 City Council Agenda February 18,2014 ACTION ITEMS The Item(s) listed in this section of the agenda will be considered individually by the Council and are expected to elicit discussion and deliberation. If you wish to speak on any item, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. 17. 13-0225 CONSIDERATION OF APPROVAL OF THE REFUNDING OF THE 2002 CERTIFICATES OF PARTICIPATION TO GENERATE DEBT SERVICE SAVINGS TO BE SHARED BETWEEN THE GENERAL FUND AND THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEE FUND A. RESOLUTION OF THE CITY OF CHULA VISTA MAKING REQUIRED FINDINGS, AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF THE 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT), IN A PRINCIPAL AMOUNT NOT TO EXCEED $49,000,000 AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH. B. RESOLUTION OF THE CHULA VISTA PUBLIC FINANCING AUTHORITY APPROVING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF THE CITY OF CHULA VISTA 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT), IN A PRINCIPAL AMOUNT NOT TO EXCEED $49,000,000 AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH. Finance Department RECOMMENDED ACTION: Council adopt Resolution A and Authority adopt Resolution B. CITY MANAGER'S REPORTS MAYOR'S REPORTS 18. 14-0097 RATIFICATION OF APPOINTMENT OF MAX ZAKER TO THE HOUSING ADVISORY COMMISSION COUNCILMEMBERS' COMMENTS City of Chula Vista Page 7 Printed on 211312014 2014-02-18 Agenda Packet Page 7 City Council Agenda February 18,2014 19. 14-0086 COUNCILMEMBER RAMIREZ Consideration of City support of the International Friendship Games to be held at Mater Dei High School, June 7, 2014. CLOSED SESSION Announcements of actions taken in Closed Session shall be made available by noon on Wednesday following the Council Meeting at the City Attorney's office in accordance with the Ralph M. Brown Act (Government Code 54957.7). 20. 14-0068 CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Government Code Section 54956.9 (b) One Case. There is an ongoing disagreement that between the "Participating Agencies" (including the City of Chula Vista), on the one hand, and the City of San Diego and Padre Dam Municipal Water District, on the other hand, over responsibility for reimbursing Padre Dam for its overpayment of wastewater fees dating back to 1998 under the terms of the Master Wastewater Disposal Agreement between the parties. ADJOURNMENT to the Special City Council Meeting on February 25, 2014, at 6:00 p.m., for the purpose of the State of the City Address, in the Council Chambers. Materials provided to the City Council related to any open-session item on this agenda are available for public review at the City Clerk's Office, located in City Hall at 276 Fourth Avenue, Building A, during normal business hours. In compliance with the AMERICANS WITH DISABILITIES ACT The City of Chula Vista requests individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service, contact the City Clerk's Office at(619) 691-5041(California Relay Service is available for the hearing impaired by dialing 711) at least forty-eight hours in advance of the meeting. City of Chula Vista Page 8 Printed on 211312014 2014-02-18 Agenda Packet Page 8 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File M 14-0023, Version: 1 PRESENTATION BY LIBRARY DIRECTOR BETTY WAZNIS OF LEAN PROCESSES TO RE- THINK SPACE USE AT THE CHULA VISTA CIVIC CENTER PUBLIC LIBRARY City of Chula Vista Page 1 of 1 Printed on 2/13/2014 powered by Legis 2014-02-18 Agenda Packet Page 9 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0074, Version: 1 PRESENTATION BY ASSOCIATE PLANNER LYNNETTE TESSITORE-LOPEZ, DEVELOPMENT SERVICES DEPARTMENT, ADVANCE PLANNING DIVISION, OF THE GREENBELT CENTENNIAL TRAIL MARKER PROGRAM AND CENTENNIAL TRAIL MAP City of Chula Vista Page 1 of 1 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 10 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0092, Version: 1 APPROVAL OF MINUTES of December 17, 2013. RECOMMENDED ACTION: Council approve the minutes. City of Chula Vista Page 1 of 1 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 11 DRAFT MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA December 17, 2013 2:00 p.m. A Regular Meeting of the City Council of the City of Chula Vista was called to order at 2:05 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL PRESENT: Councilmembers Aguilar, Bensoussan, Ramirez, Salas, and Mayor Cox ABSENT: None ALSO PRESENT: City Manager Sandoval, City Attorney Googins, City Clerk Norris, and Assistant City Clerk Bigelow PLEDGE OF ALLEGIANCE TO THE FLAG AND MOMENT OF SILENCE Construction and Repair Manager Roberts led the Pledge of Allegiance. SPECIAL ORDERS OF THE DAY • INTRODUCTION BY CITY MANAGER SANDOVAL OF EMPLOYEE OF THE YEAR,MARK ROBERTS, CONSTRUCTION AND REPAIR MANAGER City Manager Sandoval introduced employee of the year, Construction and Repair Manager Roberts. Mayor Cox read the proclamation and Deputy Mayor Bensoussan presented it to Mr. Roberts. • PRESENTATION BY ACCELA SENIOR ACCOUNT MANAGER DAVE AVILA ON BEHALF OF THE CENTER FOR DIGITAL GOVERNMENT AND DIGITAL COMMUNITIES OF A 2013 DIGITAL CITIES SURVEY AWARD RECOGNIZING THE INFORMATION TECHNOLOGY SERVICES DEPARTMENT AS ONE OF THE NATION'S TOP TEN INFORMATION TECHNOLOGY DEPARTMENTS FOR HAVING MADE STRIDES IN TECHNOLOGY, ENABLING SIGNIFICANT COST SAVINGS FOR SHARED SERVICES AND IMPROVING CITIZEN ENGAGEMENT TOOLS TO ASSISTANT DIRECTOR OF INFORMATION TECHNOLOGY HERMON HOWELL Dave Avila presented Assistant Director of Information Technology Services Howell and the City with a 2013 Digital Cities Survey Award on behalf of the Center for Digital Government and Digital Communities. Page I I Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 12 DRAFT • UPDATE BY PORT COMMISSIONER ANN MOORE ON THE CHULA VISTA BAYFRONT Port Commissioner Moore, Lesley Nishihira and other representatives of the Port of San Diego presented an update of the Chula Vista Bayfront development. • PRESENTATION BY HOUSING MANAGER LEILANI HINES REGARDING THE SOUTH BAY HOMELESS ADVOCACY'S HOMELESS CONNECT Housing Manager Hines and Don Hunter, representing South Bay Community Services, presented information on the South Bay Homeless Connect program and recent "one-stop" event to serve the homeless population. CONSENT CALENDAR Item 9A was removed from the Consent Calendar at the request of a member of the public. 1. APPROVAL OF MINUTES of November 13, 2013. Staff recommendation: Council approve the minutes. 2. WRITTEN COMMUNICATIONS A. Memorandum from Deputy Mayor Bensoussan requesting an excused absence from the October 15, 2013 City Council meeting. B. Memorandum from Councilmember Aguilar requesting an excused absence from the October 16, 2013 Special City Council meeting. C. Memorandum from Councilmember Aguilar requesting an excused absence from the December 5, 2013 Special City Council workshop. Recommendation: Council excuse the absences. 3. ORDINANCE NO. 3293 OF THE CITY OF CHULA VISTA AMENDING CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT ORDINANCE TO AUTHORIZE THE LEVY OF A SPECIAL TAX ON CERTAIN CITY PARK PROPERTY AND TO AUTHORIZE THE DIRECT BILLING OF THE CITY FOR SUCH SPECIAL TAX (SECOND READING AND ADOPTION) (Director of Public Works) Staff recommendation: Council adopt the ordinance. Page 2 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 13 DRAFT 4. ORDINANCE NO. 3294 OF THE CITY OF CHULA VISTA LEVYING A SPECIAL TAX FOR FISCAL YEAR 2013/2014 AND FOLLOWING FISCAL YEARS SOLELY WITHIN AND RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2013-1 (CLEAN ENERGY PROGRAM), CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA (SECOND READING AND ADOPTION) (Director of Public Works) Staff recommendation: Council adopt the ordinance. 5. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING CHAPTER 15.26 OF THE CHULA VISTA MUNICIPAL CODE ADOPTING THE CALIFORNIA ENERGY CODE, 2013 EDITION (SECOND READING AND ADOPTION) (Director of Development Services and Fire Chief) Staff recommendation: Council continue this item to a future date. 6. RESOLUTION NO. 2013-262 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING THE FINAL REPORT OF EXPENDITURES FOR THE THIRD AVENUE STREETSCAPE IMPROVEMENT PROJECT, PHASE I, CIP NO. STL362; REDUCING THE STL388 CIP BUDGET BY $90,000 IN GAS TAX FUNDS; AND APPROPRIATING THE EQUIVALENT AMOUNT TO STL362 (4/5 VOTE REQUIRED) (Director of Public Works) Staff recommendation: Council adopt the resolution. 7. A. RESOLUTION NO. 2013-263 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $596,875 FROM THE UNITED STATES DEPARTMENT OF JUSTICE, OFFICE OF JUSTICE PROGRAMS, BUREAU OF JUSTICE ASSISTANCE FOR INNOVATIVE RESPONSES TO REDUCING REPEAT DOMESTIC VIOLENCE AND APPROPRIATING $121,545 TO THE FISCAL YEAR 2014 POLICE GRANT FUND (4/5 VOTE REQUIRED) (Police Chief) B. RESOLUTION NO. 2013-264 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA WAIVING THE COMPETITIVE FORMAL BID REQUIREMENT AND APPROVING A CONTRACT FOR PROFESSIONAL SERVICES FOR THE POLICE DEPARTMENT (Police Chief) Staff recommendation: Council adopt the resolutions. 8. REPORT REGARDING THE DEVELOPMENT IMPACT FEE, PARK ACQUISITION AND DEVELOPMENT FEE, AND TRUNK SEWER CAPITAL RESERVE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (Director of Development Services, Director of Finance/Treasurer and Director of Public Works) Staff recommendation: Council accept the report. Page 3 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 14 DRAFT 9. A. Item removed from Consent Calendar. B. RESOLUTION NO. 2013-266 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA CLOSING OUT THE SPECIAL SEWER FUND AND TRANSFERRING AVAILABLE FUNDS TO THE TRUNK SEWER CAPITAL RESERVE FUND (4/5 VOTE REQUIRED) (Director of Finance/Treasurer) Staff recommendation: Council adopt the resolutions. ACTION: Councilmember Ramirez move to approve staff's recommendations and offered Consent Calendar items I through 8 and 9B, headings read, text waived. Deputy Mayor Bensoussan seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 ITEMS REMOVED FROM THE CONSENT CALENDAR 9. A. RESOLUTION NO. 2013-265 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A SEWER SERVICE REVENUE FUND RESERVE POLICY (Director of Finance/Treasurer) Director of Finance Kachadoorian provided additional information regarding Item 9A. David Danciu, Chula Vista resident, spoke in support of Council considering Item 9A following Public Hearing Item 10. Public Works Director Hopkins provided additional information regarding costs associated for the Point Loma Waste Water Treatment Plant to handle secondary treatment and stated that the waiver the City has received in previous years would not be granted again. There was consensus of the Council to table the balance of Item 9A to follow Item 10. PUBLIC COMMENTS Marvin Winters, Chula Vista resident, expressed concern regarding the handling of a complaint he filed in November 2013. Celia Soto Moody, Chula Vista resident, expressed concern regarding drainage issues near E Street at Harrison Avenue. PUBLIC HEARINGS 10. CONSIDERATION OF A PROPOSED INCREASE TO THE SEWER SERVICE RATES (Director of Public Works) Page 4 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 15 DRAFT Item 10 was noticed as time certain for 3:00 p.m. and was heard at 3:11 p.m. Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and no earlier than the time specified in the notice. City Engineer Valle and consultants Anna Buising, from Infrastructure Engineering Corporation (IEC), and Robb Grantham, from Carollo Engineers presented information on the item. Mayor Cox opened the public hearing and announced that written protests by property owners could be submitted until the public hearing was closed. David Danciu, Chula Vista resident, spoke in opposition to staffs recommendation and encouraged the Council to instead consider lowering the proposed rate increase, reducing the number of years that the rate increase would apply and/or reducing costs for low-income residents. Don Volk, Chula Vista resident, requested additional information on the proposed rate increase and submitted written documentation in opposition to staff s recommendation. Theresa Acerro, Chula Vista resident, spoke in support of the City considering processing its own wastewater. There being no further members of the public who wished to speak,Mayor Cox closed the public hearing. Senior Civil Engineer Yano, City Engineer Valle, and Public Works Director Hopkins provided additional information on the item in response to questions from members of the public and the Council. City Clerk Norris stated that 115 written protests had been received,which was below the 23,000 protest threshold to require the validation of protests. In response to questions from Councilmember Aguilar, Public Works Director Hopkins stated that no changes would be made to the existing rate reduction for low-income households. Councilmember Aguilar suggested that staff investigate changing the billing system in the Montgomery area for residents who are being billed through their property taxes. Councilmember Ramirez spoke in support of staff further investigating a wastewater treatment center in Chula Vista. Public Works Director Hopkins provided information on a past joint study with the Otay Water District for a water treatment plant. ACTION: Councilmember Salas moved to adopt the following Resolution Nos. 2013-267 and 2013-268, headings read, text waived. Mayor Cox seconded the motion, and it carried by the following vote: Yes: 5 —Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 Page 5 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 16 DRAFT A. RESOLUTION NO. 2013-267 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN INCREASE IN SEWER SERVICE RATES FOR FISCAL YEARS 2014/2015 THROUGH 2018/2019 AND AMENDING THE MASTER FEE SCHEDULE ACCORDINGLY B. RESOLUTION NO. 2013-268 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA SETTING THE AMOUNT TO BE DEPOSITED INTO THE SEWER FACILITIES REPLACEMENT FUND, FOR FISCAL YEARS 2014/2015 THROUGH 2018/2019, AND CONTINUING AT THE 2018/2019 AMOUNTS UNTIL THE CITY COUNCIL TAKES ACTION TO INCREASE, OR OTHERWISE ADJUST THE AMOUNT (4/5 VOTE REQUIRED) Consideration of Item 9A continued at this time. 9. A. RESOLUTION NO. 2013-265 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A SEWER SERVICE REVENUE FUND RESERVE POLICY (Director of Finance/Treasurer) ACTION: Mayor Cox moved to adopt Resolution No. 2013-265, heading read, text waived. Councilmember Aguilar seconded the motion, and it carried by the following vote: Yes: 5 —Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 11. This item was taken out of order and discussed following Item 15. 12. This item was taken out of order and discussed following Item 13. 13. This item was taken out of order and discussed following Item 11. ACTION ITEMS Item 14 was taken out of order and discussed at this time. 14. CONSIDERATION OF AMENDING THE CHULA VISTA MUNICIPAL CODE AND MASTER FEE SCHEDULE (Director of Finance/Treasurer, Police Chief, Fire Chief, Director of Library and Director of Animal Care Facility) Mayor Cox stated that Item 14.13.1 and 14.13.2 was removed from the agenda. Christine Moore, representing AT&T, submitted written documentation in opposition to staff's recommendation on Item 14.D.2. Page 6 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 17 DRAFT Finance Director Kachadoorian, Treasury Manager Allen, and Consultant Nicole Kissam, representing NBS Consulting, presented information on the item including laws that govern fees, summary results of the fee study, and a potential cost-recovery policy. ACTION: Deputy Mayor Bensoussan moved to adopt the following Resolution Nos. 2013- 272, 2013-273, 2013-274, 2013-275, 2013-276, 2013-277, 2013-278, 2013-279, and 2013-280, and place the following Ordinances on Items E through I on first reading, headings read, text waived. Mayor Cox seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 A. RESOLUTION NO. 2013-272 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 3 (ANIMAL CONTROL) OF THE CITY'S MASTER FEE SCHEDULE B. RESOLUTION NO. 2013-273 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 5 (LIBRARY) OF THE CITY'S MASTER FEE SCHEDULE C. RESOLUTION NO. 2013-274 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 6 (POLICE) OF THE CITY'S MASTER FEE SCHEDULE D.I. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 15 (FIRE) OF THE CITY'S MASTER FEE SCHEDULE D.2. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING CHULA VISTA MUNICIPAL CODE CHAPTER 9.05 (EMERGENCY RESPONSE COST RECOVERY) TO INCORPORATE COST RECOVERY FEES FOR FIRE DEPARTMENT EMERGENCY INCIDENT RESPONSE (FIRST READING) E.1. RESOLUTION NO. 2013-275 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 4 (BUSINESS) OF THE CITY'S MASTER FEE SCHEDULE RELATING TO MASSAGE ESTABLISHMENTS AND TECHNICIANS AND HOLISTIC HEALTH ESTABLISHMENTS AND PRACTITIONERS E.2. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING SECTION 5.36.135 OF THE CHULA VISTA MUNICIPAL CODE TO AUTHORIZE THE COLLECTION OF MASSAGE AND HOLISTIC HEALTH ESTABLISHMENT LICENSE ANNUAL RENEWAL FEES AND AMENDING SECTION 5.36.190 TO REQUIRE PAYMENT OF NEW APPLICATION FEES FOLLOWING CHANGE OF LOCATION OF A MASSAGE ESTABLISHMENT (FIRST READING) Page 7 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 18 DRAFT F.I. RESOLUTION NO. 2013-276 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 4 (BUSINESS) OF THE CITY'S MASTER FEE SCHEDULE CREATING NEW FEES FOR FIREARMS DEALERS F.2. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING SECTION 5.28.010 OF THE CHULA VISTA MUNICIPAL CODE TO AUTHORIZE THE COLLECTION OF FIREARMS DEALER LICENSE ANNUAL FEES AND SECTION 5.28.015 TO REQUIRE ANNUAL INSPECTIONS OF FIREARMS DEALERS BY THE POLICE DEPARTMENT (FIRST READING) G.I. RESOLUTION NO. 2013-277 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 4 (BUSINESS) OF THE CITY'S MASTER FEE SCHEDULE RELATING TO BINGO LICENSE APPLICATION FEE REFUNDS G.2. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING SECTION 9.12.160 OF THE CHULA VISTA MUNICIPAL CODE RELATING TO BINGO LICENSE APPLICATION FEE REFUNDS (FIRST READING) H.I. RESOLUTION NO. 2013-278 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 4 (BUSINESS) OF THE CITY'S MASTER FEE SCHEDULE RELATING TO PAWNBROKERS, SECONDHAND AND JUNK STORE DEALERS H.2. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING SECTION 5.38.030 OF THE CHULA VISTA MUNICIPAL CODE TO AUTHORIZE THE COLLECTION OF PAWNBROKER, SECONDHAND AND JUNK STORE DEALER LICENSE BIENNIAL RENEWAL FEES AND SECTION 5.38.120 TO AUTHORIZE THE COLLECTION OF PAWNSHOP EMPLOYEE IDENTIFICATION CARD ANNUAL RENEWAL FEES (FIRST READING) I.I. RESOLUTION NO. 2013-279 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 4 (BUSINESS) OF THE CITY'S MASTER FEE SCHEDULE RELATING TO ART FIGURE STUDIOS L2. ORDINANCE OF THE CITY OF CHULA VISTA REPEALING CHAPTER 5.14 OF THE CHULA VISTA MUNICIPAL CODE RELATING TO ART FIGURE STUDIOS (FIRST READING) J. RESOLUTION NO. 2013-280 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CHAPTER 4 (BUSINESS) OF THE CITY'S MASTER FEE SCHEDULE Mayor Cox recessed the meeting at 4:40 p.m. The Council reconvened at 5:04 p.m., with all members present. Page 8 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 19 DRAFT Item 15 was noticed as time certain for 5:00 p.m. and was discussed out of order at this time. 15. STATUS UPDATE ON THE SOUTH BAY SUBSTATION AND OPPORTUNITY FOR CITY COUNCIL TO PROVIDE DIRECTION TO STAFF ON FUTURE ACTIONS BEFORE THE COASTAL COMMISSION AND/OR THE CPUC Assistant City Manager Halbert presented an update and additional information on the South Bay Substation. The following members of the public spoke in support of undergrounding substation transmission lines on the bayfront: - Theresa Acerro, Chula Vista resident - John Moot, representing Inland Industries - Steve Padilla, Chula Vista resident,representing Inland Industries City Attorney Googins suggested that the Council consider referring the item to staff to investigate the drafting and appropriate timing of Council consideration of a resolution, considering additional analysis by the Coastal Commission and an accounting of San Diego Gas & Electric's (SDGE) position on the issue. Councilmember Salas reported that SDG&E raised objections on the issue at a recent meeting between herself and Councilmember Aguilar. She spoke in support of continuing to pursue the undergrounding of the 230 kV lines. In response to a question from Councilmember Aguilar, John Moot and Steve Padilla, both representing Inland Industries, stated they and their client supported the relocation of the substation and spoke in support of structures that would not create a negative visual impact. Councilmember Ramirez spoke in support of Council considering a resolution to express its position of supporting minimizing the visual impact of the substation. He expressed concern that the standards communicated in the resolution should represent the Council's, not staff's or the City Attorney's position. Deputy Mayor Bensoussan spoke in support of avoiding ultimatums and stated that the Council should not lose sight of the feasibility of what it is asking. In response to a question from Deputy Mayor Bensoussan, City Attorney Googins stated SDG&E's initial application did not include the Bayfront Enhancement Fund Alternative (BEFA), but that SDG&E had indicated that it was their environmentally preferred alternative and that the Coastal Commission was analyzing it. Mayor Cox expressed concern in delaying the construction of the substation, which would in turn delay future bayfront development. She also spoke in support of reducing the visual impact of the substation, as feasible, and supporting the Bayfront Enhancement Fund Alternative (BEFA). Page 9 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 20 DRAFT Councilmember Aguilar spoke in support of considering how the memorandum of understanding between the City and SDG&E is related to the issue of the substation. City Attorney Googins stated that information had been presented to Council regarding the MOU and would be considered in drafting the proposed resolution. There was consensus of the Council to make a referral to staff to draft a resolution of the City Council reaffirming and making clear the City's policy that undergrounding within the boundaries of the certified Local Coastal Program (LCP) is necessary and appropriate because the proposed South Bay substation relocation project will be before the California Coastal Commission in the coming months. Assistant City Manager Halbert confirmed that staff would bring the resolution for Council consideration no later than two weeks before the Coastal Commission meeting. PUBLIC HEARINGS (Continued) Item 11 was taken out of order and discussed at this time. 11. CONSIDERATION OF AN AMENDMENT TO THE PLANNED COMMUNITIES ZONE REQUIREMENTS FOR COMMUNITY PURPOSE FACILITIES (Director of Development Services) Councilmember Ramirez requested that when the agreements described in the ordinance are entered into, the"extraordinary public benefit" truly be extraordinary. Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and no earlier than the time specified in the notice. Mayor Cox opened the public hearing. There being no members of the public who wished to speak, Mayor Cox closed the public hearing. ACTION: Mayor Cox moved to place the following ordinance on first reading, heading read, text waived. Councilmember Ramirez seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 ORDINANCE OF THE CITY OF CHULA VISTA APPROVING AN AMENDMENT TO THE PLANNED COMMUNITY DISTRICT REGULATIONS FOR THE PROVISION OF COMMUNITY PURPOSE FACILITIES IN SECTIONAL PLANNING AREA PLANS (FIRST READING) Page 10 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 21 DRAFT 12. CONSIDERATION OF THE FINAL SECOND TIER ENVIRONMENTAL IMPACT REPORT (EIR 10-03) FOR THE OTAY VILLAGE EIGHT WEST SECTIONAL PLANNING AREA PLAN AND TENTATIVE MAP (Director of Development Services) Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and no earlier than the time specified in the notice. Principal Planner Donaghe presented information on the item. Jeff O'Connor, representing HomeFed Corporation, presented information on the planned development. Mayor Cox opened the public hearings for Items 12 and 13. There being no members of the public who wished to speak,Mayor Cox closed the public hearing. Councilmember Salas moved to approve Item 13 and Councilmember Ramirez seconded the motion. Councilmember Salas and Ramirez submitted the following amended motion: ACTION: Councilmember Salas moved to adopt Resolution No. 2013-369, heading read, text waived. Councilmember Ramirez seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 A. RESOLUTION NO. 2013-269 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA MAKING CERTAIN FINDINGS OF FACT; ADOPTING A STATEMENT OF OVERRIDING CONSIDERATIONS; ADOPTING A MITIGATION MONITORING AND REPORTING PROGRAM AND CERTIFYING THE FINAL SECOND TIER ENVIRONMENTAL IMPACT REPORT (EIR 10-03/SCH 2010062093) FOR THE OTAY RANCH VILLAGE EIGHT WEST SECTIONAL PLANNING AREA PLAN AND TENTATIVE MAP PURSUANT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT 13. CONSIDERATION OF THE VILLAGE EIGHT WEST SECTIONAL PLANNING AREA (SPA) PLAN AND TENTATIVE MAP (Director of Development Services) Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and no earlier than the time specified in the notice. Page 11 I Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 22 DRAFT ACTION: Deputy Mayor Bensoussan moved to adopt Resolution Nos. 2013-270 and 2013- 271, and place the following ordinance on first reading, heading read, text waived. Councilmember Aguilar seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 A. RESOLUTION NO. 2013-270 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE OTAY RANCH VILLAGE EIGHT WEST SECTIONAL PLANNING AREA (SPA) PLAN PROPOSING 621 SINGLE- FAMILY DWELLING UNITS, 1,429 MULTI-FAMILY DWELLING UNITS, AND 300,000 SQUARE FEET OF RETAIL AND OFFICE USES FOR AN APPROXIMATELY 300.3 ACRE SITE LOCATED SOUTH OF THE EXISTING TERMINUS OF LA MEDIA ROAD, AND SOUTHWEST OF THE INTERSECTION OF MAGDALENA AVENUE AND MAIN STREET B. ORDINANCE OF THE CITY OF CHULA VISTA APPROVING THE SECTIONAL PLANNING AREA (SPA) PLANNED COMMUNITY DISTRICT (FORM BASED CODE) REGULATIONS FOR OTAY RANCH VILLAGE EIGHT WEST (FIRST READING) C. RESOLUTION NO. 2013-271 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A TENTATIVE SUBDIVISION MAP FOR THE OTAY RANCH VILLAGE EIGHT WEST PROJECT SUBJECT TO THE CONDITIONS CONTAINED HEREIN ACTION ITEMS 14. This item was taken out of order and discussed following Item 9A. 15. This item was taken out of order and discussed following Item 14,before Item 11. OTHER BUSINESS 16. CITY MANAGER'S REPORTS City Manager Sandoval and Principal Planner Donaghe presented an update on the University Park and Innovation District. 17. MAYOR'S REPORTS Mayor Cox shared a SANDAG report on the increased usage of the SR-125. Page 12 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 23 DRAFT A. Appointment of Deputy Mayor ACTION: Mayor Cox moved to appoint Councilmember Aguilar as Deputy Mayor. Councilmember Aguilar seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 B. Appointment of Member and Alternates to the San Diego Association of Governments (SANDAG) Board of Directors ACTION: Mayor Cox moved to appoint herself as Member to the San Diego Association of Governments (SANDAG) Board of Directors. Deputy Mayor Bensoussan seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 ACTION: Mayor Cox moved to reappoint Deputy Mayor Bensoussan as Alternate to the San Diego Association of Governments (SANDAG) Board of Directors. Deputy Mayor Bensoussan seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 ACTION: Councilmember Aguilar moved to reappoint Councilmember Ramirez as Alternate to the San Diego Association of Governments (SANDAG) Board of Directors. Councilmember Salas seconded the motion, and it carried by the following vote: Yes: 5—Aguilar, Bensoussan, Ramirez, Salas, and Cox No: 0 Abstain: 0 18. COUNCILMEMBERS' COMMENTS Deputy Mayor Bensoussan announced a dog park benefit event in Eucalyptus Park, tentatively scheduled for January 25, 2014. She also announced an upcoming water conservation and landscape training class on January 11, 2014. Page 13 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 24 DRAFT Councilmember Ramirez spoke in support of the change to the staff report format to include strategic goal information. He restated his desire to increase jobs in the City. He wished staff and members of the public happy holidays. Councilmember Aguilar spoke in support of Councilmember Ramirez's statement to increase jobs in Chula Vista. She reported that she and Councilmember Ramirez were working to bring the Starlight Parade back in December 2014. Councilmember Salas spoke in support of staff being able to use the SR-125 at no cost when performing official duties. Mayor Cox stated she would speak with SANDAG on the issue. CLOSED SESSION Pursuant to Resolution No. 13706 and Council Policy No. 346-03, Official Minutes and records of action taken during Closed Sessions are maintained by the City Attorney. Mayor Cox announced that the Council would convene in closed session to discuss the item listed below. Mayor Cox recessed the meeting at 7:40 p.m. The Council convened in Closed Session at 7:55 p.m.,with all members present. 19. PUBLIC EMPLOYEE PERFORMANCE EVALUATION PURSUANT TO GOVERNMENT CODE SECTION 54957 Title: • City Clerk • City Manager ADJOURNMENT At 10:17 p.m., Mayor Cox adjourned the meeting to the next Regular City Council Meeting on January 7, 2014, at 2:00 p.m., in the Council Chambers. Kerry K. Bigelow,Assistant City Clerk Page 14 1 Council Minutes December 17,2013 2014-02-18 Agenda Packet Page 25 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0093, Version: 1 WRITTEN COMMUNICATIONS Memorandum from Deputy Mayor Aguilar requesting an excused absence from the January 28, 2014 City Council meeting. RECOMMENDED ACTION: Council excuse the absence. City of Chula Vista Page 1 of 1 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 26 \ll� Deputy Mayor Patricia Aguilar City Of Chula vista 276 Fourth Avenue � 4 Chula Vista,Ca 91910 CITY OF 619.691.5044—619.476.5379 Fax MEMO CHUlA VISTA DATE: Feb. 11, 2014 TO: Mayor and City Councilmembers CC: City Manager, City Clerk, City Attorney FROM: Deputy Mayor Patricia Aguilar RE: Absence from Office Dear Mayor and City Council members, Please excuse my absence from the City Council meeting of Jan. 28, 2014. 1 was unable to attend the meeting because of a flight cancellation due to inclement weather. Thank you. Q52 :;0 r-o M m =0 rn M c tA n� � C))> M a 2014-02-18 Agenda Packet Page 27 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0061, Version: 1 ORDINANCE OF THE CITY OF CHULA VISTA AUTHORIZING THE LEVY OF SPECIAL TAXES WITHIN THE IMPROVEMENT AREAS OF COMMUNITY FACILITIES DISTRICT NO. 14M (EASTERN URBAN CENTER/MILLENIA) (SECOND READING AND ADOPTION) RECOMMENDED ACTION: Council adopt the ordinance. City of Chula Vista Page 1 of 1 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 28 SECOND READING AN� ADOP710N ORDII�'.4NCE NO. ORDI1�'ANCE OF THE CITY COiJt�'CIL OF THE CITl' OF CHUL.4 VISTA AUTHORIZII�'G THE LEVl' OF SPECIAL TAXES V�'ITHIIV THE II�9PROVE?�4ENT AREAS OF COn4A4U1�'[Tl' FACILITIES DISTRICT 14A4 (EASTER\' URBAN CENTER/n4ILLENIA) WHEREAS, the CITY COITNCIL of the CITl' OF CHULA VISTA (the "Ciry CounciP'); has iniriated proceedings, held a public hearing, conducted an election and received a fa��orable vote from [he qualified elec[ors auchorizing che levy of special taxes within a community facilities district, all as authorized pursuant to the terms aod pro��isions of the "h4ello-Roos Community Facilities Act of 1982;" bein2 Chapter 2S, Part 1. Division 2, Title � of the Govemment Code of the Scate of California (the "Act") and the City of Chula Vista Community Faciliries District Ordioance enacted pursuant to the powers reserved by the City of Chula Vista under Sections 3. � and 7 of Arricle X] of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance ma}� be referred to collectively as the "Communiry Facilities District La���"). This Communiry Facilities District is desienated as COMMUI�TITY FACILITIES DISTRICT NO. 14M (EASTERN URBAN CENTER/�4ILLENIA) (the "District"). THE CITY COiJ\'CIL OF THE CITY OF CHULA VISTA .ACTING AS THE LEGISLATNE BODY OF COA�4UIVITY FACILITIES DISTRICT NO. 14I�4 (EASTER\' URBAN CEI�TTER/h91LLEI�TIA), DOES HEREBY ORDAIN AS FOLLO\'�'S: SECTION 1. This City Council does, by the passaee of this Ordinance, authorize the levy of special taxes �vithin Improvement Area I�'o. 1 and Improvement Area No. 2 of the District pursuant to the Rate and n4ethod of Apponionment of Special 1"aues as set fonh in Exhibit "A" attached herero (the "Rate and Method"), referenced and so incorporated. SECTION 2. This Ciri Council, actine as the legislati.�e body of the Dishict, is hereby further authorized, by Resolurion, to annually determine the special taxes to be levied within the District for the then current tax year or furure tax yeazs, except that the special tas to be levied �vithin the District shall not exceed the maximum special tax calculated pursuant to the Rate and 1�4ethod, but the special taa may be levied at a lower rate. SECTION 3. The special taxes herein authorized; to the extent possible, shall be collected in the same manner as ad ��alorem property taxes and shall be subject ro the same penalries, procedure, sale and lien prioriry in any case of delinquency as applicable for ad ��alorem tases; pro��ided, ho�3�ever, the District may utilize a direct billin� procedure for any special taxes that cannot be collected on the County tax roll or may, by resolution, elect to collect the special tar.es at a different time or in a different manner if necessary to meet its financial oblieations. SECTIO\' 4. 7�heopecial taxes shall be secured b�� the lien imposed pursuant ro Sections 31145 and 311�5 of the Streets and Highways Code of the State of Califomia, H�hich lien shall be a continuin� lien and shall secure each levy of the special tax. The lieo of the special tar shall 1 ?014-02-16 Agenda Packet Page 29 continue in force and effect until the special tax obligation is prepaid, permanently satisfied and canceled in accordance with Section 53344 of the Government Code of the State of California or until the special tax ceases to be levied by the City Council in the manner provided in Section 53330.5 of said Government Code. SECTION 5. This Ordinance shall be effective thirty (30) days after its adoption. Within fifteen (15) days after its adoption, the City Clerk shall cause this Ordinance to be published in a newspaper of general circulation in the City pursuant to the provisions of Government Code Section 36933. PREPARED BY: APPROVED AS TO FORM BY: Richard A. Hopkins Glen R. Googins Director of Public Works City Attorney 2 2014-02-18 Agenda Packet Page 30 EXHIBIT A Community Facilities District No. 14M(Eastern Urban Center/Millenia) Rate and Method of Apportionment A - 1 2014-02-18 Agenda Packet Page 31 CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 14M RATE AND METHOD OF APPORTIONMENT FOR IMPROVEMENT AREA NO. 1 AND IMPROVEMENT AREA NO. 2 (Eastern Urban Center/Millenia) A Special Tax of Community Facilities District No. 14M (Eastern Urban Center/Millenia) of the City of Chula Vista ("CFD") shall be levied on all Taxable Property in the CFD and collected each Fiscal Year commencing in Fiscal Year 2014-2015 in an amount determined through the application of the rate and method of apportionment of the Special Tax set forth below. All such Taxable Property shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "`A' Map" shall mean a master final subdivision or parcel map, filed in accordance with the Subdivision Map Act (California Government Code Section 66410 et seq.) and the Chula Vista Municipal Code, which subdivides the land or a portion thereof shown on a tentative map into "super block" lots corresponding to units or phasing of combination of units as shown on such tentative map and which may further show open space lot dedications, backbone street dedications and utility easements required to serve such "super block" lots. "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable Final Subdivision Map, other final map, other parcel map, other condominium plan, or functionally equivalent map or instrument recorded in the Office of the County Recorder. In the event that parcel acreage information is not available from the sources previously listed, San Diego County GIS data may be utilized. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or estimated costs incurred by the City, acting for and on behalf of the CFD as the administrator thereof, to determine, levy and collect the Special Taxes within Improvement Area No. 1, including salaries of City employees and a proportionate amount of the City's general administrative overhead related thereto, and the fees of consultants and legal counsel providing services related to the administration of Improvement Area No. 1; the costs of collecting installments of the Special Taxes within Improvement Area No. 1; and any other costs required to administer Improvement Area No. 1 as determined by the City. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 1 2014-02-18 Agenda Packet Page 32 "Apartment Property" means a dwelling unit within a building comprised of attached residential units available for rental by the general public, not for sale to an end user, and under common management. "Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in an `A' Map, excluding lettered lots thereon, or a Final Subdivision Map, excluding lettered lots thereon, that were recorded prior to the March 1St preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a building permit prior to the March 1St preceding the Fiscal Year in which the Special Tax is being levied. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned assessor's parcel number. If any parcel of Public Urban Parks Property is not shown on an Assessor's Parcel Map or assigned an assessor's parcel number, an Assessor's Parcel of such property shall mean that property as shown on the instrument conveying the title of such property to the City. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by assessor's parcel number. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD" means Community Facilities District No. 14M (Eastern Urban Center/Millenia) of the City of Chula Vista. "CFD Boundary Map" entitled "Proposed Boundaries of Community Facilities District No. 14M (Eastern Urban Center/Millenia), City of Chula Vista, County of San Diego, State of California" as recorded in the Office of the County Recorder of the County of San Diego on January 23, 2014 as Document No. 2014-0030558 at Page 39 of Book 44 of the Book of Maps of Assessment and Community Facilities Districts for such County. "City" means the City of Chula Vista. "City Clerk" means the City Clerk for the City of Chula Vista or his or her designee. "City Manager" means the City Manager for the City of Chula Vista or his or her designee. "City Share" means the City's Share of the budgeted costs of the maintenance of the Public Urban Parks Property, as determined in accordance with the Eastern Urban Center Parks Agreement and Section E below. "Community Purpose Facility Property" or "CPF Property" means all Assessors' Parcels which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 2 2014-02-18 Agenda Packet Page 33 "Council" means the City Council of the City of Chula Vista, acting as the legislative body of the CFD. "County" means the County of San Diego, California. "Developed Property" means all Taxable Property for which a building permit was issued prior to the March 1 st preceding the Fiscal Year in which the Special Tax is being levied. "Dwelling Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. "Eastern Urban Center Parks Agreement" means that certain Agreement Regarding Construction of Parks in a Portion of Otay Ranch Eastern Urban Center made and entered into as of the 15th day of September, 2009 by and between the City and McMillin Otay Ranch LLC, as recorded on October 28, 2009 with the San Diego County Recorder's Office, Document Number 2009-0599389, or as otherwise modified and agreed upon by all parties thereto. "Final Subdivision Map" means a subdivision of property creating buildable lots by recordation of a final subdivision map or parcel map pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.), or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which building permits may be issued without further subdivision and is recorded prior to March 1 preceding the Fiscal Year in which the Special Tax is being levied. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Improvement Area No. 1" means all property within the boundaries of such improvement area as shown on the CFD Boundary Map. "Improvement Area No. 1 Operating Fund" means a fund that shall be maintained for the CFD for each Fiscal Year to pay for the authorized maintenance services for Improvement Area No. 1 as described in the CFD special tax report and Administrative Expenses. "Improvement Area No. 1 Operating Fund Requirement" means, for any Fiscal Year, an amount equal to the budgeted costs for Improvement Area No. 1. The budgeted costs for Improvement Area No. 1 shall equal (i) the greater of(A) 50% of the budgeted costs for maintenance of the Public Urban Parks Property and (B) 100% of such budgeted costs minus the City Share; plus (ii) the budget costs of landscape maintenance, street frontage maintenance, bio-retention maintenance, storm water maintenance, and the maintenance, repair and replacement of the facilities and improvements, other than the Public Urban Parks Property, which have been accepted and or maintained by the CFD during the current Fiscal Year; plus (iii) the budgeted Administrative Expenses for the current Fiscal Year in which Special Taxes are levied. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 3 2014-02-18 Agenda Packet Page 34 "Improvement Area No. 1 Reserve Fund" means a fund that shall be maintained for the CFD for Improvement Area No. 1 for each Fiscal Year to provide necessary cash flow for the first six months of each Fiscal Year, reserve capital to cover monitoring, maintenance and repair cost overruns and delinquencies in the payment of Special Taxes within Improvement Area No. 1 and a reasonable buffer to prevent large variations in annual Special Tax levies within Improvement Area No. 1. "Improvement Area No. 1 Reserve Fund Requirement" means an amount equal to up to 100% of the Improvement Area No. 1 Operating Fund Requirement for any Fiscal Year. "Improvement Area No. 1 Special Tax Requirement" means that amount required in any Fiscal Year for the CFD to: (i) pay the Improvement Area No. 1 Operating Fund Requirement; (ii) pay any amounts required to establish or replenish the Improvement Area No. 1 Reserve Fund to the Improvement Area No. 1 Reserve Fund Requirement; (iii) pay for reasonably anticipated delinquent Special Taxes within Improvement Area No. 1 based on the delinquency rate for Special Taxes levied in the previous Fiscal Year within Improvement Area No. 1; less (b) a credit for funds available to reduce the annual Special Tax levy, including the excess, if any, in the Improvement Area No. 1 Reserve Fund above the Improvement Area No. 1 Reserve Fund Requirement and any amount remaining in the Improvement Area No. 1 Operating Fund that is available to pay the Improvement Area No. 1 Operating Fund Requirement in such Fiscal Year. "Improvement Area No. 2" means all property within the district boundaries that is owned by the City and classified as Public Urban Parks Property. "Improvement Area No. 2 Operating Fund" means a fund that shall be maintained for the CFD for each Fiscal Year to pay for the authorized maintenance services for Improvement Area No. 2 as described in the CFD special tax report. "Improvement Area No. 2 Operating Fund Requirement" means, for any Fiscal Year, an amount equal to the City Share. "Improvement Area No. 2 Special Tax Requirement" means that amount required in any Fiscal Year for the CFD to pay the Improvement Area No. 2 Operating Fund Requirement less a credit for funds, if any, available to reduce the annual Special Tax levy within Improvement Area No. 2 and any amount remaining in the Improvement Area No. 2 Operating Fund that is available to pay the Improvement Area No. 2 Operating Fund Requirement in such Fiscal Year. "Land Use Class" means any of the classes listed in Table 1. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C below, that may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 4 2014-02-18 Agenda Packet Page 35 "Mixed Use Property" means all Assessor's Parcels that have been classified by the City to allow both Residential Property and Non-Residential Property uses on each such Assessor's Parcel. For an Assessor's Parcel of Mixed Use Property, only the Residential Land Use Class thereon is subject to taxation pursuant to the provisions of Section C. "Multi-Family Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for a residential structure consisting of two or more residential dwelling units that share common walls, including, but not limited to, duplexes, triplexes, townhomes, and condominiums. "Non-Residential Property" means all Assessor's Parcels of Developed Property for which a building permit(s)has been issued for a structure or structures for non-residential use. "Ordinance" means the Chula Vista Community Facilities District Ordinance, being Ordinance No. 2730 enacted on April 28, 1998, as modified and supplemented by Ordinance No. 3293, enacted on December 17, 2013. "Property Owner Association Property" means any property within the CFD boundaries that is owned by, or irrevocably dedicated as indicated in an instrument recorded with the County Recorder to, a property owner association, including any master or sub-association. "Proportionately" means in a manner such that the ratio of the actual Special Tax levy to the Maximum Special Tax is equal for all Assessor's Parcels of Taxable Property within each Land Use Class. "Public Property" means any property within the CFD boundaries that has provided proof to the City prior to March 1 st preceding the Fiscal Year in which the Special Tax is being levied, that it is expected to be used for any public purpose and is owned by or dedicated to the federal government, the State, the County, the City or any other public agency, excluding Public Urban Parks Property. "Public Urban Parks" means those parks to which the City accepts title pursuant to the Eastern Urban Center Parks Agreement. "Public Urban Parks Property" means all Assessor's Parcels that are owned by the City and upon which the Public Urban Parks are located or to be located. "Residential Property" means all Assessor's Parcels of Developed Property classified as Apartment Property or Multi-Family Property for which a building permit(s) has been issued for purposes of constructing one or more residential dwelling units. "Special Tax" means the Special Tax levied pursuant to the provisions of sections D and E below in each Fiscal Year on each Assessor's Parcel of Developed Property, Approved Property, and Undeveloped Property in Improvement Area No. 1 to fund the Improvement Area No. 1 Special Tax Requirement and the Public Urban Parks Property to fund the Improvement Area No. 2 Special Tax Requirement. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page S 2014-02-18 Agenda Packet Page 36 "State" means the State of California. "Taxable Property" means, as to Improvement Area No. 1, all of the Assessor's Parcels within the boundaries of Improvement Area No. I that are not exempt from the Special Tax pursuant to law or as defined below under Tax-Exempt Property and, as to Improvement Area No. 2, all Assessor's Parcels of Public Urban Parks Property. "Tax-Exempt Property" means an Assessor's Parcel not subject to the Special Tax. Tax-Exempt Property includes: (i) Public Property, or (ii) Property Owner Association Property excluding Taxable Property Owner Association Property, or (iii) Assessor's Parcels of Taxable CPF Property that is owned by a non-profit organization and has provided proof to the City prior to the March 1St preceding the Fiscal Year in which the Special Tax is being levied of the organization's non-profit status, or (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement. "Taxable Property Owner Association Property" means all Association Property which is not exempt from the Special Tax pursuant to Section F below. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Approved Property or Taxable Property Owner Association Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year using the definitions above, all Taxable Property within the CFD shall be (a) categorized as being located in either Improvement Area No. I or Improvement Area No. 2; (b) classified as Developed Property, Public Urban Parks Property,Approved Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable CPF Property, and (c) subject to the levy of Special Taxes pursuant to Sections D and E below. Developed Property shall be further assigned to a Land Use Class as specified in Table 1. The Land Use Class of each Assessor's Parcel of Residential Property or Mixed Use Property shall be determined based on the records of the San Diego County Assessor, or other such information provided by the City. Assessor's Parcels of CPF Property not classified as exempt in accordance with Section F below shall be taxed as Non- Residential Property when such Assessor's Parcel is classified as Developed Property. If the Assessor's Parcel is undeveloped it shall be classified as Undeveloped Property. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 6 2014-02-18 Agenda Packet Page 37 C. MAXIMUM SPECIAL TAX RATE 1. Improvement Area No. 1 a. Developed Property TABLE 1 Maximum Special Tax for Developed Property Community Facilities District No. 14M within Improvement Area No. 1 Land Use Maximum Class Description Special Tax 1 Apartment Property $189.00 per Dwelling Unit 2 Multi-Family Property $252.00 per Dwelling Unit 3 Non-Residential Property $1,259.00 per Acre Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax that may be levied on an Assessor's Parcel shall only be levied on the Residential Property Land Use Class located on that Assessor Parcel(s). Sample Maximum Special Tax Calculation for Mixed Use (Non-Residential Property and Apartment Property) Under the proposed example, assume that Assessor's Parcel Number I is classified as a Mixed Use Property. Assessor's Parcel Number 1 is a 2 Acre parcel that contains 10,000 square feet of retail shops and Apartment Property with 10 residential dwelling units. The following table shows what the expected annual Maximum Special Tax would be for Assessor's Parcel Number 1. No. of Non-Residential Residential Assessor Residential Property Property Total Annual Parcel Parcel Dwelling Maximum Maximum Maximum No. Acreage Units Special Tax Special Tax Special Tax 1 2.00 10 $0.00 $1,890.00 $1,890.00 (1) The Maximum Special Tax is based upon the initial Maximum Special Tax rates as defined in Table 1. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 7 2014-02-18 Agenda Packet Page 38 b. Approved Property, Undeveloped Property and Taxable Property Owner Association Property within Improvement Area No. 1 The Maximum Special Tax for Approved Property, Undeveloped Property and Taxable Property Owner Association Property shall be $4,359.00 per Acre. 2. Improvement Area No. 2 a. Public Urban Parks Property TABLE 2 Maximum Special Tax for Public Urban Parks Property Community Facilities District No. 14M within Improvement Area No. 2 Land Use Maximum Class Description Special Tax 1 Public Urban Parks $33,049.00 per Acre Property 3. Annual Escalation of Maximum Special Tax The Maximum Special Tax for Improvement Area No. 1 and Improvement Area No. 2 as shown in Tables 1 and 2 above that may be levied on each Assessor's Parcel in the CFD shall be adjusted each Fiscal Year beginning in Fiscal Year 2014-15 and thereafter by a factor equal to the greater of, the positive percentage change in the San Diego Metropolitan Area All Urban Consumer Price Index (All Items) from the base date of June 1, 2013 through June 1 of the prior Fiscal Year, or 0%, provided the Maximum Special Tax shall never be less than the amounts shown in Tables 1 and 2,respectively. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR IMPROVEMENT AREA NO. 1 Commencing with Fiscal Year 2014-15, and for each following Fiscal Year, the Council shall levy the Special Tax in Improvement Area No. 1 at the rates established pursuant to steps 1 through 4 below so that the amount of the Special Tax levied equals the Improvement Area No. 1 Special Tax Requirement. The Special Tax in Improvement Area No. 1 shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Improvement Area No. 1 up to 100% of the applicable Maximum Special Tax; City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 8 2014-02-18 Agenda Packet Page 39 Second: If additional monies are needed to satisfy the Improvement Area No. 1 Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property at up to 100% of the Maximum Special Tax for Approved Property; Third: If additional monies are needed to satisfy the Improvement Area No. 1 Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Undeveloped Property; Fourth: If additional moneys are needed to satisfy the Improvement Area No. 1 Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property at up to 100% of the Maximum Special Tax for Taxable Property Owner Association Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Multi-Family Property or Apartment Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent annually up to the Maximum Special Tax as a consequence of delinquency or default by the owner of any other Assessor's Parcel within Improvement Area No. 1. E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR IMPROVEMENT AREA NO. 2 Commencing with Fiscal Year 2014-15, and for each following Fiscal Year, the Council shall levy the Special Tax Proportionately on all Public Urban Parks Property within Improvement Area No. 2 up to 100% of the Maximum Special Tax as necessary to fully fund the Improvement Area No. 2 Special Tax Requirement. For the purposes of determining the Improvement Area No. 1 Operating Fund Requirement and the Improvement Area No. 2 Operating Fund Requirement, the City Share shall be the lesser of the amount determined in Step One and Step Two below. Step One: The City shall calculate the amount equal to 50% of the budgeted costs for maintenance of the Public Urban Parks Property that has been accepted and or maintained by the CFD during the current fiscal year, for the current fiscal year in which the Special Taxes are being levied, and for Public Urban Parks Property that the City anticipates accepting during the upcoming Fiscal Year. Step Two: As outlined in Section 5.1(a) of the Eastern Urban Center Parks Agreement, each Fiscal Year, after the Council adopts the City's annual operating budget, the City shall calculate the City's total annual public park maintenance cost included in the budget. The City shall also calculate the acreage of public parks that are maintained and City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 9 2014-02-18 Agenda Packet Page 40 owned by the City and included in the budget (including the Public Urban Parks Property for which the City has accepted title). The total annual cost shall be divided by the total park acreage to determine the City's average annual park maintenance cost per acre for that Fiscal Year. This amount shall be multiplied by 21.51 acres and then multiplied by a fraction, the numerator of which is the acreage of the Public Urban Parks Property for which the City has accepted title and for which the City is currently assessing a Special Tax in anticipation of acceptance by the City and the denominator of which is 10.60 acres. If the amount calculated pursuant to this Step Two is lower than the amount calculated under Step One above, it shall be the City Share unless the City Manager, at his or her own sole discretion, elects to use the higher amount as the City Share in order to maintain the fifty/fifty (50-50) split of maintenance costs as outlined in Section 5.1(a) of the Eastern Urban Parks Agreement. F. EXEMPTIONS The CFD Administrator shall classify as Tax-Exempt Property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels defined as CPF Property that are owned by a non-profit organization which provides proof to the City prior to March Is' preceding the Fiscal Year in which the Special Tax is being levied of the organization's non-profit status, and (iii) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement. The CFD Administrator shall classify as Tax-Exempt Property within Improvement Area No. 1 those Assessor's Parcels defined as Property Owner's Association Property provided that no such classification would reduce the sum of all Taxable Property within Improvement Area No. 1 to less than 130.39 Acres. Assessor's Parcels defined as Property Owner Association Property and CPF Property that cannot be classified as Tax- Exempt Property will be classified as Taxable Property Owner Association Property and shall be taxed as part of the fourth step in Section D. The CFD Administrator will assign tax-exempt status in the chronological order in which property becomes exempt Public Property or CPF Property or Tax-Exempt Property Owner Association Property. However, should an Assessor's Parcel no longer be classified as Public Property or CPF Property or Tax-Exempt Property Owner Association Property, its tax-exempt status will be revoked. Taxable Property Owner Association Property that is not exempt from the Special Tax under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fourth step in Section D above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property and Taxable CPF Property. There shall be no Tax-Exempt Property within Improvement Area No. 2. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 10 2014-02-18 Agenda Packet Page 41 G. APPEALS Any landowner or resident who pays the Special Tax and believes that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred; the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action, if any by the CFD Administrator, the landowner or resident believes such error still exists; such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of the CFD, a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. H. MANNER OF COLLECTION Special Taxes levied in Improvement Area No. 1 pursuant to Section D above shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the CFD Administrator may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet the financial obligations of the CFD or as otherwise determined appropriate by the CFD Administrator. Special Taxes levied in Improvement Area No. 2 pursuant to Section E above shall be collected by direct billing by the CFD Administrator, such Special Taxes to be due and payable and shall become delinquent at the same time as Special Taxes levied within Improvement Area No. 1. L TERM OF SPECIAL TAX Taxable Property in Improvement Area No. 1 and Improvement Area No. 2 of the CFD shall remain subject to the Special Tax in perpetuity or until the Council takes appropriate actions to terminate the Special Tax in both Improvement Areas pursuant to the Act. City of Chula Vista-Community Facilities District No.14M(Eastern Urban Center/Millenia) Page 11 2014-02-18 Agenda Packet Page 42 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 13-0183, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING REVISIONS TO COUNCIL POLICY NO. 478-01 THAT REFERS TO THE PARTICIPATION BY PRIVATE DEVELOPERS IN THE FINANCING AND/OR INSTALLATION OF TRAFFIC SIGNALS AND APPROPRIATING $16,358 TO THE FISCAL YEAR 2013-2014 TRAFFIC SIGNAL FUND ( 4/5 VOTE REQUIRED) RECOMMENDED ACTION: Council adopt the resolution. SUMMARY On August 8, 1978, the City Council by Resolution No. 9221 , adopted Council Policy No. 478-01 to establish an equitable participation by private developers for the financing and/or installation of traffic signals on public streets within the City. The proposed action would make the Traffic Signal Fee exemptions consistent with the City's Transportation and Public Facility Development Impact Fee (DIF) programs in exempting Community-Purpose Facilities from paying the fee. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because the activity consists of a governmental administrative/fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is required. Although environmental review is not required at this time, once the scope of individual traffic signal projects that may be funded have been defined, environmental review will be required for each project and the appropriate environmental determination will be made. BOARD/COMMISSION RECOMMENDATION Not applicable. DISCUSSION Background On August 8, 1978, the City Council by Resolution No. 9221 (see Attachment 1), adopted Council Policy No. 478-01 (Policy) to establish the Traffic Signal Fee (Fee) to establish an equitable contribution by private developers of residential, commercial and industrial uses in the financing and/or installation of traffic signals on public streets within the City. The reasoning behind the implementation of the Fee was to create a proportionate contribution by all private developments generating significant vehicular traffic toward the projected traffic signal needs of the City. The payment of the Fee is usually a condition of building permit issuance, or approval of a rezoning action. The Fee is calculated on the basis of vehicle trips generated by the proposed City of Chula Vista Page 1 of 3 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 43 File #: 13-0183, Version: 1 development and does not include trips generated at the development site under previous or current land use. The Amount of the Fee Currently, the Fee is $34.27 per vehicular trip, and any new development project within the City that generates an increase in the number of trips based on its current land use is subject to the Fee. With the adoption of Resolution No. 2001-385, the Fee is automatically adjusted every year based upon the Engineering News Record 20 City Construction Cost Index. Exemptions The only development projects currently exempt are on-site recreational or service facilities (cabanas, clubhouses, swimming pools, meeting rooms, etc.) that are open to the public. City staff recommends that Section 7 of Policy No. 478-01 be revised to exempt "Community- Purpose Facilities," as defined in Chula Vista Municipal Code Section 19.04.055, from the Fee. This exemption would be consistent with the exemptions of the Public Facility DIF, the Western Transportation DIF, and the Eastern Transportation DIF (Municipal Code 3.50.100, 3.54.070, and 3.55.100, respectively). For the proposed revisions to the language of the Policy, please see Exhibit A. DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently, the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1), is not applicable to this decision. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The adoption of this Resolution to revise Council Policy No. 478-01 will address the Operational Excellence and the Economic Vitality Goals of the City. The revision to the Policy will provide City Staff with a clear direction to consistently implement the City's Development Impact Fee Programs. In addition, City Staff considers that the adoption of this resolution will clarify to potential Developers of Community- Purpose Facility Projects that no Traffic Signal Fees are required giving the Developer an incentive to create these type of facilities in Chula Vista that will benefit the whole community. CURRENT YEAR FISCAL IMPACT There is no current year fiscal impact with this action. Traffic signals at major intersections are funded by their respective Transportation DIF Program (Eastern or Western). The impact of this change will be to slightly reduce the availability of funds to construct and/or modify minor intersection traffic signals. Approval of the appropriation of $16,358 to the Other Expenses category will have no current year net fiscal impact to the Traffic Signal Fund. Funds equivalent to this amount were collected in the current fiscal year and are being refunded to the YMCA for their new facility at 2311 Boswell Road, City of Chula Vista Page 2 of 3 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 44 File #: 13-0183, Version: 1 Chula Vista. If the proposed action is approved, the YMCA will qualify for an exemption of the Fee as its development use is defined as a "Community-Purpose Facility." ONGOING FISCAL IMPACT There will be no ongoing fiscal impact to the General Fund or the Traffic Signal Fee Fund. ATTACHMENTS Attachment 1: City Council Resolution No. 9221 and Text for Council Policy No. 478-01 Exhibit A: Proposed Revisions to the Language of Council Policy No. 478-01 City of Chula Vista Page 3 of 3 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 45 RESOLUTION NO. 2014- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING REVISIONS TO COUNCIL POLICY NO. 478-01 THAT REFERS TO THE PARTICIPATION BY PRIVATE DEVELOPERS IN THE FINANCING AND/OR INSTALLATION OF TRAFFIC SIGNALS AND APPROPRIATING $16,358 TO THE FISCAL YEAR 2013-2014 TRAFFIC SIGNAL FUND WHEREAS, on August 8, 1978, the City Council, by Resolution No. 9221, adopted Council Policy No. 478-01 (Policy) to establish the Traffic Signal Fee (Fee) to regulate an equitable contribution by private developers of residential, commercial and industrial uses in the financing and/or installation of traffic signals on public streets within the City; and WHEREAS, the City twice updated Council Policy No. 478-01 to adjust the amount of the Fee from $7.00 to $23.00 per vehicular trip: on March 23, 1993 with Resolution No. 17048; and on November 13, 2001, with Resolution No. 2001-385; and WHEREAS, presently, the amount of the Fee is $34.27 per vehicular trip, and any new development project within the City that generates an increase in number of trips based on its current land use is subject to the Fee. With the adoption of Resolution No. 2001-385, the fee is automatically adjusted every year based upon the Engineering New Record 20 City Construction Cost Index; and WHEREAS, the only development projects exempt are on-site recreational or service facilities, including but not limited to cabanas, clubhouses, swimming pools, and meeting rooms that are open to the public; and WHEREAS, City staff recommends that Section 7 of Policy No. 478-01 be revised to exempt development uses with characteristics or activities as a principal use of land, generally described as "Community-Purpose Facilities," as defined in Chula Vista Municipal Code Section 19.04.055, so that the Fee mirrors the same exemptions of the Public Facility Development Impact Fee (DIF), the Western Transportation DIF and the Eastern Transportation DIF (Chula Vista Municipal Code Section's 3.50.100, 3.54.070 and 3.55.100 respectively); and WHEREAS, $16,358 was collected in Fiscal Year 2013-2014 from the YMCA for the Fee; and WHEREAS, the YMCA qualifies for an exemption under the development use as Community-Purpose Facility, and funds collected are requested to be refunded under this exemption. 2014-02-18 Agenda Packet Page 46 Resolution No. Page 2 NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the revisions proposed by City staff to Council Policy No. 478-01, as shown on Exhibit "A," which is attached hereto and incorporated herein by this reference as if set forth in full; and appropriates $16,358 to the Other Expenses category of the Traffic Signal Fund. Presented by Approved as to form by Kelly G. Broughton Glen R. Googins Development Services Director City Attorney 2014-02-18 Agenda Packet Page 47 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: PARTICIPATION BY PRIVATE POLICY EFFECTIVE DEVELOPERS IN THE FINANCING NUMBER DATE PAGE AND/OR INSTALLATION OF TRAFFIC SIGNALS 478-01 1 OF 4 ADOPTED BY: Resolution No. 9221 DATED: AMENDED BY: Council Action (02/18/14); Resolution No.: PURPOSE To establish a policy for participation by private developers for the financing and/or installation of traffic signals on public streets within the City of Chula Vista. BACKGROUND New developments, whether residential, commercial, or industrial, generate additional traffic which results in increased congestion or safety hazards at various street intersections throughout the City. The installation of traffic signals is sometimes necessary in order to accommodate the safe and efficient flow of vehicular traffic. The City has in the past required developers to participate in the cost of signalization which directly impacted a major individual development. Lesser developments,however,were not required to participate. The system was inherently inequitable. This policy provides for proportionate contribution by all private developments generating significant traffic toward the projected traffic signal needs of the City. It is the intent of the City Council in establishing this policy that all development, redevelopment, remodeling or other activity which will result in a long-term INCREASE in the number of vehicle trips upon the City's system of streets shall be subject to the traffic signal charge. That charge shall be based on upon the net INCREASE in number of trips generated by any specific site,and shall NOT include trips generated at such site under previous or current usage. STATEMENT OF POLICY I. All new private residential, commercial or industrial development as described below shall, as a condition of building permit issuance (or approval of a rezoning action relative to creation of new mobile home spaces), pay a traffic signal charge for additional trips generated as authorized by ordinance of the City Council, and in such amount per additional trip as stipulated by City Council resolution from time to time. The base charge is initially set at$23.00 per average weekday daily trip. Trips generated by current property usage or verifiable prior usage shall be excluded in determining the total charge, which shall be based on additional trips generated at the site under the new use. For the purposes of this policy, verifiable prior usage shall be the last known usage of the property within five (5)years of the date of application for development approval if said property is currently vacant. In the event that the property has been vacant for more than five (5) years, no exclusions will be me made regardless of property usage more than five (5)years in the past. 2. Remodeling (enlarging, altering, repairing or improving and/or replacement) of existing residential development is exempt from the traffic signal charge except where and to the extent additional residential dwelling units are created. 2014-02-18 Agenda Packet Page 48 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: PARTICIPATION BY PRIVATE POLICY EFFECTIVE DEVELOPERS IN THE FINANCING NUMBER DATE PAGE AND/OR INSTALLATION OF TRAFFIC 478-01 2 OF 4 SIGNALS ADOPTED BY: Resolution No. 9221 DATED: AMENDED BY: Council Action (02/18/14); Resolution No.: 3. Structural, occupancy, or use modifications to existing commercial or industrial developments which are projected to increase the average daily traffic generated relative to the total development site by 2% or more shall be subject to payment of the traffic signal charge to the extent of the projected increase in traffic. Traffic volume determinations/projections for current and future traffic at the site shall be made by the City Engineer who shall be required as a condition of approval to any action formally permitting a structural, or occupancy, or use modification to an existing commercial or industrial/development. 4. Notwithstanding any other provisions of this policy,no private development shall pay the traffic signal charge more than once for a given level of traffic generation. Where ADDITIONAL trips are generated relative to a previously developed property, the traffic signal charge will be applied only to the ADDITIONAL units and/or trips generated. 5. Any private development which has been required to install a traffic signal shall get credit for the cost of that installation in computing traffic signal charges for subsequent development within the boundaries of that private development. 6. The traffic signal charge shall be based on the vehicular trip generation rate for the applicable land use category as shown per the latest 'Brief Guide of Vehicular Traffic Generation Rates for the San Diego Region", which is published by San Diego Association of Governments (SANDAG). Traffic generation rates for land uses not addressed by the SANDAG guide shall be determined using the latest ITE Trip Generation book or as approved by the City Engineer. 7. Development Projects Exempt from the Fee: Development Projects that have the following qualifications can be exempt from the Traffic Signal Fee: a. No additional charge will be required of residential developments for on-site recreational or service facilities (cabanas, clubhouses, swimming pools, meeting rooms, etc.) unless such facilities are open to the public. Any such public facilities shall pay a charge based on the total acreage of the facility including parking areas and a vehicular trip rate of 200 per acre. b. Development projects designated as "Community-Purpose Facilities", as defined in CVMC 19.04.055. 8. For all private developments, the traffic signal charge shall be computed by multiplying the new additional vehicle trip generation times the established base charge (in dollars per one-way trip per day). 2014-02-18 Agenda Packet Page 49 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: PARTICIPATION BY PRIVATE POLICY EFFECTIVE DEVELOPERS IN THE FINANCING NUMBER DATE PAGE AND/OR INSTALLATION OF TRAFFIC 478-01 3 OF 4 SIGNALS ADOPTED BY: Resolution No. 9221 DATED: AMENDED BY: Council Action (02/18/14); Resolution No.: 9. The entire City, including subsequent annexations, shall be the same Benefit Area for Traffic Signals. All traffic signal charges shall be placed in the Traffic Signal Fund. Use of funds from such account shall be limited to design, construction inspection and modification of traffic signals within the Benefit Area for Traffic Signals. Traffic signal construction may include: traffic signal controller, standards, signal heads, wiring, conduit, power supply, detectors, pedestrian push buttons, uninterruptible power supply systems and indicators, painting of street striping, interconnection with signals under master controller, signal-related street widening and signal-related raised median island construction. 10. The City may require that a developer whose project creates an immediate need for signalization (per warrant system specified in C.V. Code Section 10.24.070) undertake to install such signalization subject to future reimbursement from the Traffic Signal Fund. Reimbursement of a developer to the extent that their construction cost (including design) exceeds his traffic signal charge shall have first call on the Traffic Signal Fund. No interest shall accumulate on the amount to be reimbursed. Reimbursement for any given installation shall commence only when and if funds are available in the Traffic Signal Fund and when all prior date reimbursement commitments have been satisfied in full. 11. Any private development which installs a traffic signal that is not required by the City or does not meet traffic signal warrants as specified in Chula Vista Code Section 10.24.070,may not be given any credit for the costs of the signal against their required traffic signal fee. The City reserves the right to grant credits if it concludes after performing an appropriate engineering analysis, the cost of such analysis being borne by the developer, that the signal will provide significant benefit to the general public. Such consideration by the City will only be provided if the signal is installed on a public street, or streets, and any credit will be prorated based on the affected approaches to the intersection owned by the City. Example, an intersection with a private street on one approach and two approaches owned by the City will be potentially eligible for a credit not to exceed two-thirds of the cost of the signals. The City will not provide reimbursements for any costs incurred by a developer for a signal not required by the City nor meeting traffic signal warrants. 12. The City may advance funds to the Traffic Signal Fund or provide funds for traffic signal installation which funds shall be subject to reimbursement in the same manner as provided herein for a developer. 13. The above change at $23.00 per average weekly daily trip be adjusted, starting on October 1, 2002, and on each October 1st thereafter, based on the one year change (from July to July) in the 20 City Construction Cost Index as published monthly in the Engineering News Record. For reference purposes, the July 2001, 20 City Construction Cost Index is 6404.03. Adjustments to the Traffic 2014-02-18 Agenda Packet Page 50 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: PARTICIPATION BY PRIVATE POLICY EFFECTIVE DEVELOPERS IN THE FINANCING NUMBER DATE PAGE AND/OR INSTALLATION OF TRAFFIC 478-01 4 OF 4 SIGNALS ADOPTED BY: Resolution No. 9221 DATED: AMENDED BY: Council Action (02/18/14); Resolution No.: Signal Participation Fee based upon the 20 City Construction Cost Index shall be automatic and shall not require further action of the City Council. J:\Engineer\LANDDEV\Projects\Miscellaneous Projects\Traffic Signal Participation Fee Update\478-01 Traffic signal installation by private developers_REV 12-24-13.doc 2014-02-18 Agenda Packet Page 51 I, RESOLUTION NO. 0221 21 SOLUTION OF THE CITY COUNCIL OF THE CITY OF C ULA VISTA ADOPTING A COUNCIL POLICY FOR TRAFFIC SIGNAL PARTICIPATION Tie City Council of the City of Chula Vista does hereby i olve as follows: N W, THEREFORE, BE IT RESOLVED by the City Council of the City Df Chula Vista, that that certain policy for traffic signal participation, attached hereto as Exhibit "A" and incorporated herein by reference as if set forth in full, be, and the same, is hereby adopted. Presented by Approved as to form by 9. J. Rob ens, Director of George ;yr Lindberg, City Attorn u lic Works C/ ADOPTED AND APPROVED by the CITY COUNCIL of the CITY OF H LA VIS A, CALIFORNIA, this 8th day of August , 1978 Yli the following vote, to-wit: AYES: Councilmen,' Scott, Cox, Hyde, Gillow A ES: Councilmen.- Egdahl ABEENT: Councilmen! None Cj � � 4j4rAt Mayor of the City of Chula Vista P. ES Cit Clerk E OF CALIFORNIA) NTY OF SAN DIEGO) ss. Y OF C ULA VISTA) City Clerk of the City of C ula Vista, California, DO HEREBY CERTIF�YZI t the above is full, t ue and correct copy of Resolution No. and that the e has rot been amended or repealed. DATED i City Clerk 2014-02-1B A enda Packet Page 52 CITY OF C'!fiULA VISTA COUi;CI L POLICY SUBJECT NCLICY EFFECTIVE v FACE IPdL'i�BER Dr11 E TICIPA ION BY PRIVATE DEVELOPERS IN M: FINANCING AND/OR INSTALLATION OF 11 of 5 FFIC 5 GNALS A TED DY RESOLUTION i'10 , DATED tT POSE To establ' sh a policy for participation by private developers for the i ancing and/or installation of traffic signals on public streets i hin th City of Chula Vista. 134A' tKGROUND New developments, whether residential, commercial, or industrial, �jOlierate additional traffic which results in increased congestion or Ttety hazards at various street intersections throughout the City. D insta lation of traffic signals is sometimes necessary in order to ommoda e the safe and efficient flow of vehicular traffic. City aas in the past required developers to participate in the cost of s ' gnalization which directly impacted a major individual elopme t. Lesser developments, however, were not required to ticipa e. The system was inherently inequitable. This poli y provides for proportionate contribution by all traffic geaerating private developments toward the projected traffic signal 1,10 ds of L he City. ST TEMENT OF POLICY 1. All new private residential, commercial, or industrial development shall, as a condition of building permit issuance (or approval of a rezoning action relative to creation of new mobile home spaces) , pay traffic signal charge as authorized by ordinance of the City p ncil, and in such amount per trip as stipulated by City Council :�esolutioa from time to time. The base charge is initially set at 7. 00 per one-way trip per day. 2. Remodeling (enlarging, altering, repairing or improving) of existing residential development is exempt from the traffic signal Charge ex ept where and to the extent additional residential dwelling units are created. Structural, occupancy, or use modifications to existing com- cial or industrial developments which are projected to increase Ehe avera e daily traffic -generated relative to the total development site by 20% or more shall be subject to payment of the traffic signal h rge to the extent of the projected increase in traffic. Traffic o ume determinations/projections for current and future traffic at he site shall be made by the City Engineer who shall utilize data r vided in Table I and/or traffic counts as applicable. Payment 2014-02i i ` Page 53 CITY OF CHULA VISTA COUNCIL POLICY SUBJECT PCJLICY EFFECTIVE TICIPA ION BY PRIVATE DEVELOPERS IN NUMBER Dr;T E PAGE ME FINANCING AND/OR INSTALLATION OF r,RkFFIC S GNALS �2 of 5 A 61 TED BY RE50LUT i ON IN0 . DA-TED of traffi signal charges shall be required as a condition of approval 0 any ac ion formally permitting a structural, or occupancy, or modification to an existing commercial or industrial development. Notwi hstanding any other provisions of this policy, no private deielopme -it shall pay the traffic signal charge more than once for a i en lev 1 of traffic generation. Where additional trips are e erated relative to a previously developed property, the traffic sijnal charge will be applied only to the additional units and/or rips gen rated. Any private development which has been required to install a traffic signal shall get credit for the cost of that installation computing traffic signal charges for subsequent development within boundaries of that private development. The traffic signal charge shall be based on the vehicular trip feaeratioti rate for the applicable land use category as shown on le I . Where a specific traffic generation projection has been pared by a traffic engineer and approved by the City Engineer ioc a non-residential development, that study shall be used in ii u of tie standard generation rates shown in Table I. Traffic 0aeratioi rates for land uses not specifically covered by the Table hall be letermined by the City Engineer. No ad itional charge will be required of residential developments :.or onsit recreational or service facilities (cabanas, clubhouses , ocoming ools, meeting rooms, etc. ) unless such facilities are open the pu lic. Any such public facilities shall pay a charge based on the to al acreage of the facility including parking areas and a icular trip rate of 200 per acre. For all private development the traffic signal charge shall be b puted by multiplying the total vehicle trip generation of new trips derived from Table I times the established base charge (in dollars por one-way trip per day) . The e tire City, including subsequent annexations, shall be in same Benefit Area for Traffic Signals. All traffic signal charges 3h all be Dlaced in the Traffic Signal Fund. Use of monies from h acco nt shall be limited to design, construction inspection and b ificat' on of traffic signals within the Benefit Area for Traffic . nals. Traffic signal construction may include: traffic. signal o trolle standards , signal heads, wiring, conduit, power supply, Z 014-02 Page 54 o CITY OF C!IULA VISTA CONNCII L POLICY S L ECT POLICY EFFECTIVE TICIPA ION BY PRIVATE DEVELOPERS IN NL"iI LE R DATE PAGE FINANCING AND/OR INSTALLATION OF FFIC SIGNALS �3 of 5 A b T ED BY RESOLUTION 1110 , DATED ectors pedestrian push buttons and indicators, painting of street iping, interconnection with signals under master controller, signal ated s reet widening and signal-related median island construction. 0 The ity may require that a developer whose project creates an need for signalization (per warrant system specified in . Code Section 10. 24. 070) undertake to install such signalization ject to future reimbursement from the Traffic Signal Fund. imburseinent of a developer to the extent that his construction cost Wicludin design) exceeds his traffic signal charge shall have first call on the Traffic Signal Fund. No interest shall accumulate on s9amount to be reimbursed. Reimbursement for any given installation all commence only when and if funds are available in the Traffic nal Fund. and when all prior-dated reimbursement commitments iave been satisfied in full. The 2ity may advance funds to the Traffic Signal Fund, or vide f nds for traffic signal installation which funds shall be ject to reimbursement in the same manner as provided herein for a developer. i TABLE I VEHICULAR TRIP GENERATION TABLE (ONE-WAY TRIPS) Ij ND USE CATEGORY TRIP GENERATION FACTOR (PER DAY) i sident' al Single family detached 12 Multi-family 8 Mobile home 6 mmerci 1 Hotel 10 trips per room Mot 1 10 trips per room *Hos ital 12 trips per bed or 17 trips per 1,000 sq. ft. of structure Nur ing home 3 trips per bed General office building 12 trips per 1,000 sq. ft. of leasable area 2V14-02-� rA U Page 55 CITY O E C}IU LA VISTA COUNCIL POLICY S ); ECT POLICY EFFECTIVE 1 PARTICIPATION BY PRIVATE DEVELOPERS IN ill L,�BER DATE I PAGE FINANCING AND/OR INSTALLATION OF %FFIC S GNALS �4 of 5 A b TED b'Y RESOLU T i Oil "w0 . DATED TABLE I (Continued) Shopping center - to 49,999 sq. ft. 115 trips per 1,000 sq. ft. of leasable area 50,000 to 99 , 999 sq. ft. 80 trips per 1, 000 sq. ft. of leasable area 100, 000 to 199 , 999 sq. ft. 60 trips per 1,000 sq. ft. of leasable area 200,000 to 499,999 sq. ft. 50 trips per 1,000 sq. ft. of leasable area 500, 000 to 999 ,999 sq. ft. 35 trips per 1, 000 sq. ft. of leasable area over 1, 000, 000 sq. ft. 30 trips per 1, 000 j sq. ft. of leasable area Discount Store 65 trips per 1, 000 sq. ft. of leasable area Low tarn-over or "full meal" 55 trips per 1, 000 type Restaurant sq. ft. of gross floor area High urn-over or "coffee shop" 165 trips per 1,000 type Restaurant . ft. of gross floor area yp s sq g Drive-In Restaurant 550 trips per 1,000 sq. ft. of gross floor area Service Station 750 trips per day Supermarket 125 trips per 1,000 sq. ft. of gross floor area Convenience Market (16 hr. ) 320 trips per 1, 000 sq. ft. of gross floor area Convenience Market (24 hr. ) 575 trips per 1,000 sq. _ft. of gross floor area �ndustrial *Indu trial 5 trips per 1, 000 sq. ft. of gross floor area -OR- 60 trips per acre of gross site area. r x . ���-u �l ��14-02 1 A enda Packet i CITY OF C!IULA VISTA COU10-I L POLICY SUBJECT f CLICY EFFECTIVE i PAGE PARTICIPATION BY PRIVATE DEVELOPERS IN L'i,'.BER DA T E T;", FINANCING AND/OR INSTALLATION OF ri FFIC SIGNALS �5 of 5 A p TED BY RESOLUTION Ir0 , DATED LE I (Continued) I *Gener 1 Light Industrial 5 trips per 1, 000 sq. ft. of gross floor area -OR- 50 trips per acre of gross site area *Industrial Park 8 trips per 1,000 sq. ft. of gross floor area -OR- 70 trips per acre of gross site area i *Manufacturing 4trips per 1,000 sq. ft. of gross floor area -OR- 55 trips per acre of gross site area *Warehousing 5 trips per 1,000 sq. ft. of gross floor area -OR- 60 trips per acre of gross site area *NOTE: Where alternative generation factors are provided, that which results in the higher total vehicle trip generation shall be used in computing the traffic signal fee. I 204-02- Page 57 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0027, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE APPLICATION FOR GRANT FUNDS FOR THE SUSTAINABLE COMMUNITIES PLANNING GRANT AND INCENTIVES PROGRAM UNDER THE SAFE DRINKING WATER, WATER QUALITY AND SUPPLY, FLOOD CONTROL, RIVER AND COASTAL PROTECTION BOND ACT OF 2006 (PROPOSITION 84) FOR THE F STREET PROMENADE STREETSCAPE MASTER PLAN AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE FUNDING AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF CONSERVATION RECOMMENDED ACTION: Council adopt the resolution. SUMMARY The Strategic Growth Council has released a Request for Proposals for the third round of the "Sustainable Communities Planning Grant and Incentives Program". The State Department of Conservation (DOC) manages competitive grants to cities, counties, and designated regional agencies to develop and implement plans that reduce greenhouse gas emissions and achieve other sustainability objectives. The Sustainable Communities Planning Grant and Incentives Program provides a unique opportunity to improve and support infill development and equity through improvement of existing infrastructure and to protect and conserve natural resources through a collaborative and coordinated approach. The Program is funded through the Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Act of 2006 (Proposition 84). DOC has allocated approximately $16 million of Proposition 84 funds for Round 3. The funds awarded will support development, adoption, and implementation of sustainable community planning elements throughout the State. City Council has directed staff to look for alternative funding sources to help plan and deliver City Services. To that end, the City of Chula Vista proposes to submit the following planning grant application: Preparation of the F Street Promenade Streetscape Master Plan. This master planning effort along F Street in the City's urban core will provide the area with plans to implement "Complete Streets" design elements for future improvements along F Street between Third Avenue and Bay Boulevard. Complete streets are well-balanced, connected, safe, and convenient multi-modal transportation networks designed to serve all users of streets, regardless of their age or ability, or whether they are driving, walking, bicycling, or taking transit. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activities authorizing the filing of grant applications soliciting funds specifically for the preparation of the F Street Promenade Streetscape Master Plan for compliance with the California Environmental Quality Act (CEQA). The Development Services Director has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because the proposed action consists of a governmental fiscal activity which, on its own, would not result in a potentially significant physical City of Chula Vista Page 1 of 4 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 58 File #: 14-0027, Version: 1 impact on the environment. However, when the actual project(s) for which the grant monies are earmarked are adequately defined and ready to be carried out, the appropriate environmental review and documentation will be required. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. BOARD/COMMISSION RECOMMENDATION Not applicable. DISCUSSION The principal goal of this grant program is to fund the development and implementation of plans that lead to significant reductions in greenhouse gas emissions (GHGs) in a manner consistent with the State Planning Priorities, AB 32 and the current Environmental Goals and Policy Report. The grant program is meant to foster the development of sustainable communities throughout California. Sustainable communities shall promote equity, strengthen the economy, protect the environment, and promote healthy, safe communities. Funded activities are intended to achieve the following Program Objectives: • Improve air and water quality • Revitalize urban and community centers • Promote public health • Improve infrastructure systems • Increase infill & compact development • Protect natural resources and agricultural lands • Increase housing affordability • Promote water and energy conservation • Reduce automobile usage and fuel consumption • Promote equity The following is a brief description of the grant proposal which is aligned with the State goals described above. F Street Promenade Streetscape Master Plan The F Street Promenade Streetscape Master Plan is proposed under Focus Area #1 "Innovative Incentives for Sustainable Development Implementation" grant category. According to the grant application guide, the intent of this Focus Area is to support local planning activities that implement a proposed or adopted Regional Transportation Plan, and when applicable, a Sustainable Communities Strategy, or any other local or regional plan, in a way that incentivizes sustainable, infill development, location- and resource-efficient development, or preserves or enhances natural or agricultural lands. The project proposes to develop a Streetscape Master Plan for an approximately one+ mile long segment of F Street. The project will create a plan for a "Promenade" that will link the City's downtown Village District and Civic Center with the City's Bayfront. The Streetscape Plan would be a "complete street" with a full range of convenient and safe access linkages, by car; transit; bicycle; or on foot. The need for a Streetscape Plan along this segment of F Street is identified in both the City's General Plan and further described as an implementation project in the Urban Core Specific Plan. The Master Streetscape Plan would emphasize this one+ mile link as an attractive, safe and convenient route for resident and visitors alike. The vision for the Master Streetscape Plan is a pedestrian-oriented promenade that links Third Avenue; the Civic Center; Broadway; the E Street transit center, and the Bayfront Planning Area with themed landscaping, wayfinding, and other City of Chula Vista Page 2 of 4 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 59 File #: 14-0027, Version: 1 streetscape elements. The freeway crossing of Interstate 5 and the adjacent parallel railroad spur/overcrossing will be evaluated to accommodate additional pedestrian use and create enhanced and inviting entryways into the Bayfront. Existing trees from Third Avenue to Broadway would be preserved and incorporated into the streetscape theme. The exact location and configuration of bikeways and parkway amenities will be detailed by the Streetscape Master Plan which will be developed with broad public input to ensure the plan reflects the community's values. The grant application, if successful, would provide funding for the Conceptual Design, Streetscape Master Plan and preliminary construction drawings that could then be used to implement a future capital improvement project. The maximum grant award is $500,000 and requires minimum 10% local match since it is not located within an area designated as an Environmental Justice community. The grant request is for $491 ,010 with a local match of $52,026 for a total Project cost of $543,036. Five percent of the local match is required to be a cash match. The cash match will cover costs of supplies and materials for the four community outreach meetings and production of preliminary construction drawings. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The F Street Promenade Streetscape Master Plan supports the Economic Vitality Goal as it seeks to foster opportunities to invest in Western Chula Vista. CURRENT YEAR FISCAL IMPACT The grant request of $$491 ,010 would cover the majority of staff and consultant costs in preparing the Streetscape Master Plan and preliminary construction drawings. The grant requires a minimum 10% local match of which 5% is required to be a cash match. The Development Services Fund will cover the costs of supplies and materials for the community outreach efforts and preliminary construction drawings at a cost of about $27,450. The remaining local match will be in kind staff services (currently budgeted in the General Fund) for technical staff services such as graphics support and GIS, and preparation of the real property survey. ONGOING FISCAL IMPACT The project is a request for funding of a planning effort. There are no capital improvements proposed at this time. ATTACHMENTS None City of Chula Vista Page 3 of 4 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 60 File M 14-0027, Version: 1 City of Chula Vista Page 4 of 4 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 61 COUNCIL RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE APPLICATION FOR GRANT FUNDS FOR THE SUSTAINABLE COMMUNITIES PLANNING GRANT AND INCENTIVES PROGRAM UNDER THE SAFE DRINKING WATER, WATER QUALITY AND SUPPLY, FLOOD CONTROL, RIVER AND COASTAL PROTECTION BOND ACT OF 2006 (PROPOSITION 84) FOR THE F STREET PROMENADE STREETSCAPE MASTER PLAN AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE FUNDING AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF CONSERVATION WHEREAS, the Legislature and Governor of the State of California have provided funds for the program shown above; and WHEREAS, the Strategic Growth Council has been delegated the responsibility for the administration of this grant program, establishing necessary procedures; and WHEREAS, said procedures established by the Strategic Growth Council require a resolution certifying the approval of application(s) by the Applicant's governing board before submission of said application(s) to the State; and WHEREAS, the applicant, if selected, will enter into an agreement with the State of California to carry out the development of the proposal; and WHEREAS, the Development Services Director has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because the proposed action consists of a governmental fiscal activity which, on its own, would not result in a potentially significant physical impact on the environment. However, when the actual project(s) for which the grant monies are earmarked are adequately defined and ready to be carried out, the appropriate environmental review and documentation will be required. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it: 1. Approves the filing of an application for the F Street Promenade Streetscape Master Plan ("Proposal") in order to become a sustainable community. Specifically, approves the application for grant funds for the Sustainable Communities Planning grant and Incentives Program under the Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006 (Proposition 84) for the F Street Promenade Streetscape Master Plan; 2014-02-18 Agenda Packet Page 62 Resolution No. Page 2 2. Certifies that applicant understands the assurances and certification in the application; and 3. Certifies that applicant or title holder will have sufficient funds to develop the Proposal or will secure the resources to do so; and 4. Certifies that the Proposal will comply with any applicable laws and regulations; and 5. Appoints the City Manager, or designee, as agent to conduct all negotiations, execute and submit all documents including, but not limited to applications, agreements, and payment requests and so on, which may be necessary for the completion of the aforementioned proj ect(s). Presented by Approved as to form by Kelly Broughton Glen R. Googins Development Services Department City Attorney 2014-02-18 Agenda Packet Page 63 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0035, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING THE CONTRACT FOR THE "TRAFFIC SIGNAL MODIFICATIONS, THIRD AVENUE/J STREET AND THIRD AVENUE/NAPLES STREET IN THE CITY OF CHULA VISTA, CA (TF382) FEDERAL NO. HSIPL 5203(038)" PROJECT TO T&M ELECTRIC, INC. DBA PERRY ELECTRIC IN THE AMOUNT OF $264,035 RECOMMENDED ACTION: Council adopt the resolution. SUMMARY On January 15, 2014, the Director of Public Works received six (6) sealed bids for the Traffic Signal Modifications at Third Avenue/J Street and Third Avenue/Naples Street Intersections (TF382), Federal No. HSIPL 5203(038) project. The project is included in the Capital Improvement Project fiscal year 2013/2014. The proposed resolution, if approved, would accept bids and award the contract for this project to T&M Electric, Inc. dba Perry Electric in the amount of$264,035. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the projects qualify for a Class 1 categorical exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines because the proposed traffic signal modification work and ancillary work involves negligible or no expansion of an existing use. Thus, no further CEQA environmental review is required. In addition, the Development Services Director has reviewed the proposed projects for compliance with the National Environmental Policy Act (NEPA) in conjunction with the California Department of Transportation (Caltrans), the state department designated as Lead Environmental Agency by the U.S. Department of Transportation, Federal Highway Administration (FHWA) for federally funded street projects. It was determined that the projects qualify for a categorical exclusion pursuant to Title 23 Code of Federal Regulations (CFR ) Section 771 .117(d); activity-(d)(1) [Modernization of a Street by resurfacing, restoration, rehabilitation or reconstruction]. Thus, no further NEPA environmental review is required. BOARD/COMMISSION RECOMMENDATION Not applicable. DISCUSSION This project will upgrade and modify two existing traffic signals at the intersections of Third Avenue/"J" Street and Third Avenue/Naples Street. The proposed left-turn only phase movement is targeted at reducing the frequency of collisions resulting from conflicts associated with left-turn maneuvers and opposing through vehicles. Also, as part of the improvement is the installation of ADA compliant push buttons with 4-part crossing instruction signs, installation of loop detectors, re- wiring the intersection, minor sidewalk improvements, construction of ADA compliant pedestrian ramps, enhanced re-striping and signage, and other required traffic control devices. City of Chula Vista Page 1 of 3 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 64 File #: 14-0035, Version: 1 On January 15, 2014, the Director of Public Works received six (6) bids as follows: CONTRACTOR BID 1 T&M Electric, Inc. dba Perry Electric - Santee, CA $264,035.00 2 Select Electric, Inc. - Poway, CA $305,460.00 3 iLekos Electric, Inc. - El Cajon, CA $313,590.00 4 HMS Construction, Inc. - Vista, CA $329,831.00* 5 Steiny and Company, Inc. - Baldwin Park, CA $336,000.00 6 DBX, Inc. - Temecula, CA $396,945.00 *Corrected amount, HMS bid of$329,871.00 has a total mathematical error of$40.00. The low bid submitted by T&M Electric, Inc. is below the Engineer's estimate of $270,555 by $6,520 (approximately 2.4 %). T&M Electric, Inc. has installed similar traffic signal projects in the City with satisfactory performance. T&M Electric, Inc. is a licensed Electrical Contractor class C10 with a current and active License No. 747931 . Staff reviewed the lowest bid submitted by T&M Electric, Inc. and determined that the bid package is complete, with no errors or omissions. In addition, because the funding source (Federal Highway Administration Funds) requires bidders to make good faith efforts in utilizing DBEs (Disadvantaged Business Enterprises), staff reviewed the contractor's bid package and determined that the contractor complied with the requirement. The DBE goal for this project is 9.6% and T&M Electric, Inc. has achieved the goal. Therefore, staff recommends awarding a construction contract to T&M Electric, Inc. in the amount of$264,035.00. Wage Statement This is a federally funded project. The Contractor that is awarded the contract and its subcontractors are required to pay prevailing wages to persons employed by them for work under this contract. The prevailing wage scales are those determined by the U.S. Federal Department of Labor Relations (Davis-Bacon) and those determined by the Director of Industrial Relations, State of California. The Contractor is obligated to pay the higher of the two wage determinations (hourly rate plus fringe benefits) for each applicable craft or classification. Disclosure Statement Attachment 1 is a copy of the Contractor's Disclosure Statement. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy City of Chula Vista Page 2 of 3 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 65 File #: 14-0035, Version: 1 Community, Strong and Secure Neighborhoods and a Connected Community. The Traffic Signal Modifications Third Avenue/J Street and Third Avenue/Naples Street project supports the Strong & Secure Neighborhoods goal as it provides modified and upgraded traffic signals, vital to the quality of life for the residents. A well maintained traffic signal system improves safety to motorists, bicyclists, and pedestrians as well as it create an appealing community for the residents to live, work, and play. CURRENT YEAR FISCAL IMPACT Sufficient funds are available in CIP Project No. TF382 to complete the project. There is no direct impact to the General Fund as this project is funded with TransNet and Highway Safety Improvement Program (HSIP) funds. The table below summarizes the project construction costs. FUNDS REQUIRED FOR CONSTRUCTION A. Contract Amount $ 264,035.00 B. Contract Contingency $ 28,482.45 C. Construction Inspection Staff Cost $ 35,482.55 D. Other Staff Cost (Design Support, Sury $10,000.00 & Geotechnical) 11TOTAL FUNDS REQUIRED FOR CONST$338,000.00 ONGOING FISCAL IMPACT Upon completion of the project, the improvements will require routine maintenance. City of Chula Vista Page 3 of 3 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 66 COUNCIL RESOLUTION NO. 2014- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING THE CONTRACT FOR THE "TRAFFIC SIGNAL MODIFICATIONS, THIRD AVENUE/J STREET AND THIRD AVENUE/NAPLES STREET IN THE CITY OF CHULA VISTA CALIFORNIA (TF382) FEDERAL NO. HSIPL 5203(038)" PROJECT TO T&M ELECTRIC, INC. DBA PERRY ELECTRIC IN THE AMOUNT OF $264,035 WHEREAS, this project is included in the FY2013/2014 Capital Improvement Program (CIP) budget to upgrade and modify two existing traffic signals at the intersections of Third Avenue/"J" Street and Third Avenue/Naples Street; and WHEREAS, the Development Services Director has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualify for a Class 1 categorical exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines; and WHEREAS, on January 15, 2014, after a public bidding process, the Director of Public Works received six (6) sealed bids for the "Traffic Signal Modifications Third Avenue/J Street and Third Avenue/Naples Street, (TF382) Federal No. HSIPL 5203(038) Project;" and WHEREAS, the six (6) bids are as follows: CONTRACTOR BID 1 T&M Electric, Inc. dba Perry Electric — Santee, CA $264,035.00 2 Select Electric, Inc. - Poway, CA $305,460.00 3 Lekos Electric, Inc. — El Cajon, CA $313,590.00 4 HMS Construction, Inc. - Vista, CA $329,831.00* 5 Steiny and Company, Inc. — Baldwin Park, CA $336,000.00 6 DBX, Inc. —Temecula, CA $396,945.00 *Corrected amount, HMS bid of$329,871.00 has a total mathematical error of$40.00. WHEREAS, the low bid submitted by T&M Electric, Inc. dba Perry Electric is below the Engineer's estimate of $270,555 by $6,520 (approximately 2.4 % below the Engineer's estimate); and WHEREAS, T&M Electric, Inc. dba Perry Electric has installed similar traffic signal projects in the City with satisfactory performance; and J:\Clerk\Agendas-Minutes-Notices\2014 Agenda Packets\980_City Council_2 18_2014\0008_1_Item 6-Resolution.doe 2014-02-18 Agenda Packet Page 67 Resolution No. 2014- Page 2 WHEREAS, T&M Electric, Inc. dba Perry Electric is a licensed Electrical Contractor Class C10 with a current and active License No. 747931; and WHEREAS, since this is a Federally funded project, the Contractor that is awarded the contract and its subcontractors are required to pay prevailing wages to persons employed by them for work under this contract; and WHEREAS, the funding source (Federal Highway Administration Funds) requires bidders to make good faith efforts to utilize DBEs (Disadvantaged Business Enterprises). Staff reviewed the contractor's bid package and determined that the contractor complied with the DBE requirement; and WHEREAS, sufficient funds; from TransNet and Highway Safety Improvement Program (HSIP) are available in the CIP Project No. TF382 to complete the project; and WHEREAS, a breakdown of construction costs is as follows: FUNDS REQUIRED FOR CONSTRUCTION A. Contract Amount $ 264,035.00 B. Contract Contingency $ 28,482.45 C. Construction Inspection Staff Cost $ 35,482.55 D. Other Staff Cost (Design Support, Survey Monument Preservation & Geotechnical) $10,000.00 TOTAL FUNDS REQUIRED FOR CONSTRUCTION $338,000.00 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it accept bids and awards the contract for the "Traffic Signal Modifications Third Avenue/J Street and Third Avenue/Naples Street in the City of Chula Vista, California (TF382) Federal No. HSIPL 5203(038)" Project to T&M Electric, Inc. dba Perry Electric in the amount of $264,035. Presented by Approved as to form by Richard A. Hopkins Glen R. Googins Director of Public Works City Attorney 2014-02-18 Agenda Packet Page 68 CITY OF CHULA VISTA DISCLOSURE STATEMENT L Pursuant to Council Policy 101-01,prior to any action upon matters that will require discretionary action k by the Council,Planning Commission and all other official bodies of the City,a statement of disclosure of i certain ownership or financial interests,payments,or campaign contributions for a City of Chula Vista election must be filed.The following information must be disclosed: I. List the names of all persons having a financial interest in the property that is the subject of the application or the contract,e.g.,owner,applicant,contractor,subcontractor, material supplier. 2. If any person* identified pursuant to(1)above is a corporation or partnership, list the names of all individuals with a$2000 investment in the business(corporation/partnership)entity. i 3. If any person* identified pursuant to(1)above is a nonprofit organization or trust,list the names of any person serving as director of the non-profit organization or as trustee or beneficiary or trustor of the trust. C)4A, 4. Please identify every person, including any agents, employees, cojisultants, or independent contractors you have assigned to represent you before the City ill this matter. S. Has any person* associated with this contract had any financial dealings with an official" of the City of Chula Vista as it relates to this contract within the past 12 inonths? Yes No_�< � V11"P i I 23 QAlingineeringW1 Projectsl'T 1'1'382-3rd&J--3rd&Nap1oMpecsVrF382 Colurae!R.doe I 2014-02-18 Agenda Packet Page 69 i If Yes,briefly describe the nature of the financial interest the official**may have in this contract. b. Have you made a contribution of more than $250 within the past twelve(12)months to a current member of the Chula Vista City Council?No Yes if yes,which Council member? 7. Have you provided more than $310(or an item of equivalent value)to an official** of the City of Chula Vista in the past twelve(12)months?(This includes being a source of income,money to retire a legal debt,gift,loan,etc.)Yes No If Yes,which official**and what was the Mature of item provided? F' i is Date: lgnature of ContpefarApplicant �ac�c� �CCT Print or type name o ContractorlApplicant Pei-son is defined as: any individual, firm, co-partnership,joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality, district, or other political subdivision, -or arty other Troup or combination acting as a unit. ** Official includes, but is not limited to- Mayor, Council member, Planning Commissioner, Member of a board,commission,or committee of the City,employee,or staff members. r 24 t Q:U.ingirtcering1A11 PrgjectsVJT11F3S2-3rd&J--3rd&.Nap1eslspecsl'1T382 Contract-R.doc i r 2014-02-18 Agenda Packet Page 70 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0050, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE SUBMITTAL OF REGIONAL GRANT APPLICATIONS FOR CALRECYCLE GRANTS FOR WHICH CHULA VISTA IS THE LEAD AGENCY AND AUTHORIZING THE PUBLIC WORKS DIRECTOR OR DESIGNEE TO EXECUTE ALL GRANT DOCUMENTS AND IMPLEMENT PROJECTS FUNDED BY CALRECYCLE REGIONAL GRANTS, FOR A PERIOD OF FIVE YEARS, ON BEHALF OF THE PARTICIPATING AGENCIES RECOMMENDED ACTION: Council adopt the resolution SUMMARY CalRecycle is opening the first cycle of Used Oil Competitive Grants designed to enhance public education and outreach efforts of existing local and regional programs. Chula Vista is the lead agency for the South Bay and East County Used Oil Collection Program which includes the cities of Imperial Beach, Coronado, Chula Vista, National City, Lemon Grove, La Mesa, El Cajon and Santee. CalRecycle is requiring regional grant applicants to have a new resolution authorizing the agency to apply for the competitive grants as the lead agency. For this grant cycle we are also adding the County of San Diego. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity qualifies for a Class 8 categorical exemption pursuant to Section 15308 [Actions by Regulatory Agencies for Protection of the Environment] of the State CEQA Guidelines because the proposed action will allow the submittal of various state grant applications and result in the implementation of options available to the public for recycling and proper disposal of solid waste and thus reducing potential adverse impacts to the environment and human health. Thus, no further environmental review is required. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION The California Oil Recycling Enhancement Act (ACT), which is administered by the California Natural Resources Agency - Department of Resources Recycling and Recovery (CalRecycle), is designed to reduce the potential for illegal disposal of used motor oil and filters by funding local government collection and education programs. With the passage of SB 246 in 2009, significant changes were made to the Act including increasing the fees paid by manufacturers and consumers to $0.24 per gallon, effective January 1, 2014. This increased the amount of funding available to operate used oil and filter collection/education City of Chula Vista Page 1 of 2 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 71 File #: 14-0050, Version: 1 programs. CalRecycle has now opened up a new cycle of competitive grants. Chula Vista, as the lead agency for the South Bay and East County Used Oil Collection Program (which includes Imperial Beach, Coronado, Chula Vista, National City, Lemon Grove, La Mesa, El Cajon and Santee) administers this program. In order to apply for this competitive grant, CalRecycle is requesting a new resolutions authorizing Chula Vista to apply for the competitive grant as the lead agency for these participating agencies. DECISION-MAKER CONFLICT Not Applicable Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently, the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1), is not applicable to this decision. Staff is not independently aware, and has not been informed by any council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. Applying for these grant funds supports the citywide strategic goal for a Healthy Community, which strives to develop and implement strategies and programs that restore and protect natural resources and promote sustainability. CURRENT YEAR FISCAL IMPACT If awarded, staff will return to City Council to appropriate the CalRecycle grant funds. Grant funds will fully offset the proposed program costs resulting in no net fiscal impact to the Waste Management and Recycling Fund. There is no impact to the General Fund. ONGOING FISCAL IMPACT There is no ongoing fiscal impact to the Waste Management and Recycling Fund as a result of this action. If awarded, grant revenues will fully offset proposed program expenditures. City of Chula Vista Page 2 of 2 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 72 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE SUBMITTAL OF REGIONAL GRANT APPLICATIONS FOR CALRECYCLE GRANTS FOR WHICH CHULA VISTA IS THE LEAD AGENCY AND AUTHORIZING THE PUBLIC WORKS DIRECTOR OR DESIGNEE TO EXECUTE ALL GRANT DOCUMENTS AND IMPLEMENT PROJECTS FUNDED BY CALRECYCLE REGIONAL GRANTS, FOR A PERIOD OF FIVE YEARS, ON BEHALF OF THE PARTICIPATING AGENCIES WHEREAS, California Public Resources Code sections 40000, et seq. authorize the Department of Resources Recycling and Recovery (CalRecycle), to administer various Grant Programs (grants) in furtherance of the State of California's efforts to reduce, recycle and reuse solid waste generated in the state, thereby preserving landfill capacity and protecting public health and safety and the environment; and WHEREAS, in furtherance of this authority, CalRecycle is required to establish procedures governing the application, awarding, and management of the grants; and WHEREAS, CalRecycle grant application procedures require, among other things, an Applicant's governing body to declare by Resolution certain authorizations related to the administration of CalRecycle grants; and WHEREAS, the City has previously served as the lead agency for the South Bay and East County Used Oil Collection Program (which includes Imperial Beach, Coronado, Chula Vista, National City, Lemon Grove, La Mesa, El Cajon and Santee) (collectively, the "participating agencies"); and WHEREAS, CalRecycle has opened up a new cycle of competitive grants and City staff recommends that the City continue to act as the lead agency in applying for the grants, and that the County of San Diego also be included in the participating agencies; and WHEREAS, CalRecycle is requesting a new resolution authorizing Chula Vista to apply for the competitive grant as the lead agency for these participating agencies; and WHEREAS, City staff recommends that the Public Works Director be authorized to execute the grant documents and implement projects funded by the grants, for a period of five years. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista authorizes the submittal of application(s) to CalRecycle for all regional grants for which Chula Vista, as the lead agency and on behalf of the participating agencies, is eligible. 2014-02-18 Agenda Packet Page 73 Resolution No. Page 2 BE IT FURTHER RESOLVED that the Director of Public Works, or his/her designee, is hereby authorized and empowered to execute in the name of the City of Chula Vista, as the lead agency and on behalf of the participating agencies, all grant documents, including but not limited to, applications, agreements, amendments and requests for payment, necessary to secure grant funds and implement the approved grant project. BE IT FURTHER RESOLVED that these authorizations are effective for five (5) years from the date of adoption of this Resolution Presented by Approved as to form by Richard Hopkins Glen R. Googins Director of Public Works City Attorney 2014-02-18 Agenda Packet Page 74 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0057, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A MASTER LICENSE AGREEMENT WITH VERIZON WIRELESS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, FOR THE INSTALLATION AND OPERATION OF AS MANY AS 25 WIRELESS TELECOMMUNICATIONS FACILITIES OR SUBSTANTIALLY SIMILAR FACILITIES ON CITY-OWNED AND CONTROLLED PROPERTY, SUBJECT TO ALL NECESSARY APPROVALS, FOR A PERIOD OF 5 YEARS WITH AN OPTION TO RENEW FOR AS MANY AS FOUR ADDITIONAL 5-YEAR TERMS AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT RECOMMENDED ACTION: Council adopt resolution. SUMMARY The Public Works Department is submitting a Master Communications Site License Agreement (MLA) for the City Council's review and consideration. Adoption of the proposed resolution would establish a MLA between the City and Verizon Wireless (VW) LLC, a Delaware limited liability company, dba Verizon Wireless ("Verizon Wireless" ), for the installation of as many as 25 wireless telephone facilities (WTF) on property owned or controlled by the City. The proposed MLA includes mutually beneficial and agreed upon terms that are consistent with those provided to other wireless carriers including, but not limited to: establishing a five-year term with up to four additional five-year options that are subject to the City's review and approval, additional rent reduction incentive for a smaller site option. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity, approval of an MLA, for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060 (c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Although environmental review is not necessary at this time, each individual wireless telecommunication facility will have environmental review once the projects are further defined and a CEQA determination will be completed prior to installation of any new facilities. BOARD/COMMISSION RECOMMENDATION Not applicable. DISCUSSION City of Chula Vista Page 1 of 5 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 75 File #: 14-0057, Version: 1 The City Council approved Resolution 18601 on March 18, 1997, conceptually approving the marketing of City properties for use by telecommunications companies. On September 16, 1999, the City Council approved Master License Agreements (MLA) with AT&T and Cox PCS, Assets, LLC, for installation and operation of as many as 50 wireless communication sites on property owned or controlled by the City. The City also approved an MLA with Pacific Bell Wireless, LLC for as many as 25 sites in November 2002, with Cricket for as many as 35 sites in February 2006, with the New Cingular (AT&T)for as many as 25 sites in July 2007 and T-Mobile for 25 sites in December 2007. In 1998, when the City began negotiations, City Council directed staff to negotiate rates that would provide wireless carriers an incentive to come to Chula Vista. It was City Council's desire to see Chula Vista commercial and residential consumers have the opportunity to be early adopters of the technology and benefit from the competition of multiple carriers. Staff reached out to the industry, held workshops and invited them to the City to structure "master" agreements that would provide prompt entry at below-market rates. Fifteen years later, now that the latest telecommunication technology is readily available to Chula Vista consumers, City Council requested that staff balance the goals of ensuring that the City continues to attract state of the art, competitive service options for consumers with market rate lease payments for City sites. City Council also requested that staff emphasize co-location, stealth installations and other methods or reducing visual impacts. Additionally, over a relatively short period of time, the technology has evolved from a unique business tool, used by a few people, primarily in commercial areas, to a common business and household convenience used almost everywhere by almost everyone. That has put tremendous demand on sites in predominantly residential areas with few site options. The increase in sites to cover the varied topography of a growing city increases exponentially by: 1) the limitations that each site can carry during peak periods, 2) the increased intensity of bandwidth use for items such as video, internet and music uses versus the original voice functions, and 3) the desire to accommodate more carriers with the expectation of fostering greater consumer choice, competition for price and service quality. The public demand for these services continues to grow and all of these issues place a greater demand on sites, particularly in residential neighborhoods. Federal and state law does not allow cities to deny permits based on health or solely on aesthetics issues. City staff has worked with industry for many years on a "Master License Agreement" approach to reduce the pressure on siting these facilities in less appropriate areas. The MLAs provide the City with an opportunity to work cooperatively with the carriers to expedite their projects, provide the coverage needed to meet public demand, provide incentives to pursue sites that have the least impact to residents and meet the aesthetic and safety goals of the community, while capturing revenue that helps the City fund public services at no additional cost to the ratepayer. Above all, the wireless industry values rapid deployment, and works with the City to accommodate the community's objectives based predominantly on our ability to demonstrate a record of timely zoning and construction approvals that support that goal. The City Attorney's Office, Finance, Development Services and Risk Management have provided critical assistance to Public Works in developing and securing the MLA terms needed to protect the public interest while meeting City of Chula Vista Page 2 of 5 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 76 File #: 14-0057, Version: 1 the objectives of the communications industry. Master License Agreement: The MLA allows Verizon Wireless to install as many as 25 total WTF's on property owned and/or controlled by the City and to operate within the scope of this MLA for a period of five years. The MLA allows for as many as four additional five-year terms, each with the written request of Verizon Wireless and the subsequent written approval of the City Manager. Prior to the renewal of each five-year term, the annual license fee is subject to renegotiation to ensure that the City is receiving market value for its facilities. Verizon Wireless has completed that negotiation on what staff considers to be mutually beneficial terms. Verizon Wireless annual license fees vary based on the number of cabinets and antennae at each WTF site and the footprint of the site . The annual fee for each WTF site that includes as many as 7 equipment cabinets and 12 antennas would be adjusted as follows: Macro Site Annual abinets Only ntennae Only ptions ee* nnual Fee nnual Fee nnual Fee** 2014 $30,000.00 18,000.00 12,000.00 4,944.00 2015 $30,900.00 18,540.00 12,360.00 5,092.32 2016 31,827.00 19,096.20 12,730.80 5,245.09 2017 32,781.81 19,669.09 13,112.72 5,402.44 2018 33,765.26 20,259.16 13,506.11 5,564.52 2019 34,778.22 20,866.93 13,911.29 5,731.45 2020 35,821.57 21,492.94 14,328.63 5,903.39 2021 36,896.22 22,137.73 14,758.49 6,080.50 2022 F38,003.1 0 F22,801.86 15,201.24 F6,262.91 2023 39,143.20 23,485.92 15,657.28 6,450.80 Maximum 10'x20'area standard enclosure or a15'x30'area non-standard where a backup generator is included in enclosure footprint and site conditions allow the additional size "Approximately 3'x3'x3' or 27 cubic feet cabinet and up to (3) three standard antennae. In some Instances, Verizon Wireless will require a site for antennas or cabinets only. Staff has also included a rent option for a smaller site configuration that other carriers have requested in the past and expect to use frequently. The annual license fee for those facilities will be less than a full site as identified in the table above. The MLA would also continue to include a clause that reduces these rates by as much as 40% with Verizon Wireless and other contractors if they propose projects that underground the cabinets and pedestals or take other similar measures to reduce the impacts to land use. Council approved a similar clause in the 2006 Cricket and Sprint and the 2007 New Cingular and T-Mobile MLA's. Verizon Wireless is required to comply with all local, state and federal applicable laws. The Schedule of Premises (SOP) shall be administratively approved for each site and contain specific conditions that must be satisfied and maintained in order to use the wireless facility. The Schedule of Premises will be submitted to the Public Works Department and circulated to all other appropriate departments. Verizon Wireless shall continue to pay the appropriate full staff costs for processing each submittal. All of Verizon Wireless's construction, installation, maintenance and removal of the WTF facilities will City of Chula Vista Page 3 of 5 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 77 File #: 14-0057, Version: 1 be at their sole responsibility and cost. If Verizon Wireless causes any damage to the public right of way or City property, they are required to repair it promptly at their sole cost. Verizon Wireless will not be allowed to activate their site until the City signs off on final construction. The original MLA, the Schedule of Premises for each site and City Municipal Code provide for a number of risk mitigation measures for the City including: indemnity; insurance requirements; limitation on remedies available to Verizon Wireless in the event of a City breach; and reservation of the City's emergency and police powers. Impacts on City Property: The installation will vary depending on the site Verizon Wireless needs. As mentioned, all installations will be required to receive all applicable permits and Verizon Wireless will work closely with Development Services and Public Works to assure that they do not interfere with City operations or facility maintenance. The three primary types of installations are building mounted, ground mounted and light standard mounts. Building mounted installations generally involve mounting antennas on the facade or on the roof of the building, in addition to accommodating equipment cabinets on the ground or on the roof. Ground mounted applications involve construction of a "monopole" or more stealth applications where the monopole is camouflaged as an artificial pine, broadleaf or palm tree, flagpoles or complimentary structures such as clock towers or facility signs. In this case the cabinets are generally mounted on a concrete slab adjacent to the antenna structure. The largest size cabinet systems with a backup generator use an area of approximately 15 by 30 feet. Both applications will require some trenching and cabling. The installations will require maintenance and administration on a limited basis. All proposed facilities would be required to secure all necessary land use, building and engineering permits. Staff will encourage Verizon Wireless to take advantage of reductions in monthly site payments by undergrounding the cabinets and other structures whenever possible. Financial Benefits: Verizon Wireless will be compensating the City for use of each site by paying an annual license fee to the City General Fund for each system installed. Verizon Wireless annual license fee for a typical site that includes both antennas and cabinets is approximately $30,000. The MLA authorizes as many as 25 WTF facilities by Verizon Wireless. The annual fee increases by 3% a year beginning January 2014, and is subject to renegotiation prior to the renewal of each five-year term to ensure the City is receiving market rate rent. Staff will also work with Verizon Wireless and other carriers to implement basic facility improvements or enhancements at each site to help them compliment the facilities' function when the construction and demolition or site programming warrant it. For example, it is common for WTF equipment shelters to provide extra storage for Recreation or the Library, a pad for water fountains, vending machines or other amenities not currently available in that part of the facility. It is also common for light standards to be replaced or upgraded when antennae are added. These improvements are typically in addition to the lease payments. With the addition of a Verizon Wireless MLA, the City now has an estimated 70% of the regional mobile communications business under an MLA agreement that contains terms that the City believes are important to protecting the public interest PW will be working with the City Attorney and Finance Department to actively engage the remaining major City of Chula Vista Page 4 of 5 Printed on 2/13/2014 powered by Leg 2014-02-18 Agenda Packet Page 78 File #: 14-0057, Version: 1 carrier(s) in MLA discussions over the next few months. DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently, the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1) is not applicable to this decision. Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This project supports the Economic Vitality goal as it seeks to increase City revenue and wireless telecommunications facilities. CURRENT YEAR FISCAL IMPACT Verizon Wireless will increase the annual fee paid to the City for all future sites by 3%. Since none of these sites will be completed in the current fiscal year, no revenue increase is projected for Fiscal Year 2013/2014. However, staff believes there will ultimately be four (4) sites operational at the end of December 2014 with potential revenue of$120,000 annually. ONGOING FISCAL IMPACT If Verizon Wireless were to execute all the remaining full sites (approximately 19) it could generate up to approximately $570,000 in additional revenue per year and will be subject to the annual 3% increase in January of each year. City of Chula Vista Page 5 of 5 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 79 l i MASTER COMMUNICATIONS SITE LICENSE AGREEMENT THIS MASTER COMMUNICATIONS SITE LICENSE AGREEMENT ("License") dated as of F 201 for the purpose of reference only and effective the date on which the last party hereto affixes his/her signature ("Effective Date"), is entered into between Verizon Wireless (VAW) LLC, a Delaware limited liability company, d/b/a Verizon Wireless ("Verizon Wireless"), and the CITY OF CHULA VISTA, A MUNICIPAL CORPORATION("City")with reference to the following facts: A. Verizon Wireless wishes to attach, install, erect, operate, and maintain up to twenty-five (25) various unmanned wireless telecommunications facilities, or substantially similar facilities, on public property under the ownership and/or control of the City for purposes of providing wireless communications services. B. City is willing to allow Verizon Wireless to attach, install, erect, operate and maintain the facilities subject to the terms and conditions set forth herein and in the site specific Schedule of Licensed Premises(defined below). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree to the following covenants,terms, and conditions: 1. DEFINITIONS 1.1 Verizon Wireless Improvements: "Verizon Wireless Improvements" shall mean those ! unmanned wireless telecommunications facilities comprised of wireless transmitting and receiving equipment, antennas, cables, conduits, wires, batteries, utility lines, transmission lines, wireless transmitting and receiving antennas and supporting structures and improvements, which are approved by the City and which are located or proposed to be located per the applicable Schedule, on Licensed Premises. A typical example of the facilities comprising the Verizon Wireless hmprovements is set forth in Exhibit A, attached hereto. Verizon Wireless Improvements shall exclude light standards or poles located in City rights-of-way, whether or not said light standards or poles are installed by City or Verizon Wireless. Such excluded improvements shall be owned and maintained by City. 1.2 Commencement Date: "Commencement Date" with respect to each Schedule (as defined below) shall mean the first day of the month after the City grants Verizon Wireless a Schedule. 1.3 Fair Market Rental Rate (FMRR): "Fair Market Rental Rate" shall mean the dollar amount of rent that a willing licensee would pay and a willing licensor would accept to install similar telecommunications equipment in similar locations for the same Schedule Renewal Tenn(as defined below) and as agreed upon by the Parties(defined below). 1.4 Hazardous Materials: "Hazardous Materials" shall mean any hazardous waste or hazardous substance as defined in any federal, state, or local statute, ordinance, rule, or regulation applicable to the Property, including, without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (Title 42 United States Code sections 9601-9675), the Resource Conservation and Recovery Act (Title 42 United States Code sections 6901-6992k), the Carpenter Presley-Tanner Hazardous Substance Account Act (Health and Safety Code sections 25300-25395.15), and the Hazardous Waste Control Law (Health and Safety Code sections 25100-25250.25). Hazardous Materials shall also include, but not be limited to, asbestos or asbestos containing materials, radon gas, and petroleum or petroleum fractions, whether or not defined as hazardous waste or hazardous Page 1 of 32 2014-02-18 Agenda Packet Page 80 i substance in any such statute, ordinance,rule,or regulation. 1.5 Licensed Premise(s) or Premise(s): "Licensed Premise(s)" or "Premise(s)" shall mean portions of City owned or controlled Property(ies) described in a Schedule approved by the City and shall include any appurtenant property the City owns, or controls and on which Verizon Wireless installs utility and transmission lines with City's prior approval as provided herein. 1.6 Party or Parties: "Party" shall mean City and Verizon Wireless individually and "Parties" shall mean City and Verizon Wireless collectively. 1.7 Pre-existing Communications: "Pre-existing Communications" shall be defined as those communications configurations, equipment and frequencies which exist on City's property or are in use by the City thereon as of the Commencement Date of an applicable Schedule. 1.8 Property: "Property" individually and "Properties" collectively shall mean that certain real property located in the City of Chula Vista, California which the City owns or controls, whether in fee or other property right, such as an easement or lease. The applicable Property shall be described in a Schedule. 1.9 Regulations: "Regulations" shall mean all Federal, State, and Local laws, regulations, ordinances, and guidelines, including, but not be limited to, those relating to the form, size, strength and construction materials specified for City street lights, applicable to Verizon Wireless'use as permitted hereunder. 1.10 Renewal Term: "Renewal Term" shall mean a five (5) year term subsequent to the period lasting five(5)years from the Effective Date, during which this License has been extended as provided herein. 1.11 Schedule: "Schedule" shall mean the document(s) titled "Schedule of Licensed Premises," for each Property at which Verizon Wireless desires to construct a communications facility and each Schedule shall be substantially in the form attached hereto as Exhibit "B", and which shall include a detailed description of the Verizon Wireless Improvements or light standards allowed on the Licensed Premises, their configuration, and the site specific conditions necessary for approval("Conditions of Approval"). 1.12 Supporting Structures: "Supporting Structures" shall mean any light standard, mast arm, pole,or other physical improvement associated with the support therefor. I 2. PREMISES AND LICENSED USES 2.1 Grant of License. Subject to the following terms and conditions and each Schedule's site specific Conditions of Approval, City hereby grants to Verizon Wireless a license, solely for the use of the Verizon Wireless Improvements, to the Premises (but non-exclusive with respect to the Properties) as described and depicted in each Schedule. All of the terms and conditions of this License shall be incorporated into each Schedule by reference and made a part thereof without the necessity of repeating or attaching this License to each Schedule. In the event of a contradiction,modification or inconsistency between the terms of this License and any Schedule,the terms of the License shall govern. Page 2 of 32 2014-02-18 Agenda Packet Page 81 i 2.2 Use. The Premises may be used by Verizon Wireless solely for the transmission and reception of non-franchised wireless telecommunication signals on various frequencies and the construction, maintenance, repair and operation of City-approved Verizon Wireless j Improvements. 2.2.1 Nuisance. Verizon Wireless shall not use the licensed Premises in any manner,which, in the reasonable opinion of the City,creates a nuisance or disturbs the quiet enjoyment of the surrounding area by persons in said area. Notwithstanding the foregoing, City acknowledges that Verizon Wireless' permitted use of the Premises pursuant to this License shall not constitute a nuisance. City reserves its rights to exercise its police powers and authority as they may apply to nuisance response and abatement, as provided by City ordinance exclusive of any contract provisions. 2.2.2 User's Tax. Verizon Wireless acknowledges that the City has adopted a utility user's tax ("UUT"), and it agrees that it shall collect such tax in accordance with and subject -to the provisions of California Public Utilities Code §799. Verizon Wireless'obligation for collecting and remitting UUT collected in accordance with and subject to the provisions of California Public Utilities Code §799 commenced on May 1, 2009 and shall continue throughout the Tenn of this Agreement and any extension hereto. 2.2.3 Hazardous Materials. Verizon Wireless shall not bring any Hazardous Materials onto the Licensed Premises except for those contained in Verizon Wireless'back-up power batteries (e.g. lead-acid batteries), fuel for emergency generators and properly stored, reasonable quantities of common materials used in telecommunications operations (e.g. cleaning solvents). Verizon Wireless shall handle, store and dispose of all Hazardous Materials it brings onto the Licensed Premises in accordance with all federal, state and local laws and regulations. City makes no representation or warranty regarding the existence of Hazardous Materials on some or all of the Licensed Premises, which are being licensed to Verizon Wireless in an "AS IS" condition-, provided however that from and after the Commencement Date of each Schedule, the City agrees that it will not use, generate, store or dispose of any Hazardous Materials on, under, about or within any Property at which Verizon Wireless Irprovements are located in violation of any law or regulation.Verizon Wireless is solely responsible for investigation of any and all Licensed Premises as it sees fit to determine the suitability of the Premises for its intended use. 2.3 Pre-Construction; Testing. Verizon Wireless shall have the right(but not the obligation) at any tirne following the full execution of this License and prior to the Commencement Date under each Schedule to enter the Premises for the purpose of making necessary inspections, engineering surveys (and soil tests where applicable) and other reasonably necessary tests (collectively "Tests") to determine the suitability of the Premises for Verizon Wireless Improvements and for the purpose of preparing for the construction of Verizon Wireless Improvements at no expense to City. During any Tests or pre-construction work, Verizon Wireless shall have the insurance coverage set forth in Section 5 below. Verizon Wireless shall provide the City with prior notice of any proposed Tests or pre-construction work and will coordinate the scheduling of sarne with City. Verizon Wireless, at Verizon Wireless' sole cost and expense, will restore the Licensed Premises to the same condition as existed prior to any such Tests or pre-construction work by Verizon Wireless to the reasonable satisfaction of the City Engineer, Page 3 of 32 2014-02-18 Agenda Packet Page 82 2.4 Installation of Verizon Wireless Improvements. 2.4.1 In General. This License grants to Verizon Wireless the right to construct, maintain, repair and operate Verizon Wireless Improvements on the Licensed Premises, subject to the terms and conditions set forth herein and those Conditions of Approval found in each Schedule. All Verizon Wireless construction and installation work shall be performed at Verizon Wireless' sole cost and expense and in a good and workmanlike manner. Title to Verizon Wireless Improvements shall be held solely by Verizon Wireless, and all Verizon Wireless Improvements shall remain the personal property of Verizon Wireless and shall not be treated as real property or become a part of any Premises even though affixed thereto. All street light standards on Property owned or controlled by the City, whether installed pursuant to this License by City or Verizon Wireless, shall be owned and maintained by the City. Prior to installation and operation of each set of Verizon Wireless Improvements,Verizon Wireless must obtain any and all required federal, state and local permits required for such installation and operation. City permits required include, without limitation, building permits and an approved Schedule. City agrees to cooperate with Verizon Wireless, at no cost to City, in obtaining any such required federal, state and local permits, subject to City Council approval as may be required. City shall exercise its best efforts to process Verizon Wireless Improvement applications within forty-five (45) calendar days after the submittal of a completed application. In addition, all work shall be scheduled in advance and coordinated with parks operations personnel, onsite recreational staff, Public Works, Engineering or other City staff as appropriate prior to commencement of the work to minimize the potential for conflicts with recreation and other City programs or activities occurring on the applicable Property. Verizon Wireless agrees that its facilities will not be activated until the City's Building Department has signed off on final construction pursuant to applicable law. Absent such sign off, Verizon Wireless shall have recourse to an appeal to the City Manager,whose decision shall be final. a. Addition of Schedules. Upon the mutual agreement of City and Verizon Wireless to enter or terminate a Schedule, or pursuant to the exercise of termination rights granted to either party hereunder in connection with terminating a Schedule, City and Verizon Wireless agree that City shall be pennitted to add and delete Schedules by administrative action. No more than 25 Schedules may be in effect at any one time. b. Reimbursement of Related Costs, Verizon Wireless agrees to reimburse City for the reasonable costs, including reasonable administrative overhead, of processing the approval of each Schedule ("Reimbursement Amounts"). The Reimbursement Amounts shall be determined by the City and are incorporated into the City's Fee Schedule, which may be amended from time to time. In connection with the foregoing, City shall provide Verizon Wireless with reasonably supporting documentation of the Reimbursement Amounts and overhead. The process for reimbursement shall be conducted in the same or similar manner as the City's processing of a non-administrative conditional use permit. In the event that the City anticipates that the Reimbursement Amounts under this Section may exceed $5,000.00, the City shall notify Verizon Wireless prior to expending additional time or incurring costs in excess of$5,000.00 and obtain approval from Verizon Wireless to incur such additional costs. In no event shall Verizon Wireless be obligated to reimburse the City for any Page 4 of 32 I 2014-02-18 Agenda Packet Page 83 I I Reimbursement Amounts that exceed $5,000.00 that have not been previously approved by Verizon Wireless as provided herein. However, in the event that City cannot complete all of the work associated with processing a schedule for less than $5,000.00 and Verizon Wireless does not grant approval to exceed such limit,City may refuse to issue the associated Schedule. 2.4.2 Location of Verizon Wireless Improvements. The location of Verizon Wireless Improvements on Licensed Premises shall be subject to the City's Zoning Administrator's prior approval. In deciding whether to approve a location, the Zoning Administrator will take into consideration City's goal to assure that wireless telecommunication networks are completed with the fewest possible facilities, in the least visible fashion, and with the least disruptive impact on neighborhoods and communities within the City of Chula Vista. For example, denying or conditionally approving a location to preserve and enhance the aesthetic qualities of the City of Chula Vista shall not be deemed unreasonable. City approval shall be deemed given once the Zoning Administrator has approved the Schedule of Licensed Premises with any associated Conditions of Approval. If a Schedule is denied,Verizon Wireless shall have recourse to appeal to the City Manager, whose decision will be final. It is understood that both Parties will reasonably work together to find the optimum location for Verizon Wireless Improvements on the Licensed Premises that have the least impact to City and private property. 2.4.3 Utilities. Verizon Wireless shall have the right to install utilities that are necessary for the operation of Verizon Wireless Improvements, at Verizon Wireless' expense, and to improve the present utilities on or near the Premises (including, but not limited to the installation of emergency back-up power). Such utilities shall be subject to City approval and removal in the same manner as other Verizon Wireless Improvements as provided herein. Verizon Wireless shall fully and timely pay for all utilities furnished to the Premises for the use, operation and maintenance of Verizon Wireless Improvements. Payment of all costs for said utilities' deactivation and removal, including any costs, which would survive the term of this License or any Schedule, shall be the exclusive obligation of Verizon Wireless. Verizon Wireless Improvements shall include separate utility meters. 2AA Street Light Standards. In the case of installations on street light standards or mast anns,Verizon Wireless shall comply with all applicable Regulations for the installation of streetlights. a. Replacement. If the installation is to be done via replacement of an existing standard and/or mast arm, said replacement shall meet all applicable Regulations existing as of the date of the application for the permit to replace said standard and/or mast arm or on the date of replacement if a permit is not required. The design of the pole,method of attachment for Verizon Wireless Improvements and all other connections shall meet the specifications reasonably required by the City Engineer and such replacement shall be completed to the satisfaction of the City Engineer. i b. Amendment of Regulations Subsequent to Installation. Consistent with the City's lawful exercise of police powers, Regulations may be amended at the City's sole and absolute discretion, including, but not limited to, allowing for additional space for internal wiring of City and/or Verizon Wireless or, altered foundation Page 5 of 32 2014-02-18 Agenda Packet Page 84 I requirements to accommodate joint City and Verizon Wireless uses, or other technical reasons. i. Cost of Compliance. City shall pay costs of compliance with amended Regulations in proportion to the modifications associated with City's use of the light standards or mast arms owned by the City. Verizon Wireless shall pay all costs in proportion to the modifications associated with Verizon Wireless Improvements. ii. Provision of Alternative Location. In the event that such amended Regulations materially adversely impact the functioning of existing Verizon Wireless Improvements, then City shall use reasonable efforts to provide a suitable alternate location at the applicable Property. C, Return of City Equipment, If Verizon Wireless Improvements replaces existing light standards and/or mast arms in accordance with section 2.4.4.(a) above, Verizon Wireless shall be responsible for delivering the existing standards and/or mast arms to the City Corporation Yard or some other suitable site within the City designated by the City Engineer in writing in the same condition as existed immediately before the standards and/or mast arms were removed. If required to accommodate Verizon Wireless Improvements, upon reasonable notice and written request by the City Engineer given to Verizon Wireless no more than fifteen (15) days after full execution of the applicable Schedule, Verizon Wireless shall provide a replacement pole that is pre-approved by the City Engineer and shall deliver the existing pole to the City Corporation Yard or some other suitable site within the City designated by the City Engineer, 2.5 Access. 2.5.1 Verizon Wireless and Verizon Wireless employees, agents, contractors and subcontractors shall have access to the Premises from the nearest public right-of-way twenty-four(24)hours per day, seven (7) days per week, at no charge to Verizon Wireless, subject to the conditions I set forth in each Schedule. City hereby licenses to Verizon Wireless all rights of ingress and egress held by City to the extent required to construct, maintain, repair, install and operate Verizon Wireless Improvements on the Premises. Verizon Wireless' exercise of such rights shall not cause undue inconvenience to City, nor materially interfere with City's paramount right of access. 2.52 In connection with installations on light standards,mast arms or poles,Verizon Wireless shall provide at least seven(7) days written notice to the City Engineer of the proposed installation date and time. Verizon Wireless shall pay any and all costs associated with City shut off and reconnect of power to the Premises, installation oversight and/or inspections that City reasonably deems necessary. 2.53 In connection with Verizon Wireless' maintenance of Verizon Wireless Improvements on street light standards,mast arms or poles,Verizon Wireless shall provide at least twenty-four (24)hours notice to the City Engineer and pay City the reasonable costs associated with City shut off and reconnect of power to the Premises,maintenance oversight and/or inspections if City deems reasonably necessary. In case of need for emergency maintenance or repair of Verizon Wireless Improvements, Verizon Wireless shall use its best efforts to give prior notice to City Engineer but shall notify City of such work as promptly as reasonably possible Page 6 of 32 2014-02-18 Agenda Packet Page 85 i i iafter the work is commenced. i ! 2.5.4 In connection with City's maintenance of street lights which share a standard or mast aria with Verizon Wireless Improvements, City shall provide Verizon Wireless at least twenty- four (24) hours notice of said maintenance. If City desires to have a technician of Verizon Wireless on site during said maintenance, Verizon Wireless shall provide said technician upon at Ieast twenty-four (24) hours notice. In the event that City needs to perform emergency maintenance of City's street lights that share a standard or mast arm with Verizon Wireless Improvements,prior notice shall not be required;however, City shall notify Verizon Wireless of such work as promptly as reasonably possible after the work is commenced. 2.6 Interference with Communications. 2.6.1 Pre-existing Communications. Verizon Wireless Improvements at any given Premises shall not interfere with Pre-existing Communications. a. Frequency Compatible. Any Verizon Wireless Improvements on the Premises shall be frequency compatible with all Pre-existing Communications. i. Eliminate Interference. In the event Verizon Wireless Improvements electronically or physically interfere with Pre-existing Communications, Verizon Wireless shall take all necessary steps, at its own cost and expense,to eliminate such interference,whether so required by the FCC or not. 2.6.2 Interference With Verizon Wireless Improvements Subsequent to Installation. The City shall not knowingly interfere with the location, configuration, frequency or operation of Verizon Wireless Improvements,except as follows: a. Installation, Repair, Maintenance, and/or Replacement. During the duration,and for a reasonable period of time thereafter, of the installation,repair,maintenance, j and/or replacement of public improvements,City may cause interference with the location, configuration, frequency or operation of Verizon Wireless Improvements; provided however, that the City shall use commercially reasonable efforts to minimize such interference. i. Interference Other than Tern orar In the event any equipment I installation by City made subsequent to the installation of Verizon Wireless I Improvements causes interference with the location, configuration, frequency or operation of Verizon Wireless Itnprovements beyond the duration of time permitted in Section 2.6.2(x),City shall use its best efforts to eliminate such interference, to the extent reasonably possible, after obtaining written notice from Verizon Wireless of such interference, wbetber required by the FCC or not. ii. Pre-existing Communications, Pre-Existing Communications that do not materially change their power level, frequency or location and are being operated in compliance with applicable laws, rules and regulations shall not be deemed to interfere with Verizon Wireless Improvements. Page 7 of 32 2014-02-18 Agenda Packet Page 86 I I b. Emergencies. Notwithstanding any other provision in this License to the contrary, in the event of an emergency, City shall have the right to take such action that it detennines, in its sole discretion, is necessary under the circumstances to address the emergency, even though such actions may cause interference with Verizon Wireless Improvements and/or the operation thereof. If City must take action which causes or may cause interference, City shall endeavor to (a) give Verizon Wireless oral notice of such action as quickly as practicable and (b) to the extent practicable under the circumstances, upon written notice by Verizon Wireless of the existence of interference,minimize the duration and extent of such interference. 2.6.3 Subsequent Installations by Other City Licensees. Subsequent to the installation of Verizon Wireless Improvements, City shall not permit its licensees or future licensees to install new equipment on the applicable Property or property contiguous thereto owned or controlled by City, if such equipment is likely to cause interference with Verizon Wireless' operations at the Licensed Premises. Verizon Wireless shall reasonably cooperate in good faith with City to determine whether such interference is likely to be caused by the prospective future licensee. Should any licensees be determined to cause interference to Verizon Wireless' operations under FCC/CPUC regulations after installation of such licensee's facilities, City shall notify such licensee of its obligation to cease such interference as required by FCC/CPUC regulations. 2.6.4 Cooperation between Parties to Mitigate Interference. In the event that Verizon Wireless Improvements interfere with Pre-existing Communications or City's or other licensees subsequent installations interfere with then-existing Verizon Wireless Improvements, the Parties shall reasonably cooperate with each other to identify and remedy any such interference. For purposes of this Section 2.6.4, the existence of electronic and physical interference shall be evaluated by the then-current standards set by the FCC, if available, or by agreement of City and Verizon Wireless or Verizon Wireless and other licensees, as applicable. In the event interference by newly installed facilities is likely, City shall direct the party installing such facilities to meet and confer with Verizon Wireless in order to develop an approach or design that eliminates or ! materially reduces the potential for interference; provided however, that Verizon Wireless shall not be required to modify the Verizon Wireless Improvements or its operations or incur any costs or expenses in connection with the foregoing. 3 i 2.6.5 Changes to Frequencies. Upon the request of the Director of Public Works of the City, Verizon Wireless agrees to notify the Director of Public Works of the City immediately of any changes in Verizon Wireless frequencies to be used at the Premises. 2.7 Removal of Verizon Wireless Improvements; Damage or Destruction. 2.7.1 Upon expiration,cancellation or termination of this License or any Schedule hereunder, Verizon Wireless shall be responsible for: (i) removing from the Premises subject to such expiration, cancellation, or termination, at its sole cost, all Verizon Wireless Improvements, except those that the Parties agree in writing shall not be removed or shall be transferred to City; (ii) repairing, at its sole cost, all damage caused by such removal; and(iii) surrendering the Premises to City in the Premises' original condition, ordinary wear and tear and damages caused by third parties excepted. Said return of Premises in their original condition shall include Verizon Wireless'remediation of any Page S of 32 2014-02-18 Agenda Packet Page 87 i Hazardous Material discharge at the Licensed Premises caused by Verizon Wireless or its agents and shall be performed in accordance with all applicable laws and to the reasonable satisfaction of the City. In the event any Verizon Wireless Improvements are transferred to City by written City agreement, City acknowledges and agrees that it shall take possession of such Verizon Wireless Improvements in their then "as is" condition without any representation or warranty from Verizon Wireless regarding their fitness for a particular purpose and that Verizon Wireless shall have no further liability therefor. a. Timeframe for Removal. Verizon Wireless shall remove, at its sole expense, all Verizon Wireless Improvements from the Premises within sixty (60) calendar days after the date an applicable Schedule expires or otherwise terminates. hi the event that five (5) or more Schedules expire or terminate contemporaneously, then Verizon Wireless shall have a reasonable amount of additional time to remove the affected Verizon Wireless Improvements, provided Verizon Wireless initiates and diligently proceeds with removal. Any Verizon Wireless Improvements remaining on affected Premises beyond the time period available for removal as set forth above shall, at the sole discretion of the City, either(i)in whole or in part become City property or(ii)in whole or in part be removed and disposed of by City, with the reasonable costs of said removal and disposal, including reasonable administrative overhead, to be reimbursed to City by Verizon Wireless within thirty(30)calendar days after Verizon Wireless receives City's request for reimbursement together with reasonable evidence of the cost. b. Maintenance of Performance Bond. During the timeframe required for removal, Verizon Wireless shall maintain its performance bond to ensure removal is completed to the satisfaction of the City Manager. 2.8.2 Damage to Supporting Structures. If a Supporting Structure on a Premises is damaged from any cause, the following provisions related to obligations for repair, replacement,and costs shall apply: a. City Obligations. i. Notice from City. In the event that City becomes aware of damage to a Supporting Structure from a third party (one other than Verizon Wireless or its agents), City shall notify Verizon Wireless in writing of such damage as soon as reasonably possible but no later than seventy-two (72) hours of discovering the damage. ii. Notice of Interference from Damage. Upon receiving notice from Verizon Wireless of damage to Supporting Structure(s) that render Verizon Wireless unable to conduct normal operations, City shall have the obligation to use its best efforts to repair or replace, within a reasonable period of time, the damaged Supporting Structures,provided none of the following apply: I i • The damage.is caused by the acts or omissions of Verizon Wireless or its agents or the presence and/or operation of the Verizon Wireless Improvements. Page 9 of 32 2014-02-18 Agenda Packet Page 88 i • Verizon Wireless chooses to terminate the use of the Licensed Premises suffering such damage. • City, determines, in good faith within thirty(30) days after such damage or destruction, that the damaged Supporting Structure is no longer j required or desirable to serve the public health, safety and welfare and that the City has no existing or foreseeable intention of replacing or repairing the facility. • The damage or destruction occurs during the last twelve (12) months of the Schedule Term or any Schedule Renewal Term, and Verizon Wireless does not, within ten (10) business days after receiving City notice of such destruction, exercise an option to extend or renew, which may then be available regarding the subject Premises hereunder. b. Verizon Wireless Obligations. In the event of daivage to Supporting Structures, Verizon Wireless shall have the following obligations: I i. Notice. Verizon Wireless shall notify the City in writing of any damage to the Supporting Structures that render Verizon Wireless unable to conduct normal operations. ii. Costs of Removal of Verizon Wireless Improvements. In the event that Verizon Wireless chooses to terminate the use of any License Premises suffering such damage,Verizon Wireless shall notify the City Engineer of its decision within ten(10)calendar days after it provides notice of such damage and Verizon Wireless shall comply with all terms of this License concerning removal of Verizon Wireless improvements, including the removal or replacement of wiring, foundation or other associated facilities that may be required to accommodate the replacement City facilities and to return the Licensed Premises to its original condition as required in Section 2.7.1 above. iii. Replacement of Supporting Structures. In the event that the damage is caused by Verizon Wireless or its agents'acts or omissions,Verizon Wireless shall have the obligation to repair or replace, at its sole cost, or pay to the City the reasonable costs of such repair or replacement, at the option of the City. I C. Abatement of Associated Fees, If City has the obligation to repair or replace pursuant to Section 2.8.2(x) above,the Annual Fee(as described below)for such Licensed Premises shall abate in full from the date such damage occurs .until Verizon Wireless is able to commence normal operations. d. Temporary Supporting Structure. If Verizon Wireless is rendered unable to conduct normal operations due to damage or destruction, City shall use reasonable efforts to identify and make available to Verizon Wireless, within ten (10) calendar days following the damage or destruction, a temporary site owned or controlled by City,which in Verizon Wireless'reasonable judgment is equally suitable for Verizon Wireless' intended uses and in the City's reasonable opinion shall not have an adverse impact on the public health, safety, and welfare. Page 10 of 32 2014-02-18 Agenda Packet Page 89 I I Verizon Wireless may construct and operate substitute Verizon Wireless Improvements thereon until the Licensed Premises are fully repaired and available to Verizon Wireless. Any permits required for construction of such temporary substitute Verizon Wireless Improvements shall be issued by City within ten (10) days after all applicable applications have been submitted by or on behalf of Verizon Wireless; provided however, City shall not waive any discretion it may have with regards to such permits and shall comply with all applicable codes and regulations prior to issuance. During the period between the occurrence of any damage or destruction and the issuance of a permit or license allowing Verizon Wireless to install temporary substitute Verizon Wireless Improvements, Verizon Wireless shall be pennitted to bring onto the applicable Property, at a mutually agreeable location, a mobile cell site and antenna structure. I e. Failure to Comply With Respective Obligations Following Damage. If either Party fails to comply with its respective obligations under this Section, including commencement and completion of repair or replacement, the Party not so obligated shall have the right, but not the obligation, to repair or replace the Supporting Structures. All such work shall be performed using only contractors reasonably approved by the City. The Party repairing or replacing such Supporting Structures pursuant to this provision shall be entitled to reimbursement from the other Party of all reasonable costs and expenses associated with such repair or replacement. i. Reimbursement shall be due and payable within thirty (30) calendar days after receipt of a written request for reimbursement, which shall include sufficient evidence of such costs and expenses. If reimbursement is due to Verizon Wireless, it shall have the right to offset Annual Fees under all Schedules by the amount of any reimbursement owing but not timely paid. If the City timely, decides in good faith not to repair or replace pursuant to subsection 2.8.2(a)(iii) above, then all such work by Verizon Wireless shall be at its sole expense, but Verizon Wireless shall have the option to remove or leave in place any new or replacement light standard, mast arm or pole upon expiration or termination of the applicable Schedule. I I 29 Associated Taxes/Assessments. Verizon Wireless shall pay personal property taxes and possessory interest taxes, if any, assessed against the Verizon Wireless hnprovements or the Premises arising from the installation of the Verizon Wireless Improvements. Verizon I Wireless recognizes and understands that the Schedules may create a possessory interest in the Premise(s) subject to property taxation and that Verizon Wireless may be subject to the payment of property taxes levied on such interest. Verizon Wireless further agrees that such tax payment shall not reduce any Annual Fee or other tax, such as the Utility User's Tax or Telecommunications Tax paid to or owed to City hereunder and that such tax shall be paid by Verizon Wireless before becoming delinquent. City shall have no responsibility or liability for any such tax. No interest granted to Verizon Wireless pursuant to the Schedules shall mature into an ownership interest in the Premise(s). Page l l of 32 2014-02-18 Agenda Packet Page 90 i 3. TERM 3.1 Term of this License. 3.1.1 Initial Term. The initial term of this License shall be five (5) years ("Initial Term"), such terin starting on the Effective Date unless it is earlier terminated by either Party in accordance with the provisions herein. 3.1.2 Extensions of Term. The Initial Tern shall be extended for a maximum of four (4) successive five (5) year terns, subject to the termination provisions herein (each extension, a "Renewal Term"). Each Renewal Term shall be subject to the same terms and conditions as set forth herein. I a. Automatic Extension. This License shall be extended automatically'for each j successive Renewal Term, unless Verizon Wireless provides City with written notice of its intention not to renew at least ninety (90) calendar days prior to the expiration of the Initial Tenn or then current Extension Term. b. Pees Associated with Automatic Extension. In the event that an extension is automatic, Verizon Wireless shall be responsible for all fees as if Verizon . Wireless had requested such extension. 3.1.3 Maximum Life of License. In no event shall the term of this License, including all Renewal Tenns, exceed twenty-five (25) from the Effective Date of this License without further action by the City Council. Notwithstanding the foregoing or the provisions of Section 3.1.2 above, to the extent that any Schedule is in effect at the natural termination or this License (twenty-five (25) years after it is fully executed), such Schedule(s) shall be permitted to complete the remainder of their then-current term, as if this License had not terminated. Additionally, any such Schedule(s) may complete their remaining extension terns, provided this License is extended or a new Master License Agreement has been fully executed. I 3.2 Term of Schedules 3.2.1 Initial Term. The initial term of each Schedule shall be five (5) years ("Schedule Term") from such Schedule's Commencement Date. Each Schedule Term shall commence based upon the date Verizon Wireless commences installation of the equipment on the applicable Premises. In the event the date Verizon Wireless commences installation of the equipment on the Premises falls between the 1 S€ and 1501 of the month, the Schedule shall commence on the 1St of that month and if the date installation commences falls between the 16fl'and last day of the month,then the Schedule shall commence on the lit day of the following month (either, the "Schedule Commencement Date"). 3.2.2 Extension Terms, Verizon Wireless shall have the right to extend a Schedule Tenn for three (3) successive periods of five (5) years each (each, a "Schedule Renewal Tenn"). The Schedule Renewal Terms shall be on the same terns and conditions as the Schedule Tenn,except that the Annual Fee(as defined below)may be adjusted as provided in Section 4.1 below. Each Schedule shall be automatically extended for each successive Schedule Renewal Term unless Verizon Wireless notifies the City in writing of Verizon Wireless' intention not to extend such Schedule at least ninety Page 12 of 32 2014-02-18 Agenda Packet Page 91 i i (90) days prior to the expiration of such Schedule Term or then-current Schedule Renewal Term. 4. COMPENSATION i 4.1 Payment. 4.1.1 Annual Fees. Inconsideration for the use of each Licensed Premises,Verizon Wireless agrees to pay City a fee("Annual Fee")for each Licensed Premises as follows: a. From Schedule Commencement Date. Annual Fees for each Schedule from the Schedule Commencement Date shall be in the amounts identified in Exhibit C, attached hereto. The Annual Fee for the first year of a Schedule and thereafter shall be based upon the year in which such Schedule is fully executed and as referenced in Exhibit C, b. Subsequent Years. Annual Fees for each year after the tenth (10d) year of the term of the Schedule shall be equal to one hundred three percent (103%) of the immediately preceding year's fees. C. Implementation Date of Annual Fee. The Annual Fee for each Licensed Premises shall be adjusted on January 1 of each year thereafter during the term of the Schedule in accordance with the terms herein. 4.1.2 Fee Adjustments. a. Fee Reduction. The City may, at its sole discretion, decrease any of the Annual Fees listed in Exhibit C for future terms by up to forty percent(40%)in the event that Verizon Wireless installs cabinets or pedestals below ground or in a manner that by the City's sole judgment reduces the impact to land use and/or aesthetics. 4.13 Payment Due Date. The Annual Fee for each Schedule shall be payable in advance on or before each January 1"of each year during the term of such Schedule. a. Partial Payments. In the event that a Schedule Commencement Date is a date other than January 1", the "Initial Payment," made with respect to the Schedule shall be a prorated amount based on a three hundred sixty (360) day calendar year with months of thirty (30) days. Such prorated Initial Payment shall be payable within forty-five(45) days after the Schedule Commencement Date. b. Late Payments. If payment is not received by January I st or within forty-five (45) after a Schedule Commencement Date, a late fee of five percent(5%) of the balance due will be assessed. In addition, interest will accrue on the balance owed at a rate of six percent(6%)per annum until paid. 4.1.4 Fee Abatement. If a Schedule is terminated and the effective date of such termination is prior to December 31" of any year for any reason other than Verizon Wireless' default, City shall refund to Verizon Wireless the unearned portion of the Annual Fee for the calendar year in which tennination occurs, provided that City may reduce any such refund by(i) any termination fee owing to City under Section 8.2.3(x) below; (ii) those sums, if any, due from Verizon Wireless under Section 2.7 above; or (iii) Page 13 of 32 i 2014-02-18 Agenda Packet Page 92 amounts due pursuant to Section 2.4.1(a)(i) above. City shall refund such monies due by either remitting full payment within sixty(60) calendar days after the effective date of tennination or applying a credit for the full amount of the refund to the next Annual Fees due from Verizon Wireless. 4.1.5 Place of Payment. Payments shall be made to The City of Chula Vista, Finance Department,276 Fourth Avenue,Chula Vista, CA 91910,or to such other place as City may from time to time designate by written notice to Verizon Wireless at least thirty (30) days before any Annual Fee payment due date. Payments shall be accompanied by a description of payment, which identifies the amount paid for each specific Schedule site locations for which payment is being made, including the Permit Number, Site Number and the address on the Schedule of Premises. Upon agreement of the Parties, Verizon Wireless may pay Annual Fees by electronic funds transfer and in such event, City agrees to provide to Verizon Wireless bank routing information for such purpose upon request of Verizon Wireless. ' I 5. INSURANCE. Verizon Wireless shall procure prior to the commencement of any Schedule and shall maintain, while any Schedule is effective, including the period between the expiration of a � Schedule and the removal of the Verizon Wireless Improvements and/or other equipment from the Premises or appurtenant property,policies of insurance in the amounts and types identified below. Claims-made policies are not acceptable. 5.1 Minimum Scope of Insurance. Coverage must be at least as broad.as: 5.1.1 CGL. Insurance Services Office Commercial General Liability coverage(occurrence Form CGOOOI or its substantial equivalent). 5.1.2 Auto. Insurance Services Office Form Number CA 0001 covering Automobile Liability, Code 1 (any auto)or its substantial equivalent. 5.1.3 WC. Workers'Compensation insurance as required by the State of California and Employer's Liability Insurance. 5.14 All Risk. The policy shall be written on a standard"all risk" contract, excluding earthquake and flood and covering the Verizon Wireless Improvements. 5.2 Minimum Limits of Insurance. Limits of insurance shall be no less than those included in the table below: i.General Liability: $1,000,000 per occurrence for bodily injury,personal injury,(including (Including operations, death),and property damage.If Commercial General Liability insurance products and completed with a general aggregate limit is used,the general aggregate limit must be operations,as twice the required occurrence limit. applicable) ii.Automobile Liability: $1,000,000 per accident for bodily injury, including death, and property i damage, i iii.Workers' Statutory Compensation $1,000,000 each accident Employer's Liability: $1,000,000 disease-policy limit $1,000,000 disease-each employee Page 14 of 32 2014-02-18 Agenda Packet Page 93 i 5.3 Deductibles and Self-Insured Retentions. Verizon Wireless shall be responsible for any deductibles and self-insurance retentions maintained under any policies required by this License, and City shall have no liability with respect thereto. Verizon Wireless shall indemnify and hold City harmless with respect to any such deductibles or self-insurance retentions. 5.4 Other Insurance Provisions. The policies as indicated are to contain, or be endorsed to contain.,the following provisions: 5.4.1 Additional Insureds. City of Chula Vista, its officers, officials, employees, agents, and volunteers are to be included as additional insureds with respect to the general and automobile insurance liability policies required hereunder, including those with respect to liability arising out of automobiles owned, leased,hired or borrowed by or on behalf of Verizon Wireless,where applicable, and,with respect to liability arising out of work or operations performed by or on behalf of Verizon Wireless, including providing materials, parts or equipment furnished in connection with such work or operations. The general liability additional insured coverage must be provided in the form of an endorsement to the contractor's insurance using ISO CG 2010 or its substantial equivalent. Specifically, the endorsement must not exclude Products/Completed Operations coverage. 5.4.2 Primary Insurance. Verizon Wireless' General Liability insurance coverage must be primary insurance as it relates to Verizon Wireless' operations and pertaining to the City, its officers, officials, employees, agents, and volunteers. Any insurance or self- insurance maintained by the City, its officers, officials, employees, or volunteers is wholly separate from the insurance of any contractors and in no way relieves any contractor from its responsibility to provide insurance. 5.4.3 Cancellation. The insurance program must provide that coverage will not be canceled, except after thirty(30) days prior written notice to the City(ten(10) days shall apply to non-payment). 5.4.4 Active Negligence. Coverage shall not extend to any indemnity coverage for the active negligence of the additional insureds in any case where an agreement to indemnify the additional insured would be invalid under Subdivision (b) of Section 2782 of the Civil Code. 5.4.5 Waiver of Subrogation. Verizon Wireless' insurer will provide a Waiver of Subrogation in favor of the City for the Workers Compensation Policy providing coverage for the term required by this Agreement. 5.4.6 Severability of Interest. "Cross liability," "severability of interest" or "separation of insured" endorsements/clauses shall be included in the commercial general liability and automobile liability policies. 5.5 Acceptability of Insurers. Insurance is to be placed with licensed insurers admitted or authorized to transact business in the State of California with a current A.M. Best's rating of no less than A-/VII. If insurance is placed with a surplus lines insurer,insurer must be listed on the State of California Dist of Eligible Surplus Lines Insurers ("LESLI") with a current A.M. Best's rating of no less than A-/X. Exception may be made for the State Compensation Fund when not specifically rated. Page 15 of 32 2014-02-18 Agenda Packet Page 94 i 5.6 Verification of Coverage. Verizon Wireless shall furnish the City with original certificates and additional insured endorsements (which City acknowledges may be a blanket additional insured endorsement) evidencing the coverage required by this Section 5. The endorsements should be on insurance industry fonns, provided those endorsements or policies conform to the License requirements. All certificates and endorsements are to be received and approved by the City,in its reasonable discretion,before work commences. 5.6.1 Renewal or Change in Carriers. At any such time as Verizon Wireless renews the insurance policies required under this Section 5,Verizon Wireless shall,within ten(10) business days thereafter,provide the City with verification of coverage as required in this Section 5.6 for such renewal policies. 5.7 Contractors and Subcontractors. Verizon Wireless shall require that all contractors and subcontractors obtain insurance meeting the criteria set forth herein and shall ftmlish to the City.copies of all certificates evidencing such policies of insurance. 5.8 Not a Limitation of Other Obligations. Insurance provisions under this Section 5 shall not be construed to limit the Verizon Wireless obligations under this Site License Agreement, including Indemnity. 6. INDEMNITY 6.1 General Provision. Verizon Wireless shall defend,indemnify,protect and hold harmless the City, its elected and appointed officers and employees (each a "City Party" and collectively, "City Parties"),from and against all claims for damages,liability, cost and expense(including without limitation reasonable attorneys' fees) to the extent arising out of or related to the installation, operation, maintenance, repair, and replacement of the Verizon Wireless Improvements or other acts or omissions of Verizon Wireless, its agents, employees, contractors, subcontractors, or others acting under the direction or control of Verizon Wireless. 6.2 Approvals. The obligation to defend, indemnify,protect, and hold the City Parties harmless from and against all claims for damages, liability, cost and expense (including without limitation reasonable attorneys' fees) shall include those claims against City Parties arising out of or related to, whether directly or indirectly, from (a) City's approval and issuance of Schedule and (b) City's approval or issuance of any other pen-nit or action, whether discretionary or non-discretionary,in connection with the use contemplated herein. 6.3 Liens and Stop Notices. Verizon Wireless shall keep the Licensed Premises free of any mechanic's liens arising out of or related to Verizon Wireless Improvements and immediately secure the release of any stop notices. Verizon Wireless shall defend,indemnify,protect, and hold harmless, the City Parties from and against any and all liability, claims, costs, and damages, including but not limited to, reasonable attorney fees,to the extent arising from or attributable to a failure to pay claimants. Verizon Wireless shall be responsible for payment of all persons entitled to assert liens and stop notices. 6A Hazardous Materials. Verizon Wireless agrees to defend, indemnify, and hold harmless, the City, its agents, officers and employees from and against any and all costs, damages, claims, and liabilities, including reasonable attorneys' fees, foreseeable or unforeseeable, to the extent arising from or related to the Hazardous Materials releases or contamination of the Licensed Premises. Page 16 of 32 2014-02-18 Agenda Packet Page 95 i i 6.5 Costs of Defense and Award. Included in the obligations in Sections 6.1 through 6.4, above, is Verizon Wireless'obligation to defend,at Verizon Wireless' own cost, expense and risk, any and all aforesaid suits, actions or other legal proceedings of every kind that may be brought or instituted against the City Parties. Verizon Wireless shall pay and satisfy any judgment, award or decree that may be rendered against City Parties for any and all legal expenses and costs incurred by each of them in connection therewith. 6.6 City Parties' Sole Negligence or Sole Willful Misconduct. The indemnity provisions in this License shall not include any claims or liabilities arising from or related to the sole negligence or sole willful misconduct of the City Parties. 63 Insurance Proceeds. Verizon Wireless' obligation to indemnify shall not be restricted to insurance proceeds,if any,received by the City Parties. 6.8 Enforcement Costs. Verizon Wireless agrees to pay any and all costs City reasonably incurs enforcing the indemnity and defense provisions set forth in this Section 6. 6.9 Survival. Verizon Wireless' obligations under this Section 6 shall survive the termination of this Agreement, 6.10 Consequential Damages. Except for indemnification obligations provided hereunder, neither Party shall be liable to the other, or any of their respective agents, representatives, employees for any lost revenue, lost profits, loss of technology,rights or services, incidental, punitive,indirect, special or consequential damages,loss of data,or interruption or loss of use of service, even if advised of the possibility of such damages, whether under theory of contract,tort(including negligence),strict liability or otherwise. 7. SECURITY 7.1 Performance Bond(s). City will require Verizon Wireless to furnish a bond, or alternative form of security ("Performance Bond") reasonably acceptable to City, for faithful performance by Verizon Wireless of its obligations under this License. 7.2 Term. The Performance Bond(s) shall remain in full force and effect for at least thirty (30) calendar days following the termination of this License or until City,in its sole but good faith discretion, determines that Verizon Wireless has fulfilled all of its obligations under this License,whichever is later. 7.3 Certificate of Agency. All bond(s) signed by an agent of the issuer must be accompanied by a certified copy of such agent's authority to act. 7.4 Licensing and Rating. The bond(s) shall be duly executed by responsible surety companies admitted to do business in the State of California, licensed or authorized in the jurisdiction in which the project is located to issue bonds for the limits required by this License, listed as approved by the United States Department of Treasury Circular 570, and whose underwriting limitation is sufficient to issue bonds in the amount required by this License and which also satisfy the requirements stated in Section 995.660 of the Code of Civil Procedure, except as provided otherwise by laws or regulations,secured through an authorized agent with an office in California,and have a minimum AM Best rating of"A2. Page 17 of 32 2014-02-18 Agenda Packet Page 96 7.5 Form. All bonds shall be in the form reasonably prescribed by the City Attorney and any bond required shall include the condition that the bond shall not be terminated or cancelled except upon ninety(90) calendar days prior written notice to City. 7.6 Amount. The amount of such bonds shall not to exceed $25,000, for the first five (5) sites, and $15,000 for each additional five (5) sites thereafter. The City will request that the bond be adjusted for inflation every five (5) years based on the Consumer Price Index All Urban Consumers, San Diego Area. 7.7 Insolvency or Bankruptcy. If the surety on any bond furnished by Verizon Wireless is declared bankrupt or becomes insolvent or its right to do business is terminated in California, Verizon Wireless shall within thirty(30) calendar days thereafter substitute another bond and surety,acceptable to the City. 8. TERNUNATION 8.1 Termination of License for Convenience. Either Party may terminate this License at any time following the Initial Tenn for any reason by delivering to the other Party,written notice of the intent to terminate ("Notice of Termination"). If this License is terminated pursuant to this provision, the effective date of the termination shall be the final day of the then current Renewal Term. 8.1.1. Fees. In the event that Licensee terminates this License pursuant to this provision, Annual Fees shall continue to be due for any Schedules then in effect for the remainder of the tenns of such Schedules. If the effective date of tennination for a Schedule is any date other than December 315", the Annual Fee for the final year of such Schedule term shall be prorated accordingly. 8.1.2 No Additional Schedules. Following the delivery of the Notice of Termination, no i additional Schedules shall be approved, at the sole discretion of the City; provided however, that this License shall remain in full force and effect for the remainder of the existing terns with respect to any Schedules then in effect. 8.2 Termination of Schedule(s). Verizon Wireless shall have the right to terminate Schedule(s) with thirty (30) calendar days prior written notice delivered to City or any shorter notice i expressly set forth below, provided such termination does not result in the abolition of all Verizon Wireless Improvements/Schedules under this License, if any of the following conditions apply: 82.1 Prior to Commencement Date. Verizon Wireless delivers to City such 30-day written notice prior to the Commencement Date of the Schedule(s) to be terminated for any reason or no reason. 8.2.2 Inability to Obtain Approval(s). Verizon Wireless reasonably determines at any time after the Commencement Date under such Schedule that any governmental or non- governmental license, permit, consent, approval, easement necessary or restriction waiver that is required to enable Verizon Wireless to install and operate Verizon Wireless Improvements cannot be obtained at a reasonable expense or within a reasonable period of time, Page 18 of 32 2014-02-18 Agenda Packet Page 97 I 1 8.2.3 Premises Not Appropriate. Verizon Wireless determines at any time after the Commencement Date of such Schedule that the Premises are not appropriate or suitable for Verizon Wireless operations for enviromuental or technological reasons, including without limitation, any ruling or directive of the FCC or other governmental or regulatory agency; problems with signal strength or interference not encompassed by Section 2.6 above; or for any other reason Verizon Wireless no longer desires to use the Premises. a. Termination Fee. In the event that Verizon Wireless exercises the right to terminate pursuant to this Section 8.2.3,Verizon Wireless shall pay City, or City may deduct from any rebate due Verizon Wireless, at City's sole option, a termination fee twenty-five percent (25%) of the then Annual Fee for the associated Licensed Premises. 8.2.4 -Inability to Remedy Interference. Any Pre-existing Communications, or any communications facilities or other structures of any kind now or hereafter located on or in the vicinity of the Licensed Premises, interfere with the location, configuration, frequency or operation of Verizon Wireless Improvements and such interference cannot be corrected. 8.2.5 City Default. City commits a default under this License with respect to such Schedule I and fails to cure such default within thirty(30) calendar days of the delivery to City of a notice to cure,or if such cure cannot with reasonable weans be completed within such period, the City fails to commence such cure within thirty (30) calendar days of delivery to City of the notice to cure and diligently pursue such cure to completion. 8.2.6 Damage to Licensed Premises. The Licensed Premises under such Schedule is damaged from any cause other than actions or omissions of Verizon Wireless, its agents, employees, contractors, or subcontractors, such that, in Verizon Wireless' reasonable judgment,it hinders Verizon Wireless'normal operations and City does not provide to Verizon Wireless a temporary site for Verizon Wireless Improvements within ten(10) calendar days following the delivery to City of a notice of such damage and request for an alternative site to be used during the repair and restoration of the Licensed Premises. 8.3 Termination by City. City shall have the right to terminate a Schedule if any of the following occur: 83.1 Verizon Wireless Default. Verizon Wireless commits a default under this License with respect to such Schedule and fails to cure such default within (i)ten(10)business days after Verizon Wireless receives written notice of the default where the default is a failure to pay the Annual Fee for the subject Premises when due, or (ii) thirty (30) calendar days after Verizon Wireless receives written notice of any other default; provided however, if the period reasonably necessary to cure takes longer than thirty (30) calendar days and Verizon Wireless commences to cure the default within such thirty (30) calendar days and diligently pursues such cure to completion, then such default shall not result in termination of the associated Schedule. A violation of the Schedule's Conditions of Approval shall be deemed a default for purposes of this subsection. Page 19 of 32 2014-02-18 Agenda Packet Page 98 i 8.3.2.Damage to Licensed Premises. The Premises are wholly or partially damaged or destroyed so as to interfere with Verizon Wireless' normal operations, City has no obligation to repair under Section 2.8.2(a) above,and neither Party elects to repair. 8.3.3. Threat to Public. The City Manager determines in good faith that there exists an immediate and substantial threat to public health and safety, other than claims that radio frequency emissions are a threat to health and safety, due to particular circumstances affecting the Premises that cannot be rectified through means less onerous than termination (such as temporary emergency cessation of use by Verizon Wireless pending corrective work), in which case the City may terminate the Schedule immediately and shall notify Verizon Wireless as soon thereafter as reasonably possible. Any such determination shall be made pursuant to applicable law. 8.3.4 FCC Determination. The Federal Communications Commission makes a determination, which is final and non-appealable or which is affirmed and becomes 'final after the exhaustion of all available appeals, concluding that Verizon. Wireless' use as set forth in this License presents a material risk to the public health or safety, including harm related to radio frequency emissions in excess of levels permitted by the FCC, either the City or Verizon Wireless may terminate the applicable Schedule upon five(5)days notice to the other party. 8.4 Termination Due to Transfer of Licensed Premises. A Schedule shall automatically terminate as of the date that possession of a Licensed Premises, or portion thereof, is delivered to any governmental authority pursuant to the exercise of its power of eminent domain, if, in Verizon Wireless' good faith opinion, such transfer renders the Licensed Premises,or portion thereof,unsuitable for Verizon Wireless'normal operations. 8.5 Rights of Parties Following Termination. Upon termination of this License or any Schedule(s), neither Party shall have any further rights, obligations or liabilities to the other, except those under the License or applicable Schedule which: (i) by express provisions or their sense and context are intended to survive termination; (ii) are related to the period prior to termination; or(iii)where termination is by reason of breach or default of the other Party. 8.6 No Liability. Other than the provision of a temporary site for Verizon Wireless Improvements and the abatement of fees provided for in Section 2.8.2(d) and (c) above, respectively, the Parties agree that City shall have no liability for any loss, damage, expenses or claims, direct or consequential, from (i) Verizon Wireless' inability to use the Licensed Premises for its intended purpose, (ii) Verizon Wireless'use of any related access roads, (iii) Verizon Wireless'operation of the Verizon Wireless Improvements, or(iv)the termination of the License by either Party. The foregoing shall not apply to any loss, damage, expenses or claims described in this Section that are caused by the City or City Parties, but shall be subject to the provisions of Section 6.10 above. 9. NOTICE AND APPROVALS 9.1 Writing. Any demand upon or notice required or permitted to be given by one Party to the other Party shall be in writing. 9.2 Effective Date. Except as otherwise provided by law, any demand upon or notice required or permitted to be given by one Party to the other Party shall be deemed validly given if sent by certified mail, return receipt requested or by commercial courier, provided the courier's Page 20 of 32 2014-02-18 Agenda Packet Page 99 I regular business is delivery service and provided further that it guarantees delivery to the addressee by the end of the next business day following the courier's receipt from the sender and shall be effective upon actual receipt or refusal as shown on the receipt obtained pursuant to the foregoing. 9.3 Recipients. All demands or notices required or permitted to be given shall be sent to all of the following: 9.3.1 City Manager,City of Chula Vista 276 Fourth Avenue Chula Vista,California 91910 Phone: (619) 691-5031 Fax: (619) 585-5884 9.3.2 Verizon Wireless(VAW)LLC, -dIb/a Verizon Wireless 180 Washington Valley Road Bedminster,New Jersey 07921 Attn:Network Real Estate 9.4 Change of Address(es). Notice of change of address shall be given in the manner set forth in this Section. 9.5 Approvals. For administrative purposes, any activity covered by this License, which requires permission or consent of City shall be sent in accordance with and to the City Manager identified in the Notice provisions,above. 10 MISCELLANEOUS 10.1 Headings. All section headings are for convenience only and shall not affect the interpretation of this License. 10.2 Gender and Number. Whenever the context requires,the use herein of(i)the neuter gender includes the masculine and the feminine genders and (ii) the singular number includes the plural number. 10.3 Reference to Sections. Each reference in this License to a section refers, unless otherwise stated,to a section in this License. 10.4 Incorporation of Recitals. All recitals herein are incorporated into this License and are made a part hereof. 10.5 Covenants and Conditions. All provisions of this License expressed as either covenants or conditions on the part of the City or Verizon Wireless, shall be deemed to be both covenants and conditions. 10.6 Integration. This License, the Exhibits, Recitals, and references incorporated into this License fully express all understandings of the Parties concerning the matters covered in this License.No change, alteration, or modification of the tenns or conditions of this License, and no verbal understanding of the Parties, their officers, agents, or employees shall be valid unless made in the form of a written change agreed to in writing by both Parties or an Page 21 of 32 2014-02-18 Agenda Packet Page 100 I i i i amendment to this License agreed to by both Parties. All prior negotiations and agreements are merged into this License. 10.7 Severability. The unenforceability, invalidity, or illegality of any provision of this License shall not render any other provision of this License unenforceable,invalid,or illegal. 10.8 Drafting Ambiguities. The Parties agree that they are aware that they have the right to be advised by counsel with respect to the negotiations,terms and conditions of this License, and the decision of whether or not to seek advice of counsel with respect to this License is a decision which is the sole responsibility of each Party. This License shall not be construed in favor of or against either Party by reason of the extent to which each Party participated in the drafting of the License. 10.9 Conflicts Between Terms. If an apparent conflict or inconsistency exists between the main body of this License and the Exhibits,the main body of this License shall control. If a conflict exists between an applicable federal, state, or local law, rule, regulation, order, or code and this License, the law, rule, regulation, order, or code shall control. Varying degrees of stringency among the main body of this License, the Exhibits, and laws, rules, regulations, i orders, or codes are not deemed conflicts, and the most stringent requirement shall control. Each Party shall notify the other immediately upon the identification of any apparent conflict or inconsistency concerning this License. 10.10 Prompt Performance.Time is of the essence of each covenant and condition set forth in this License. i 10.11 Good Faith Performance. The Parties shall cooperate with each other in good faith, and assist each other in the performance of the provisions of this License. 10.12 Further Assurances. City and Verizon Wireless each agree to execute and deliver such additional documents as may reasonably be required to effectuate the purposes of this License. I 10.13 Exhibits. Each of the following Exhibits is attached hereto and incorporated herein by this reference: Exhibit A- Sample Verizon Wireless Improvements Exhibit B -Schedule of Licensed Premises Exhibit C-Annual Pees 10.14 Compliance with Controlling Law. Verizon Wireless shall comply, at its sole cost and expense, with all laws, ordinances, regulations, and policies of federal, state, and local governments now in effect or which may hereafter be in effect applicable to its operations pursuant to this License ("Laws"). Verizon Wireless shall be responsible for obtaining any permits and approvals from any agency having jurisdiction over Verizon Wireless' activities, including those requiring and maintaining governmental permits and approvals which enable Verizon Wireless, or its assigns, to construct Verizon Wireless Improvements and operate mobile/wireless communications facilities thereon. City shall have no responsibility or liability for compliance with any such Laws; provided however, that City shall reasonably cooperate with Verizon Wireless,at no cost to City in obtaining and maintaining such permits Page 22 of 32 2014-02-18 Agenda Packet Page 101 i and approvals. 10.15 Jurisdiction,Venue, and Attorney Pees. The venue for any suit or proceeding concerning this License, the interpretation or application of any of its terins, or any related disputes shall be in the County of San Diego, State of California. The prevailing Party in any such suit or proceeding shall be entitled to a reasonable award of attorney fees in addition to any other award made in such suit or proceeding. 10.16 Municipal Powers. Nothing contained in this License shall be construed as a limitation upon the powers of the City as a chartered city of the State of California. 10.17 Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this License,against the City unless a claim has first been presented in writing and filed with the City and acted upon by the City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be mended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by the City in the implementation of same. Upon request by City,Verizon Wireless shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this License. 10.18 Third-Party Relationships. Nothing in this License shall create a contractual relationship between City and any third party. 10.19 Non-Assignment. Verizon Wireless shall not assign any rights or obligations under this License, whether by express assignment, sale of the company, or any monies due or to become due, without the City's prior written approval. Any such assignment in violation of this provision, including those by operation of law,shall constitute a material breach and, at the discretion of the City, immediately terminate this License. Approval of any such proposed assignment may be withheld in the sole and absolute discretion of the City. In no event shall any putative assignment create a contractual relationship between the City and any putative assignee. 10.19.1 Notwithstanding Section 10.19, above, Verizon Wireless may, without City's approval and in Verizon Wireless' sole discretion, from time to time, do any of the following: i a. Grant to any person or entity a security interest in some or all of the Verizon i Wireless Improvements and/or other Verizon Wireless property used or to be used in connection with this License. i b. Assign(i)to any entity which has, directly or indirectly, a thirty percent(30%) or greater interest in Verizon Wireless (a "Parent") or in which Verizon Wireless or a Parent has a thirty percent (30%) or greater interest (an "Affiliate"); (ii)to any entity with which Verizon Wireless and/or any Affiliate may merge or consolidate; (iii)to a buyer of substantially all of the outstanding ownership units or assets of Verizon Wireless or any Affiliate in the lnarlcet defined by the Federal Communications Commission ("FCC") in which the Property is located by reason of a merger, acquisition or other business reorganization, or (iv) to the holder or transferee of the FCC license under which Verizon Wireless Improvements are operated, upon FCC approval of any such transfer. Any such assignment shall not be effective until the Page 23 of 32 2014-02-18 Agenda Packet Page 102 i I I i I assignee signs and delivers to City a document in which the assignee assumes responsibility for all Verizon Wireless' obligations under this License arising from and after the effective date of assignment. No change of stock ownership, partnership interest or control of Verizon Wireless,or transfer upon partnership of Verizon Wireless shall constitute an assignment hereunder. 10.20 Successors in Interest. This License and all rights and obligations created by this License shall be in force and effect whether or not any Parties to this License have been succeeded by another entity, and all rights and obligations created by this License shall be vested and binding on any Party's successor in interest. 10.21 No Waiver. No failure of either the City or Verizon Wireless to insist upon the strict performance by the other of any covenant,term or condition of this License or any Schedule, nor any failure to exercise any right or remedy consequent upon a breach of any covenant, teen, or condition of this License or any Schedule, shall constitute a waiver of any such breach of such covenant, term or condition.No waiver of any breach shall affect or alter this License or any Schedule, and each and every covenant, condition, and term thereof shall continue in full force and effect to any existing or subsequent breach. 10.22 Waiver of Property, Relocation and Condemnation Rights. Verizon Wireless acknowledges and agrees that this License does not confer any of the fallowing: a property right or interest(other than a possessory interest for the purpose taxation (e.g. under Section 107 of the California Revenue and Taxation Code), a right to relocation, or relocation assistance. 10.23 Limitation on City Liability. Notwithstanding any provision in this License to the contrary, Verizon Wireless' sole remedies for the City's breach of this License shall be (i) termination of this License or one or more Schedules, as appropriate; (ii) specific performance or injunction; or (iii) the right to withhold amounts in contest which are otherwise due and payable to City hereunder with respect to one or more Licensed Premises; provided that the foregoing limitation on liability does not apply to City's rebate obligation under Section 4.1.4. In no event shall Verizon Wireless be entitled to monetary damages, other than the payment of the rebate amount,against the City for breach of contract hereunder. 10.23 Signing Authority. The representative for each Party signing on behalf of a corporation, partnership, joint venture or governmental entity hereby declares that authority has been obtained to sign on behalf of the corporation, partnership,joint venture, or entity and agrees to hold the other Party or Parties hereto harmless if it is later determined that such authority does not exist. I [Signatures begin on next page] i I Page 24 of 32 2014-02-18 Agenda Packet Page 103 i IN WITNESS WHEREOF, the City of Chula Vista and Clear Wireless have executed this License thereby indicating that they have read and understood same, and indicate their full and complete consent to its terms. THE CITY OF CHULA VISTA, Verizon Wireless(VAW)LLC,a Delaware limited liability A Municipal Corporation("City") company,d/b/a Verizon Wireless("Verizon Wireless") By: By: Its: Name:Brian Mecum Its:Area Vice President Network Dated: Dated: i i Attest: I Donna Norris,City Clerk Approved as to form and legality: GLEN R.GOOGINS,City Attorney i By: Deputy City Attorney I I Exhibit List to License (1) Exhibit A Sample Verizon Wireless Improvements (2) Exhibit B Schedule of Licensed Premises (3) Exhibit C Annual Fees Page 25 of 32 2014-02-18 Agenda Packet Page 104 i EXHIBIT A Sample Verizon Wireless Improvements [To be Inserted] i I I Page 26 of 32 2014-02-18 Agenda Packet Page 105 i I g4 n �aA�K5 � r� y I - g35w � •� as��S�T.1�' um Syy��� e�CB n Rag$ 0 6� �"on=�� u" �"� :•�C - �F ; ofn Co 0 i i C , CO �; r > m m 2 CD D �R €4,a,Nun CDP CID a 6 es=0 s uS'�p a�� Sg` c m � I as ;ESA N i i a s ' CO / m gc G € a o ° O s9s �e N m vam F? £ gy$ I M � N °•"�• sm � � � � � � - wee _t�+��� IM m eSCR s I 2014-02-18 Agenda Packet D Z Page 106 i I CD w o 6 zo F � ssss88bg4 m ° o MR mo �mz ' z �� age I °:E a �a' ce s „ua °are N m I Fg f Z 6 $ Co a Na ON -.. g> ^'E �a g VF~ a I ` o R1 Co MAMIMW 7 i - � k L m m m R 1� � n�r.i»"n.. .s�.e� // n�ru•ss•e._ .asa � Cl m - 3 p3 u e ms 3 UjAN: -m� yz Ee h N e € 0 n T ° '1H m o � 3g !I, m =���ms a x cn I i I i e gll!aa�\a Sm C s ! 2014-02-18 Agenda Packet Page 107 i I i i I awc _o aQ �g g R y F. C u� m 1 v , I i nipl 3m URI I d2 2014-02-18 Agenda Packet Page 108 f I i r IE 3 3 1 I I I I 3 1 1 � E E ZZ (� 111" "oil "11111111111 Is" " pill 110111111111 1!211 PIE 111illflum a f I 31 j i rr 8 �l I �I E O 3 I I � 1 1 i F D $ S I HOW g q x P s m g 4 " s z lei mom it 2014-02-18 Agenda Packet Page 109 4O A � M rn b m �u HBO Z g� r g o glop 11 oil H FRUM jC RM r f - S YV / 5g7 RUM#� �08� MMM rn -- I 0000 m z e e o I 2014-02-18 Agenda Packet Page 110 z � HN EM o� s � � 'mob• "/ � / IT2 a i 4^ 5� j� 1 i m8 58318 Ig � a €�z All v M7-eaanNC � 1 I. _ Zk - � e N>< °a o n� � m � °�� � 2014-02-18 Agenda Packet Page 111 loop a c cn g CO € � n c _u Z m © 5 Z m *1 19- - z g j i w I I I m; ' m$m � �� 3� ��p" �F � o�� �� s -" I nn P. =€ m € MMo M. all 5° R 0 1 Inn b "d °� m " 9�I! 311d W it 12 m €gy m O z Ms!R M! 01 i m C q 1 a"; m ii 09 9,1011 Sus a �$c 'q €� I i I I o�a f1l 2014-02-18 Agenda Packet Page 112 t 4 � _ - § Y�'�� u ; 4, 5 ySt�'1451111 L. 5 (� ii j_.'• - �1�� m- s - h `1115tt t}��1}t 115S�I1 F'$� f v ��ui y I y - Ry }y1y4�5 y51Se I,y 155515 � �. . 6Fl1 i yty}}Ilti tl`��l j1tl t' `� 111'55 y5q tt itS l S;11 1y 114515�'�4 itl �1 -- 1} 511 X51 � 3 - m 3>`G 2F VA"Pi z 2� � n' Swy�z R� vy Ssg S 4°q� �ga 0 9 22 s o soon g 4NI E ass �z m — m gsa�e n e p a x a 2014-02-18 Agenda Packet Page 113 I r� h� 03 V a sT 0 0 c��Ati Co A W TP�fi� J� C, m Z A~D OZ A � I .o� I I i h - � L m O: a; y - E mm a � � N � a 2014-02-18 Agenda Packet Page 114 i EXHIBIT B i SCHEDULE OF LICENSED PREMISES � I i i i i I I i I Page 27 of 32 2014-02-18 Agenda Packet Page 115 CITY OF CHUIM ASIA SCHEDULE OF LICENSED PREMISES/ CONSTRUCTION PERMIT WIRELESS FACILITY SITE LICENSE FOR VERIZON WIRELESS PERMIT NUMBER: WTF- VR01 SITE NUMBER:JMBER: V-1-25-month-year DECISION DATE: <Approval Date> LOCATION: ANNUAL FEE: $ beginning January 1,20_thru December 31,20 INITIAL FEE: $ (due with signed SOLD) for term beginning Month, day,20 through December 31,20_ This Schedule of Licensed Premises ("Schedule"),made this day of ,�,between the City of Chula Vista, with an address of 276 Fourth Avenue, Chula Vista, California 91910, hereinafter designated"City," and Verizon Wireless (VAW)LLC, a Delaware limited liability company dba Verizon Wireless,hereinafter designated"Verizon Wireless". This Schedule is a Schedule as referenced in that certain Master Communications Site License Agreement between City and Verizon Wireless dated (the "Agreement"). All of the teens and conditions of the Agreement are incorporated hereby by reference and made a part hereof without the necessity of repeating or attaching the Agreement. In the event of a contradiction, modification or inconsistency between the terms of the Agreement and this Schedule, the terms of the Agreement shall govern. Capitalized terns used in this Schedule shall have the same meaning described for them in the Agreement unless otherwise indicated herein. Legal Description: The site("City Property")is located at ,APN Number See Exhibit "A",attached hereto and by reference made a part hereof. Description of Installation: Verizon Wireless proposes to install: (number of cabinets, antennae, enclosure description and total square footage. Description of Installation: (For plans & detail, see Exhibit "B", attached hereto and by reference made a part hereof) (Description of Installation,hereinafter-Wireless Telecommunications Facilities, "WTF") Now,therefore,in consideration of their mutual promises, and other good and valuable consideration,the parties hereto agree as follows: Permission is hereby granted to Verizon Wireless by City to install WTF on the City Property at the Page 2$ of 32 2014-02-18 Agenda Packet Page 116 i location specified above in accordance with the following terms and conditions: 1. WTF shall be installed and maintained in a safe and sanitary manner by Verizon Wireless as required by the Agreement. 2. Submit WTF plans for Building Permit to the Chula Vista Building Division and comply with all applicable regulations to the reasonable satisfaction of the City Building Official prior to the issuance of Building Permits. 3. Any concrete pads or vault cover doors in or adjacent to sidewalks must be back a minimum of eighteen(18)inches from the sidewalk. 4. Disruption of.existing site improvements and facilities,including site-landscaping improvements, resulting from the installation of the WTF shall be replaced and/or repaired in kind, subject to the appropriate City approval(s). Existing site irrigation shall be maintained in full functioning order at all tunes throughout the construction process. 5. Verizon Wireless shall be responsible for maintaining the Licensed Premises in a reasonably safe and secure condition to the public and shall also provide a temporary chain link fence to be installed around the perimeter of the Licensed Premises during construction of WTF. 6. Traffic control plans for works in the right-of-way must be approved by City Traffic Engineering Section and shall be set out,maintained and removed by an"A" or a C31 licensed contractor. 7. Verizon Wireless shall call Underground Service Alert(One call mark-out service) at 1-800-422- 4133 a minimum of two (2) working days prior to any excavation being done in the public right- of-way, or in the open space/public utilities area, including postholes or footing excavations. Mark-out of existing underground facilities shall be made prior to snaking any excavations. 8. Verizon Wireless shall remove any graffiti from the WTF within forty-eight (48) hours after receipt of written notice as prescribed under the City Municipal Code and/or upon written notice from the City. If Verizon Wireless fails to remove graffiti within such (48) forty-eight hours after written notice is received, the City shall have the right to remove graffiti or paint the WTF, the paint being provided and the reasonable cost of labor shall be paid by Verizon Wireless. 9. City inspections shall not be performed during designated City holidays in accordance with Exhibit "C", attached hereto and incorporated herein by this reference. Work requiring City inspection shall not be done on those days. 10. In addition, all construction of the WTF work shall be scheduled in advance (a minimum of five (5) working days) and coordinated with parks operations personnel, onsite recreation staff, City Engineer and Public Works Staff or other City Staff as appropriate prior to commencement of the work to minimize the potential for conflicts with recreation, City programs, vehicle traffic and City operations occurring on or near the WTF site. Contact Gordon Day, Building Project Manager at(619) 476-4368 and Larry Smith, Sr. Landscape Inspector at(619)476-8780. Verizon Wireless agrees that the site will not be activated until the City has signed off on final construction,as required by applicable laws,rules and regulations. Page 29 of 32 2014-02-18 Agenda Packet Page 117 ENVIRONMENTAL The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 3 categorical exemption pursuant to Section 15303 (New Construction or Conversion of Small Structures) of the State CEQA Guidelines because the project consists of installation of small unobtrusive wireless communication antennas and equipment to existing small structures. Thus, no further environmental review is necessary. IMPORTANT NOTE: Violations of these conditions may result in the termination of the right to use the City's Property for wireless communications(see Section 8.33 of the Agreement). cc: Torn Adler, Senior Civil Engineer Roberto Perez, Senior Engineering Technician Sheryl Fields,Conservation&Environmental Services IN WITNESS WHEREOF,the Parties hereto have set their hands and affixed their respective seals the day and year first above written. CITY OF CHULA VISTA i Richard A.Hopkins,City Engineer Michael Meacham,Director of Conservation Director of Public Works Director of Public Works Operationsand Environmental Services VERIZON WIRELESS: Verizon Wireless (VAW)LLC dba Verizon Wireless Authorized Signature of Verizon Wireless Date Name: Brian Mecum Title: Area Vice President Network i I i Page 30 of 32 2014-02-18 Agenda Packet Page 118 EXHIBIT C ANNUAL FEES j i *Macro Site Cabinets Only Antennae Only Options** Annual Fee* Annual Fee Annual Fee Annual Fee** 201 $30,000 $18,000 $12,000 $4,944 $ 0,900 00 ., , w18,540 00 t:. $ z30 00 ,092 3 2016 $31,827.00 $19,096.20 $12,730.80 $5,245.09 201$ X33'765 26 20 29 6 5� 1 55645 2(1 9 $34 78 2� $20 8663 39d 5 ? 14 _ NO 4 r ,38 6503 0 $I4,758 `$ i 080 50 S 202238 011 1022;801'86 NINE 5,201266 91 IT123 � 3 1343 20 2348a 92 ,.. 557 $ 6450 80 ..�.... ... ., _ ��ro,... �. .,. .. .� t * Maximum 10'x20' area standard enclosure 15'x30' area non-standard where a bacImp generator is included in enclosure footprint and site conditions allow the additional size. "Approximately 3'x3'x3' or 27 cubic feet cabinet and up to (3)three standard panel antennae A. For Macro Verizon Wireless facilities that include up to seven(7) equipment cabinets, and up to twelve (12) antennas approximately 72 inches in height,in addition to necessary cables, electrical power, telephone service, and other necessary fixtures, in an area no more than ten feet by twenty feet* (10'x20'), for the period from the Conunencement Date of this License through December 31, 2014, in the amount of$30,000, ($2,500 per month); and/or B.For Verizon Wireless ground facilities only that include only up to seven(7) equipment cabinets, in addition to necessary transmission cables, electrical power, telephone service and other necessary fixtures and no antennas for the period from the Commencement Date of this License through December 31, 2014,in the amount of$18,000 ($1,500 per month); and/or C.For Verizon Wireless tower facilities only that include only up to twelve(12) antennas approximately 72 inches in height, in addition to necessary transmission cables, electrical power, telephone service, and other necessary fixtures for the period from the Commencement Date of this License through December 31,2014, in the amount of$12,000 ($1,000 per month); and/or D. For Micro Verizon Wireless facilities that include up to four(4) cabinets and six(6) antennas approximately 72 inches in height in addition to necessary cables, electrical power, telephone service and other necessary fixtures, in an area no more than ten feet by sixteen feet(10'x16'), Page 31 of 32 2014-02-18 Agenda Packet Page 119 i for the period from the Commencement Date of this License through December 31, 2014, in the amount of$20,000 ($1,666 per month); and/or E. *** For Verizon Wireless facilities that include only up to three(3)antennas approximately 72 inches in height, in addition to necessary transmission cables, electrical power, telephone service, and other necessary fixtures and limited to one above ground cable and pedestal of not more than 27 cubic feet, for the period from Commencement Date of this License through December 31, 2014, in the amount of$4,944($412 per month). F.The City may at its sole discretion decrease any of the fees listed above by up to 40% for under grounding cabinets or pedestals in a manner that by the City's sole judgment reduces the impact to land use mad/or aesthetics. G.For each calendar year thereafter throughout the initial term of each Schedule,an amount equal to 103%of the Annual Fee for the immediately preceding calendar year. I Page 32 of 32 2014-02-18 Agenda Packet Page 120 RESOLUTION NO. 2014- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A MASTER LICENSE AGREEMENT WITH VERIZON WIRELESS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, FOR THE INSTALLATION AND OPERATION OF AS MANY AS 25 WIRELESS TELECOMMUNICATIONS FACILITIES OR SUBSTANTIALLY SIMILAR FACILITIES ON CITY-OWNED AND CONTROLLED PROPERTY, SUBJECT TO ALL NECESSARY APPROVALS, FOR A PERIOD OF 5 YEARS WITH AN OPTION TO RENEW FOR AS MANY AS FOUR ADDITIONAL 5-YEAR TERMS AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT WHEREAS, the City Council approved Resolution 18601 on March 18, 1997, conceptually approving the marketing of City properties for use by telecommunication companies; and WHEREAS, the City Council has requested that staff ensure that consumers have access to competitive, state of the art telecommunication services within the City; and WHEREAS, as the need for such services increases, new locations are required for the various telecommunication companies to site their facilities and equipment; and WHEREAS, the City has an interest in locating such facilities where potential visual impacts are minimized; and WHEREAS, over the years, the City and telecommunication companies have negotiated a standard agreement called a Master License ("MLA") that provides an incentive to the telecom companies to site the facilities in low visual impact areas while establishing a regular revenue stream to the City; and WHEREAS, the proposed MLA is for a five-year term and allows for as many as four additional five-year terms, each with the written request of Verizon Wireless and the subsequent written approval of the City Manager; and WHEREAS, during the first year of the initial term, Verizon Wireless will compensate the City for use of each site that includes both antennas and cabinets through the payment of an annual license fee of approximately $30,000 to the City General Fund; and WHEREAS, the annual fee increases by 3% a year beginning January 2014, and is subject to renegotiation prior to the renewal of each five-year term to ensure the City is receiving market rate rent; and 2014-02-18 Agenda Packet Page 121 Resolution No. Page 2 WHEREAS, staff believes that by the end of December 2014, Verizon will have established four(4) sites,yielding an initial annual revenue of$120,000.00; and WHEREAS, the terms and conditions of the proposed MLA are consistent with those provided to other wireless carriers; and WHEREAS, the Development Services Director has reviewed the proposed agreement and determined that the activity is not subject to CEQA and that each individual wireless telecommunication facility will have environmental review once the projects are further defined and a CEQA determination will be completed prior to installation of any new facilities. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it approve a Master License Agreement with Verizon Wireless, LLC, a Delaware Limited Liability Company, for the installation and operation of as many as 25 wireless telecommunications facilities or substantially similar facilities on city-owned and controlled property, subject to all necessary approvals for a period of 5 years with an option to renew for as many as four additional 5-year terms and authorizing the Mayor to execute the agreement. Presented by Approved as to Form Richard A. Hopkins Glen R. Googins Director of Public Works City Attorney 2014-02-18 Agenda Packet Page 122 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0040, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $120,000 FROM THE U.S. DEPARTMENT OF HOMELAND SECURITY AND APPROPRIATING SAID FUNDS TO THE POLICE GRANT FUND FOR OPERATION STONEGARDEN (4/5 VOTE REQUIRED) RECOMMENDED ACTION: Council adopt the resolution. SUMMARY Since the events of September 11 , 2001 , the interception of terrorists and their weapons attempting entry across the nation's borders has become the priority mission of the U.S. Department of Homeland Security. Grant funding via "Operation Stonegarden" has been awarded to the San Diego County region to facilitate regional partnerships and enhance border enforcement capabilities. In coordination with the U.S. Customs and Border Protection (CBP) and grant administration by the County of San Diego, the Police Department has been allocated $120,000 for Operation Stonegarden 2013 funding. ENVIRONMENTAL REVIEW This proposed activity has been reviewed for compliance with the California Environmental Quality Act (CEQA) and it has been determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION The mission of Operation Stonegarden is to raise border security by increasing law enforcement presence along the border, intelligence/information sharing and communication. Participating agencies in this regional effort include the U.S. Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), San Diego County Sheriff's Department, California Department of Motor Vehicles, California Highway Patrol, California Fish and Game, San Diego County Probation Department and San Diego Harbor Police. The Chula Vista Police Department is in the unique position of being geographically located in close proximity to the border (5 miles) with three main north/south arteries traversing the city. As a result, multiple local and federal agencies frequently ask the Department for assistance and interdiction of both north and south bound traffic involved in border-related crimes. The Police Department will continue to participate in regional efforts of border enforcement on an overtime basis. The Department was funded over $3.7 million in prior Stonegarden awards, and the 2013 funding of $120,000 will continue those regional efforts. City of Chula Vista Page 1 of 2 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 123 File #: 14-0040, Version: 1 DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1) is not applicable to this decision. Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. Funds received for Operation Stonegarden supports the goal of Strong and Secure Neighborhoods by providing additional law enforcement presence in the community. CURRENT YEAR FISCAL IMPACT Approval of this resolution will result in a one-time appropriation of$120,000 to personnel services of the Police Grant Fund. The funding from the U.S. Department of Homeland Security will completely offset these costs, resulting in no net fiscal impact to the General Fund. ONGOING FISCAL IMPACT There is no ongoing fiscal impact. City of Chula Vista Page 2 of 2 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 124 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $120,000 FROM THE U.S. DEPARTMENT OF HOMELAND SECURITY AND APPROPRIATING SAID FUNDS TO THE POLICE GRANT FUND FOR OPERATION STONEGARDEN WHEREAS, since the events of September 11, 2001, the interception of terrorists and their weapons attempting entry across the nation's borders has become the priority mission of the U.S. Department of Homeland Security; and WHEREAS, grant funding via "Operation Stonegarden" has been awarded by the U.S. Department of Homeland Security to the San Diego County region to facilitate regional partnerships and enhance border enforcement capabilities; and WHEREAS, the Police Department has been allocated $120,000 for Operation Stonegarden to participate in regional enforcement efforts and support the mission of the operation; and WHEREAS, the grant funds provided by the U.S Department of Homeland Security will completely offset the total costs of Operation Stonegarden. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby accept $120,000 from the U.S. Department of Homeland Security and appropriate $120,000 to personnel services of the Police Grant Fund for Operation Stonegarden. Presented by: Approved as to form by: David Bejarano Glen R. Googins Police Chief City Attorney 2014-02-18 Agenda Packet Page 125 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0055, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $50,000 FROM THE U.S. DEPARTMENT OF JUSTICE AND APPROPRIATING SAID FUNDS TO THE POLICE GRANT FUND FOR THE ORGANIZED CRIME DRUG ENFORCEMENT TASK FORCE (4/5 VOTE REQUIRED) RECOMMENDED ACTION: Council adopt the resolution. SUMMARY The Police Department has been allocated $50,000 from the U.S. Department of Justice to purchase a van used in Organized Crime Drug Enforcement Task Force (OCDETF) operations. OCDETF reduces the availability of drugs by disrupting and dismantling major drug trafficking organizations and money laundering organizations. ENVIRONMENTAL REVIEW This proposed activity has been reviewed for compliance with the California Environmental Quality Act (CEQA) and it has been determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION The Organized Crime Drug Enforcement Task Forces (OCDETF) Program was established in 1982 to mount a comprehensive attack against organized drug traffickers. Today, the OCDETF Program is the centerpiece of the United States Attorney General's drug strategy to reduce the availability of drugs by disrupting and dismantling major drug trafficking organizations and money laundering organizations and related criminal enterprises. OCDETF was originally formed as a part of a true "Task Force" approach against sophisticated criminal organizations, with prosecutors and law enforcement personnel working side-by-side in the same location. The Police Department has been allocated $50,000 to purchase a specialized van which will be used during search and arrest warrant operations. The van will be outfitted with safety and specialty equipment required for the type of operations that it will be used for. DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1) is not applicable to this decision. Staff is not independently aware, nor has staff been informed City of Chula Vista Page 1 of 2 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 126 File #: 14-0055, Version: 1 by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. Funds received for OCDETF supports the goal of Strong and Secure Neighborhoods by equipping law enforcement personnel with necessary resources to provide a safe community. CURRENT YEAR FISCAL IMPACT Approval of this resolution will result in a one-time appropriation of $50,000 to the capital category of the Police Grant Fund. The funding from the U.S. Department of Justice will completely offset these costs, resulting in no net fiscal impact to the Police Grant Fund. ONGOING FISCAL IMPACT Ongoing costs for the van, such as fuel and maintenance, will be funded by the U.S. Department of Justice, resulting in no net fiscal impact to the Police Grant Fund. City of Chula Vista Page 2 of 2 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 127 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $50,000 FROM THE U.S. DEPARTMENT OF JUSTICE AND APPROPRIATING SAID FUNDS TO THE POLICE GRANT FUND FOR THE ORGANIZED CRIME DRUG ENFORCEMENT TASK FORCE WHEREAS, the Organized Crime Drug Enforcement Task Forces (OCDETF) Program was established in 1982 to mount a comprehensive attack against organized drug traffickers; and WHEREAS, the OCDETF Program is the centerpiece of the United States Attorney General's drug strategy to reduce the availability of drugs by disrupting and dismantling major drug trafficking organizations and money laundering organizations; and WHEREAS, the Police Department has been allocated $50,000 to purchase a specialized van used during search and arrest warrant operations; and WHEREAS, the funds provided by the U.S Department of Justice will completely offset the total costs of the van purchase. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby accept $50,000 from the U.S. Department of Justice and appropriate $50,000 to the capital category of the Police Grant Fund for the Organized Crime Drug Enforcement Task Force. Presented by: Approved as to form by: David Bejarano Glen R. Googins Police Chief City Attorney 2014-02-18 Agenda Packet Page 128 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0058, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $75,507 FROM THE COUNTY OF SAN DIEGO AND APPROPRIATING SAID FUNDS TO THE FISCAL YEAR 2013/2014 POLICE GRANT FUND FOR REGIONAL REALIGNMENT RESPONSE PROGRAMS (4/5 VOTE REQUIRED) RECOMMENDED ACTION: Council adopt the resolution. SUMMARY In 2011 , Governor Edmund G. Brown Jr. signed Assembly Bill (AB) 109 and AB 117, which significantly reduces state jail populations through early release programs and transfer to County jail facilities. This legislation provides funding to counties to develop and implement a targeted, proactive, intelligence-based approach to control and counteract the risks associated with realigned offenders released in San Diego County. The City of Chula Vista has been awarded $75,507 to conduct various operations in relation to this legislation. ENVIRONMENTAL REVIEW This proposed activity has been reviewed for compliance with the California Environmental Quality Act (CEQA) and it has been determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION In 2011 , Governor Edmund G. Brown Jr. signed Assembly Bill (AB) 109 and AB 117, which significantly reduces state jail populations through early release programs and transfer to County jail facilities. This was done in response to the U.S. Supreme Court's order to reduce the number of inmates in the state's 33 prisons to original design capacity (currently at 137.5% of capacity). Under the Assembly Bill (AB) 109 and AB 117 newly-convicted low-level offenders without current or prior serious or violent offenses stay in county jail to serve their sentence. This has reduced the annual state prison admissions to less than 35,000 a year. Prior to Realignment, there were approximately 55,000 to 65,000 new admissions from county courts to state prison. Overall, the diversion of low-level offenders and parole violators to county jail instead of state prison has resulted in a population decrease in State prison of about 28,000 (-17%). The intent of Regional Realignment Response is to encourage counties to develop and implement evidence-based practices and alternatives to incarceration to limit future crimes and reduce victimization. City of Chula Vista Page 1 of 2 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 129 File #: 14-0058, Version: 1 The San Diego Sheriff Department has been designated as the fiscal agent of Regional Realignment Response funds for the San Diego County region. A Memorandum of Agreement between the County of San Diego and participating cities in the county has been created to outline the disbursement of Realignment funds. The City of Chula Vista has been allocated $75,507 this fiscal year. The Police Department will allocate $75,507 to fund overtime operations to conduct compliance checks on San Diego County Probationers. DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1) is not applicable to this decision. Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. Funds received for Regional Realignment Response supports the goal of Strong and Secure Neighborhoods by providing additional law enforcement presence in the community to address the impact of convicted felons who have been released early into the community. CURRENT YEAR FISCAL IMPACT Approval of this resolution will result in a one-time appropriation of $75,506 to personnel services of the Police Grant Fund to fund overtime operations. The funding from the County of San Diego will completely offset these costs, resulting in no net fiscal impact to the Police Grants Fund. ONGOING FISCAL IMPACT There is no ongoing fiscal impact. City of Chula Vista Page 2 of 2 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 130 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $75,507 FROM THE COUNTY OF SAN DIEGO AND APPROPRIATING SAID FUNDS TO THE FISCAL YEAR 2013/2014 POLICE GRANT FUND FOR REGIONAL REALIGNMENT RESPONSE PROGRAMS WHEREAS, in 2011, Governor Edmund G. Brown Jr. signed Assembly Bill (AB) 109 and AB 117, which significantly reduces state jail populations through early release programs and transfer to County jail facilities; and WHEREAS, grant funding via the Community Corrections Partnership (CCP) to create a Regional Realignment Response Group (R3); and WHEREAS, the San Diego County Sheriff has been designated as the fiscal agent of the Regional Realignment Response funds for the San Diego County region; and WHEREAS, the Police Department has been allocated $75,507 from the Regional Realignment Response Group to participate in regional enforcement efforts and support the mission of the operation; and WHEREAS, the grant funds provided by the San Diego County Sheriff Department completely offset the total costs of Regional Realignment Response Group. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby accept$75,507 from the County of San Diego and appropriate $75,507 to personnel services of the Police Grant Fund for Regional Realignment Response. Presented by: Approved as to form by: David Bejarano Glen R. Googins Police Chief City Attorney 2014-02-18 Agenda Packet Page 131 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0051, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA (A) AUTHORIZING THE TRANSFER OF $8,017,453 IN WIRELESS TELEPHONE USERS TAX (T.U.T.) REVENUES FROM THE GENERAL FUND TO THE T.U.T. COMMON FUND AND APPROPRIATING FUNDS THEREFORE (B) APPROPRIATING $3,789,234 IN THE T.U.T. COMMON FUND FOR EXPENSES RELATED TO THE SETTLEMENT AGREEMENT IN THE MATTER OF CARLA VILLA, ET. AL., V. CITY OF CHULA VISTA (4/5THS VOTE REQUIRED) RECOMMENDED ACTION: Council adopt the resolution. SUMMARY On April 12, 2013, the City approved a settlement agreement that resolved a class action lawsuit challenging the City's collection of Telephone Users' Taxes from wireless customers. The settlement received final approval of the court and became fully effective as of February 11 , 2014. This action appropriates and transfers funds in order to implement the terms of the Settlement Agreement. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity, appropriating funds per settlement terms, for compliance with the California Environmental Quality Act (CEQA) and has determined that this activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change to the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to CEQA. BOARD/COMMISSION RECOMMENDATION Not Applicable DISCUSSION As you know, on April 12, 2013, the City entered into an agreement for the settlement of a class action lawsuit known as Carla Villa, et. al. v. City of Chula Vista. The lawsuit was filed by two Chula Vista residents on behalf of payers of the City's Telephone Users' Tax for wireless devices. The City disagrees with the lawsuit's claim that certain aspects of the tax are unlawful, but, because the issues were highly complex, and continued litigation would have been expensive, the City determined that it was in the best interest of the City's citizens to settle the case. The Settlement Agreement made cash rebates available to Chula Vista wireless telephone users who paid taxes on their wireless telephone bills from April 2010 through April 2013. Pursuant to the terms of the Settlement Agreement, the City will bring forward a separate action reducing the City of Chula Vista Page 1 of 4 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 132 File #: 14-0051, Version: 1 Telephone Users' Tax rate from 5% to 4.75% and an ordinance clarifying how the Telephone Users' Tax applies to wireless phone services. The Settlement Agreement established a Common Fund in the amount of $8 million in wireless Telephone Users' Taxes, along with any interest accrued to the fund between the date of preliminary approval of the settlement (April 12, 2013) and the effective date of the settlement (February 11, 2014). The Settlement Agreement included the establishment of a Common Fund to account for settlement funds and the City has created the TUT Common Fund in accordance with the terms of the Settlement Agreement. Any monies remaining in the TUT Common Fund after payment of all refunds to wireless customers and court approved expenses ("Unclaimed Common Fund") may be used by the City for the purposes identified in the Settlement Agreement. The Settlement Agreement lays out the administration and uses of these funds as follows: 'Any unclaimed portion of the Common Fund, in which City retains a reversionary interest, shall be earmarked as separate from City's General Fund and shall be used for the benefit of Chula Vista citizens to address communications, police services, fire services, libraries, parks and recreation services. City shall maintain accounting documentation, available for audit by Class Members, that ensures the monies are spent at dictated in this Agreement." Of the total $8 million Common Fund, $1,579,299 has been allocated to refunds to settlement class members and $2,209,935 has been allocated to court approved expenses, leaving $4,228,219 in unclaimed funds in the TUT Common Fund. A total of $17,453 in interest has accrued to the Common Fund since the date of the preliminary settlement and is included in the unclaimed amount. In accordance with the settlement agreement, staff is requesting an appropriation of$3,789,234 from the TUT Common Fund. The remaining $4,228,219, which represents the Unclaimed Common Fund monies, is not being appropriated at this time. Appropriation for this portion of the funds will be considered in conjunction with development of the fiscal year 2014-15 budget. An additional appropriation will be necessary in the future to fund outside counsel costs incurred by the City Attorney's Office in responding to this lawsuit. These expenses may not be funded by the TUT Common Fund. Sufficient wireless Telephone Users' Tax funds outside the TUT Common Fund have been set aside and are available for this purpose. This appropriation will be included in the next Quarterly Financial Report to the City Council (report for the quarter ending December 30, 2013). DECISION-MAKER CONFLICT Staff has determined that the action contemplated by this item is ministerial, secretarial, manual, or clerical in nature and, as such, does not require the City council members to make or participate in making a governmental decision, pursuant to California Code of Regulations Title 2, section 18702.4 (a). Consequently, this item does not present a conflict under the Political Reform Act (Cal. Gov't Code 87100, et seq.). Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This action supports City of Chula Vista Page 2 of 4 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 133 File #: 14-0051, Version: 1 the Operational Excellence goal by establishing the TUT Common Fund, creating a transparent accounting structure for the implementation of the Settlement Agreement. This transparency supports City Initiative 1.3.1 . - "Foster public trust through an open and ethical government." CURRENT YEAR FISCAL IMPACT Approval of the resolution authorizes the transfer of $8,017,453 from the General Fund to the TUT Common Fund in wireless Telephone Users' Taxes pursuant to the settlement terms. There is no impact to the General Fund operating reserves as these funds were set aside in previous years to address the pending litigation and settlement. Approval of the resolution further authorizes the appropriation of $3.8 million in the TUT Common Fund for the expenditures outlined in the table below. SOURCES OF FUNDS Description Amount Wireless TUT Settlement 8,000,000 Interest Earnings 17,453 Final Common Fund Balance 8,017,453 USES OF FUNDS Description Amount Claims Administrator 199,879 Attorney Fees to Class 1 ,837,500 Attorney Cost Reimbursement to Class 162,556 Class Representative Payment 10,000 Class Member Refund Payment 1 ,579,299 Subtotal 3,789,234 Unclaimed Portion of Common Fund 4,228,219 Total Settlement 8,017,453 The unclaimed portion of the settlement TUT Common Fund can be used to fund expenses to address communications, police services, fire services, libraries, parks and recreation services. In accordance with the City's Fiscal Policies and past practices, these one-time revenues are recommended for capital or other non-recurring expenses. Application of one-time revenues to ongoing expenditures creates a structural deficit in future years. No appropriation of the unclaimed Common Fund monies is proposed at this time but will be considered in the fiscal year 2014-15 budget development process. This action does not include appropriations to fund outside counsel costs incurred by the City Attorney's Office in responding to this lawsuit. Necessary appropriations will be included in the next Quarterly Financial Report to the City Council. Sufficient wireless Telephone Users' Taxes have been set aside to fully offset this expense without impacting the General Fund reserves. City of Chula Vista Page 3 of 4 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 134 File #: 14-0051, Version: 1 ONGOING FISCAL IMPACT There is no ongoing fiscal impact as a result of this action to fund the settlement terms. The reduction of the Telephone Users' Tax rate from 5% to 4.75%, which will be effective March 1 , 2014, is projected to reduce General Fund revenues by approximately $235,000 annually. Actual impacts of the rate reduction will vary based on future service charges subject to the TUT. These charges have decreased an average of 4% annually since 2011 . As the charges continue to decline, the fiscal impact of the rate reduction will also decrease. Ongoing availability and use of wireless Telephone Users' Tax funds will be considered in conjunction with future budget processes. ATTACHMENTS 1 . Final Order and Judgment Granting Final Approval of Class Action Settlement (Villa v. Chula Vista) City of Chula Vista Page 4 of 4 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 135 F t L E D Clerk of the superior cout-, 3 DEC 12 2013 1V , 4 SY.TIPIN JOHNSON,f)eputy Is 5 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SAN DIEGO, CENTRAL DISTRICT CARLA VILLA and VANESSA GARZA, Case No.: 37-2011-00093296-CU-MC-CTL 10 on behalf of themselves and all others similarly situated, ORDER AND JUDGMENT 11 GRANTING FINAL APPROVAL OF Plaintiffs, CLASS ACTION SETTLEMENT 12 V. Hearing Date: December 12, 2013 13 Dept: C-75 CITY OF CHULA VISTA: and DOES I Judge: Richard E. L. Strauss 14 through 100, inclusive, Complaint Filed: June 22, 2011 15 Defendant. Trial Date: Vacated—None Set 16 17 The Joint Motion for an Order Granting Final Approval of Class Action Settlement 18 carne before this Court on December 12, 2013. Class Counsel's Motion for Award of Attorney 19 Fees and Payments to Class Representatives also came on for hearing, 20 Carla Villa and Vanessa Garza ("Class Representatives") brought this lawsuit on behalf 21 of themselves and those similarly situated (collectively, "Plaintiffs") against the City of Chula 22 Vista("City") based on allegedly illegal and improper tax collection methods with respect to 23 the City's Telephone Users' Tax ("TUT"), Chula Vista Municipal Code (C.V.M.C.) 3.44.030, 24 et. seq., as applied to wireless/cellular telephone services. Plaintiffs sought a refund of all TUT 25 collected on charges for cellular telephone services. Plaintiffs' complaint seeks declaratory and 26 injunctive relief, and alleges money had and received, and unjust enrichment. 27 The City denies that the tax was collected illegally, denies all of the claims and any 28 1 [PROPOSED] ORDER AND JUDGMENT GRANTING FINAL APPROVAL OF CLASS ACTION I SETTLEMENT 2014-02-18 Agenda Packet Page 136 1 liability or wrongdoing of any kind associated with Plaintiffs' clairris asserted in their 2 complaint, and further denies that the action was appropriately certified as a Class Action. On April 12, 2013, this Court entered an Order Granting Preliminary Approval of 4 Settlement, resulting in certification of the following provisional settlement class: 5 All persons, includin'a' individuals, non-corporate entities, and corporations, wherever oroanized and existin-, who have paid the 6 Chula Vista Telephone Users Tax imposed by Chula Vista Municipal Code § 3.44.030 on mobile phone services or who have 7 paid the Telephone Users Tax on telephone services which are not taxable under section 4251 of the Internal Revenue Code. 9 That order further directed the parties to provide notice to the class, which informed 10 absent Class Members of: (a) the proposed settlement, and the settlement's key terms; (b) the I I date, time and location of the Final Approval Hearing; (c) the right of any class member to 12 ob.ect to the proposed settlement, and an explanation of the procedures to exercise that right. 13 (d) the right of any class member to exclude themselves from the proposed settlement, and an 14 explanation of the procedures to exercise that right; and (e) an explanation of the procedures 15 for Class Members to participate in the proposed settlement. 16 Pursuant to the Court's July 30th, 2013 Ex Parte Order Approving Supplemental 17 Notice and Continuing the Final Approval Hearing, the parties gave further notice as described 18 above in (a) through (e), including the continued Final A proval Hearing date of November 19 15, 2013, to all mailing addresses within the 91902 zip code located in that portion of the 20 community of Bonita situated within the limits of the City of Chula Vista. 21 In July 2013 Sprint Telephony PCS, Virgin Mobile, and Nextel Boost ("Sprint 22 Claimants") submitted TUT refund claims for TUT they allegedly paid related to the purchase 23 of prepaid iriobile service plans in the City and during the Class Period. A dispute thereby 24 ensued regarding whether the Sprint Claimants submitted proper claims in compliance with 25 the settlement terms, whether they qualify as class members, whether they paid the TUT as s 26 service user under the terms of the ordinance and whether they were proper parties to submit 27 claims under the Settlement. After a mediation session before Hon. Leo Papas [Ret.] of [PROPOSED[ ORDER AND JUDGMENT GRANTING FINAL APPROVAL OF CLASS ACTION 2014-02-18 Agenda Packet Page 137 I Judicate West and further arms-length negotiations, the Class, including Class Representatives 2 Villa and Garza,. the City, and the Sprint Claimants reached a compromise, docurnented in a 3 supplemental agreement, with the basic terms providing: 4 A. The Sprint Claimants' claims will be honored by the claims administrator and they 5 will be paid a total of$425,000 from the common fund. The Sprint Claimants shall 6 divide and allocate the $425,000 as they deem appropriate. 7 B. Class Counsel agree that the amount of$162,500 shall be subtracted from any 8 amount of attorney fees ordered by this Court, and such amount shall be allocated 9 to the payment to the Sprint Claimants to facilitate having the Sprint Claimants 10 included as class members. 11 12 The Court finds that the parties' settlement of the Sprint Claimants' claims was made in good faith and represents the best interests of all those involved. 13 14 Class Members were provided notice of the continued Final Approval Hearing through 15 the class administration website. No class member filed a notice of intention to appear at the 16 continued September 20, 2013 Final Approval Hearing pursuant to paragraph 16 of the Court's 17 Preliminary Approval Order. No notices of intention to appear were filed for the continued 18 final approval hearing set for November 15 or the further continued hearing of December 12, 19 2013. 20 The Court, upon notice having been given as required by both the Preliminary 21 Approval Order and the Ex Parte Order Approving Supplemental Notice and Continuing the 22 Final Approval Hearing, and having considered the proposed Settlement Agreement,attached 23 hereto as Exhibit A, as well as all papers filed, hereby ORDERS, ADJUDGES AND 24 DECREES AS FOLLOWS: 25 1. This Court has jurisdiction over the subject matter of the action and over all 26 parties thereto, including all members of the settlement class. 27 2. The Court finds that the settlement class is properly certified as a class for 28 3 ORDER AND JUDGMENT GRANTING, FINAL APPROVAL OF CLASS ACTION SETTLEMENT 2014-02-18 Agenda Packet Page 138 I settlement purposes only. 2 3. The notices provided to the settlement class conforms with the requirements of 3 California Code of Civil Procedure section 382, California Civi I Code section 178 1, California 4 Rules of Court 3.766 and 3.769, the California and United States Constitutions, and any other 5 applicable law, and constitutes the best notice practicable under the circumstances, by 6 providing individual notice to all physical addresses to which mail is delivered in the City of 7 Chula Vista and also to all mailing addresses within the 91902 zip code located ill that portion 8 of the community of Bonita situated within the linlits of the City of Chula Vista, and by 9 providing due and adequate publication notice of the proceedings and of the matters set forth 10 therein sufficient to notify Class Members. The notices fully satisfied the requirements of due 11 process. 12 4. The Court has reviewed the terms of the Settlement Agreement and finds that 13 the Settlement Agreement is fair, adequate, and reasonable when balanced against the possible 14 outcome of further litigation relating to class certification, liability, and damages. The Court 15 finds further that settlement at this time will avoid substantial additional costs and will avoid 16 the delay and risks presented by continued prosecution of the litigation. The Court also finds 17 that the settlement has been reached after significant and extensive arm's-length negotiations 18 between and among highly-experienced counsel for the parties, with the assistance of an 19 experienced mediator. The Settlement Agreement satisfies the standards and applicable 20 requirements for final approval of this class action settlement under the requirements of the 21 United States and California Constitutions and including all applicable laws and rules of court. 22 The Settlement Agreement attached to this Order as Exhibit A is hereby approved and made 23 part of this judgment as if fully set forth herein, and shall have the full force and effect of an 24 order of this Court. The parties shall effectuate the Settlement Agreement according to its 25 terms. 26 5. One class member objects to the terms of the settlement. Finding that the 27 settlement is fair, reasonable, and adequate, the Court finds that this objection lacks merit and 28 4 [PROPOSED] ORDER AND JUDGMENT GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT 2014-02-18 Agenda Packet Page 139 I is overruled. 2 b One class ineniber uas requested to be opted-out of the ^cu/o/^z" and has "= been excluded and is not bound by the 'Lidgment in this action except as provided by law. 4 7 Upon entry of this (}ronr, compensation to the participating members "^ the 5 settlement class shall be effected pursuant to the terms of the Settlen-lent Agreement. 6 8 In addition to any recovery that Plaintiffs may receive Linder the scu,"^""". and 7 in recognition of the Class Representatives' efforts on behalf of the settlement class, the Court 8 hereby the payment of an incentive award u/ $5uvvu/ each Class Representative, 9 payable out of the Common Fund. lO 9 Class l Casey Gerry Schenk r/uucu"u/^Blatt & Penfield and `_"p^`^^ °- I l A (collectively, "Class Counsel") have moved for an award" of attorneys'" ^`~"~.. 12 of which u voonou Class Members pursuant to ~`ourt's ^ ^^"...~ y 13 Approval Order. UuscV upon all papers filed with the Court,v'^u ^ula""�e " ".^ `-""^` " 14 observation and assessment or the performance u/ Class Counsel uu".a.^"". ° litigation," "~ 15 ccxu|dog settlement recovery, and good cause appearing uoz"^v^ ".^ ~"`"`^"^`"x "pe~,,~ lb the payment o1attorneys' fees to Class Counsel in the amount v^ 17 subject kz the reduction nf$l02,5OO us specified above, and the reimbursement oflitigation IS expenses iu the sum o{$l62,555.D8 (requested cost recovery amount o[$|58'85I88, plus lg $�,70O additional mediation costs incurred after O|io�the u�oiinnfor{coy), both nfwhich me 20 payable out of the Common Fund. 21 lO. The Court approves and orders final payment io the amount o{$ll6,955.64 22 ($199,879.04, less previous payment by City in the amount of$82,923.40) frorn the Common 23 Fund to Gi)urdi & Co. ("Claims Administrator") for perrorcouocc of its settlement claims _ 24 administration services. This final payment amount of$l|6,955.04iain addition tothe 25 $82,923.40 the City has already paid to Cluirns Administrator for such costs from thoCommon 20 Fund. Payment nf said costs shall ho made within 30dayonfthisOrder. 27 lI, The,payments dcuudbudio paragraphs 8 and 9of this Order, suhioc< io 28 5 NY1 AL AP R L OF CLASS ACTION SETTLEMENT zo1+'oz10 Agenda Packet Page 140 I deduction on account of the Sprint Claimants' settlement, shall be made within 14 days of the 2 Effective Date (for purposes of this order"Effective Date" shall have the sarne meaning as it is -1 defined in the Settlement Agreement). 4 12. The parties are ordered to give notice to all Class Members in accordance with 5 California Rule ofCourt 3.771(b) by mail service to each person or entity that filed a timely 6 objection and by posting this Order and Final Judgment on the class settlement website for a 7 period of at least 60 days after the Court enters this Order. 8 13. Upon the Effective Date Plaintiffs and all Class Members and their executors, 9 estates, predecessors, successors, assigns, agents and representatives, shall be deemed to have 10 jointly and severally released and forever discharged the City and the Related Parties from any I I and all Released Claims, whether known or unknown, arising from the facts alleged in the 12 complaint for the class claim period of April 2010 through April 2013 as more fully detailed in 13 the Settlement Agreement. The Class Members shall be fully and forever barred from 14 instituting or prosecuting in any court or tribunal, either directly or indirectly, individually or 15 representatively, any and all Released Claims against the City or any of the Related Parties. 16 The Court notes that, by way of the Settlement Agreement, Plaintiffs and all Class Members 17 have waived the protections afforded by California Civil Code Section 1542, as they relate to 18 the allegations contained in Plaintiffs' Complaint. 19 14. Upon completion of administration of the settlement, the parties shall file a 20 declaration stating forth that claims have been paid and that the terms of the settlement have 21 been completed. 22 15. Upon the Effective Date, the City shall retain a reversionary interest upon the 23 unclaimed portions of the Common Fund. The City's reversionary interest shall be earmarked 24 as separate frorn the City's General Fund and shall be used for the benefit of Chula Vista 25 citizens to address communications. police services, fire services, libraries. , parks, and 26 recreation services as set forth in the Settlement Agreement. City shall maintain accounting 27 documentation, available for audit by Class Members, that ensures the monies are spent as 28 6 [PROPOSED] ORDER AND JUDGMENT GRANTING FINAL APPROVAL OF CLASS ACTION 11 SETTLEMENT 2014-02-18 Agenda Packet Page 141 I dictated by this Final Order and by the terms of the Settlement Agreement. 2 16. This Final Judgment and Order is intended to be a final disposition of the above 3 captioned action in its entirety, and is intended to be immediately appealable. Under California 4 Code of Civil Procedure section 578, 579 and 664.6, the Court, in the interests of justice and 5 there being no reason for delay, expressly directs the Clerk of the Court to enter this Final 6 Judgment and Order, and hereby decrees, that upon entry, it be deemed as a Final Judgment 7 with respect to all claims in accordance with the Settlement Agreement. 8 17. This Court shall retain jurisdiction with respect to all matters related to the 9 administration and consummation of the settlement, and any and all claims, asserted in, arising 10 out of, or related to the subject matter of the lawsuit, including but not limited to all matters 11 related to the settlement and the determination of all controversies relating thereto. 12 13 IT IS SO ORDERED. 14 DEC 12..2013 OW RICHARD EL SMI 15 Ron. Richard E. L.Strauss " 16 JUDGE OF THE SUPERIOR COURT 17 18 19 20 21 22 23 24 25 26 27 28 7 -(PROPOSED] ORDER AND JUDGMENT GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT 2014-02-lB Agenda l acket Pa I ge 142 EXH I BIT A 2014-02-18 Agenda Packet Page 143 SETTLEMENT AGREEMENT (Villa v. Chula Vista) WHEREAS, Plaintiffs Carla Villa and Vanessa Garza brought this class action on behalf of themselves and those similarly situated (collectively, "Plaintiffs") against the City of Chula Vista ("City") for allegedly improper tax collection methods with respect to the City's Telephone Users' Tax ("TUT"), as more fully stated in the action entitled Carla Villa, et. al. v. City of Chula Vista, San Diego Superior Court Case No. 37-2011-00093296-CU-MC-CTL; WHEREAS, City denies all of the claims asserted by Plaintiffs in their complaint,and further denies that the action was appropriately certified as a Class Action; WHEREAS, the parties to this Agreement have conducted a thorough examination and investigation of the facts and law relating to the subject matters set forth in the Complaint and the claims set forth therein, including completing substantial discovery, and have engaged in significant motion practice, providing them an informed view of the strengths and weaknesses of their respective positions; WHEREAS, the parties recognize the risks and costs of prosecuting or defending this litigation and believe that it is in the parties' best interest to resolve finally and completely the potential claims of the Plaintiffs and the Class Members against the City at this time by and through this Settlement; WHEREAS, it is the intent of this agreement to ensure that every class member is given the fullest opportunity to receive refunds, in accordance with the procedures described herein, of any and all TUT paid within the Refund Recovery Period; WHEREAS, arm's length negotiations under the supervision of an experienced mediator have taken place between Class Counsel and Counsel for the City; and WHEREAS, the undersigned parties believe this Agreement offers significant benefits to the Settlement Class, and is fair, reasonable, adequate and in the best interests of all parties, NOW, THEREFORE, the undersigned parties stipulate and agree that all claims of the Plaintiffs and Class Members against the City shall be settled, discharged and resolved on the terms and conditions set forth below. Page 1 of 21 SETTLEMENT AGREEMENT 2014-02-18 ra illy et acket' City of Chula Vista, San Diego Superior Court Case No.37-20I 1-00093296-CU-MC-CTL page 144 I. DEFINITIONS As used in this document, the following terms shall have the defined meanings set forth below. Where appropriate, terms used in the singular shall be deemed to include the plural and vice versa. "Action" shall mean the class action in which Plaintiffs have filed a complaint on behalf of the taxpayers of the City of Chula Vista entitled Carla Villa, et al. v. City of Chula Vista, San Diego Superior Court Case No. 37-2011-00093296-CU-MC-CTL. "Attorneys' Fees and Expenses" means the amount(s) approved by the Court for payment to Class Counsel including attorneys' fees, costs, and litigation expenses. "Authorized Claimant" means a Class Member whose claim has been allowed as provided by the terms of this Agreement and the Final Order and Judgment of Dismissal of the Court approving the Settlement. "Claim Form" means the claim form, substantially in the form set forth in Exhibit A to this Agreement, which form must be timely and fully completed and submitted by each Class Member who wishes to receive, and is eligible to receive, payment of settlement benefits under the terms of this Agreement. "Claims Administrator" means the qualified-third party selected by the Parties and approved by the Court in the Preliminary Approval Order to administer this Agreement, including implementing the Notice provisions herein. The Parties agree to recommend that the Court appoint Gilardi& Co. as Claims Administrator. "Claims Period" shall refer to the time during which Class Members may timely submit Claim Forms, which shall span from the later of the postmark date of the mailing of the Notice to Class Members or the date of publication following entry of the Preliminary Approval Order, and end on the 90th day thereafter. "Class Members" means those persons as defined in "Settlement Class" below. "Class Period" means April 4, 2010 through April 12, 2013. "Class Settlement" means the terms of the settlement provided in this Agreement. "Common Fund" means the Eight Million Dollars ($8,000,000),plus any interest accruing to that amount beginning on the date of Preliminary Approval until the Effective Date, the City will earmark in its general fund beginning on the date of Preliminary Approval, which will be the total amount available to be used to pay refunds to the Settlement Class, and all Attorneys Fees and Expenses, and Notice and Claims Administration Expenses, as approved by the court, and under the terms of this Agreement. Page 2 of 21 SETTLEMENT AGREEMENT 2014-92rI-b Ei4A?d&I' LeY•City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL page 145 "Complaint" means the class action complaint Plaintiffs, through Class Counsel, filed on June 22, 2011. "City"means the City of Chula Vista. "Court"means the Superior Court of California, County of San Diego. "Effective Date"means the date on which the Settlement and Final Order and Judgment have become"final" in that all of the following conditions have been satisfied: I. The Final Order and Judgment has been entered; and 2. If an appeal, review or reconsideration is not sought from the Final Order and Judgment, the expiration of the time for the filing or noticing of any appeal, petition for review or motion for reconsideration; or 3. If an appeal, review or reconsideration is sought from the Final Order and Judgment, the date on which the Final Order and Judgment is affirmed and is no longer subject to judicial review. "Fairness Hearing" means the final hearing(s) scheduled by the Court in the Action, after proper notice, to determine whether to approve this Agreement. "Final Order and Judgment" means the last of the orders and final judgment of the Court dismissing the Action with prejudice as to the City and approving this Agreement. "Lead City Counsel" means DALEY&HEFT, LLP "Class Counsel" means the law firms of CAPRETZ &ASSOCIATES and CASEY GERRY SCHENK FRANCAVILLA BLATT&PENFIELD, LLP "Notice" means the Court-approved form of notice of this Agreement and Class Certification to be published to the Settlement Class as provided herein, substantially in the form of Exhibit C. "Notice and Claims Administration Expenses" means all reasonable costs and expenses incurred in connection with preparing, printing, mailing and publishing the Notice, processing claims, and administering this Agreement. "Parties" means the Plaintiffs Carla Villa and Vanessa Garza and all Class Members and Defendant City. "Plaintiffs" means Plaintiffs Carla Villa and Vanessa Garza and all Class Members. "Preliminary Approval Order" means the order of this Court, substantially in the form of Exhibit B attached hereto, granting preliminary approval of this Agreement and authorizing the Notice. Page 3 of 21 SETTLEMENT AGREEMENT 2014-MJ§Agnq,aJfaefe;1 City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 146 "Publication Notice" means the Court-approved form of Notice of this Agreement to the Settlement Class for publication in one or more editions of the San Diego Union Tribune and in the Chula Vista Star News. "Refund Recovery Period" means April 4, 2010 through the date of the Notice of Publication, or two weeks after preliminary approval is granted by the Court, whichever date is after. "Related Parties" means all of the City's past, present, and future, Mayor, council members, city managers, city clerks, finance directors, employees, agents, attorneys, and all their respective predecessors and successors in interest and legal representatives. "Released Claims" means and includes any and all claims, demands, rights, obligations, suits, and causes of action of every nature and description whatsoever, ascertained or unascertained, suspected or unsuspected, existing or claimed to exist including both known and unknown claims, of the Plaintiffs and all Class Members that were or could have been brought against the City and/or their Related Parties, or any of them arising from the facts alleged in the Complaint. The court shall retain jurisdiction to enforce the terms of this Agreement by any and all means available. "Released Parties" means the Plaintiffs, the City and the City's Related Parties. "Settlement Agreement" or "Agreement" means this Agreement and the exhibits attached hereto. "Settlement Class" means the Class certified by the Court: "All persons, including individuals, non-coiporate entities, and corporations, wherever organized and existing, who have paid the Chula Vista Telephone Users Tax imposed by Chula Vista Municipal Code § 3.44.030 on mobile phone services or who have paid the Telephone Users Tax on telephone services which are not taxable under section 4251 of the Internal Revenue Code." "Settling Parties" consists of all Class Members who do not exercise a valid opt-out and the City. "Settlement Value" includes the total value of the Settlement Agreement, the Common Fund, clarification of the taxing ordinance, and the reduction in the TUT tax rate. "TUT" shall mean the Telephone Users' Tax (Chula Vista Municipal Code 3.44.030, et seq.) collected by the City through the telephone utility providers as applied to wireless telephone services. II. REQUIRED EVENTS Promptly after the execution of this Agreement by representatives of both Parties: Page 4 of 21 SETTLEMENT AGREEMENT 2014d624#A� W@wt6&4ty. City of Chula Vista,San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL page 147 A. Filing The Parties shall submit this agreement for Preliminary Approval, thereby notifying the Court that PIaintiffs and the City have reached a formal settlement. B. Approval Lead City Counsel and Class Counsel shall take all necessary steps to obtain judicial approval of this Agreement and the dismissal with prejudice of the Action. As part of the approval process, the parties agree to cooperate and use their best efforts to describe and establish the benefits of this Agreement to the Settlement Class. C. Motion To effectuate the requirements of Paragraph II.A. above, the Parties shall jointly move for an order in substantially the same form as Exhibit B ("Preliminary Approval Order"), which by its terms shall: 1. Preliminarily approve the terms of the Class Settlement; 2. Determine or approve the Notice and Publication Notice to be given to the Settlement Class advising them of the Class Settlement and of the Fairness Hearing to be held to determine the fairness, reasonableness and adequacy of the Class Settlement; 3. Approve the appointment of the Claims Administrator; and 4. Schedule hearings to review comments and objections, if any, regarding the Class Settlement and to consider the fairness, reasonableness and adequacy of the Class Settlement and the application for an award of attorneys' fees and reimbursement of expenses, and to consider whether the Court should issue a Final Order approving the Class Settlement, dismissing the Action with prejudice as to the City, and awarding appropriate attorneys' fees and costs to Class Counsel, in the Court's discretion D. Efforts Class Counsel and the City and its counsel will cooperate to undertake all reasonable actions in order to accomplish the events described in this Section II. In the event that the Court fails to grant Preliminary Approval or fails to issue a Final Order and Judgment, Class Counsel and the City agree to use all reasonable efforts, consistent with this Agreement, to cure any defect identified by the Court, assuming the parties in good faith believe that the defect is curable. E. Fairness Hearing Upon expiration of the deadline for filing objections and/or requests for exclusion under this Agreement as set forth in the Preliminary Approval Order and Notice, and on the date set forth in the Preliminary Approval Order, a Fairness Hearing shall be conducted to determine final approval of the settlement along with the amount properly payable for attorneys' fees,costs and expenses. Page 5 of 21 SETTLEMENT AGREEMENT 2014-1 224 (gAW4.fq&ey. City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL page 148 F. Final Order and Judgment Upon final approval of this Agreement by the Court at or after the Fairness Hearing, the Parties shall present the Final Order and Judgment to the Court for approval and entry. Class Counsel and Lead City Counsel shall use all reasonable efforts, consistent with this agreement, to promptly obtain a Final Order and Judgment. zzz. SETTLEMENT TERMS A. Benefits to Parties As part of this Settlement, the Class Members shall receive the Settlement Value as described more fully below, and the City shall receive the release of claims provided herein and a dismissal with prejudice of the action. B. Refund to Class Members 1. Establishment of Common Fund. The Common Fund in the amount of Eight Million Dollars ($8,000,000), plus any interest accruing to that amount beginning on the date of Preliminary Approval until the Effective Date, shall be the total amount available to be claimed against by Class Members, less Notice and Claims Administration Expenses, and less Attorneys' Fees and Expenses, as approved by the Court. Class Members who paid TUT during the Class Period and who file a Claim Form pursuant to the procedures set forth herein and in the Court's Preliminary Approval Order(and any subsequent Orders, if applicable) are eligible to receive a refund of TUT paid. 2. Basic Class Member Information. Class Members must submit a completed CIaim Form, which includes the following information: (a) the primary account holder's name; (b) the billing/service address; (c) the claimant's mailing address if different from billing/service address; (d) the primary account holder's wireless telephone number under which Class Member is claiming a refund; and (e) the option of refund requested. 3. Option 1: Flat $35 Payment Refund Procedure. Class Members shall have the option of returning the Claim Form with no additional documentation for a flat payment of $35, subject to proration procedures referred to in paragraph III.B.7, infra. One flat payment refund will be issued for each account, regardless of the number of phones affiliated with that account. Should the Class Member select this Flat Payment Refund Procedure, he or she shall certify substantially as follows: "I paid for mobile or cellular telephone services between April 4, 2010 and April 12, 2013 and the billing address for said services was in the City of Chula Vista." 4. Option 2: $50/Year Refund Procedure. Class Members may instead obtain a flat refund of$50 for each year of the Refund Recovery Period (up to $150) that the Class Member submits proof of payment of the TUT within one or more years of the Refund Recovery Period. Acceptable methods of proof per $50 claim include copies of pages from a wireless telephone bill showing payment of the TUT, copies of wireless telephone plans with a Chula Vista billing address, and/or copies of canceled checks or other form of payment showing payment of a wireless phone bill, which Page 6 of 21 SETTLEMENT AGREEMENT 7014-ear} g atpag�q. City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 149 has a billing address in Chula Vista. Class Members choosing this option will receive a refund of$50 for each applicable year that payment of the TUT is shown by any of the aforementioned acceptable methods of proof regardless of the actual amount of TUT paid by the class member. Proof of payment for any number of years fewer than the full three years of the Refund Recovery Period will result in a$50 refund for only those years for which proof is submitted. 5. Option 3: Estimated Full Refund Procedure. Class Members may obtain a full or estimated full refund of all TUT paid during the refund period by submitting acceptable proof of payment of the TUT. Acceptable methods of proof of payment of the TUT include: a. Copies of wireless telephone bills showing charges for the TUT, b. Copies of wireless telephone plans with a Chula Vista billing address, and/or c. Copies of checks or other forms of payment showing payment of a wireless phone bill, which has a billing address in Chula Vista. At least one wireless telephone bill must be provided so the amount of TUT paid by the Class Member can be estimated. As long as one wireless telephone bill is provided showing charges for the TUT, proofs "b" and "c" above are appropriate to establish TUT paid in the additional months for that year of the Refund Recovery Period and the other years as described below. In order to receive an estimated refund of all TUT paid during the Refund Period, Class Members must provide an acceptable form of proof of payment (a-c above) for any two months in each year of the Refund Recovery Period (e.g., two forms of proof for April 2012-April 2013, two for April 2011-April 2012, and two for April 2010-Apri12011). Proof of two months of payment for fewer than each of the three years of the Refund Recovery Period will result in a refund of TUT only for those years covered by the two-months' proof. The amount of recovery under Option 3 shall be determined by the TUT paid in one month (or, if multiple bills are submitted, the average TUT paid) multiplied by 12 months for the year applicable to the proof of payment submitted. The total amount of recovery under Option 3 shall be determined based on the method stated in the preceding sentence as applied for each applicable year of the three year Refund Recovery Period that a Class Member claimant provides proof of two months of payment. On the Claim Form, if Class Members have not had continuous wireless service throughout the Claims Period, they shall indicate the month and year they began wireless service, which marks the beginning of their request for an estimated full refund. Class Members will receive no refund for those months prior to the month indicated. 6. Claimant's Statement. Regardless of the refund option selected, each Class Member must sign a statement acknowledging the accuracy of the information provided and permitting the Claims Administrator, at its discretion, to verify the information in the Claim Form (or submitted therewith) by requesting information from the Class Page 7 of 21 SETTLEMENT AGREEMENT 2014-6Hi$AWWaetaakev.City of Chula Vista,San Diego Superior Court Case No.37-201 I-00093296-CU-MC-CTL Page 150 Member's wireless telephone service provider. Either party may recommend to the Claims Administrator such verification. 7. The City shall issue a refund of TUT with respect to all valid claims subject to (a) a pro rata discount (using the method and formula identified in Section V.B.) if the dollar amount of claims exceeds the amount available for refund after attorneys' fees, expenses and administrative costs are deducted from the common fund; and, where applicable, (b) information from the Claimant's utility service providers showing that Claimant paid TUT. 8. As set forth in Section V.B, the Claims Administrator shall determine if each claim is valid. A Class Member who fails to make a valid Claim for settlement benefits will not receive any refund under this section of the Agreement. 9. Any unclaimed portion of the Common Fund, in which City retains a reversionary interest, shall be earmarked as separate from City's General Fund and shall be used for the benefit of Chula Vista citizens to address communications, police services,fire services, libraries, parks, and recreation services. City shall maintain accounting documentation, available for audit by Class Members, that ensures the monies are spent as dictated in this Agreement. C. Other Benefits to Class Members 1. Agreement to Lower the TUT Rate. The City agrees to lower the TUT rate from 5% to 4.75%. This reduction will take effect beginning on the first day of the next billing cycle (consistent with each telephone utility's billing practices) after Final Order and Judgment. Thereafter, the City agrees the TUT shall not be raised above 4.75% except upon voter approval as required by California law. 2. Agreement to Amend the TUT Ordinance. No later than 180 days after Final Order and Judgment, the City shall amend the TUT ordinance to address ambiguities in the ordinance relating to telecommunications services. IV. NOTIFICATION OF SETTLEMENT TO CLASS MEMBERS A. Overview After the issuance of the Preliminary Approval Order, members of the Settlement Class shall receive a Notice that informs theirs of, among other things, Class Certification, the terms of this Agreement, the rights that will be extinguished under the Agreement, and their rights and the processes by which to comment on, object to, or exclude ("opt-out") themselves from the Settlement. The Notice will inform them that, if they paid bills for the use of cellular or mobile telephone services with a billing address located within the City of Chula Vista at any time since April 4, 2010, they may be entitled to a refund pursuant to the terms of this Agreement. In addition, the Notice will advise them of the Claim Form they must complete in order to obtain a refund. The Notice shall be substantially in the form described in Exhibit C. In addition, the Publication Notice shall be published in print media to members of the Settlement Class. The Notice shall also include one or more toll-free telephone numbers for Class Members to call should they have any questions about the claims process. Page 8 of 21 SETTLEMENT AGREEMENT 2014'0'Z k% PJfldRYAA'City of Chula Vista,San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL page 151 B. Claims Administrator Class Counsel and the City shall select a Claims Administrator to be approved by the Court. The Claims Administrator shall be responsible for implementing the Notice to the Settlement Class. Dissemination of Notice to the Settlement Class shall be accomplished by both mailed notice and publication notice, written in English and Spanish. The Claims Administrator shall be responsible for, without limitation, (i) arranging for the publication and mailing of the Notice; (ii) respond to requests for the Notice; (iii) administration of claims as set forth below; and (iv) operate a toll-free Iive telephone support line for Class Members. The Notice shall comply with all applicable requirements of law. Nothing in this Agreement is intended to prohibit Class Counsel from providing assistance to Class Members during the Claims Process. The Claims Administrator shall also create a website (www.ChulaVistaCellPhoneTaxSettletment.cam) providing Notice of the information described in Section IV.A. The website shall allow Class Members to electronically submit claims forms and upload any required documentation under the terms of this Agreement. The website shall be in both Spanish and English. C. Confidentiality The Claims Administrator (and any person retained by the Claims Administrator) shall sign a confidentiality agreement in a form agreed by Class Counsel and the City. The confidentiality agreement will provide that the Claims Administrator shall treat as confidential the names, addresses and other information about the specific Class Members supplied by the City, Class Counsel, the utility providers, or by other individuals. The confidentiality agreement will further provide that the Claims Administrator shall use this information only as required by this Agreement. D. Publication Notice Upon issuance of the Preliminary Approval Order, the City shall cause to be published the Publication Notice in the form approved by the Court in the Preliminary Approval Order, in one or more editions of the San Diego Union Tribune and in the Chula Vista Star-News. The publication of the Publication Notice will begin promptly after entry of the Preliminary Approval Order on a date to be agreed upon by the Parties so as to provide the best practical notice to the Settlement Class. E. Individual Notice Within twenty (20) days of entry of the Preliminary Approval Order, the Claims Administrator shall mail Notice of Class Settlement and Claim Form, all in the form approved by the Court in the Preliminary Approval Order, to all physical addresses located within the City of Chula Vista to which mail is delivered. Page 9 of 21 SETTLEMENT AGREEMENT 2014-all§AMjWa pq et1,City of Chula Vista,San Diego Superior Court Case No.37-2011-0009')296-CU-MC-CTL Page 152 F. Notification on Websites The City and Class Counsel agree to provide notice of this Agreement on their respective websites including a link to the website established by the Claims Administrator for the submission of claims. This section shall not be interpreted to limit either party or their counsel's desired graphic, pictorial, or typographical web design for attracting attention to the Settlement Agreement, its terms, or to the link to the website created by the Claims Administrator, so long as said design is not misleading about the terms of this Agreement, and does not act to disparage either party. G. Joint Press Release The parties shall agree to a joint press release to major local television and newspaper outlets in San Diego County. The cost and administration of issuing this press release shall be borne by the Common Fund. The joint press release shall constitute substantially the same form attached as Exhibit D. H. Costs of Notice and Administration All reasonable costs as may be awarded by the court associated with the Notice and Claims Administration shall be paid from the Common Fund described in Section III.A.I prior to any refund disbursements to Class Members. V. CLAIMS ADMINISTRATION A. Claim Form Members of the Settlement Class will be directed to return the completed Claim Form to the Class Administrator within ninety (90) days of the mailing of the notices to the Class Members or the date of Publication of the Notice, whichever is later. Class Members may submit their completed Claim Form within this 90 day period by hand-delivery, fax, mail, or by electronic submission on the website created by the Claims Administrator. The written Claim Form shall be double-sided, with one side in English and the other in Spanish. The website shall have the electronic version of full Claim Forms in English and Spanish as formatted appropriately. When mailing the Claim Form as described in Section IV.E., the Claims Administrator shall include with the Claim Form a self-addressed pre-paid postage envelope in which the Claim Form may be returned. B. Claims Processing Class Members must provide the information described in Section III.B.2 and 6 (and as required for compliance with the selected refund claim options as provided in Section IILB 3, 4 and 5) during the Claims Period or else the Claim is invalid. The Claims Administrator shall review the refund information received from the Class Members and shall make a determination Page 10 of 21 SETTLEMENT AGREEMENT 7014-e9rW%tW,tP.a&het. City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 153 as to the amount of refund each claimant is entitled to. Within fifteen (15) days of the last date upon which an appeal may be filed in this Action, the Class Administrator shall make a determination as to whether the balance of the Common Fund described above in Section III.A.I, supra, is sufficient to make full refunds to all claimants. If the balance in the fund is sufficient to make full refunds, then the Claims Administrator shall promptly issue refund checks payable to the claimants. If the balance in the fund is not sufficient, then the Claims Administrator shall make a determination as to a pro rata distribution based on the amount claimed and the amount available, and shall promptly issue refund checks payable to claimants in the pro rata amount, using the following formula: Pro rata deduction = Net Settlement Fund Amount Total Value of Refunds Claimed Pro rata deduction x value of claim = net prorated refund C. Deceased Claimants Claims may be filed by deceased claimants through representatives of their estate if appropriate documentation is provided. Any claims paid to a deceased claimant shall be made payable to the estate of the deceased claimant or, in the absence of an estate, to next of loin with documentation. D. Timing All Claim Forms must be submitted by the postmark date set forth in the Court's Preliminary Approval Order and as specified in the Notice. Any Class Member who fails to submit a Claim Form by such date shall be forever barred from receiving any payment pursuant to this Agreement, but shall in all other respects be bound by the terms of this Agreement by the Final Order and Judgment entered in the Action. E. Rejected Claims 1. Claim Forms that do not meet the requirements set forth in this Agreement and in the Claim Form instructions, including those that are not signed, do not provide a billing address in Chula Vista, fail to provide a covered wireless phone number, or do not have the necessary documentation, shall be deemed deficient. 2. The cellular or mobile telephone bills provided by the Class Members shall create a rebuttable presumption that the claimant paid the TUT in the amount set forth on the bill.. Any Party may verify any Claim with the respective telephone utility provider's records at such Party's discretion and expense. Based on such verification or any other relevant circumstances, any Party may, upon notice to counsel for the opposing Party, recommend to the Claims Administrator that the claim should be approved or rejected. The Claims Administrator shall then make its own independent determination at its sole discretion whether to approve or reject the claim. Immediately, but no later than 10 days after receipt of a deficient Claim Form, the Page 11 of 21 SETTLEMENT AGREEMENT 7014cogrkPlft ft tfa€V4. City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 154 Claims Administrator shall notify the Claimant (whose Claim Form has been deemed deficient) of the deficiencies and requesting the Claimant correct them. If the Claimant has provided an email address, notice of deficiency may be sent electronically. If the Claimant has not provided an email address, the notice of deficiency must be mailed to the Claimant. The Claims Administrator shall timely provide to Class Counsel and to Lead City Counsel copies of all rejection notices. 3. Any Class Member whose initial Claim Form is rejected shall have the right to resubmit the Claim Form following notice of rejection so long as the resubmission is timely under section V.A. of this Agreement. 4. The Claims Administrator's final determination of the validity of a claim shall be non- appealable. 5. Specific Claim Form Issues: a. The following are examples of deficient Claim Forms requiring further action: i. A Claimant does not sign. ii. A Claimant signs, but does not date. iii. A Claimant does not provide his or her first and last name (failure to provide middle initial is not deficient). iv. A Claimant does not provide his or her wireless telephone number. v. A Claimant checks Option 2 but provides improper, or no, supporting documentation. vi. A Claimant checks Option 3 but provides improper, or no, supporting documentation. vii. A Claimant fails to list or document a billing address in Chula Vista. viii. A Claimant fails to provide a verifiable wireless phone number. b. The following are NOT deficiencies requiring further action by the Claimant. Instead, the Claims Administrator shall follow the instructions provided: i. If a Claimant does not provide a mailing address, but does provide a wireless telephone billing address, this is not deficient. ii. If a Claimant fails to provide an email address, this is not deficient. iii. If a Claimant fails to check a box under Options 1, 2, or 3, and no supporting documentation is provided, the Claims Administrator shall proceed as though the Claimant checked Option 1. iv. If a Claimant fails to check a box under Options 1, 2, or 3, and supporting documentation is provided, the Claims Administrator shall proceed as though the Claimant checked Option 2. v. If a Claimant checks multiple boxes under Options 1, 2, and 3, and does not provide supporting documentation, the Claims Administrator shall proceed as though Claimant checked only Option 1. vi. If a Claimant checks multiple boxes under Options 1, 2, and 3, and provides supporting documentation, the Claims Administrator shall proceed as though the Claimant checked the highest Option level for which the Claimant qualifies. Page 12 of 21 SETTLEMENT AGREEMENT 2014-GBd8 VjAWxpaakev. City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 155 F. No Liability for Benefits Determinations As discussed in Section II.D,supra, Class Counsel and the City will cooperate and use all reasonable efforts to secure a Final Order and Judgment. If, despite the efforts of the parties, the Court does not approve and enter the Final Order and Judgment or the Effective Date does not occur, no payments or distributions of any kind shall be made, nor shall the City be obligated to reduce the TUT rate as provided herein, or require the City to modify the TUT ordinance language as specified under this Agreement. G. Live Call Center Support The Claims Administrator shall provide live call center support to Class Members for any questions that may arise regarding the claims administration process including, but not limited to, how to fill out and return the Claim Form, what to do in the event the Claim Form is lost,and general questions about the settlement. H. Reminder Notice Four weeks before the end of the Claims Period, the Claims Administrator shall mail a one-time Reminder Notice postcard to all Chula Vista Class Members or addresses. The Reminder Notice shall include, among other things, information concerning the lawsuit, the deadline for submission of claims, and instructions on how a Claimant may make a claim. VI. OBJECTIONS AND OPT-OUTS BY CLASS MEMBERS A. Objections Objections by any Class Member to: (a) the proposed settlement contained in the Settlement Agreement and described in the class notice; (b)the payment of fees and reimbursement of expenses to Plaintiffs' Counsel; and/or (c) entry of the Judgment shall be heard, and any papers submitted in support of said objection shall be considered by the Court at the Fairness Hearing only if, at least two weeks prior to the Fairness Hearing, such objector files with the Clerk of the Superior Court for the County of San Diego: (1) a notice of his, her or its objection and a statement of the basis for such objection; and (2) if applicable, a statement of his, her or its intention to appear at the Fairness Hearing. Copies of the foregoing must also be mailed or delivered to counsel for the Parties. In order to be considered for hearing, all objections must be submitted to the Court and actually received by the counsel identified in the class notice on or before two weeks prior to the Fairness Hearing. A Class Member need not appear, in person or by counsel at the Fairness Hearing in order for his, her or its objection to be considered. B. Exclusions/Opt-Outs Any Class Member(s) who elect to exclude themselves or "opt out" of this Agreement must file a written request to opt out with the Claims Administrator on or before the date Page 13 of 21 SETTLEMENT AGREEMENT 2014-Unig Jhaaey City of Chula Vista, San Diego Superior Court Case No.37-201 I-00093296-CU-MC-CTL Page 156 specified in the Preliminary Approval Order. The Claims Administrator will record the date of receipt of the request for opt out and forward it to both Lead City Counsel and Class Counsel within seven (7) business days of the deadline for submitting opt outs, as specified in the Preliminary Approval Order. The Claims Administrator will also file the original requests to opt out with the Clerk of the Court no later than five (5) days prior to the scheduled Fairness Hearing date. The Claims Administrator shall retain copies of all written requests for opt out until such time as it has completed its duties and responsibilities under this Agreement. Any opt- outs made after the Notice of Class Certification but before Preliminary Approval shall be provided to the Claims Administrator. The request to opt out shall be signed by the Class Member, and include his/her name, address and telephone number, with a statement that includes the Class Member's desire to opt out of the class action involving the City of Chula Vista's collection of the TUT. 1. Class Members who opt out of the settlement shall relinquish their rights to benefit under the terms of this Agreement and will not release their claims under Section VII, below. However, Class Members who fail to submit a valid and timely request or exclusion on or before the date specified in the Preliminary Approval Order shall be bound by all of the terms of this Agreement and the Final Order and Judgment, regardless of whether they have otherwise attempted to request exclusion from the Settlement. 2. Any Class Member who submits a timely request for exclusion or opt-out may not file an objection to the settlement and shall be deemed to have waived any rights or benefits under this Agreement. C. Rescission of Opt Outs 1. The parties recognize that some Class Members who initially submit a request for an opt out seeking exclusion may, upon further reflection, wish to withdraw or rescind such opt out requests. Class Members shall be permitted to withdraw or rescind their opt out requests by submitting a "Rescission of Opt Out" statement to the Claims Administrator that includes their name, address, and telephone number and a statement indicating a desire to withdraw the previous request to opt out. 2. Class Members submitting such rescission statements shall sign and date the statement and cause it to be delivered to the Claims Administrator no later than the deadline for the claims filing period specified in the Preliminary Approval Order. 3. Class Members may submit a Claim Form along with their rescission of opt out statement. 4. The Claims Administrator shall stamp the date received on the original of any rescission of opt out Statement and serve copies to Class Counsel and Lead City Counsel no later than seven (7) business days after the deadline for claims filing period specified in the Preliminary Approval Order, and shall file the date stamped originals with the Clerk of the Court promptly thereafter. The Claims Administrator shall retain copies of all rescissions of opt out statements until such time as the Claims Administrator is relieved of its duties and responsibilities under this Agreement. Page 14 of 21 SETTLEMENT AGREEMENT 7014(93-PaI3VSRiAa;tfqS q� City of Chula Vista,San Diego Superior Couit Case No.37-201 1-00093296-CU-MC-CTL Page 157 D. List of Opt Outs No later than seven (7) business days after the deadline for submission of requests for exclusion or opt-out, the Claims Administrator shall provide to Class Counsel and Lead City Counsel a complete opt out list together with copies of the opt out requests. VII. RELEASES AND DISMISSAL OF THE ACTION AND JURISDICTION OF THE COURT A. Release of Claims by the Plaintiffs and the Settlement Class It is hereby agreed that, upon the Effective Date, Plaintiffs and all Class Members and their executors, estates, predecessors, successors, assigns, agents and representatives, shall be deemed to have jointly and severally released and forever discharged the City and the Related Parties from any and all Released Claims, whether known or unknown, arising from the facts alleged in the Complaint. Class members provide this release conditioned upon the City's compliance with all provisions of this Agreement. The court shall retain jurisdiction to enforce the terms of this Agreement by any and all means available. The Class Members shall be fully and forever barred from instituting or prosecuting in any court or tribunal, either directly or indirectly, individually or representatively, any and all Released Claims against the City or any of the Related Parties. Plaintiffs and all Class Members hereby acknowledge and waive the protections afforded by California Civil Code Section 1542, as they relate to the allegations contained in Plaintiffs Complaint, which provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. B. Dismissal Upon the Effective Date, the Action shall be dismissed with prejudice in its entirety. C. Continuing Jurisdiction Notwithstanding the dismissal described in Section VII. B, above, the Court shall retain jurisdiction over the Action for the purpose of entering all orders authorized hereunder, that may be necessary to implement or enforce the provisions of this Agreement. Except as otherwise provided herein, in the event that any applications for relief from this Agreement are made, such Page 15 of 21 SETTLEMENT AGREEMENT 2014Q2ti93WjHs0&ha&ker.City of Chula Vista,San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 158 applications shall be made to the Court. The Parties shall have the right to reduce the settlement to a stipulated judgment pursuant to Code of Civil Procedure Section 664.6. D. Exclusive Remedies Under Settlement Upon the Effective Date: (i) This agreement shall be the exclusive remedy for any and all Released CIaims of Class Members and (ii) the Released Parties shall not be subject to liability or expense of any kind to any Class Members, who shall be permanently barred and enjoined from initiating, asserting, or prosecuting against the Released Parties in any federal or state court or tribunal any and all Released Claims other than as provided by this Agreement. VIII. EFFECT OF DISAPPROVAL, CANCELLATION OR TERMINATION A. Conditions for Voiding this Agreement In the event (i) the Court does not enter the Preliminary Approval Order specified in this Agreement, (ii) the Court does not finally approve the settlement as provided in this Agreement, (iii) the Court does not enter the Final Order and Judgment as provided in this Agreement, or(iv) the settlement does not become final for any other reason, this Agreement shall be null and void and any order or judgment entered by the Court in furtherance of this settlement shall be vacated nune pro tune, in which case the Settling Parties shall proceed in all respects as if this Agreement had not been executed, and the terms or fact of this Agreement (as well as the negotiations leading up to the execution of this Agreement) shall be inadmissible in any proceeding for any purpose. Except as to the accrual of interest as set forth in the definition of"Common Fund", the obligations under this agreement, including the payment of claims, the payment of attorneys' fees and/or costs, shall be delayed until the Effective Date in the event an appeal is filed by either Party, including any objecting class member. IX. SETTLEMENT NOT EVIDENCE AGAINST THE SETTLING PARTIES A. Termination of Settlement Agreement In the event this Agreement is terminated for any reason: (i) all negotiations, proceedings, documents prepared and statements made in connection herewith shall be without prejudice to the Settling Parties, shall not be deemed or construed to be an admission by any Settling Party of any act, matter or proposition, and shall not be used in any manner or for any purpose in any subsequent activity in the Action or in any other action or proceeding; and (ii) other than as expressly preserved by this Agreement in the event of its termination. This Agreement shall have no further force and effect with respect to any Settling Party and shall not be used in the Action or any other proceeding for any purpose. Page 16 of 21 SETTLEMENT AGREEMENT 20140arkBWgHtW&1Pa&kef.City of Chula Vista,San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 159 B. The City's Denial of Liability The City denies all of the claims asserted by Plaintiffs in their Complaint, and further denies that the Action was appropriately certified as a Class Action. Nothing in this Agreement may be construed as an admission by any of the Parties of any wrongdoing or breach of any obligation whatsoever. X. ATTORNEYS' FEES AND ADMINISTRATIVE EXPENSES A. Class Counsel Fees and Costs The City agrees not to object to a request by Class Counsel for attorneys' fees provided that said request does not exceed 25% of the Common Fund as defined herein, plus litigation costs. Attorneys' fees, costs or expenses payable to Class Counsel as determined by the Court shall be paid from the Common Fund within fourteen (14) days of the Effective Date. B. Payment to Class Representatives The City agrees not to object to a payment of$5,000 to each named class representative as compensation for their services to the Class. Such payments, as determined by the Court, shall be paid from the Common Fund within fourteen (14) days of the Effective Date of the Final Order and Judgment. XI. REPRESENTATIONS, WARRANTIES, AND COVENANTS Class Counsel who are signatories hereof represent and warrant that they have the authority, on behalf of all Plaintiffs to execute, deliver, and perform this Agreement, and to consummate the transactions contemplated hereby. Class Counsel further warrant and represent that they have authority to seek the dismissal with prejudice of this Action. This Agreement has been duly and validly executed and delivered by Class Counsel and Plaintiffs and constitutes their legal valid and binding obligation. Both of the Class Representatives shall also sign this agreement in their individual and representative capacities. The City represents and warrants that it has authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by the City of this Agreement and the consummation by it of the actions contemplated hereby have been duly authorized by all necessary action on the part of the City. This Agreement has been duly and validly executed and delivered by the City and constitutes its legal, valid and binding obligation. H Page 17 of 21 SETTLEMENT AGREEMENT 2014 @2rk8ktgHa0&IPa eIt.City of Chula Vista,San Diego Superior Court Case No. 37-2011-00093296-CU-MC-CTL Page 160 XII. MISCELLANEOUS PROVISIONS A. Captions The headings of the sections and paragraphs of this Agreement are included for convenience only and shall not be deemed to constitute part of this Agreement or to affect its construction. B. Amendments This Agreement, including all appendices and exhibits attached hereto, may not be modified or amended except in writing signed by all Parties hereto. C. Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. D. Applicable Law This Agreement shall be governed and construed in accordance with the substantive laws of the State of California, without giving effect to any of its conflict of law provisions. E. Costs Except as specifically provided in this Agreement and as approved by the Court, each Party shall bear its own costs and attorneys' fees including taxable court costs. F. Exhibits All of the Exhibits to this Agreement are material and integral parts hereof and are fully incorporated herein by reference. This Agreement and the Exhibits hereto constitute the entire, fully integrated agreement among the Settling Parties and cancel and supersede all prior written and unwritten agreements and understandings pertaining to the settlement of the Action. The Parties each covenant and warrant that they have not relied upon any promise, representation or undertaking not set forth in writing herein to enter into this Agreement. G. Void Clauses If any provision,paragraph, section, article, or other portion of this Agreement is found to be void, all the remaining portions of this Agreement shall remain in effect and be binding upon the Parties provided that the void provisions were not material. The Court shall make the determination as to whether the void provisions were material. Page 18 of 21 SETTLEMENT AGREEMENT 2014®aEl1ffl)kjHaO&1Pake1. City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 161 H. Timing The Parties reserve the right, subject to the Court's approval, to request any reasonable extensions of time that might be necessary to carry out any of the provisions of this Agreement. L Notices Any notice, request or instruction or other document to be given by any Party to this Agreement to any other Party to this Agreement (other than class notification) shall be in writing and delivered personally or sent by registered or certified mail,postage prepaid to: To Class Counsel at: James T. Capretz, Esq. CAPRETZ& ASSOCIATES 5000 Birch St., Suite 2500 Newport Beach, CA 92660 And, Gayle M. Blatt, Esq. CASEY GERRY SCHENK FRANCAVILLA BLATT&PENFIELD, LLP 110 Laurel St. San Diego, CA 92101 To Lead City Counsel at: Scott Noya,Esq. DALEY& HEFT, LLP 462 Stevens Ave., Suite 201 Solana Beach, CA 92075 With a copy to: Charles H. Dick, Jr. 600 W. Broadway, Suite 1200 San Diego, CA 92101 J. Court Actions All applications for Court approval or Court orders required or permitted under this Agreement shall be made with reasonable prior notice to all Parties. Page 19 of 21 SETTLEMENT AGREEMENT 7014-GAIU%JWtemkeV.City of Chula Vista,San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 162 K. Interpretation The determination of the terms of, and the drafting of, this Agreement including any Exhibits, has been by mutual agreement after negotiation, with consideration by and participation of all Parties and their counsel. Because this Agreement was drafted with the participation of all Parties and their counsel, the presumption that ambiguities shall be construed against the drafter does not apply. Each of the Parties was represented by competent and effective counsel throughout the course of settlement negotiations and in the drafting and execution of this Agreement, and there was no disparity in bargaining power among the parties to this Agreement. L. Abeyance The parties agree to hold all proceedings in the Action, except such proceedings as may be necessary to implement and complete this Agreement, in abeyance pending the Final Hearing to be conducted by the Court. M. Fairness The parties believe that this Agreement is a fair, adequate and reasonable settlement of the Action and have arrived at this Agreement through arm's-length negotiations, taking into account all relevant factors,present and potential. IN WITNESS THEREOF, the Parties or their respective counsel have executed this Agreement as of the date(s) indicated on the lines below: CASEY GERRY SCHENK FRANCAVILLA BLATT&PENFIELD, LLP Date: By: /— , �J ,3b V_ Gayle M. Blatt, Attorneys for Plaintiffs CAPRETZ& ASSOCIATES, LLP Date: By: James Capretz, Attorneys for Plaintiffs �r Date: 4//,y i 3 By: ar a i Ia, Class Representative Page 20 of 21 SETTLEMENT AGREEMENT 2014QW'h18VjUs0;o1P.ake)r.City of Chula Vista, San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL Page 163 K. Interpretation The determination of the terms of, and the drafting of, this Agreement including any Exhibits,has been by mutual agreement after negotiation,with consideration by and participation of all Parties and their counsel. Because this Agreement was drafted with the participation of all Parties and their counsel, the presumption that ambiguities shall be construed against the drafter does not apply. Each of the Parties was represented by competent and effective counsel throughout the course of settlement negotiations and in the drafting and execution of this Agreement, and there was no disparity in bargaining power among the parties to this Agreement. L. Abeyance The parties agree to hold all proceedings in the Action, except such proceedings as may be necessary to implement and complete this Agreement, in abeyance pending the Final Hearing to be conducted by the Court. M. Fairness The parties believe that this Agreement is a fair, adequate and reasonable settlement of the Action and have arrived at this Agreement through arm's-length negotiations, taking into account all relevant factors,present and potential. IN WITNESS THEREOF, the Parties or their respective counsel have executed this Agreement as of the date(s)indicated on the lines below: CASEY GERRY SCHENK FRANCAVILLA BLATT&PENFIELD, LLP Date: By: Gayle M,Blatt,Attorneys for Plaintiffs CAPRETZ&ASSOCIATES,LLP Date orZk B 7 e Capretz,AWomeys for Plaintiffs Date: By: Carla Villa, Class Representative Page 20 of 21 SETTLEMENT AGREEMENT Carla Villa,et.al.v.City of Chula Vista,San Diego Superior Court Case No.37-2011-00093296-CU-MC-CTL 2014-02-18 Agenda Packet Page 164 Date: By: Vanessa za, Class Representative CITY OF CHULA VISTA Date: By: Glen Googins, City Attorney City of Chula Vista DALEY&HEFT Date: By: Scott Noya, Attorneys for Defendant City of Chula Vista Page 21 of 21 SETTLEMENT AGREEMENT 7 014- j1(jj A&Wpdta 01etV.City of Chula Vista,San Diego Superior Court Case No.37-201 1-00093296-CU-MC-CTL Page 165 Date: By: Vanessa Garza, Class Representative CITY OF CHtiLA VISTA Date: By: Glen Googins, City Attorney City of Chula Vista DALEY&HEFT ` Date: '0c)13 B y: vrr Sc ott Noya, Attorneys efendant City of Chula Vista Page 21 of 21 SETTLEMENT AGREEMENT Carla Villa,et.al.v.City of Chula Vista;San Diego Superior Court Case No. 37-2411-00093296-CU-MC-CTL 2014-02-18 Agenda Packet Page 166 i € Vanessa Garza, Class Representative CITY OF CI-IULA VISTA Date: ZCP 31 By: .� Glen Googins, City A orne City of Chula Vista DALEY & HEFT Date: By: Scott Noya, Attorneys for Defendant City of Chula Vista € i I l 31 1 Page 21 of 21 SETTLEMENT AGREEMENT Carla Villa, et, al. v.City of Chula Vista, San Diego Superior Court Case No. 37-2011-00093296-CU-MC-CTL 2014-02-18 Agenda Packet Page 167 € RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA (A) AUTHORIZING THE TRANSFER OF $8,017,453 IN WIRELESS TELEPHONE USERS TAX REVENUES FROM THE GENERAL FUND TO THE TUT COMMON FUND AND APPROPRIATING FUNDS THEREFORE (B) APPROPRIATING $3,789,234 IN THE TUT COMMON FUND FOR EXPENSES RELATED TO THE SETTLEMENT AGREEMENT IN THE MATTER OF CARLA VILLA, ET. AL., V. CITY OF CHULA VISTA (4/5THS VOTE REQUIRED) WHEREAS, the City has reached a class action settlement in the matter of Carla Villa et. al. v. City of Chula Vista; and WHEREAS, pursuant to the terms of the Final Order and Judgment Granting Final Approval of Class Action Settlement in the aforementioned action, the City is ordered to provide an $8 million interest accruing Common Fund which will be used to pay refunds to the Settlement Class, and all Attorneys Fees and Expenses, and Notice and Claims Administration Expenses, as approved by the Court; and WHEREAS, the City has established a new fund titled TUT Common Fund in accordance with the settlement; and WHEREAS, it is therefore necessary to transfer$8,017,453 ($8.0 million from settlement plus $17,453 in interest earnings) from the General Fund to the newly established TUT Common Fund, to be used per the Final Order; and WHEREAS, a total of$1,579,299 in class member refunds have been claimed; and WHEREAS, a total of $2,209,935 in Attorney's Fees and Expenses and Notice and Claims Administration Expenses have been approved by the Court; and WHEREAS, it is therefore necessary to appropriate $3,789,234 to the TUT Common Fund for these expenses; and WHEREAS, payment of the aforementioned expenses results in an unclaimed balance in the TUT Common Fund in the amount of$4,228,219; and WHEREAS pursuant to the Final Order, any unclaimed portion of the TUT Common Fund, in which the City retains a reversionary interest, shall be earmarked as separate from the City's General Fund and shall be used for the benefit of Chula Vista citizens to address communications, police services, fire services, libraries,parks and recreation services. 2014-02-18 Agenda Packet Page 168 Resolution No. Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it does hereby authorize the following in accordance with the settlement agreement in the matter of Carla Villa et. al. v. City of Chula Vista: 1) Authorize the transfer of$8,017,453 in Wireless Telephone Users Tax revenues from the General Fund to the TUT Common Fund and appropriates $8,017,453 to the Transfers Out Category of the Non Departmental budget; and 2) Appropriate $3,789,234 to the Other Expense Category of the TUT Common Fund for expenses outlined in the settlement agreement as specified herein, above. Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Director of Finance/Treasurer City Attorney 2014-02-18 Agenda Packet Page 169 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0056, Version: 1 INVESTMENT REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2013 RECOMMENDED ACTION: Council accept the report. SUMMARY Transmitted herewith is the City's investment report for the quarter ended September 30, 2013. A separate information memo was distributed to the City Council in October to meet the reporting requirements set forth in the California Government Code Sections 53600 et seq. and the City of Chula Vista Investment Policy. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 (b)(4) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not Applicable DISCUSSION The total cash and investment portfolio held by the City as of September 30, 2013 was $209,747,129. This is a decrease of approximately $18M from June 30, 2013. This is primarily due to the fact that only a small portion of the City's major revenues such as property or sales tax are received during this quarter compared to the other quarters. For the quarter ended September 30, 2013, the earned interest yield was 0.66%, a slight increase from the 0.62% reported for the quarter ended June 30, 2013. The weighted average maturity as of September 30, 2013 remained the same from the previous quarter's 2.18 years which is within the Council Policy of less than 3.0 years. The weighted average maturity remains sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated. DECISION-MAKER CONFLICT Staff has determined that the action contemplated by this item is ministerial in nature and does not require the City Council members to make or participate in making a governmental decision, pursuant to California Code of Regulations section 18702.4(a). Consequently, this item does not present a conflict under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Staff is not independently aware, nor has staff been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy City of Chula Vista Page 1 of 2 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 170 File #: 14-0056, Version: 1 Community, Strong and Secure Neighborhoods and a Connected Community. The investment portfolio supports the Operational Excellence goal as it seeks to maintain the safety and liquidity of the City's cash while contributing investment earnings to the bottom line. CURRENT YEAR FISCAL IMPACT Considering the projected timing of cash receipts and disbursements and the structure of the Pooled Investment Portfolio, the City should be able to comfortably meet overall cash flow needs over the next six months. There is no direct fiscal impact by this action. ONGOING FISCAL IMPACT There is no ongoing fiscal impact by this action. City of Chula Vista Page 2 of 2 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 171 CITY OF CHUTA VISTA Finance Department Investment Report for the Quarter Ended September 30, 2013 January 23, 2094 Honorable Mayor and City Council, I am pleased to present this report of investment activity for the quarter ended September 30, 2013 in compliance with the reporting requirements as set forth in the California Government Code Sections 53600 et seq. and the City of Chula Vista Investment Policy. The information presented in this report highlights the investment activity for the quarter ended September 30, 2013 as well as provides a comparison to the quarters ended June 30, 2013 and September 30, 2012. Market Overview The Federal Open Market Committee (FOMC) continues to maintain the key Fed Funds rate at a target range of 0.00% to 0.25% in hopes of stimulating the economy. Two-year Treasuries yielding 0.34% at the beginning of the quarter decreased to 0.33% by the end of the quarter. The overall consumer price index (CPI) rose 1.2% on a year-over-year basis, and the core CPI (excluding food and energy) showed a 1.7% increase year-aver-year. The Federal Reserve continues to monitor these increases to ensure that inflation remains under control. Portfolio Composition The table below provides a summary of the City's total investment portfolio as of September 30, 2013. The Investment Portfolio ($201,699,387), Cash/Time Deposits ($8,047,742) and Bank Trustee/Fiduciary Funds ($64,515,471) continue to be invested in accordance with the Government Code, bond covenants and the Council Investment Policy as adopted on February 26, 2013. 2014-02-18 Agenda Packet Page 172 Investment Report Quarter ended 09/30/2013 Page 2 of 5 Summary of Cash and Investments as of September 30,2013 %of Investment Type Par Value Market Value Book Value Portfolio Investment Portfolio Federal Securities 122,000,000 120,713,515 121,998,500 44.48°/% Pooled Investments 79,699,387 79,710,162 79,699,387 29.06% Corporate Bonds 0 0 0 0.00% Subtotal 201,699,387 200,423,677 201,697,887 73.54% Cash/Time Deposits $8,047,742 $8,047,742 $8,047,742 2.93% Total Cash&Investments Held by the City $209,747,129 $208,471,419 $209,745,629 76.48% Held by Bank Trustee/Fiduciary Funds(1) U. S. Government 0 0 0 0.00% Repurchase Agreement 0.00% Investment Agreements 13,538,230 13,538,230 13,538,230 4.94% Mutual Funds 48,136,812 48,137,352 48,136,812 17.55% Cash with Fiscal Agents 2,094,981 2,094,981 2,094,981 0.76% Restricted Cash 745,448 745,448 745,448 0.27% Total Held by Bank Trustee/Fiduciary Funds $64,515,471 $64,516,011 $64,515,471 23.52% Total Portfolio $274,262,600 $272,987,430 $274,261,100 100.00% (1)Reflects bond proceeds held by trustee in accordance with bond covenants. The graph below provides a snapshot of the portfolio composition by investment type for that portion of the portfolio not held by the bank trustee or in a fiduciary fund. Portfolio Composition as of September 30, 2013 ($201.7M Total Par Value) LAIF (State US Government Pool) Agency 19.6% 60.5% SD County Pool CalTrust 19.5% 0.5% 2014-02-18 Agenda Packet Page 173 Investment Report Quarter ended 09/30/2013 Page 3of5 Portfolio Performance The summary information provided below includes the total portfolio income recognized for the last quarter as compared to the prior quarter and the same quarter one year ago. Total Portfolio Income Recognized Accrual Basis September 30, 2013 June 30, 2013 September 30, 2012 Quarter-End Net Interest Earnings $ 332,101 $ 305,221 $ 381,041 Net Gains (Losses) from Sales $ - $ - $ Net Total Income Recognized $ 332,101 $ 305,221 $ 381,041 Fiscal Year-to-Date Net Interest Earnings $ 332,101 $ 1,336,534 $ 381,041 Net Gains (Losses)from Sales $ - $ - Net Total Income Recognized $ 332,101 $ 1,336,534 $ 381,041 This info comes from the monthly Sympro 'Interest Earnings Summary"reports. This table shows the City's average yield to maturity as of Agency Yield September 30, 2013 as compared to the County of San Diego Chula Vista 0.66% and other cities in the county. Carlsbad and Oceanside both County of San Diego 0.30% have dedicated staff that actively manage their portfolios by Carlsbad 1.02% buying and selling investments daily as opposed to our more El Cajon 0.53% passive "hold-to-maturity" investment style. Liquidity needs Oceanside 0.91% and risk tolerance can also affect yields. San Diego 0.42% Benchmark Comparison The following graph compares the monthly earned interest yield of the City's Portfolio Fund with the monthly average yields for the same period of the State of California Local Agency Investment Fund (LAIF) and the two-year and three-year treasury from September 2011 through September 2013. 2014-02-18 Agenda Packet Page 174 Investment Report Quarter ended 09/30/2013 Page 4 of 5 Monthly Benchmark Comparison 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4 0.2% 0.0% Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 +City —LAIF t2yr Treasury —a 3yr Treasury Per Section 16.1 of the City's Investment Policy, the Benchmark Yield ADM two-year U.S. Treasury and the Local Agency Investment Fund yields are the performance City 0.66% 239 797 benchmarks to be used when determining whether 2 Year 0.3263% 730 % market yields are being achieved. The three-year U.S. 2 Year Treasury 0 Treasury is added as an additional point of reference in 3 Year Treasury 0.63% 1,095 order to provide an upper range that is above the ADM =Average Days to Maturity weighted average maturity of the City's portfolio, which is at 797 days. Investment Activi During the quarter, two investments totaling $6,000,000 were redeemed prior to their maturity dates. These monies represent pooled cash received from various funding sources such as sewer, TDIF, PAD, General Fund, etc. These funds were reinvested through the purchase of four Federal Agency Securities totaling $12,000,000 using the City's Investment Policy guidelines to ensure safety, liquidity and yield. There is no further activity to report on other than routine investments in money market mutual funds by the City's fiscal agents. Conclusion The total cash and investment portfolio held by the City as of September 30, 2013 was $209,747,129. This is a decrease of approximately $18M from June 30, 2013. This is primarily due to the fact that only a small portion of the City's major revenues such as property or sales tax are received during this quarter compared to the other quarters. For the quarter ended September 30, 2013, the earned interest yield was 0.66%, a slight increase from the 0.62% reported for the quarter ended June 30, 2013. 2014-02-18 Agenda Packet Page 175 Investment Report Quarter ended 09/3012013 Page 5 of 5 The weighted average maturity as of September 30, 2013 remained the same from the previous quarter's 2.18 years which is within the Council Policy of less than 3.0 years. The weighted average maturity remains.sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated. Considering the projected timing of cash receipts and disbursements and the structure of the Pooled Investment Portfolio, the City should be able to comfortably meet overall cash. flow needs over the next six months. There is no direct fiscal impact by this action. I certify that this report reflects the City of Chula Vista and related agencies pooled investments and is in conformity with the State of California Government Code on authorized investments and with the Investment Policy of the City of Chula Vista as stated in Resolution No. 2013-020 dated February 26, 2013. 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LL, {,l_ LL LL LL LL LL LL LL LL LL LL to O O O � � Q � N fn to C d E N h h h Lry d h V W N h W (D m V3 N N O m CO N Cl LO V W LS) a) ttT d' N O N ti CO CD N h N m m m o P r N P N m N m m N m y 11 !D D D h n 0 fl h O fD D h h h h h h h m h p cO h (D 0 0 0 0 0 0 0 0 o a 0 0 0 0 0 0 0 0 0 0 7 N 0 0� d = o G�7 rn d v d o Q x Q m N LL Y x N h h QI M u'1 �} m 14 M c7 O U ('� >_ N �O C„) LL' LL O d Q (q o (ti o y C7 C7 C7 C7 W C7 U 0W (7 L7 m cD u C7 LL] W W 0 C7 W W W C9 W C t= C L -O V V V Ln M V eD 0 m (D 2 m Co (0 M 0 M cO 4 M 0 n W N p Co } y r2 V r� (n V c'7 (h 2 2 (� — (r, c2 (2 r� M (n m P m m m m m C 2014-02-18 Agenda Packetu n 0 (n is M M M M M M M M n co 0 M M M M M M M M M M M M M Pagc 178 Ny y am ' i n n n n n n m w ro ea m as w o7 � V � (D o a a a o 0 0 0 0 rO Or o a a m N 1F fa ~N P] 0 P] nn � � N Q (m�F N N O dp1] 11N N O N C1 U � 0 0 r r r 0 � [V t!l CO m O � r r O O O O O. 0 O O O v a" o o o o P Q u7 0 o A d o d W w -C 1- O d co Cd )n d K1 O M l o N O O W D1 O W W Qf d) m O o 4 d' [o d/ to 0 � N I In M n W o O 7 7 to m a p m r O o N N al vL v vi Ili L'i u7_ L in Fn L m n n r� I m I- L .-- M R r r - - - -- r - r r a og mi g cp m m m (n eo m m co m m m m m w �n d N N N N N N N N N N N N N N N I m tp y W W W W W W cc m W W W W W aV cp Le m H r r r - r r r r r - r r r r' r 'g a) O o o rCi P o o Lo 0 0 0 0 Lo o o a1 Ib n o o n )n o n O M 42 O N O O i� W o) O W m o) o W O o P M �5 0 0 r o 0 0 o o r r r r r r - Q! 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U- CP O r+ CO CD r ¢ h p7 "C OL -p N Yy (6 U m — — N > ,� Q) Q M -p cl V 3- C cD > m > L (U c m N Q U (6 U R` -O d C m r rn � m � � c v U h c n a� m e ¢ o E 3 w > N Q .� C O L C N N w m L l4 -V O m C LL' p d m c r°� �'❑ Li E a� c O E m aci E D i cn w Fm x u i m a .- Q m U m S U U > ; c m _ m (v a Q ° = o c (o °' c m v o w u = o .2 U m o = � m w u N c o a�Ei LL N a E N m � E U U o E L m 2i U M ¢ H .2 y R 0 3 D - 0. 0. - 2 O m n 'c 'c cr°� m "a o m o ) N - O cD °' do ao � co O O r r r �` O i ¢ F o d 'Q 3 r U O N O O O U U LL d O U rL LL j N Ur m'C ®1 -38 A"nd�ac]Pet ❑ ❑ ❑ ❑ o o LL ❑ ❑ ❑ ❑ ° f U) m ¢ m Page 190 Q y p O d LL LL LL LL O O > LL LL LL LL o o a > ta cD ❑ ❑ g N R m U N N U N U U U U N N U U U U U (V " " U d O 0, U O 0 City of Chula Vista Cashffirne Deposits 30-Sep-13 CASH IN DANK Bank.of America -General Account 7,260,410 Bank of America - Payroll Account (1,736) California Bank - Direct Deposit Account 3,381 Wells Fargo Bank-CV Workers Comp Account 468,062 7,730,117 CASH ON HAND Petty Cash Fund 7,625- 7,625 TIME DEPOSIT Bank of.America Time Deposit 310,000 3t0,000 Cash/Time Deposits as of 09/3012013 8,447,742 j:financeldata\Cash and Time Deposits FY1314 SEPTEMBER 30, 2013.xls As of 112412013 2014-02-18 Agenda Packet Page 191 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0089, Version: 1 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $38,750 TO FUND THE LAW OFFICE MANAGER POSITION IN THE CITY ATTORNEY'S OFFICE FOR THE REMAINDER OF FISCAL YEAR 2013/2014 TO BE OFFSET BY REVENUES FROM REIMBURSEMENTS FOR LEGAL SERVICES PROVIDED TO THE SUCCESSOR AGENCY RESULTING IN NO NET FISCAL IMPACT (4/5 VOTE REQUIRED) RECOMMENDED ACTION: Council adopt the Resolution. SUMMARY This item proposes the funding of the Law Office Manager position within the City Attorney's office for the remainder of Fiscal Year 2013/2014. Funding will be accomplished with no net fiscal impact through reimbursements from the Successor Agency to the City Attorney's office for legal services rendered. The Law Office Manager's duties will be manifold; however the position's primary focus will be to enhance the quality, quantity and timeliness of legal services provided by the Office to all client City departments through the application of Continuous Improvement tools and principles. Depending upon results, and available resources, this position may be proposed for continued funding in the City's budget for Fiscal Year 2014/2015. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project"as defined under Section 15378(b)(4) of the State CEQA Guidelines because it is a government fiscal activity) that will not result in a physical change in the environment, therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not applicable. DISCUSSION The Law Office Manager position has been identified as an authorized position, but not funded, within the City Attorney's office budget since 2009. This item proposes the funding of the Law Office Manager position for the remainder of Fiscal Year 2013/2014. Funding will be accomplished with no net fiscal impact through reimbursements from the Successor Agency to the City Attorney's office for services rendered, or, if necessary, other available funds from the City Attorney's Office existing budget. The Office Manager's duties will be manifold; but, the position's primary focus will be to enhance the quality, quantity and timeliness of legal services provided to all City departments through the application of Continuous Improvement tools and principles. Current projects of this type (in various stages of implementation) include: (1) an automated project request and tracking system; (2) comprehensive document management systems, including form and opinion banks; (3) "standard City of Chula Vista Page 1 of 2 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 192 File #: 14-0089, Version: 1 work" for routine tasks; (4) performance metrics for both advisory and litigation functions; and (5) increased development and deployment of training modules. Depending upon results, this position may be proposed for continued funding in the City's budget for Fiscal Year 2014/2015. Both the City Manager and the City Attorney support the funding of this analyst level position to boost the City Attorney's office overall effectiveness. Overall City productivity is also projected to increase because of the key role the City Attorney's office serves in providing support to all City Departments. DECISION-MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific; consequently, the 500-foot rule found in California Code of Regulations section 18704.2(a) (1), is not applicable to this decision. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This action will enhance the City Attorney's office capacity to support all of these goals, particularly Operational Excellence, as the position of Office Manager will be focused on implementing Continuous Improvement projects, both existing and future, with the objective of providing higher quality legal services to all City departments. CURRENT YEAR FISCAL IMPACT The Law Office Manager position is an authorized but unfunded position in the City Attorney's Office budget. Approval of the resolution will provide funding for this position for the remainder of fiscal year 2013/2014. There is no net fiscal impact in the current year to the General Fund as a result of this change. The appropriation of $38,700 will be fully offset by a reimbursement from the Successor Agency administrative funds for legal staff time services provided to the Successor Agency related to the winding down of the Redevelopment Agency, or, if necessary, other funds available within the City Attorney's existing budget. ONGOING FISCAL IMPACT If this position is proposed for ongoing funding in next year's budget, further fiscal analysis will be conducted and provided at that time. The current projected annualized cost of this position would be approximately $92,900. At least a portion of that cost could be offset by continued reimbursements from the Successor Agency. City of Chula Vista Page 2 of 2 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 193 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $38,750 TO FUND THE LAW OFFICE MANAGER POSITION IN THE CITY ATTORNEY'S OFFICE FOR THE REMAINDER OF FISCAL YEAR 2013/2014 TO BE OFFSET BY REVENUES FROM REIMBURSEMENTS FOR LEGAL SERVICES PROVIDED TO THE SUCCESSOR AGENCY RESULTING IN NO NET FISCAL IMPACT (4/5 VOTE REQUIRED) WHEREAS, the Law Office Manager position has been identified as an authorized position, but not funded,within the City Attorney's office budget since 2009; and WHEREAS, the City Manager and the City Attorney have proposed the funding of the Office Manager position within the City Attorney's office for the remainder of Fiscal Year 2013/2014; and WHEREAS, funding will be accomplished with no net fiscal impact through reimbursements from the Successor Agency to the City Attorney's office for legal services rendered; and WHEREAS, the Office Manager's primary focus will be to enhance the quality, quantity and timeliness of legal services provided to all City departments through the application of Continuous Improvement tools and principles; and WHEREAS, Depending upon early results, this position may be proposed for continued funding in the City's budget for Fiscal Year 2014/2015; and WHEREAS, Both the City Manager and the City Attorney support the funding of this analyst level position to boost the City Attorney's office overall effectiveness; and WHEREAS, overall City productivity is also projected to increase because of the key role the City Attorney's office serves in providing support to all City Departments. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby appropriate $38,750 to the City Attorney's Personnel Services budget to fund the Law Office Manager position in the City Attorney's Office for the remainder of fiscal year 2013/2014 to be offset by revenues from reimbursements for legal services provided to the Successor agency, and/or other available sources within the City Attorney's existing budget, resulting in no net fiscal impact. Presented by Approved as to form by Glen R. Googins Glen R. Googins City Attorney City Attorney 2014-02-18 Agenda Packet Page 194 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0052, Version: 1 CONSIDERATION OF THE PROPOSED ASSESSMENT OF CERTAIN DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER-OCCUPIED PARCELS OF LAND AND PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING CERTAIN DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER-OCCUPIED PARCELS OF LAND AND APPROVING THE PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION RECOMMENDED ACTION: Council conduct the public hearing and adopt the resolution. SUMMARY In order to adequately protect the City's interest in delinquent sewer service charges and ensure that collection efforts are directed toward the responsible property owner in the event of a change of ownership, staff is recommending approval of liens against affected properties as a preliminary action to placing the delinquencies on the property tax rolls if they remain unpaid. Adoption of this resolution will enhance the collection process for delinquent sewer service charges by ensuring that the correct property owners are charged and that the payments will be received on a timely basis. This is the identical process approved by the City Council since August 1998. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project"as defined under Section 15378(b)(4) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not applicable DISCUSSION City of Chula Vista Page 1 of 3 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 195 File #: 14-0052, Version: 1 Section 13.14.150 of the Chula Vista Municipal Code allows delinquent sewer service charges to be assessed as recorded liens upon the affected properties, and ultimately placed on the property tax bills for collection. The ordinance states that upon notification of the property owners, a public hearing is set for sewer service accounts which are over sixty days delinquent. At the hearing, the City Council considers the delinquent accounts together with any objections or protests by interested parties. At the conclusion of the hearing, the City Council may either approve the delinquency and amount owed on the accounts as submitted, or as modified or corrected by the City Council. Lastly, the City Council adopts a resolution assessing such amounts as recorded liens upon the respective parcels of land, and the amounts are charged to the property owners on the next regular property tax bill. Because charges can only be submitted for placement on the property tax bills once each year in August, staff is recommending assessing liens on the affected properties midyear to better ensure the City's chances for collection. If the City were to address these delinquent charges only once each year in August, the effectiveness of using the property tax bill as a means of collection would be significantly reduced as the owners of record in August would not necessarily be the people responsible for the delinquent charges. In cases where the properties are sold or transferred, assessing liens midyear holds the correct parties responsible for the delinquent charges. In cases where the property owners choose to refinance their mortgages, the midyear liens ensure the City's receipt of payment in a timely manner, as the delinquent charges are paid through escrow during the refinancing process. In June 2013, the City Council approved 390 delinquent accounts valued at $270,155 to be placed on property tax bills for collection. These accounts were in addition to the 180 delinquent accounts valued at $93,310 approved by the City Council for placement on the property tax bill in December 2012. Of these 570 total delinquent accounts approved by the City Council for collection via property tax billing, 307 were resolved and 263 were submitted to the County of San Diego in August 2013 for placement on the property tax bill. Since the June 2013 action, staff has identified 363 accounts totaling $218,274 as being over 60 days delinquent. Through preliminary collection efforts, 175 accounts have been resolved, and the remaining 188 accounts valued at $146,405 are now being submitted (listing available at the Finance Department). These property owners have been notified of their delinquencies within the last 60 days, and two weeks ago, they were notified of the public hearing and were again asked to pay their delinquent sewer service charges to avoid a lien being placed on their property. Payment arrangements will be set up as needed, and staff will continue to update this list as payments are received and accounts are cleared. A final list will be submitted to the City Council for consideration on the day of the public hearing in order to reflect the most current payment postings. Staff is recommending that the City Council approve the final list of delinquent sewer accounts as submitted, and that these charges be forwarded to the County and assessed as recorded liens on the respective owner occupied parcels of land and ultimately placed on the next regular tax bill for collection. City of Chula Vista Page 2 of 3 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 196 File #: 14-0052, Version: 1 DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This action supports the Operational Excellence goal by protecting revenues. Implementing policies to protect/generate revenues is an objective of City Initiative 1 .1 .1 - "Implement Fiscal Recovery and Progress Plan." CURRENT YEAR FISCAL IMPACT Approval of the resolution supports collection of delinquent sewer service charges totaling $146,405. All expenses associated with this action are borne by the City's sewer funds; all sewer service charges collected as a result of this action will be deposited into the City's sewer funds. ONGOING FISCAL IMPACT There is no ongoing fiscal impact. The delinquent sewer charges will ultimately be recovered via tax bill or property lien release payments. ATTACHMENTS None City of Chula Vista Page 3 of 3 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 197 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING CERTAIN DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER OCCUPIED PARCELS OF LAND AND APPROVING PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION WHEREAS, Chula Vista Municipal Code Section 13.14.150 allows delinquent sewer service charges to be assessed as recorded liens upon the affected properties and ultimately placed on the property tax bills for collection; and WHEREAS, Section 13.14.150 requires the City to hold a public hearing, no sooner than seven days after the sixty-day delinquency period has passed, with advance notice to be mailed to the affected property owners, notifying them that failure to pay the delinquent account will result in a lien upon the property bill and the amount owed will be charged to the property owner on the next regular tax bill; and WHEREAS, City staff has identified certain properties for which the sewer service charges are over sixty days delinquent; and WHEREAS, many of the property owners have gone through this lien process previously as they continue to leave their sewer service accounts unpaid; and WHEREAS, the property owners have been notified of their delinquencies within the last sixty days, were notified of the time and place of the public hearing and were again asked to pay their delinquent sewer service charges to avoid a lien being placed on their property; and WHEREAS, staff is recommending that the City Council approve the final list of delinquent sewer service accounts as submitted, and that these charges be forwarded to the County and assessed as recorded liens on the respective parcels of land and ultimately placed on the next regular tax bill for collection; and WHEREAS, the City Council has held the requisite public hearing and considered the delinquent accounts together with any objections or protests presented by interested parties; and WHEREAS, at the conclusion of the hearing, the City Council approved the delinquency and amount owed on the accounts as submitted. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it: (1)has considered assessing certain delinquent sewer service charges, as detailed in the final list of delinquent sewer service accounts presented to the City Council for this matter, as recorded liens on the affected properties; (2) has heard and overruled any and all protests or objections presented at the public hearing on this matter; and (3) approves, with respect to the 2014-02-18 Agenda Packet Page 198 Resolution No. Page 2 delinquent account list submitted to the City Council and on file in the City Finance Department, assessing delinquent sewer service charges as recorded liens upon the respective parcels of land and the placement of such delinquent charges as special assessments on the next corresponding regular tax bills, unless cleared prior to transmittal of the delinquent account list to the County. Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Finance Director/Treasurer City Attorney 2014-02-18 Agenda Packet Page 199 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0054, Version: 1 CONSIDERATION OF THE PROPOSED ASSESSMENT OF CERTAIN DELINQUENT SOLID WASTE SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE PARCELS OF LAND AND PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING CERTAIN DELINQUENT SOLID WASTE SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE PARCELS OF LAND AND APPROVING THE PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION RECOMMENDED ACTION: Council conduct the public hearing and adopt the resolution. SUMMARY In order to adequately protect the City's interest in delinquent solid waste service charges and ensure that collection efforts are directed toward the responsible property owner in the event of a change of ownership, staff is recommending approval of liens against affected properties as a preliminary action to placing the delinquencies on the property tax rolls if they remain unpaid. Adoption of this resolution will enhance the collection process for delinquent solid waste service charges by reducing the amount of uncollectible losses and ensure that payment will be received on a timely basis. This is the identical process approved by the City Council on a regular basis since mid-2001 . ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project"as defined under Section 15378(b)(4) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION Not applicable DISCUSSION City of Chula Vista Page 1 of 3 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 200 File #: 14-0054, Version: 1 In November 1998, the City Council amended Municipal Code Section 8.24 to eliminate suspension of solid waste service for nonpayment. To ensure that all residents pay their fair share of the costs of this program, the ordinance allows delinquent solid waste service charges to be assessed as recorded liens upon the affected properties and ultimately placed on the property tax bills for collection. The ordinance states that upon notification of the property owners, a public hearing is set for solid waste service accounts that are over ninety days delinquent. At the hearing, the City Council considers the delinquent accounts together with any objections or protests by interested parties. At the conclusion of the hearing, the City Council may either approve the delinquency and amount owed on the accounts as submitted or as modified or corrected by the City Council. Lastly, the City Council adopts a resolution assessing such amounts as recorded liens upon the respective parcels of land, and the amounts are charged to the property owners on the next regular property tax bill. As these amounts are collected, the monies are remitted to Republic Services (formerly Allied Waste), less the City's Franchise Fees, AB939 fees and late charges. Because charges can only be submitted for placement on the property tax bills once each year in August, staff is recommending assessing liens on the affected properties midyear to better ensure the City's chances for collection. If the City were to address these delinquent charges only once each year in August, the effectiveness of using the property tax bill as a means of collection would be significantly reduced as the owners of record in August would not necessarily be the people responsible for the delinquent charges. In cases where the properties are sold or transferred, assessing liens midyear holds the correct parties responsible for the delinquent charges. In cases where the property owners choose to refinance their mortgages, the midyear liens ensure the City's receipt of payment in a timely manner, as the delinquent charges are paid through escrow during the refinancing process. In June 2013, the City Council approved 1,029 delinquent accounts valued at $284,420 to be placed on property tax bills for collection. These accounts were in addition to the 989 delinquent accounts valued at $142,425 approved by the City Council for placement on the property tax bill in December 2012. Of these 2,018 total delinquent accounts approved by the City Council for collection via property tax billing, 656 were resolved and 1,362 were submitted to the County of San Diego in August 2013 for placement on the property tax bill. Since the June 2013 Council action, Republic Services has identified and submitted 3,403 delinquent accounts valued at over $464,259 to the City for collection. Through the City's collection efforts, 2,232 accounts have been resolved, and the remaining 1,171 accounts valued at $162,353 are now being submitted (listing available at the Finance Department). The account status and property ownership on these accounts have been verified by both Republic Services and City staff. While many of these delinquent accounts have gone through this lien process previously, as they continue to leave their solid waste service accounts unpaid, the total number of delinquent accounts being submitted for the lien process continues to climb. These property owners have been notified of their delinquencies through a series of past due notices sent by Republic Services, until they were ultimately submitted to the City for collection. City staff sent out past due letter within the last 60 days, and two weeks ago, these property owners were notified of the public hearing and were asked to pay their delinquent solid waste service charges prior to transmittal of the delinquent account list to the County to avoid a lien being placed on their property. City staff has been working with Republic Services to resolve any customer disputes as they arise and payment arrangements have been set up as needed. Staff will continue to update this City of Chula Vista Page 2 of 3 Printed on 2/13/2014 2014-02-18 Agenda Packet Page 201 File #: 14-0054, Version: 1 list as payments are received and accounts are cleared. A final list will be submitted to the City Council for consideration on the day of the public hearing in order to reflect the most current payment postings. Staff is recommending that the City Council approve the final list of delinquent solid waste service accounts as submitted, and that these charges be forwarded to the County and assessed as recorded liens on the respective parcels of land and ultimately placed on the next regular tax bill for collection. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This action supports the Operational Excellence goal by protecting revenues. Implementing polices to protect/generate revenues is an objective of City Initiative 1 .1 .1 . - "Implement Fiscal Recovery and Progress Plan." CURRENT YEAR FISCAL IMPACT Approval of the resolution supports collection of delinquent solid waste charges totaling $162,353. Of this amount, the City is projected to realize Franchise Fee, AB939 and late charge revenues totaling approximately $29,360, with the balance of $132,995 being forwarded to Republic Services. The $29,360 to be realized by the City is already reflected in the adopted fiscal year 2013-14 budget. ONGOING FISCAL IMPACT There is no ongoing fiscal impact. The delinquent solid waste charges will ultimately be recovered via tax bill or property lien release payments. ATTACHMENTS None City of Chula Vista Page 3 of 3 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 202 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING CERTAIN DELINQUENT SOLID WASTE SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE PARCELS OF LAND AND APPROVING PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION WHEREAS, in November 1998, the City Council amended Municipal Code Section 8.24.180 to eliminate suspension of solid waste service for nonpayment; and WHEREAS, to ensure that all residents pay their fair share of the costs of this program the ordinance allows for delinquent solid waste service charges to be assessed as recorded liens upon the affected properties and ultimately placed on the property tax bills for collection; and WHEREAS, Section 8.24.180 requires that, once solid waste fees become more than ten days delinquent, the City's contract or franchise agent shall issue late notices to the responsible owners and occupants; and WHEREAS, the Section further requires that, if an owner or occupant is delinquent on payment of a solid waste bill for a period of 90 days, the account shall be assigned to the City for collection, which must send a "final notice of delinquency," including the amount owed, penalty schedule, lien procedure and associated costs and administration fees, prior to setting the matter for hearing to consider a lien; and WHEREAS, the Section provides that, if a solid waste service charge is not paid within 15 days after the final notice of delinquency, the matter may be set for a public hearing, at least seven calendar days after the 15-day period, following notification to the property owners; and WHEREAS, the account status and property ownership of these accounts have been verified by both Republic Services (formerly Allied Waste Services) and City staff, and WHEREAS, these property owners have been notified of their delinquencies through a series of past due notices sent by Republic Services, until they were ultimately submitted to the City for collection; and WHEREAS, staff has notified the property owners of the public hearing and these owners were asked to pay their delinquent solid waste service charges prior to transmittal of the delinquent account list to the County to avoid a lien being placed on their property; and WHEREAS, staff is recommending that the City Council approve the final list of delinquent solid waste service accounts as submitted, and that these charges be forwarded to the County and assessed as recorded liens on the respective parcels of land and ultimately placed on the next regular tax bill for collection; 2014-02-18 Agenda Packet Page 203 Resolution No. Page 2 WHEREAS, the City Council has held the requisite public hearing and considered the delinquent accounts together with any objections or protests presented by interested parties; and WHEREAS, at the conclusion of the hearing, the City Council approved the delinquency and amount owed on the accounts as submitted. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it: (1) has considered assessing certain delinquent solid waste service charges, as detailed in the final list presented to the City Council for its consideration of this matter, as recorded liens on the affected properties; (2) has heard and overruled any and all protests or objections presented at the public hearing on this matter; and (3) approves, with respect to the delinquent account list submitted to the City Council and on file in the City Finance Department, assessing delinquent solid waste service charges as recorded liens upon the respective parcels of land and the placement of such delinquent charges as special assessments on the next corresponding regular tax bills, unless cleared prior to transmittal of the delinquent account list to the County. Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Finance Director/Treasurer City Attorney 2014-02-18 Agenda Packet Page 204 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 13-0225, Version: 1 CONSIDERATION OF APPROVAL OF THE REFUNDING OF THE 2002 CERTIFICATES OF PARTICIPATION TO GENERATE DEBT SERVICE SAVINGS TO BE SHARED BETWEEN THE GENERAL FUND AND THE PUBLIC FACILITIES DEVELOPMENT IMPACT FEE FUND A. RESOLUTION OF THE CITY OF CHULA VISTA MAKING REQUIRED FINDINGS, AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF THE 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT), IN A PRINCIPAL AMOUNT NOT TO EXCEED $49,000,000 AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH. B. RESOLUTION OF THE CHULA VISTA PUBLIC FINANCING AUTHORITY APPROVING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF THE CITY OF CHULA VISTA 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT), IN A PRINCIPAL AMOUNT NOT TO EXCEED $49,000,000 AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH. RECOMMENDED ACTION: Council adopt Resolution A and Authority adopt Resolution B. SUMMARY The Chula Vista Public Financing Authority issued $60,145,000 City of Chula Vista 2002 Certificates of Participation for financing the acquisition and construction of the City's police headquarters building. At this time the financial market conditions appear favorable for a refunding of this bond issue. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the requested actions are not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change to the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to CEQA. BOARD/COMMISSION RECOMMENDATION Not applicable. DISCUSSION On May 14, 2002, the City Council of the City of Chula Vista (the "City") adopted Resolution 2002- City of Chula Vista Page 1 of 4 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 205 File #: 13-0225, Version: 1 162 and the Board of Directors of the Chula Vista Public Financing Authority (the "Authority") adopted Resolution PFA-5, each authorizing the sale of the $60,145,000, 2002 Certificates of Participation, Police Facility Project (the "2002 Certificates") to finance the acquisition and construction of the City's police headquarters. On August 1 , 2013, the 2002 Certificates outstanding bonds became eligible for refunding. The financial market conditions appear favorable to consider a refunding at this time. Under the City's adopted debt policy, a refunding will be considered if a minimum goal of 5% net present value savings of the outstanding par value of the bonds can be achieved. Current market conditions indicate that net present value savings would range between 5.7% if the 2002 Certificates are fully refinanced and 7.5% if some but not all of the 2002 Certificates are refinanced. Approving the resolutions will authorize the execution and delivery of the following documents: 1 . Preliminary Official Statement 2. Amended and Restated Trust Agreement 3. Amended and Restated Assignment Agreement 4. First Amendment to Lease Purchase Agreement 5. First Amendment to Site Lease 6. Escrow Agreement 7. Continuing Disclosure Agreement 8. Purchase Contract The debt service on the 2002 Certificates is paid by the General Fund and the Public Facilities Development Impact Fee fund (PFDIF) in a ratio of 55.65% and 44.35% respectively. The net present value savings of the refunding will be shared in the same ratios between the two funds. If net present value savings of at least 5% cannot be achieved either by a full refunding or a partial refunding of the 2002 Certificates, then the refunding will be postponed until market conditions improve sufficiently to achieve the minimum savings threshold. The financing team assembled for this refunding include the following firms: • Stradling, Yocca, Carlson & Rauth will act as the City's Bond and Disclosure Counsel. • Harrell and Company Associates will serve as the City's Financial Advisor • De La Rosa and Company will serve as the City's Investment Banker providing Underwriting Services DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council and Public Financing Authority and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any City Council and Public Financing Authority member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS City of Chula Vista Page 2 of 4 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 206 File #: 13-0225, Version: 1 The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The bond refunding will support the goal of economic vitality by reducing the debt payments for the City's General Fund and Public Facilities Development Impact Fee fund. CURRENT YEAR FISCAL IMPACT Refunding the 2002 Certificates of Participation will reduce debt service payments. The resolution being considered by the City Council authorizes the refunding of all or only a portion of the 2002 Certificates, depending on market conditions at the time of sale. If it is not possible to achieve a 5% present value savings by refunding all of the 2002 Certificates, it may be possible to achieve at least a 5% savings by refinancing some of the shorter maturities. An example of the savings that could be achieved today based on either a partial or full refunding of the 2002 Certificates is shown below: Description Partial Full Par Amount Refunded 30,890,000 48,410,000 Annual Savings 215,000 222,000 Payment Reduction 6.9% 5.5% #of Years 13.4 18.4 Total Savings 2,881,000 4,084,800 Present Value Savings 7.4% 5.7% If net present value savings of at least 5% cannot be achieved under any scenario, then the refunding will be postponed until market conditions improve sufficiently to achieve the minimum savings threshold. The costs of issuance are estimated to range between $376,000 (partial refunding) and $505,000 (full refunding) and will be financed over the remaining life of the bonds. Cost of issuance fees to be paid is contingent upon issuance of the refunding bonds. ONGOING FISCAL IMPACT Refunding the 2002 Certificates of Participation will provide total savings that will range between $2.8 million and $4.1 million over the life of the bond issuance. The savings will benefit the General Fund City of Chula Vista Page 3 of 4 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 207 File #: 13-0225, Version: 1 and Public Facilities Development Impact Fee fund in a ratio of 55.65% and 44.35% respectively. ATTACHMENTS 1 . Preliminary Official Statement 2. Amended and Restated Trust Agreement 3. Amended and Restated Assignment Agreement 4. First Amendment to Lease Purchase Agreement 5. First Amendment to Site Lease 6. Escrow Agreement 7. Continuing Disclosure Agreement 8. Purchase Contract City of Chula Vista Page 4 of 4 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 208 RESOLUTION NO. RESOLUTION OF THE CITY OF CHULA VISTA MAKING REQUIRED FINDINGS, AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF THE 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT), IN A PRINCIPAL AMOUNT NOT TO EXCEED $49,000,000 AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the City of Chula Vista (the "City") is a municipal corporation and a charter city duly organized and existing under and pursuant to the Constitution and laws of the State of California (the "State"); and WHEREAS, the Chula Vista Public Financing Authority (the "Authority") has assisted the City in financing the acquisition and construction of the City's police headquarters building through the execution and delivery of the $60,145,000 City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates")which are outstanding pursuant to that certain Trust Agreement, dated as of June 1, 2002 as amended by the First Amendment to Trust Agreement dated as of January 1, 2006 (together, the "Original Trust Agreement"), by and among the City, the Authority and U.S Bank National Association, as trustee (the"Trustee"); WHEREAS, in order to facilitate the execution and delivery of the 2002 Certificates, the City leased to the Authority the real property (the "Site") set forth in Exhibit A to that certain Site Lease, dated as of June 1, 2002 (the "Original Site Lease"), by and between the City and the Authority, and the Authority simultaneously leased back the Site and the improvements located thereon to be constructed with the proceeds of the 2002 Certificates (together, the "Leased Premises") to the City pursuant to that certain Lease/Purchase Agreement, dated as of June 1, 2002 (the"Original Lease"),by and between the City and the Authority; and WHEREAS, the Original Trust Agreement and the Assignment Agreement, dated as of June 1, 2002 (the "Original Assignment Agreement"), by and between the Authority and the Trustee, allow for the execution and delivery of Additional Certificates (as that term is defined in the Original Trust Agreement) to refund all or a portion of the 2002 Certificates; and WHEREAS, the City desires to cause the Trustee to execute and deliver the 2014 Refunding Certificates of Participation (Police Facility Project), in the aggregate principal amount not to exceed $49,000,000 (the "2014 Certificates"), in order to refund all or a portion of the 2002 Certificates; and WHEREAS, to accomplish the sale, preparation, execution and delivery of the 2014 Certificates, the City desires to enter into that certain First Amendment to Site Lease, dated as of March 1, 2014 (the "First Amendment to Site Lease"), by and between the City and the Authority and that certain First Amendment to Lease/Purchase Agreement, dated as of March 1, J:\Clerk\Agendas-Minutes-Notices\2014 Agenda Packets\980_City Council 2_18 2014\0019_1_Item 17-City Council Resolution.docx 2014-02-18 Agenda Packet Page 209 Resolution No. Page 2 2014 (the "First Amendment to Lease/Purchase Agreement"), by and between the City and the Authority, in order to make certain amendments thereto; and WHEREAS, to facilitate the execution and delivery of the 2014 Certificates the City desires to enter into that certain Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Amended and Restated Trust Agreement"), by and among the Authority, the City and the Trustee and that certain Amended and Restated Assignment Agreement, dated as of March 1, 2014 (the "Amended and Restated Assignment Agreement"), by and between the Authority and the Trustee; and WHEREAS, in order to facilitate the execution and delivery of the 2014 Certificates, the City desires to enter into a Purchase Contract (the "Purchase Contract") for the 2014 Certificates with E.J. De La Rosa& Co., Inc., or any successor entity thereto by merger or acquisition, or any assignee thereof(the "Underwriter"); and WHEREAS, in order to facilitate the execution and delivery of the 2014 Certificates, the City desires to approve and deliver a final Official Statement substantially in the form of the Preliminary Official Statement which has been presented to this City Council at the meeting at which this Resolution is being adopted (the "Preliminary Official Statement"); and WHEREAS, in order to refund and defease all or a portion of the 2002 Certificates, the City desires to enter into an Escrow Agreement (the "Escrow Agreement"), by and among the City, the Authority and U.S. Bank National Association, as escrow bank (the "Escrow Bank"); and WHEREAS, the forms of the documents necessary for the execution and delivery of the 2014 Certificates are on file with the Clerk as described herein; and WHEREAS, all acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of the 2014 Certificates do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided. NOW, THEREFORE, the City Council of the City of Chula Vista does hereby resolve as follows: SECTION 1. Findings. The City Council hereby specifically finds and declares that each of the statements, findings and determinations of the City set forth in the recitals above and in the preambles of the documents approved herein are true and correct. SECTION 2. Authorization of 2014 Certificates. The City Council hereby authorizes the refunding of all or a portion of the 2002 Certificates through the preparation, sale and delivery of the 2014 Certificates in an amount not to exceed $49,000,000. SECTION 3. First Amendment to Lease/Purchase Agreement. The form of the First Amendment to Lease/Purchase Agreement presented to this meeting and on file with the Clerk 2014-02-18 Agenda Packet Page 210 Resolution No. Page 3 (the "Clerk"), is hereby approved. Each of the Mayor of the City (the "Mayor"), the City Manager of the City (the "City Manager") and the Director of Finance of the City (the "Director of Finance") or their designees (collectively, the "Authorized Officers"), acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority the First Amendment to Lease/Purchase Agreement in substantially said form, with such changes therein as the Authorized Officer or Officers executing the same, or the City Attorney, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers. As the annual lease payments due under the Original Lease will be reduced as a result of the execution and delivery of the 2014 Certificates, the City Council hereby finds and determines that the annual lease payments and additional payments due in each fiscal year under the Original Lease as amended by the First Amendment to Lease/Purchase Agreement will not exceed the fair rental value of the Leased Premises during such fiscal year. SECTION 4. First Amendment to Site Lease. The form of the First Amendment to Site Lease presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority the First Amendment to Site Lease in substantially said form, with such changes therein as the Authorized Officer or Officers executing the same, or the City Attorney, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers. SECTION 5. Amended and Restated Trust Agreement. The form of the Amended and Restated Trust Agreement presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority and the Trustee the Amended and Restated Trust Agreement in substantially said form, with such changes therein as the Authorized Officer or Officers executing the Amended and Restated Trust Agreement, or the City Attorney, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the Authorized Officers. SECTION 6. Amended and Restated Assignment Agreement. The Amended and Restated Assignment Agreement substantially in the form on file with the Clerk is hereby approved for execution and delivery by the Authority (the "Assignment Agreement"). The City Manager is hereby authorized and directed, for and in the name and on behalf of the City, to execute the Assignment Agreement, in substantially said form, with such changes as the City Manager or the City Attorney may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by the City Manager. SECTION 7. Escrow Agreement. The form of the Escrow Agreement presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Authority and the Escrow Bank the Escrow Agreement in substantially said form,with such changes therein as the Authorized Officer or Officers executing the same, or the City Attorney, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of such Authorized Officers. 2014-02-18 Agenda Packet Page 211 Resolution No. Page 4 SECTION 8. Purchase Contract. The form of the Purchase Contract, by and between the City and the Underwriter presented to this meeting and on file with the Clerk and the sale of the 2014 Certificates to the Underwriter pursuant thereto upon the terms and conditions set forth therein is hereby approved, and subject to such approval and subject to the provisions hereof, each of the Authorized Officers, acting alone, is hereby authorized and directed to evidence the City's acceptance of the offer made by the Purchase Contract by executing and delivering the Purchase Contract in said form with such changes therein as the Authorized Officer or Authorized Officers executing the same, or the City Attorney, may approve and such matters as are authorized by this Resolution, such approval to be conclusively evidenced by the execution and delivery thereof by any one of the Authorized Officers; provided, however, that the Purchase Contract shall be executed only if the aggregate principal amount of the 2014 Certificates does not exceed $49,000,000, the Underwriter's discount (exclusive of original issue discount) does not exceed six-tenths of one percent (0.6%) of the principal amount of the 2014 Certificates and the net present value savings realized by the City in terms of reduced lease payments, as confirmed by the City's Financial Advisor, is not less than five percent (5%) of the principal amount of the 2002 Certificates refunded. Each of the Authorized Officers, acting alone, is further authorized and directed to consult with the City's Financial Advisor and to determine whether the refunding of all or a portion of the 2002 Certificates is the best alternative for the City and to then direct the Underwriter to sell a principal amount of 2014 Certificates to effect the full or partial refunding, as applicable. SECTION 9. Preliminary Official Statement. The form of the Preliminary Official Statement, presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized to make such changes to the Preliminary Official Statement as are necessary to make it final as of its date and are authorized and directed to execute and deliver a certificate deeming the Preliminary Official Statement final as of its date in accordance with Rule 15c2-12 promulgated under the Securities Exchange Act of 1934. Each of the Authorized Officers, acting alone, is hereby authorized and directed to execute, approve and deliver the final Official Statement in the form of the Preliminary Official Statement with such changes, insertions and omissions as the Authorized Officer executing such document, or the City Attorney, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by an Authorized Officer. SECTION 10. Continuing Disclosure Agreement. The form of the Continuing Disclosure Agreement, dated as of March 1, 2014 (the "Continuing Disclosure Agreement"), by and between the City and NBS Government Finance Group, as dissemination agent, presented to this meeting and on file with the Clerk, is hereby approved. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Agreement in substantially said form, with such changes therein as the Authorized Officer or Officers executing such document, or the City Attorney, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof by one or more if such Authorized Officers. SECTION 11. Attestations. The Clerk and such person or persons as may have been designated by the Clerk to act on her behalf, are hereby authorized and directed to attest the signature of the Authorized Officers designated herein to execute any documents described herein, and to affix and attest the seal of the City, as may be required or appropriate in 2014-02-18 Agenda Packet Page 212 Resolution No. Page 5 connection with the execution and delivery of the First Amendment to Lease/Purchase Agreement, the Amended and Restated Trust Agreement, the Continuing Disclosure Agreement, the First Amendment to Site Lease, the Escrow Agreement, the Purchase Contract, the Assignment Agreement and the Official Statement. SECTION 12. Other Actions. The Authorized Officers and the City Attorney are each hereby authorized and directed,jointly and severally, to do any and all things and to execute and deliver any and all documents which each may deem necessary or advisable in order to consummate the sale, execution and delivery of the 2014 Certificates and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, the 2014 Certificates, the First Amendment to Lease/Purchase Agreement, the Amended and Restated Trust Agreement, the Continuing Disclosure Agreement, the First Amendment to Site Lease, the Purchase Contract, the Escrow Agreement, the Preliminary Official Statement, and the Official Statement and are further authorized and directed to pay all costs of issuance approved by the Director of Finance or her designee. Such actions heretofore taken by such officers or designees are hereby ratified, confirmed and approved. SECTION 13. Effect. This Resolution shall take effect immediately upon its passage. Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Director of Finance/Treasurer City Attorney 2014-02-18 Agenda Packet Page 213 DOCSOC/1647840v4/024036-0063 2014-02-18 Agenda Packet Page 214 PFA RESOLUTION NO. RESOLUTION OF THE CHULA VISTA PUBLIC FINANCING AUTHORITY APPROVING THE EXECUTION AND DELIVERY OF DOCUMENTS IN CONNECTION WITH THE SALE AND DELIVERY OF THE CITY OF CHULA VISTA 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT), IN A PRINCIPAL AMOUNT NOT TO EXCEED $49,000,000 AND AUTHORIZING AND DIRECTING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the Chula Vista Public Financing Authority (the "Authority") is a joint exercise of powers authority organized and existing under Article 4 of Chapter 5 of Division 7 of Title I of the Government Code of the State of California (the "JPA Act") with the authority to assist in the financing of the construction, reconstruction, modernization and equipping of certain capital improvements on behalf of the City of Chula Vista(the"City"); and WHEREAS, the Authority has assisted the City in financing the acquisition and construction of the City's police headquarters building through the execution and delivery of the $60,145,000 City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates") which are outstanding pursuant to that certain Trust Agreement, dated as of June 1, 2002 as amended by the First Amendment to Trust Agreement dated as of January 1, 2006 (together, the "Original Trust Agreement"), by and among the City, the Authority and U.S Bank National Association, as trustee (the "Trustee"); WHEREAS, in order to facilitate the execution and delivery of the 2002 Certificates, the City leased to the Authority the real property (the "Site") set forth in Exhibit A to that certain Site Lease, dated as of June 1, 2002 (the "Original Site Lease"), by and between the City and the Authority, and the Authority simultaneously leased back the Site and the improvements located thereon to be constructed with the proceeds of the 2002 Certificates (together, the "Leased Premises") to the City pursuant to that certain Lease/Purchase Agreement, dated as of June 1, 2002 (the"Original Lease"),by and between the City and the Authority; and WHEREAS, the Original Trust Agreement and the Assignment Agreement, dated as of June 1, 2002 (the "Original Assignment Agreement"), by and between the Authority and the Trustee, allow for the execution and delivery of Additional Certificates (as that term is defined in the Original Trust Agreement) to refund all or a portion of the 2002 Certificates; and WHEREAS, the City desires to cause the Trustee to execute and deliver the 2014 Refunding Certificates of Participation (Police Facility Project), in the aggregate principal amount not to exceed $49,000,000 (the "2014 Certificates"), in order to refund all or a portion of the 2002 Certificates; and WHEREAS, to accomplish the sale, preparation, execution and delivery of the 2014 Certificates, the City desires to enter into that certain First Amendment to Site Lease, dated as of March 1, 2014 (the "First Amendment to Site Lease"), by and between the City and the Authority and that certain First Amendment to Lease/Purchase Agreement, dated as of March 1, DOCSOC/1647864x4/024036-0063 2014-02-18 Agenda Packet Page 215 Resolution No. Page 2 2014 (the "First Amendment to Lease/Purchase Agreement"), by and between the City and the Authority, in order to make certain amendments thereto; and WHEREAS, to facilitate the execution and delivery of the 2014 Certificates the City desires to enter into that certain Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Amended and Restated Trust Agreement"), by and among the Authority, the City and the Trustee and that certain Amended and Restated Assignment Agreement, dated as of March 1, 2014 (the "Amended and Restated Assignment Agreement"), by and between the Authority and the Trustee; and WHEREAS, in order to facilitate the execution and delivery of the Certificates, the City desires to enter into a Purchase Contract(the "Purchase Contract") for the 2014 Certificates with E.J. De La Rosa & Co., Inc., or any successor entity thereto by merger or acquisition, or any assignee thereof, and WHEREAS, in order to refund and defease all or a portion of the 2002 Certificates, the City desires to enter into an Escrow Agreement (the "Escrow Agreement"), by and among the City, the Authority and U.S. Bank National Association, as escrow bank (the "Escrow Bank"); and WHEREAS, the forms of the documents necessary for the execution and delivery of the 2014 Certificates are on file with the Secretary of the Board of Directors of the Authority as described herein; and WHEREAS, all acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of the 2014 Certificates do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to assist the City in consummating such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the Board of Directors of the Chula Vista Public Financing Authority does hereby resolve as follows: SECTION 1. 2014 Certificates. This Board of Directors hereby authorizes the preparation, sale and delivery of the 2014 Certificates in an aggregate principal amount not to exceed $49,000,000 in accordance with the terms and provisions of the Amended and Restated Trust Agreement. The purposes for which the proceeds of the sale of the 2014 Certificates shall be expended are to refund all or a portion of the 2002 Certificates and to pay the costs of the sale and delivery of the 2014 Certificates. SECTION 2. 2014 Certificate Documents. The First Amendment to Site Lease, the First Amendment to Lease/Purchase Agreement, the Amended and Restated Trust Agreement, the Amended and Restated Assignment Agreement and the Escrow Agreement (collectively, the "Agreements") presented at this meeting are approved. Each of the Chairman, Vice Chairman, Executive Director, Chief Financial Officer and Secretary of the Authority, or the Chair's DOCSOC/1647864x4/024036-0063 2014-02-18 Agenda Packet Page 216 Resolution No. Page 3 designee, are authorized and directed to execute and deliver the Agreements. The Agreements shall be executed in substantially the forms hereby approved, with such additions thereto and changes therein as are recommended or approved by counsel to the Authority and approved by the officer or officers of the Authority executing the Agreements, such approval to be conclusively evidenced by the execution and delivery thereof by one or more of the officers listed above. SECTION 3. Other Actions. The Chairman, Vice Chairman, Executive Director, Chief Financial Officer, Secretary and other officers of the Authority are 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 2014 Certificates, and the execution of the Agreements and otherwise effectuate the purposes of this Resolution, and such actions previously taken by such officers are hereby ratified and confirmed. SECTION 4. Effect. This Resolution shall take effect from and after its date of adoption. Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Director of Finance/Treasurer City Attorney DOCSOC/1647864x4/024036-0063 2014-02-18 Agenda Packet Page 217 DOCSOC/1647864x4/024036-0063 2014-02-18 Agenda Packet Page 218 PRELIMINARY OFFICIAL STATEMENT DRAFT DATED FEBRUARY 12,2014 NEW ISSUE RATINGS uBOOK-ENTRY-ONLY S&P: m Moody's• See"CONCLUDING INFORMATION-Ratings on the Certificates"herein E u In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel, under m existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest(and original issue discount)with respect to the Certificates is excluded from Ogross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative C minimum tax imposed on individuals and corporations. In the further opinion of Special Counsel, such interest (and original issue discount) is exempt from State of California personal income tax. Special Counsel expresses no opinion regarding any other tax y consequences related to the ownership or disposition of or the accrual or receipt of interest with respect to, the Certificates. See m r. "LEGAL MATTERS-TAXMA7TERS"herein. C SAN DIEGO COUNTY STATE OF CALIFORNIA $49,000,000* ° 2014 REFUNDING CERTIFICATES OF PARTICIPATION o (POLICE FACILITY PROJECT) c Evidencing Undivided Proportionate Interests c in Lease Payments to Be Made by the c CITY OF CHULA VISTA, CALIFORNIA ° = Pursuant to a Lease with the 7„ ; a. CHULA VISTA PUBLIC FINANCING AUTHORITY co c Dated: Date of Delivery Due: August 1,as Shown on the Inside Front Cover Page. o o The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must c� read the entire Official Statement to obtain information essential to the making of an informed investment decision. See"RISK y o FACTORS" herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the to Certificates. The City of Chula Vista 2014 Refunding Certificates of Participation(Police Facility Project)(the"Certificates")are being executed and delivered to (i)provide funds to refinance certain obligations of the City of Chula Vista(the"City")described herein, and(ii)pay the c costs incurred in connection with the execution and delivery of the Certificates. The Certificates evidence undivided proportionate y interests of the Owners in lease payments("Lease Payments")to be made by the City to the Chula Vista Public Financing Authority(the "Authority")as rental for certain real property and the improvements thereon(referred to herein as the"Leased Premises")consisting of c5 the City's Police Headquarters,pursuant to a Lease/Purchase Agreement dated as of June 1,2002 and amended by a First Amendment to C Lease/Purchase Agreement dated as of March 1,2014 by and between the City and the Authority(as amended,the"Lease"),as described herein. See "THE LEASED PREMISES" herein. The City is required under the Lease to make Lease Payments in each fiscal year in consideration of the use and possession of the Leased Premises from any source of legally available funds,including certain funds held under a trust agreement,as described herein,and insurance or condemnation awards,in an amount sufficient to pay the annual principal o and interest due with respect to the Certificates, subject to abatement, as described herein. See "SOURCES OF PAYMENT FOR THE o r. CERTIFICATES"and"RISK FACTORS"herein. Interest represented by the Certificates is payable on August 1,2014, and semiannually thereafter on August 1 and February 1 of each o y year until maturity or earlier prepayment. See "THE CERTIFICATES - General Provisions" and "THE CERTIFICATES - Prepayment" herein. C � ° THE CERTIFICATES DO NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR rC, C PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE .� OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS UNDER THE LEASE DOES NOT CONSTITUTE AN OBLIGATION OF THE C C CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS w c� LEVIED OR PLEDGED ANY FORM OF TAXATION. NEITHER THE CERTIFICATES NOR THE OBLIGATION OF THE CITY TO MAKE C p LEASE PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE AUTHORITY,THE CITY,THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR y c� RESTRICTION. v� o The Certificates are offered, when, as and if executed and delivered, subject to the approval as to their legality by Stradling Yocca Carlson&Rauth,a Professional Corporation,Newport Beach,California, Special Counsel. Certain legal matters will be passed on for u .: the City by Glen R. Googins, as City Attorney, and by Stradling Yocca Carlson&Rauth, a Professional Corporation,Newport Beach, a„ California, as Disclosure Counsel and for the Underwriter by its counsel,Nossaman LLP, Irvine, California. It is anticipated that the O 5 Certificates,in book-entry form,will be available for delivery on or about ,2014 through the facilities of The Depository Trust Company(see"APPENDIX E-DTC AND THE BOOK-ENTRY-ONLY SYSTEM"herein). • The date of the Orcial Statement is ,2014. DE"RvsA&Co. as I N V IE S i M E rJ T 6 A N K E R S rn �i * Preliminary,subject to change. 2014-02-18 Agenda Packet Page 219 $49,000,000* 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT) Evidencing Undivided Proportionate Interests in Lease Payments to Be Made by the CITY OF CHULA VISTA,CALIFORNIA Pursuant to a Lease with the CHULA VISTA PUBLIC FINANCING AUTHORITY MATURITY SCHEDULE (Base CUSIPO j- Maturity Date Principal Interest Reoffering August 1 Amount Rate Yield CUSIPO j- 2014 2015 2016 2017 2018 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 * Preliminary,subject to change. Copyright 2014,American Bankers Association.CUSIPO is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services Bureau, operated by Standard & Poor's. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the City and are included solely for the convenience of the holders of the Certificates. None of the Authority, the City, the Financial Advisor or the Underwriter takes any responsibility for the selection or uses of these CUSIP numbers,and no representation is made as to their correctness on the Certificates or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Certificates 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 Certificates. 2014-02-18 Agenda Packet Page 220 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT For purposes of compliance with Rule I5c2-12 of the United States Securities and Exchange Commission, as amended("Rule I5c2-12'), this Preliminary Official Statement constitutes an "official statement" of the City with respect to the Certificates that has been deemed "final"by the City as of its date except for the omission of no more than the information permitted by Rule I5c2-12. Use of Official Statement This Official Statement is submitted in connection with the offer and sale of the Certificates referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Certificates. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority or the City in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced herein, the words or phrases will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend" and similar expressions identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward- looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Limit of Offering. No dealer,broker, salesperson or other person has been authorized by the Authority or the City to give any information or to make any representations in connection with the offer or sale of the Certificates other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Authority,the City,the Financial Advisor 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 Certificates by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has submitted the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Information Subject to Change. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances,create any implication that there has been no change in the affairs of the City or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Certificates at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Certificates to certain dealers and others at prices lower than the public offering prices set forth on the inside front cover page hereof and said public offering prices may be changed from time to time by the Underwriter. THE CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE CERTIFICATES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. 2014-02-18 Agenda Packet Page 221 CITY OF CHULA VISTA, CALIFORNIA CITY COUNCIL Cheryl Cox,Mayor Rudy Ramirez, Councilmember Patricia Aguilar, Councilmember Pamela Bensoussan, Councilmember Mary Salas, Councilmember CITY STAFF Jim Sandoval, City Manager Gary Halbert,Assistant City Manager Kelley Bacon,Deputy City Manager Maria Kachadoorian,Director of Finance/Treasurer Phillip Davis,Assistant Director of Finance Glen R. Googins, City Attorney Donna Norris, CMC, City Clerk PROFESSIONAL SERVICES Special Counsel and Disclosure Counsel Stradling Yocca Carlson&Rauth, a Professional Corporation Newport Beach,California Financial Advisor Harrell&Company Advisors,LLC Orange,California Trustee and Escrow Bank U.S. Bank National Association Los Angeles, California Verifications Grant Thornton LLP Minneapolis,Minnesota 2014-02-18 Agenda Packet Page 222 TABLE OF CONTENTS INTRODUCTION...........................................................1 Motor Vehicle License Fees.........................................43 The City..........................................................................1 Public Facilities Development Impact Fees.................44 TheAuthority-----------------------------------------------------------------1 Personnel------------------------------------------------------------------...44 Purpose...........................................................................2 Employee Relations and Collective Bargaining-----------45 Security and Sources of Repayment-------------------------------2 Retirement Programs.......................................------------45 Tax Exemption---------------------------------------------------------------3 Defined Contribution Pension Plan..................------------51 Professional Services------------------------------------------------------4 Other Post Employment Benefits...------------------------------51 Offering of the Certificates---------------------------------------------4 Risk Management--------------------------------------------------------53 Information Concerning this Official Statement------------4 City Investment Policy and Portfolio---------------------------54 THE CERTIFICATES----------------------------------------------------6 Outstanding Indebtedness of the City--------------------------55 General---------------------------------------------------------------------------6 Direct and Overlapping Debt---------------------------------------57 Prepayment*-------------------------------------------------------------------6 Financial Statements----------------------------------------------------59 Scheduled Lease Payments--------------------------------------------8 RISK FACTORS...........................................................63 THE FINANCING PLAN.............................................10 The Lease Payments----------------------------------------------------63 State Budget;Redevelopment Agency Legislation......65 The Refunding Program...............................................10 Limited Recourse on Default;No Acceleration.-----.....67 Estimated Sources and Uses of Funds..........................10 Enforcement of Remedies............................................67 THE LEASED PREMISES..........................................11 Bankruptcy of the City-------------------------------------------------68 Description of the Leased Premises-----------------------------11 Constitutional Limitation on Taxes and Expenditures.68 Substitution of Leased Premises-----------------------------------11 Early Prepayment Risk................................................73 Loss of Tax Exemption................................................73 SOURCES OF PAYMENT FOR THE IRS Audit of Tax-Exempt Bond Issues........................73 CERTIFICATES........................................................13 Secondary Market Risk------------------------------------------------73 General.........................................................................13 Lease Payments------------------------------------------------------------14 LEGAL MATTERS......................................................74 Reserve Fund----------------------------------------------------------------14 Enforceability of Remedies.........................................74 Insurance Relating to the Leased Premises------------------15 Approval of Legal Proceedings...................................74 Insurance and Condemnation Awards..........................16 Tax Matters..................................................................74 Remedies on Default----------------------------------------------------16 Absence of Litigation..................................................76 Encumbrances--------------------------------------------------------------16 CONCLUDING INFORMATION...............................77 THE CITY OF CHULA VISTA...................................17 Ratings on the Certificates...........................................77 General Information-----------------------------------------------------17 Underwriting------------------------------------............................77 Government Organization--------------------------------------------17 The Financial Advisor..................................................77 Governmental Services ------------------------------------------------18 Continuing Disclosure.................................................77 Community Facilities and Services------------------------------18 Verifications of Mathematical Computations...............78 Transportation--------------------------------------------------------------19 Additional Information------------------------------------------------78 Population--------------------------------------------------------------------20 References-------------------------------------------------------------------78 Per Capita Personal Income-----------------------------------------21 Execution---------------------------------------------------------------------78 Employment-----------------------------------------------------------------22 APPENDIX A-SUMMARY OF PRINCIPAL LEGAL Industry------------------------------------------------------------------------23 DOCUMENTS Largest Employers--------------------------------------------------------24 Commercial Activity----------------------------------------------------25 APPENDIX B-CITYAUDITED FINANCIAL Building Activity 27 STATEMENTS FINANCIAL INFORMATION....................................28 APPENDIX C-FORM OF CONTINUING DISCLOSURE Fiscal Policies---------------------------------------------------------------28 AGREEMENT Budgetary Process and Administration-------------------------30 APPENDIX D-PROPOSED FORM OF OPINION OF Appropriations Limit....................................................31 SPECIAL COUNSEL Economic Conditions and Outlook------------------------------31 Revenues and Expenditures------------------------------------------32 APPENDIX E - DTC AND THE BOOK-ENTRY-ONLY Ad Valorem Property Taxes------------------------------------------38 SYSTEM Taxable Property and Assessed Valuation--------------------38 Redevelopment Agencies.............................................40 Largest Taxpayers---------------------------------------------------------41 State Legislative Shifts of Property Tax Allocation......41 LocalTaxes------------------------------------------------------------------42 2014-02-18 Agenda Packet Page 223 OFFICIAL STATEMENT $49,000,000* 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT) Evidencing Undivided Proportionate Interests in Lease Payments to Be Made by the CITY OF CHULA VISTA,CALIFORNIA Pursuant to a Lease with the CHULA VISTA PUBLIC FINANCING AUTHORITY This Official Statement which includes the cover page and appendices (the "Official Statement"), is provided to furnish certain information concerning the sale, execution and delivery of 2014 Refunding Certificates of Participation (Police Facility Project) (the "Certificates"), in the aggregate principal amount of$49,000,000*, representing the undivided proportionate interests of Owners thereof in Lease Payments(defined below)to be made by the City of Chula Vista,California(the "City"or"Chula Vista"), as rental for certain property pursuant to a Lease/Purchase Agreement as more fully described herein with the Chula Vista Public Financing Authority(the "Authority"). INTRODUCTION This Introduction contains only a brief description of this issue and does not purport to be complete. The Introduction is subject in all respects to more complete information in the entire Official Statement and the offering of the Certificates to potential investors is made only by means of the entire Official Statement and the documents summarized herein. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision (see "RISK FACTORS" herein). The City The City of Chula Vista is located on San Diego Bay in Southern California, 8 miles south of San Diego and 7 miles north of the Mexico border in an area generally known as "South Bay." The City encompasses approximately 50 square miles. Based on population, Chula Vista is the second largest city in San Diego County(see "THE CITY OF CHULA VISTA"herein). The Authority The Authority is a joint exercise of powers authority organized and existing under and by virtue of the Joint Exercise of Powers Act, constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5,Division 7,Title 1 of the Government Code of the State of California(the "Joint Powers Act"). The City and the Redevelopment Agency of the City of Chula Vista (the "Redevelopment Agency") formed the Authority by the execution of a joint exercise of powers agreement dated as of April 4. 1995 (the "Joint Powers Agreement"). Pursuant to the Marks-Roos Local Bond Pooling Act of 1985, as amended, constituting Article 4 (commencing with Section 6584), of Chapter 5, Division 7,Title 1 of the Government Code of the State (the "Bond Law"), the Authority is authorized, among other things, to issue revenue bonds to provide funds to finance and refinance public capital facilities and to otherwise assist the City in financing and refinancing such facilities. The Authority is governed by a five-member Board which consists of all members of the City Council. The Mayor of the City is appointed the Chairperson of the Authority. The City Manager acts as the Executive Director of the Authority. * Preliminary,subject to change. 1 2014-02-18 Agenda Packet Page 224 The State Legislature approved a bill, AB X1 26, pursuant to which all California redevelopment agencies, including the Redevelopment Agency, were dissolved as of February 1, 2012. The primary provisions enacted by AB X1 26 relating to the dissolution and wind down of former redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27, 2012 by Assembly Bill No. 1484 ("AB 1484"), enacted as Chapter 26, Statutes of 2012 (as further amended from time to time,the"Dissolution Act"). In accordance with the provisions of the Dissolution Act,the City elected to serve as the successor agency to the Redevelopment Agency (the "Successor Agency"). The Dissolution Act provides that the Successor Agency is a separate public entity from the City and none of the liabilities or assets of the Redevelopment Agency become liabilities or assets of the City. The Dissolution Act resulted in the assignment of the Redevelopment Agency's rights, duties and performance obligations under the JPA Agreement to Successor Agency. Purpose The Certificates are being executed and delivered to refinance a portion of the existing Lease and to current refund the City's outstanding 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates")maturing on or before August 1, 2027* (the "Refunded Certificates"), and to pay the costs of issuance of the Certificates. See "THE FINANCING PLAN"herein. Security and Sources of Repayment The Certificates are being executed and delivered pursuant to an Amended and Restated Trust Agreement dated as of March 1, 2014, (as amended and restated,the "Trust Agreement"),by and among the City,the Authority and U.S. Bank National Association, as trustee (the "Trustee"). For a summary of the Trust Agreement, see "APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - TRUST AGREEMENT"herein. Certain capitalized terms used in this Official Statement and not otherwise defined have the meanings given them in"APPENDIX A." Pursuant to a Site Lease, dated as of June 1, 2002 as amended pursuant to a First Amendment to Site Lease dated as of March 1, 2014 (as amended, the "Site Lease"), by and between the Authority and the City, the City has leased the Leased Premises, as described herein under the caption "THE LEASED PREMISES," to the Authority. The Authority has subleased the Leased Premises to the City under the Lease/Purchase Agreement, dated as of June 1, 2002 as amended by a First Amendment to Lease/Purchase Agreement dated as of March 1, 2014, by and between the City and the Authority (as supplemented, the "Lease"). Lease payments (the "Lease Payments") are to be made pursuant to the Lease. The Certificates and the 2002 Certificates to remain outstanding represent undivided proportionate interests in the Lease Payments to be made by the City to the Authority as the rental for the Leased Premises pursuant to the Lease. The Lease Payments are payable by the City from any source of legally available funds of the City, including certain funds held under the Trust Agreement and investment earnings thereon, and the net proceeds of insurance or condemnation awards (see "SOURCES OF PAYMENT FOR THE CERTIFICATES," "FINANCIAL INFORMATION" and"APPENDIX A-SUMMARY OF PRINCIPAL LEGAL DOCUMENTS-THE LEASE"herein). * Preliminary,subject to change. 2 2014-02-18 Agenda Packet Page 225 The City has covenanted in the Lease to take such actions as may be necessary to include all Lease Payments in its annual budgets and to make the necessary annual appropriations for all such Lease Payments subject to complete or partial abatement of such Lease Payments resulting from a taking of the Leased Premises (either in whole or in part) under the powers of eminent domain or resulting from damage or loss of all or any portion of the Leased Premises. All of the Authority's right,title and interest in and to the Lease (apart from certain rights to receive Additional Payments to the extent payable to the Authority and to indemnification), including the right to receive Lease Payments under the Lease, are assigned to the Trustee for the benefit of the Owners of the Certificates and the 2002 Certificates to remain outstanding under an Amended and Restated Assignment Agreement by and between the Authority and the Trustee dated as of March 1,2014,(the "Assignment Agreement"). For a summary of the Trust Agreement, the Site Lease and the Lease, see "APPENDIX A- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" herein. Certain capitalized terms used in this Official Statement and not otherwise defined have the meanings given them in"APPENDIX A." The City is also required to pay any taxes and assessments levied on the Leased Premises and all costs of maintenance and repair of the Leased Premises. Except for the Authority's right, title and interest in and to the Lease Payments and otherwise to the Lease which have been assigned to the Trustee, no funds or properties of the Authority or the City are pledged to or otherwise liable for the obligations of the Authority(see "RISK FACTORS"herein). The Lease is, in the opinion of Special Counsel, a valid and binding obligation of the City enforceable against the City in accordance with its terms,except to the extent enforceability thereof may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights heretofore or hereinafter enacted and may be subject to the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases (see "RISK FACTORS - Limited Recourse on Default; No Acceleration" herein). The form of Special Counsel's opinion is attached hereto as "APPENDIX D." The obligation of the City to pay Lease Payments does not constitute an obligation for which the City is obligated to levy or pledge any form of taxation or for which the City has pledged any form of taxation. The obligation of the City to pay Lease Payments does not constitute a debt or liability of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. Tax Exemption In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Special Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein,the interest(and original issue discount)due with respect to the Certificates 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 and corporations. In the further opinion of Special Counsel, the interest (and original issue discount) due with respect to the Certificates is exempt from State of California personal income tax. See "LEGAL MATTERS -Tax Matters"herein. 3 2014-02-18 Agenda Packet Page 226 Professional Services The legal proceedings relating to the execution and delivery of the Certificates are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel. Certain legal matters will be passed on for the City by Glen R. Googins, as City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel, and for the Underwriter by its counsel, Nossaman LLP, Irvine, California. U.S. Bank National Association serves as Trustee under the Trust Agreement. The Trustee will act on behalf of the Certificate Owners and the Owners of the 2002 Certificates for the purpose of receiving all moneys required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the Lease Payments and other funds held under the Trust Agreement, and otherwise to hold all the offices and perform all the functions and duties provided in the Trust Agreement to be held and performed by the Trustee. Harrell&Company Advisors,LLC(the "Financial Advisor") advised the City as to the financial structure and certain other financial matters relating to the Certificates. The City's audited general purpose financial statements for the fiscal year ended June 30, 2013, attached hereto as "APPENDIX B" have been audited by Pun & McGeady LLP, Certified Public Accountants and Business Advisors, San Diego, California. The City's audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. Accordingly,the auditor has not performed any post-audit of the financial condition of the City. Grant Thornton LLP, Minneapolis, Minnesota will verify the mathematical accuracy of certain computations relating to the refunding of the Refunded Certificates. Offering of the Certificates Authority for Execution and Delivery. The Certificates are to be executed and delivered pursuant to the Trust Agreement, and have been authorized by a resolution of the City adopted on , 2014. The Lease has been entered into in accordance with the laws of the State of California (the "State"), and particularly Section 37350 of the Government Code of the State applicable to the City and the Authority. Offering and Delivery of the Certificates. The Certificates are offered, when, as and if executed and delivered, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, Newport Beach, California, Special Counsel. It is anticipated that the Certificates, in book-entry form, will be available for delivery in New York,New York on , 2014 through the facilities of The Depository Trust Company. See "APPENDIX E-DTC AND THE BOOK-ENTRY-ONLY SYSTEM." Information Concerning this Official Statement This Official Statement speaks only as of its date. The information set forth herein has been obtained by the City with the assistance of the Financial Advisor, from sources which are believed to be reliable and such information is believed to be accurate and complete, but such information is not guaranteed as to accuracy or completeness, nor has it been independently verified and is not to be construed as a representation by the Financial Advisor or the Disclosure Counsel. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended as such and are not to be construed as representations of fact. The information and expressions of opinion herein are subject to change without notice and the delivery of this Official Statement shall not,under any circumstances, create any implication that there has been no change in the information or opinions set forth herein or in the affairs of the City since the date hereof. 4 2014-02-18 Agenda Packet Page 227 Availability of Legal Documents. The summaries and references contained herein with respect to the Trust Agreement,the Lease,the Site Lease,the Assignment Agreement,the Certificates and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Certificates are qualified in their entirety by reference to the form thereof included in the Trust Agreement. Copies of the documents described herein are available for inspection during the period of initial offering of the Certificates at the offices of the Financial Advisor. Copies of these documents may be obtained after delivery of the Certificates at the trust office of the Trustee,U.S. Bank National Association, Los Angeles, California or from the City at 276 Fourth Avenue, Chula Vista,California 91910,telephone (619) 691-5250. 5 2014-02-18 Agenda Packet Page 228 THE CERTIFICATES General The Certificates will be executed and delivered in the form of fully registered Certificates in principal amounts of $5,000 each or any integral multiple thereof. The Certificates will be dated their date of delivery and mature on August 1 in the years set forth on the inside front cover page hereof. Each Certificate will be payable with respect to interest on February 1 and August 1 of each year, commencing on August 1,2014 at the respective rates of interest set forth on the inside front cover page hereof. The Certificates will be executed and delivered in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only. Purchasers of the Certificates will not receive certificates representing their ownership interests in the Certificates purchased. Principal, premium, if any, and interest payments due with respect to the Certificates are payable directly to DTC by the Trustee. Upon receipt of payments of principal, premium, if any, and interest, DTC will in turn distribute such payments to the beneficial owners of the Certificates. See "APPENDIX E-DTC AND THE BOOK-ENTRY- ONLY SYSTEM"herein. Prepayment* Extraordinary Prepayment. The Certificates are subject to prepayment,without premium,prior to their respective maturity dates on any date, in whole or in part. from Net Proceeds which the Trustee transfers to the Prepayment Fund as provided in the Lease at least 45 days prior to the date fixed for prepayment, at a prepayment price equal to the principal amount thereof together with the accrued interest to the date fixed for prepayment. Optional Prepayment. The Certificates maturing on or after August 1, are subject to prepayment prior to maturity in whole or in part on any date on or after August 1, at the option of the City,in the event the City exercises its option under the Lease to prepay all or a portion of the principal component of the Lease Payments (in integral multiples of $5,000), at the prepayment price equal to the principal component to be prepaid,plus accrued interest to the date fixed for prepayment,without premium. Mandatory Sinking Account Prepayment. The Certificates maturing August 1, (the "Term Certificates")will be subject to prepayment in part by lot,on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid,without premium; provided,however,that if some but not all of the Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata (in integral multiples of 5,000) by the aggregate principal amount of the Term Certificates so prepaid. In addition, in lieu of prepayment thereof, the Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Date Sinking Account (August 1 Prepayment * Preliminary,subject to change. 6 2014-02-18 Agenda Packet Page 229 In the event that the Trustee shall redeem Term Certificates in part but not in whole pursuant to the optional prepayment or prepayment from Net Proceeds provisions described above, the amount of the Certificates to be prepaid in each subsequent year shall be reduced to correspond to the principal components of the Lease Payments prevailing following such prepayment as determined pursuant to the Lease. Selection of Certificates for Prepayment. Whenever provision is made in the Trust Agreement for the optional prepayment of the Certificates and less than all Outstanding Certificates are called for optional prepayment, the Trustee shall select Certificates for optional prepayment from among maturities selected by the City and by lot within any maturity. For extraordinary prepayment of Certificates,the Trustee shall select Certificates for prepayment as nearly as practicable on a pro rata basis between the Certificates and the 2002 Certificates and among maturities within a series and by lot within any maturity. The City shall provide the Trustee with a revised sinking fund schedule for the Certificates upon any prepayments. Notice of Prepayment. When prepayment, other than mandatory sinking account prepayment, is authorized or required pursuant to this Article IV, the Trustee shall give notice of the prepayment of the Certificates. Such notice shall specify: (a) the prepayment date, (b)the prepayment price, (c) if less than all of the Outstanding Certificates of a maturity are to be prepaid,the Certificate numbers(and in the case of partial prepayment, the respective principal amounts), (d) the series and CUSIP numbers of the Certificates to be prepaid, (e)the place or places where the prepayment will be made, (f)the original date of execution and delivery of the Certificates, and (g) any other descriptive information regarding the Certificates needed to identify accurately the Certificates being prepaid. Such notice shall further state that on the specified date there shall become due and payable upon each Certificate to be prepaid, the portion of the principal amount of such Certificate to be prepaid, together with interest accrued to said date, and that from and after such date, provided that moneys therefor have been deposited with the Trustee,interest with respect thereto shall cease to accrue and be payable. Notice of such prepayment shall be given to the respective Owners of any Certificates designated for prepayment by first class mail,postage prepaid at their addresses appearing on the Certificate registration books, at least thirty (30) days, but not more than sixty (60) days,prior to the prepayment date; provided that with respect to any Certificates held in book-entry form by the DTC, notice shall be provided in accordance with the procedures of the DTC. Neither failure to receive such notice nor any defect in any notice so given shall affect the sufficiency of the proceedings for the prepayment of such Certificates. Notice shall also be given to the municipal Securities Depository and to the Information Services on the date notice is given to the Owners, which notice shall be given by electronic or other means permitted under the procedures of each of such recipients. Conditional Notice of Prepayment. The City has the right to make any notice of the optional prepayment of such Certificates a conditional notice which may be rescinded by written notice to the Trustee on or prior to the date fixed for prepayment. Any notice of optional prepayment will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for prepayment for the payment in full of the Certificates then called for prepayment, and such cancellation will not constitute an Event of Default. The City and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of prepayment. The Trustee shall give notice of such rescission of prepayment in the same manner as the original notice of prepayment was sent. Effect of Prepayment. Notice of prepayment having been given as aforesaid and the deposit of the prepayment price having been made by the City, the Certificates or portions of Certificates so to be prepaid shall, on the prepayment date,become due and payable at the prepayment price therein specified, and from and after such date interest with respect to such Certificates or portions of Certificates shall cease to be payable. Upon surrender of such Certificates for prepayment in accordance with said notice, such Certificates shall be paid by the Trustee at the prepayment price. 7 2014-02-18 Agenda Packet Page 230 Partial Prepayment. Upon surrender of any Certificate prepaid in part only, the Trustee shall execute and deliver to the Owner thereof a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unprepaid portion of the Certificate surrendered and of the same interest rate and the same maturity. Scheduled Lease Payments The following is a schedule of annual payments of principal and interest represented by the Certificates. Certificate Year Ending Autmst 1 Principal Interest Annual Total 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total 8 2014-02-18 Agenda Packet Page 231 The following is a schedule of annual Lease Payments and scheduled payments of principal and interest on the Certificates and the 2002 Certificates to remain outstanding. Certificate Year Ending 2002 August 1 Certificates Certificates Total 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Total 9 2014-02-18 Agenda Packet Page 232 THE FINANCING PLAN The Refunding Program The City issued the 2002 Certificates in the principal amount of $60,145,000, of which $48,410,000 currently remains outstanding. On the Delivery Date, the City will irrevocably deposit a portion of the proceeds from the Certificates with the Trustee as escrow bank (the "Escrow Bank"), pursuant to an Escrow Agreement, dated as of March 1, 2014 (the "Escrow Agreement") by and between the City and the Escrow Bank. The deposit will be in an amount sufficient to pay interest with respect to $30,890,000 of 2002 Certificates maturing on or before August 1, 2027* (the "Refunded Certificates") on April 1, 2014, and to pay the prepayment price with respect to the Refunded Certificates pursuant to an optional prepayment thereof on April 1,2014. Special Counsel will deliver an opinion at closing to the effect that, assuming the sufficiency of the amounts deposited under the Escrow Agreement, the Refunded Certificates will be discharged and no longer be Outstanding under the Trust Agreement and will not be secured by the Lease or the Lease Payments due thereunder (see "CONCLUDING INFORMATION - Verifications of Mathematical Computations.") Amounts on deposit with the Escrow Bank are not available to pay debt service with respect to the Certificates. Estimated Sources and Uses of Funds Under the provisions of the Trust Agreement, the Trustee will receive the proceeds from the sale of the Certificates,together with other available funds,and will apply them as follows: Sources of Funds Par Amount of Certificates Original Issue Premium Available Funds Uses of Funds Transfer to Escrow Bank Underwriters'Discount Costs of Issuance Total Uses Expenses include fees and expenses of Special Counsel,the Financial Advisor,Disclosure Counsel and Trustee, rating fees,costs of printing the Official Statement,and other costs of delivery of the Certificates. * Preliminary,subject to change. 10 2014-02-18 Agenda Packet Page 233 THE LEASED PREMISES Description of the Leased Premises The Leased Premises consists of the City's 140,000 square foot Police Headquarters, together with its 411-space multi-level parking structure. The facility was constructed with proceeds of the 2002 Certificates. The facility, sited on 2.85 acres across the street from the City's Civic Center Complex, is comprised of separate north and south wings, and has 4 floors including the basement. The basement floor provides parking, a short-term holding facility, firearm range, property and evidence rooms, vehicle exams and mechanical equipment rooms. The ground floor houses parking patrol offices, crime analysis, vice, school resources, records and data entry, community facilities/multi-purpose room, a public plaza and internal courtyard. The second floor includes investigation, administration and administrative services offices, as well as locker rooms and a lunchroom. The crime lab and communications center are located on the third floor. The facility (building and parking structure but excluding the site) is insured for $64,958,000. The principal amount of the Certificates and the 2002 Certificates to remain outstanding on the Delivery Date will be $47,520,000.* Substitution of Leased Premises The City will have the right to substitute alternate real property for any portion of the Leased Premises described in the Lease or to release a portion of the Leased Premises from the lien of the Lease by providing the Trustee with a supplement to the Lease and by satisfying the conditions set forth in paragraphs (i)through (viii)below. All costs and expenses incurred in connection with such substitution or release will be borne by the City. Notwithstanding any substitution pursuant to the Lease,there will be no reduction in or abatement of the Lease Payments due from the City under the Lease as a result of such substitution. No substitution or release will be permitted under the Lease unless: (i) the City provides prior written notice thereof to National Public Finance Guarantee,the insurer of the 2002 Certificates("National"),together with a certificate that the substituted real property has an equivalent or greater useful life as the Leased Premises to be released and that the useful life of the substituted real property exceeds the remaining term of the Lease Payments under the Lease; (ii) an independent California Certified General Appraiser or equivalent certified real estate appraiser selected by the City finds (and delivers a certificate to the City and the Trustee setting forth its findings) that the substituted real property has a fair rental value greater than or equal to the fair rental value of the Leased Premises to be released so that the Lease Payments payable by the City pursuant to the Lease will not be abated; (iii) the City obtains or causes to be obtained an ALTA title insurance policy (with western regional exceptions) with endorsement so as to be payable to the Trustee for the benefit of the Owners showing no prior liens thereon other than Permitted Encumbrances. Such policy will comply with the Lease,will be in a form satisfactory to National,the Trustee and the Authority,will be in the amount equal to the principal component of Lease Payments attributable to the substituted real property, and will insure the leasehold interest or the fee simple interest of the Authority or the City,as applicable,to the substituted real property; * Preliminary,subject to change. 11 2014-02-18 Agenda Packet Page 234 (iv) the City provides the Authority and the Trustee with an opinion of Special Counsel that such substitution does not cause, in and of itself, the interest evidenced and represented by the Certificates to be included in gross income for federal income tax purposes; (v) the City will give, or cause to be given, any notice of the occurrence of such substitution required to be given pursuant to the Continuing Disclosure Agreement; (vi) upon the substitution of any real property and improvements thereon for all or a portion of the Leased Premises then existing, the City, the Authority and the Trustee will execute and the City will record with the office of the County Recorder, County of San Diego, California, any document necessary to reconvey to the City the portion of the Leased Premises being substituted and to include the substituted real property and/or improvements thereon as all or a portion of the Leased Premises; (vii) the City will certify to the Trustee and National that the substituted real property is of approximately the same degree of essentiality to the City as the portion of the Leased Premises being replaced; and (viii) the Trustee will receive National's prior written consent to such substitution and shall provide a copy of such notice to S&P. 12 2014-02-18 Agenda Packet Page 235 SOURCES OF PAYMENT FOR THE CERTIFICATES General Each Certificate and each 2002 Certificate to remain outstanding represents a direct, undivided proportionate interest in the Lease Payments to be made by the City to the Authority under the Lease. Under the Assignment Agreement, the Authority has assigned all of its rights under the Lease, including its rights to receive Lease Payments from the City and its remedies under the Lease (except certain rights to indemnification) to the Trustee for the benefit of the Owners of the Certificates. The Lease Payments are calculated to be sufficient to pay,when due,the annual principal of and interest due with respect to the Certificates. Principal and interest with respect to the Certificates and with respect to the 2002 Certificates to remain outstanding will be paid from the Lease Payments payable by the City for the use and possession of the Leased Premises, insurance or condemnation Net Proceeds received with respect to the Leased Premises to the extent that such Net Proceeds are not used for repair or replacement, interest or other income derived from the investment of the funds held by the Trustee under the Trust Agreement, or, in certain instances,from the Reserve Fund established by the Trust Agreement. The City is obligated to pay Lease Payments from any source of legally available funds, and has covenanted in the Lease to include all Lease Payments coming due in its annual budgets and to make the necessary annual appropriations therefor. The Authority, pursuant to the Assignment Agreement, has assigned all of its rights under the Lease (excepting certain rights as specified therein), including the right to receive Lease Payments and prepayments,to the Trustee for the benefit of the Owners. By the fifteenth day of each January and July (if such day is not a Business Day. the next succeeding Business Day), the City must pay to the Trustee a Lease Payment (to the extent required under the Lease) which is expected to equal the amount necessary to pay the principal and interest with respect to the Certificates and the 2002 Certificates on the next succeeding Interest Payment Date. The City's obligation to make Lease Payments will be abated in whole or in part to the extent of substantial interference with use and possession of the Leased Premises arising from damage, destruction, title defect or taking by eminent domain or condemnation of the Leased Premises. Abatement would not constitute a default under the Lease and the Trustee would not be entitled in such event to pursue remedies against the City. See "RISK FACTORS-The Lease Payments-Abatement"herein. Under the Lease, the City has agreed to pay certain taxes, assessments, utility charges, and insurance premiums charged with respect to the Leased Premises and expenses related to the Certificates and the 2002 Certificates, including the fees and expenses of the Trustee. The City is responsible for repair and maintenance of the Leased Premises during the term of the Lease. The City may at its own expense in good faith contest such taxes,assessments and utility and other charges if certain requirements set forth in the Lease are satisfied including obtaining an opinion of counsel that the Leased Premises will not be subjected to loss or forfeiture. Should the City default under the Lease, the Trustee, as assignee of the Authority, may terminate the Lease and re-lease the Leased Premises or may retain the Lease and hold the City liable for all Lease Payments thereunder on an annual basis. Under no circumstances will the Trustee have the right to accelerate Lease Payments. The exercise of the remedies provided to the Trustee is subject to various limitations on the enforcement of remedies against public agencies. See "RISK FACTORS - Limited Recourse on Default;No Acceleration"herein. See also "RISK FACTORS -The Lease Payments-City's Lease Payments and Other Payments"herein. 13 2014-02-18 Agenda Packet Page 236 Lease Payments Subject to the provisions of the Lease regarding complete or partial abatement in the event of loss of use and possession of any portion of the Leased Premises (see "RISK FACTORS - The Lease Payments - Abatement" herein) and prepayment of Lease Payments (see the provisions relating to prepayment under the caption "THE CERTIFICATES" above), the City agrees to pay to the Authority, its successors and assigns, the Lease Payments as annual rental for the use and possession of the Leased Premises. The Lease Payments are due and payable on January 15 and July 15 of each year (each, a "Lease Payment Date"). Any moneys held in the Lease Payment Fund on any Lease Payment Date (other than amounts resulting from the prepayment of the Lease Payments in part pursuant to the Lease and other amounts required for payment of past due principal or interest with respect to any Certificates or 2002 Certificates not presented for payment) shall be credited to the payment of Lease Payments due and payable on such Lease Payment Date. The Trust Agreement requires that Lease Payments be deposited in the Lease Payment Fund maintained by the Trustee. Pursuant to the Trust Agreement, on February 1 and August 1 of each year. The Trustee will apply such amounts in the Lease Payment Fund as are necessary to make interest and principal payments (including sinking account payments), respectively, with respect to the Certificates and the 2002 Certificates to remain outstanding, as the same shall become due and payable, in the amounts specified in the Lease. Reserve Fund A Reserve Fund is established by the Trust Agreement which is to be maintained in an amount equal to the least of(i) maximum aggregate annual Lease Payments payable under the Lease in any Certificate Year (exclusive of Lease Payments attributable to Certificates or 2002 Certificates that have been defeased) (ii) 125% of the average annual aggregate Lease Payments (in any Certificate Year) then payable under the Lease (exclusive of Lease Payments attributable to Certificates or 2002 Certificates that have been defeased) or(iii) 10% of the face amount of the Certificates, the 2002 Certificates and/or the Additional Certificates, as applicable (less original issue discount if in excess of two percent of the stated payment amount at maturity); provided, however, on and after the date that the 2002 Certificates are no longer Outstanding, the Reserve Requirement shall be an amount equal to 50% of the maximum aggregate annual Lease Payments (in any Certificate Year) then payable under the Lease (exclusive of Lease Payments attributable to Certificates that have been defeased), (the "Reserve Requirement"). The full amount available in the Reserve Fund may be used by the Trustee in the event of abatement or a failure by the City to make Lease Payments when due. Upon delivery of the Certificates, the Reserve Requirement will be $4,063,500. When the 2002 Certificates were delivered, the City deposited $4,063,500 of proceeds of the 2002 Certificates in the Reserve Fund. Such amount equaled the maximum aggregate annual Lease Payments payable under the Lease in any Certificate Year. In 2006, the City deposited a surety bond (the "Reserve Fund Surety Bond") issued by MBIA Insurance Corporation ("MBIA") in the face amount of$2,031,750 in the Reserve Fund, and released a like amount of funds on deposit in the Reserve Fund. In 2009,MBIA ceded its entire public finance business to a subsidiary, MBIA Insurance Corp of Illinois. MBIA Insurance Corp of Illinois has been renamed National Public Financial Guarantee Corp. The Reserve Fund Surety Bond is only available to pay that portion of Lease Payments allocable to the 2002 Certificates to remain outstanding,and not available to pay that portion of Lease Payments allocable to the Certificates. The funds on deposit in the Reserve Fund, namely $2,031,750, will be available to pay Lease Payments allocable to both the 2002 Certificates to remain outstanding and the Certificates on a pro rata basis. 14 2014-02-18 Agenda Packet Page 237 All interest or income received on the investment of the Reserve Fund will be transferred to the Lease Payment Fund to the extent the Reserve Requirement is satisfied. Insurance Relating to the Leased Premises Fire and Extended Coverage Insurance. The City will procure and maintain, or cause to be procured and maintained,throughout the Term of the Lease, insurance against loss or damage to any portion of the Leased Premises caused by fire and lightning,with extended coverage and theft,vandalism and malicious mischief insurance. Said extended coverage insurance will, as nearly as practicable,cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance, excluding flood and earthquake; provided, however, that a flood and earthquake rider shall be purchased if the City, in its reasonable discretion, determines that such coverage is available from reputable insurers at commercially reasonable rates. The City does not currently maintain earthquake insurance on the Lease Premises. The insurance shall be in an amount equal to the full replacement value of the Leased Premises, subject to a"deductible clause"not to exceed two hundred fifty thousand dollars ($250,000) for any one loss, or in the case of a flood and earthquake rider, ten percent(10%)of the coverage obtained. The term"full replacement value"as used in this paragraph shall mean the actual replacement cost of the improvements constituting the Leased Premises. Such insurance may be maintained as part of or in conjunction with any other insurance carried or required to be carried by the City, and, subject to compliance with the Lease, may be maintained in the form of self-insurance by the City through a California joint powers authority. See "RISK FACTORS." The net proceeds of such insurance will be applied as provided under the caption "Insurance and Condemnation Awards"below. Rental Interruption Insurance. The City is required to maintain, or cause to be maintained, throughout the Term of the Lease rental interruption or use and occupancy insurance to cover loss,total or partial, of the use of any part of the Leased Premises during the Term of the Lease as a result of any of the hazards described in the preceding paragraph if any, in an amount not less than maximum remaining Lease Payments in any future 24-month period. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Reserve Fund to make up delinquencies therein, and, thereafter into the Lease Payment Fund and shall be credited towards the payment of the Lease Payments in the order in which such Lease Payments come due and payable. Such insurance may be maintained as part of or in conjunction with any other insurance carried by the City and may be maintained in whole or in part in the form of insurance maintained through a joint exercise of powers authority created for such purpose. The City may not satisfy the rental interruption insurance requirements with self-insurance. Title Insurance. The City will maintain throughout the Term of the Lease title insurance on the Leased Premises, in the form of an ALTA title policy (with western regional exceptions), in an amount equal to the aggregate principal amount of the Certificates, the 2002 Certificates to remain outstanding and any Additional Certificates Outstanding,issued by a company of recognized standing,duly authorized to issue the same, payable to the Trustee for the benefit of the Owners, subject only to Permitted Encumbrances. Said policy or policies will insure the City's leasehold estate under the Lease in the Leased Premises, subject only to Permitted Encumbrances. All Net Proceeds received under said policy or policies will be deposited with the Trustee and applied as provided in the Trust Agreement. So long as any of the Certificates, 2002 Certificates and Additional Certificates, if any, remain Outstanding, each policy of the title insurance obtained pursuant to the Lease or required thereby will provide that all proceeds thereunder will be payable to the Trustee for the benefit of the Certificate Owners and the owners of the 2002 Certificates and any Additional Certificates when due. The Net Proceeds of such insurance will be applied as provided in the Lease. 15 2014-02-18 Agenda Packet Page 238 If there are not sufficient insurance proceeds to complete repair of the Leased Premises, the Lease Payment schedule will be proportionally reduced in accordance with the Lease. Such reduced Lease Payments may not be sufficient to pay principal and interest with respect to the Certificates. Such reduction would not constitute a default under either the Indenture or the Lease. Insurance and Condemnation Awards Upon receipt of Net Proceeds of insurance, the City shall deposit such amounts with the Trustee into the Net Proceeds Fund established under the Trust Agreement. The Trustee shall disburse moneys in the Net Proceeds Fund to repair and reconstruct the Leased Premises provided that it has received the written consent of National and a certificate from the City to the effect that: (i) the Net Proceeds available for such purpose,together with any other funds supplied by the City to the Trustee in a subaccount of the Net Proceeds Fund for such purpose, are expected to equal at least 110%of the projected costs of replacement or repair(or such lesser percentage as may be consented to by the Insurer),(ii), such replacement or repair can be fully completed within a period not in excess of the period in which rental interruption insurance proceeds will be available to pay in full all Lease Payments coming due during such period. If the City notifies the Trustee that the foregoing certification cannot be made or that replacement or repair of any portion of the Leased Premises is not economically feasible or in the best interest of the City, then the Trustee shall promptly transfer the Net Proceeds to the Prepayment Fund as provided in the Trust Agreement and apply them to prepayment of the Certificates and 2002 Certificates as provided in the Trust Agreement and prepayment of Lease Payments as provided in the Lease; provided that in the event of damage or destruction in whole of the Leased Premises and in the event such Net Proceeds, together with funds then on hand in the Lease Payment Fund and Reserve Fund are not sufficient to prepay all the Certificates and 2002 Certificates then Outstanding, then the City shall not be permitted to certify that repair, replacement or improvement of all of the Leased Premises is not economically feasible or in the best interest of the City. In such event, the City shall proceed to repair, replace or improve the Leased Premises as described herein from legally available funds in the then-current Fiscal Year and amounts in the Net Proceeds Fund will be applied to repair and replace the Leased Premises. No assurance can be given that the proceeds of any insurance or condemnation award will be sufficient under all circumstances to repair or replace any damaged or taken Leased Premises or to prepay all Lease Payments with respect to the Leased Premises. Also, the City makes no representation as to the sufficiency of any insurance awards or the adequacy of any self-insurance to pay, when and as due, amounts payable under the Lease or the Certificates. Remedies on Default If the City defaults in performance of its obligations under the Lease, the Trustee, as assignee of the Authority, may elect not to terminate the Lease and may re-enter and relet the Leased Premises and may enforce the Lease and hold the City liable for all Lease Payments on an annual basis while re-entering and reletting the Leased Premises. Such re-entering and reletting shall not effect a surrender of the Lease. The City, in the event of default, waives all rights to any rentals received by the Trustee through reletting of the Leased Premises. The City agrees to pay all costs, loss or damage howsoever occurring. Alternatively,the Trustee may elect to terminate the Lease and may re-enter and relet the Leased Premises and seek to recover all costs,losses or damages caused by the City's default. Encumbrances The City and the Authority may not create any mortgage, pledge, lien, charge or encumbrance upon the Leased Premises other than "Permitted Encumbrances." See "APPENDIX A- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS-DEFINITIONS." 16 2014-02-18 Agenda Packet Page 239 THE CITY OF CHULA VISTA General Information Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in an area generally known as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Neighboring communities include the City of San Diego and National City to the north and the City of Imperial Beach and the communities of San Ysidro and Otay Mesa to the south. With a January 2013 estimated population of 251,613, Chula Vista is the second largest city in the County. The City maintains an internet website (www.ci.chula-vista.ca.us) for various purposes,however, none of the information on that website is intended to assist investors in making any investment decision or to provide any continuing information with respect to the Certificates or any other bonds or obligations of the City. Government Organization The City of Chula Vista was incorporated as a general law city on March 17, 1911,and operates under the council/manager form of government. It became a charter city in 1949. The City is governed by a five- member council consisting of four members and a Mayor, each elected at large for four-year alternating terms. The City Attorney is also elected at large. Beginning in 2016, City Council members will be elected by geographic districts. The positions of City Manager and City Clerk are filled by appointments of the Council. In Fiscal Year 2013/14, the City of Chula Vista has 950 authorized full-time staff positions including sworn officers and fire personnel. Including part-time personnel, the City employs approximately 1,140 staff. The members of the City Council,the expiration dates of their terms and key administrative personnel are set forth in the charts below. CITY COUNCIL City Council Member Term Expires Cheryl Cox,Mayor December 2014 Rudy Ramirez December 2014 Patricia Aguilar December 2014 Pamela Bensoussan December 2016 Mary Salas December 2016 CHIEF ADNIINISTRATIVE PERSONNEL Jim Sandoval, City Manager Gary Halbert,Assistant City Manager Kelley Bacon,Deputy City Manager Maria Kachadoorian,Director of Finance/Treasurer Phillip Davis,Assistant Director of Finance Glen R. Googins, City Attorney (Term expires December 2014) Donna Norris, CMC, City Clerk 17 2014-02-18 Agenda Packet Page 240 Governmental Services Public Safety and Welfare In Fiscal Year 2013/14, The City of Chula Vista Police Department has authorized total positions of 319, including sworn officers and non-sworn personnel providing patrol, traffic, animal control and investigations. There are nine fire stations located in and operated by the City, staffed by 136 fire personnel. Community Services Services provided by the City include building permit and inspection,planning and zoning, landscape and public infrastructure maintenance, street cleaning, traffic signal maintenance and municipal code compliance. Public Services Water is supplied to Chula Vista by the Otay Water District and the Sweetwater Water District. Sewer service is provided by the City. Electric power and natural gas are provided by San Diego Gas and Electric. The Chula Vista Public Library is comprised of three individual libraries connected by a wide-area network. The Library's circulation was approximately 992,000 in Fiscal Year 2012/13. The Library delivers books in English and Spanish, videos and CDs, and community programming to the City's residents nearly every day of the year. The Library contains an Office of Cultural Arts dedicated to advancing the arts and culture in a manner designed to preserve the diverse cultures of the area. Culture and Leisure Chula Vista is the home to a variety of cultural and educational facilities such as the Chula Vista Heritage Museum,Onstage Playhouse,and the San Diego Junior Theater. The Chula Vista Recreation Department provides citizens with a variety of park and recreational services on a year round basis. Facilities include nine community and recreation centers, including a youth community center and a senior center. The City also has two community pools open year round, 43 community and neighborhood parks, and a Memorial Bowl with seating for 700 at which the City's Summer Concert Series is hosted. The City also has after-school recreation programs throughout the community. Community Facilities and Services Public educational instruction for kindergarten through high school is provided by the Chula Vista Elementary School District and Sweetwater Union High School District. These districts administer 42 elementary schools, one junior high school, ten middle schools, 11 senior high schools, one continuation high school, one alternative program school and one charter school. Southwestern College, a two year Community College, has enrollment of approximately 19,000. There are also four adult education schools and 16 private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista in the San Diego metropolitan area. There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doctors and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista. 18 2014-02-18 Agenda Packet Page 241 Chula Vista has more than 60 churches and nearly 100 service,fraternal and civic organizations. Chula Vista is home to the 20,000 seat Sleep Train Amphitheatre, the Living Coast Discovery Center, Aquatica SeaWorld Waterpark, four golf courses, numerous parks and open spaces, and a harbor which includes two marinas,an RV park,and several restaurants. In addition, Chula Vista is the location of the United States Olympic Training Center. This is the third such training center in the nation and the only year-round training facility. The center is located on a 150- acre property donated by EastLake Development Company adjacent to the Otay Lake reservoir. Transportation U.S.Highways 5 (along the coast)and 805 (inland)provide full freeway access from Chula Vista north to San Diego and south to the Mexican border. Commuter rail service is provided by the San Diego Trolley, a light rail system started in 1981 and 11 bus routes serve Chula Vista. The City established Chula Vista Express, a three-part commuting program to promote public transportation, carpooling, vanpooling, biking and walking to work as alternatives to driving alone. It offers free bus service from the eastern part of the City to downtown San Diego, and a free shuttle from the eastern part of the City to the H Street Trolley Station to a cash incentive for riding or joining a vanpool or carpool. Air cargo and passenger flight services are provided at San Diego's Lindbergh International Airport, 12 miles west, which is served by all major airlines. Cargo shipping is available at the Unified Port of San Diego, which serves as a transshipment facility for the region, which includes San Diego, Orange, Riverside, San Bernardino and Imperial counties,plus northern Baja California,Arizona and points east. 19 2014-02-18 Agenda Packet Page 242 Population The following table provides a comparison of population growth for the City of Chula Vista and San Diego County between 2009 and 2013. TABLE NO. 1 CHANGE IN POPULATION CHULA VISTA AND SAN DIEGO COUNTY 2009-2013 CHULA VISTA SAN DIEGO COUNTY Year Percentage Percentage Population Change Population Change 2009 239,369 3,064,436 2010 243,712 1.8% 3,091,579 0.9% 2011 245,987 0.9% 3,115,810 0.8% 2012 248,185 0.9% 3,128,734 0.4% 2013 251,613 1.4% 3,150,178 0.7% %Increase Between 2009-2013 5.1% 2.8% Source: State of California,Department of Finance, "E-4 Population Estimates for Cities, Counties and the State, 2001-2010, with 2000 & 2010 Census Counts" Sacramento, California, November 2012, and "E-4 Population Estimates for Cities, Counties, and the State, 2011-2013, with 2010 Census Benchmark" Sacramento,California,May 2013. 20 2014-02-18 Agenda Packet Page 243 Per Capita Personal Income Per capita personal income information for the City of Chula Vista, San Diego County, the State of California and the United States is summarized in the following table. TABLE NO.2 PER CAPITA PERSONAL INCOME CITY OF CHULA VISTA,SAN DIEGO COUNTY, STATE OF CALIFORNIA AND UNITED STATES cl� 2008-2012 Year Chula Vista San Diego County State of California United States 2008 $42,440 $46,851 $43,609 $40,873 2009 40,040 44,767 41,569 39,357 2010 40,880 45,431 42,297 40,163 2011 41,360 48,066 44,666 42,298 2012 41,520 49,719 46,477 43,735 Source: U.S. Department of Commerce, Bureau of Economic Analysis, and City of Chula Vista Comprehensive Annual Financial Report. For San Diego County, State of California and United States,per capita personal income was computed using Census Bureau midyear population estimates. Estimates for 2010-2012 reflect county population estimates available as of March 2013. Note: All state and local area dollar estimates are in current dollars (not adjusted for inflation). Estimates for 2008 forward reflect the results of the comprehensive revision to the national income and product accounts (NIPAs)released in July 2013. Last updated: November 21,2013-new estimates for 2012;revised estimates for 2008-2011. 21 2014-02-18 Agenda Packet Page 244 Employment As of December 2013 the civilian labor force for the City was approximately 93,300 of whom 86,400 were employed. The unadjusted unemployment rate as of December 2013 was 7.5% for the City as compared to 6.4% for the County. Civilian labor force, employment and unemployment statistics for the City, County,the State and the United States, for the years 2008 through 2012 are shown in the following table: TABLE NO.3 CITY OF CHULA VISTA CIVILIAN LABOR FORCE,EMPLOYMENT AND UNEMPLOYMENT ANNUAL AVERAGES Civilian Unemployment Year Labor Force Employment Unemployment Rate 2008 City of Chula Vista 90,400 84,100 6,400 7.0% San Diego County 1,548,600 1,455,900 92,700 6.0% California 18,207,300 16,893,900 1,313,500 7.2% United States 154,287,000 145,362,000 8,924,000 5.8% 2009 91,400 81,200 10,200 11.2% City of Chula Vista 1,554,900 1,405,600 149,300 9.6% San Diego County 4,905,300 4,337,000 568,300 11.6% California 18,215,700 16,151,100 2,064,600 11.3% United States 154,142,000 139,877,000 14,265,000 9.3% 2010 City of Chula Vista 92,700 81,300 11,400 12.3% San Diego County 1,574,100 1,408,200 165,900 10.5% California 18,330,500 16,063,500 2,267,000 12.4% United States 153,889,000 139,064,000 14,825,000 9.6% 2011 City of Chula Vista 93,100 82,200 10,900 11.7% San Diego County 1,582,200 1,423,500 158,700 10.0% California 18,404,500 16,237,300 2,167,200 11.8% United States 153,617,000 139,869,000 13,747,000 8.9% 2012 City of Chula Vista 93,900 84,100 9,800 10.4% San Diego County 1,599,200 1,456,300 142,800 8.9% California 18,494,900 16,560,300 1,934,500 10.5% United States 154,975,000 142,469,000 12,503,000 8.1% Source: California State Employment Development Department and United States Bureau of Labor Statistics. 22 2014-02-18 Agenda Packet Page 245 Industry The City is located in the San Diego-Carlsbad-San Marcos Metropolitan Statistical Area. Six major job categories constitute 81.3% of the work force. They are professional and business services (17.3%), government (17.0%), service producing (14.1%), leisure and hospitality (13.5%), educational and health services(12.3%),and manufacturing(7.1%). TABLE NO.4 SAN DIEGO-CARLSBAD-SAN MARCOS METROPOLITAN STATISTICAL AREA WAGE AND SALARY WORKERS BY INDUSTRY cn (in$Thousands) Industry 2009 2010 2011 2012 2013 Government 212.2 223.8 217.2 218.5 218.8 Other Services 47.1 46.4 47.9 49.8 50.0 Leisure and Hospitality 160.4 161.2 162.2 169.5 174.2 Educational and Health Services 142.2 143.1 148.5 152.9 158.2 Professional and Business Services 205.6 211.2 211.6 217.8 222.2 Financial Activities 69.0 67.0 67.7 70.7 69.5 Information 27.6 25.1 24.2 24.7 24.5 Transportation,Warehousing and Utilities 27.3 26.8 26.3 28.0 29.1 Service Producing Retail Trade 129.8 130.4 133.3 134.5 137.8 Wholesale Trade 39.8 40.4 41.5 44.3 43.3 Manufacturing Nondurable Goods 21.8 22.1 22.3 23.2 23.1 Durable Goods 71.5 71.1 70.9 71.1 68.4 Goods Producing Construction 60.4 56.3 56.6 57.6 58.3 Mining and Logging 0.4 0.4 0.5 0.4 0.4 Total Nonfarm 1,215.1 1,225.3 1,230.7 1,263.0 1,277.8 Farm 10.4 10.3 9.0 10.0 9.9 Total(all industries) 1.225.5 1.235.6 1.239.7 1.273.0 1.287.7 Source: State of California Employment Development Department, Labor Market Information Division, "Industry Employment&Labor Force-by month,March 2012 Benchmark." Annually,as of August. Note: The unemployment rate is calculated using unrounded data. Data may not add due to rounding. 23 2014-02-18 Agenda Packet Page 246 Largest Employers The largest employers operating within the City and their respective number of employees as of June 30, 2013 are as follows: TABLE NO.5 CITY OF CHULA VISTA LARGEST EMPLOYERS Name of Company Number of Employees Product/Service Sweetwater Union High School District 4,076 Education Chula Vista Elementary School District 2,788 Education Rohr Inc./Goodrich Aerospace 2,469 Aerospace Manufacturing Sharp Chula Vista Medical Center 1,736 Hospital Southwestern Community College 1,562 Education Wal-Mart 1,242 General Merchandise Scripps Mercy Hospital Chula Vista 1,139 Hospital Target 664 General Merchandise Costco Wholesale Group 534 General Merchandise Aquatics San Diego 501 Fitness Center Source: City of Chula Vista. 24 2014-02-18 Agenda Packet Page 247 Commercial Activity The following table summarizes the volume of retail and food services sales and taxable transactions for the City for 2007 through 2011 (the most recent year for which statistics are available for the full year). The City's sales tax receipts increased by approximately 10% between Fiscal Year 2010/11 and Fiscal Year 2012/13. See "FINANCIAL INFORMATION-Local Taxes." TABLE NO.6 CITY OF CHULA VISTA TOTAL TAXABLE TRANSACTIONS (in$Thousands) 2007-2011 Retail and Retail and Total Taxable Food Services Food Services Transactions Issued Sales Year ($000's) %Change Permits ($000's) %Change Permits 2007 $2,350,689 2,285 $2,599,523 4,277 2008 2,226,573 (5.3%) 2,353 2,476,218 (4.7%) 4,328 2009 1,976,176 (11.3%) 2,543 2,199,592 (11.2%) 4,005 2010 2,070,662 4.8% 2,649 2,303,400 4.7% 4,064 2011 2,184,654 5.5% 2,714 2,421,666 5.1% 4,095 Source: California State Board of Equalization,"Taxable Sales in California." The following table summarizes the change in taxable transactions for the City and surrounding cities for 2007 through 2011 (the most recent year for which statistics are available for the full year). TABLE NO.7 CHANGE IN TOTAL TAXABLE TRANSACTIONS CITY OF CHULA VISTA AND SURROUNDING CITIES (in$Thousands) 2007-2011 %Change from City 2007 2008 2009 2010 2011 2007-2011 CHULA VISTA $2,599,523 $2,476,218 $2,199,592 $2,303,400 $2,421,666 (6.8%) San Diego 20,056,106 19,414,259 17,163,965 17,878,932 19,497,504 (2.8%) El Cajon 2,072,398 1,907,076 1,554,961 1,664,720 1,771,959 (14.5%) Coronado 216,912 221,816 193,056 204,458 225,485 4.0% National City 1,394,601 1,232,496 1,054,258 1,129,833 1,202,452 (13.8%) Source: California State Board of Equalization,"Taxable Sales in California." 25 2014-02-18 Agenda Packet Page 248 Taxable transactions by type of business for the City are summarized below for 2007 through 2011 (the most recent year for which statistics are available for the full year). TABLE NO.8 CITY OF CHULA VISTA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in$Thousands) 2007-2011 2007 2008 2009 2010 2011 Retail and Food Services Clothing and Clothing Accessories Stores $ 138,415 $ 128,294 $ 118,759 $ 134,611 $ 139,282 General Merchandise Stores 742,235 719,596 617,638 649,020 657,146 Food and Beverage Stores 109,296 113,427 117,144 117,923 124,929 Food Services and Drinking Places 277,465 286,639 280,806 287,698 297,506 Home Furnishings and Appliance Stores 72,707 111,144 145,785 146,805 150,305 Building Materials and Garden Equipment and Supplies 123,814 96,452 94,134 94,588 99,766 Motor Vehicle and Parts Dealers 312,606 247,906 188,516 185,847 209,121 Gasoline Stations 257,165 269,256 218,397 255,746 303,189 Other Retail Group 316,986 253,859 194,997 198,423 203,410 Total Retail and Food Services 2,350,689 2,226,573 1,976,176 2,070,661 2,184,654 All Other Outlets 248.834 249.644 223.416 232,738 237,013 Total All Outlets •592 1 2.303.399 1 Source: State Board of Equalization,"Taxable Sales in California." Note: Detail may not compute to total due to rounding. 26 2014-02-18 Agenda Packet Page 249 Building Activity The following table summarizes building activity valuations for the City of Chula Vista for the Fiscal Years 2009/10 through 2012/13. TABLE NO.C-7 CITY OF CHULA VISTA BUILDING ACTIVITY AND VALUATION (in$Thousands) 2009/10—2012/13 Residential Building Non-Residential Building Permits Issued Permits Issued Fiscal Year Units Valuation Buildings Valuation FY 2009/10 283 $ 72,478,345 11 $ 6,980,615 FY 2010/11 861 144,615,239 23 $14,834,350 FY 2011/12 479 120,416,023 12 $ 4,281,013 FY 2012/13 954 226,972,213 13 $22,328,114 Source: City of Chula Vista. 27 2014-02-18 Agenda Packet Page 250 FINANCIAL INFORMATION Fiscal Policies The City Council has adopted several policies that form the overall framework within which the City's operating budget is formulated and serve as a basis for resource allocation decisions. These policies are summarized below. General • The City's financial assets will be managed in a sound and prudent manner in order to ensure the continued viability of the organization. • A comprehensive operating and capital budget for all City funds will be developed annually and presented to the City Council for approval. The purpose of the annual budget with be to (1) identify community needs for essential services, (2) identify the programs and specific activities required to provide these essential services, (3) establish program policies and goals that define the nature and level of program services required, (4) identify alternatives for improving the delivery of program services, (5) identify the resources required to fund identified programs and activities,and enable accomplishment of program objectives,and(6) set standards to facilitate the measurement and evaluation of program performance. • The City's annual operating budget will be balanced whereby planned expenditures do not exceed anticipated revenues. • Recurring revenues will fund recurring expenditures. One-time revenues will be used for capital, reserve augmentation,or other nonrecurring expenditures. • Accounting systems will be maintained in accordance with Generally Accepted Accounting Principles. • Investment policy and practice will be in accordance with State statues that emphasize safety and liquidity over yield,including quarterly status reports to the City Council. • City operations will be managed and budgets prepared with the goal of maintaining an available fund balance in the General Fund of no less than fifteen percent of the General Fund operating budget. • General Fund fiscal status reports reflecting comparisons of actual and projected performance with budget allocations for both revenue and expenditures will be presented to the City Council on a quarterly basis. Reserves The City will target to maintain a minimum Operating Reserve equal to 15% of operating budget to address extraordinary needs of an emergency nature, an Economic Contingency Reserve of 5% of operating budget to mitigate service impacts during a significant downturn in the economy and a 3% Catastrophic Event Reserve of 3% of operating budget to fund unanticipated expenses related to a major natural disaster in the City. Revenue • The City will endeavor to maintain a diversified and stable revenue base in order to minimize the impact to programs from short-term economic fluctuations. 28 2014-02-18 Agenda Packet Page 251 • Revenue projections will be maintained for the current year and four future fiscal years, and estimates will be based on a conservative,analytical,and objective process. • In order to maintain flexibility, except as required by law or funding source, the City will avoid earmarking any restricted revenues for specific purpose or program. • The City has established user fees to best ensure that those who use a proprietary service pay for that service in proportion to the benefits received. With few exceptions, such as those services provided for low-income residents,fees have been set to enable the City to recover the full cost of providing those services. • User fees will be reviewed and updated on an ongoing basis to ensure that program costs continue to be recovered and that the fees reflect changes in levels of service delivery. • The City will recover the cost of new facilities and infrastructure necessitated by new development consistent with State law and the City's Growth Management Program. Development Impact Fees will be closely monitored and updated to ensure that they are maintained at a level adequate to recover costs. • When considering new development alternatives, the City will attempt to determine the fiscal impact of proposed projects, annexations, etc. and ensure that mechanisms are put in place to provide funding for any projected negative impacts on City operations. Expenditures • Budgetary control will be exercised at the Department/category level, meaning that each department is authorized to spend up to the total amount appropriated for that department within the expenditure categories of Personnel Costs, Supplies & Services, Other Charges,Utilities, and Capital. Transfers of appropriations between expenditure categories of up to $15,000 may be approved by the City Manager. Transfers of appropriations between expenditure categories in excess of$15,000,or between departments require City Council approval. • Appropriations, other than for capital projects, remaining unspent at the end of any fiscal year will be cancelled and returned to Available Fund Balance with the exception of any appropriations encumbered as the result of a valid purchase order or as approved for a specific project or purpose by the City Council or the City Manager. Appropriations for capital projects will necessarily be carried over from year to year until the project is deemed to be complete. • The City will establish and maintain equipment replacement and facility maintenance funds as deemed necessary to ensure that monies are set aside and available to fund ongoing replacement needs. • The City will attempt to compensate non-safety employees at rates above the middle of the labor market as measured by the median rate for similar jurisdictions. Capital • Major capital projects will be included in a capital improvement program budget (the "CIP Budget'')reflecting a five-year period. The CIP Budget will be updated annually and presented to City Council for approval. Resources will be formally appropriated (budgeted) for the various projects on an annual basis in accordance with the five-year plan. 29 2014-02-18 Agenda Packet Page 252 Capital Financing and Debt Management • The City will consider the use of debt financing only for one-time capital improvement projects when the project's useful life will exceed the term of the financing and when resources are identified sufficient to fund the debt service requirements. The only exception to this limitation is the issuance of short-term instruments such as tax and revenue anticipation notes,which will only be considered in order to meet legitimate cash flow needs occurring within a fiscal year. • The City will attempt to limit the total amount of annual debt service payments guaranteed by the General Fund to no more than ten percent of estimated General Fund revenues. • The City will consider requests from developers for the use of debt financing secured by property based assessments or special taxes in order to provide for necessary infrastructure for new development only under strict guidelines adopted by the City Council, which may include minimum value-to-lien ratios and maximum tax burdens. • The City will strive to minimize borrowing costs by seeking the highest credit rating possible, procuring credit enhancement such as letters of credit or insurance, when cost effective, and maintaining good communications with credit rating agencies regarding the City's fiscal condition. • The City will diligently monitor its compliance with bond legal covenants,including adherence to continuing disclosure requirements and federal arbitrage regulations. • In addition to externally financed debt, the City utilizes inter-fund loans whenever possible to reduce borrowing costs or provide for shorter term loans. When interest is charged on internal loans,it is done at the same rate the City earns from its pooled investments. Planning Documents In 2011, the City prepared a Five-Year Financial Outlook and embarked on a Fiscal Recovery and Progress Plan, which was completed for the five year period 2013-2017. The City also adopted a Strategic Plan in 2012 and is developing a Long-Term Financial Plan. The overall goal of these planning documents is to provide advance information on the City's financial condition that can be used by decision makers in developing budgets and prioritizing goals as well as responding timely to any projected budget imbalances. Budgetary Process and Administration An annual budget is adopted by the City Council prior to the first day of the fiscal year. The budget process includes submittal of each department's budget request for the next fiscal year, a detailed review of each department's proposed budget by the City Manager, and a final City Manager recommended budget transmitted to the City Council for its review before the required date of adoption. Once transmitted to the City Council, the proposed budget is made available for public inspection. A public hearing is held to give the public the opportunity to comment upon the proposed budget. Notice of such public hearing is published in a newspaper of general circulation. The adoption of the budget is accomplished by the approval of a Budget Resolution. The legal level of budgetary control is at the department level. Any budget modification, which would result in an appropriation increase, requires City Council approval. The City Manager and Finance Director are jointly authorized to transfer appropriations up to $15,000 within a departmental budget. Any appropriation transfers between departments or greater than$15,000 require City Council approval. 30 2014-02-18 Agenda Packet Page 253 All appropriations which are not obligated, encumbered or expended at the end of the fiscal year lapse and become a part of the unreserved fund balance which may be appropriated for the next fiscal year. An annual budget for the year ended June 30, 2014, was adopted and approved by the City Council for the general, special revenue and debt service funds except for the Developer's Deposit Special Revenue fund,which is used to account for various developer deposit for development projects and is used to fund staff costs and other costs related to specific projects and the Public & Educational Government Fees Special Revenue Fund, which is used to account for the 1% PEG costs. These budgets are prepared on the modified accrual basis of accounting. The budgets of the capital projects funds are primarily long- term budgets, which emphasize major programs and capital outlay plans extending over a number of years. Appropriations Limit Section 7910 of the Government Code of the State of California requires the City to adopt a formal appropriations limit for each fiscal year. The City's appropriations limit for fiscal year 2013/14 is $710,187,628. The City's appropriations subject to the limit for 2013/14 are $80,465,230. Based on this, the appropriations limit is not expected to have any impact on the ability of the City to budget and appropriate the Lease Payments as required by the Lease. Economic Conditions and Outlook The City, like many other municipal entities, was not immune to the effects of the most recent economic recession. Like many municipal entities throughout the nation, General Fund revenues were hampered as a result of declining assessed values and depressed consumer spending. Between 2007 and 2011,the City reduced its workforce by 35%, or almost 600 of the 1,661 positions full-time and part-time authorized, and made other drastic reductions in spending. As shown in Table No. 26 (General Fund Statement of Revenues, Expenditures and Changes in Fund Balance for Fiscal Years ending June 30, 2009 through June 30, 2013) between Fiscal Year 2008/09 and Fiscal Year 2012/13, the City's General Fund revenues declined by 13.7% while the City reduced General Fund expenditures by approximately 15% between these years,and its General Fund fund balance was reduced by approximately$9.5 million. The City's budget for Fiscal Year 2013/14 continues to reflect the slow economic recovery, however, there are some positive signs indicating a modest recovery is underway. The City experienced a 12.8% increase in sales tax revenue in 2010/11 after three years of significant reductions, a 2.1% increase in sales tax revenue in 2011/12 and a 5%increase for 2012/13, indicating a continuation of this trend. Sales tax is the City's largest single revenue source and the estimated sales tax is $29.9 million for fiscal year 2013/14. The fiscal year 2013/14 budget exceeds the pre-recession level high of $28.8 million actual sales tax revenue earned in fiscal year 2006/07. This indicates that it has taken seven years for the City to recover sales tax revenue losses incurred as a result of the recession. The City's unemployment situation continues to improve as well. According to the California Employment Development Department, the unemployment rate dropped from 10.8% in June 2012 to 7.5% in December 2013. In terms of population, the City remains stable as it continues to maintain its place as the 14th largest incorporated city in the state according to the California Department of Finance. The City's housing market also continues to show positive signs of recovery. This is reflected in City property tax levels that have also experienced a modest recovery from the recession. Local property taxes are the City's second largest revenue source. The City experienced a 13.6% increase in local property tax collections in Fiscal Year 2012/13 after reductions in the three preceding years. General fund property tax revenues are projected to increase by 5.2% in fiscal year 2013/14 compared to the fiscal year 2012/13 budgeted amounts based on an assumed 2% growth rate in assessed valuation of taxable property. The increase also includes revenues received as a result of the dissolution of the City's redevelopment agency. 31 2014-02-18 Agenda Packet Page 254 The return of stable property /tax growth provides another possible indication that the housing market may be stabilizing paving the way for the City to benefit from steady revenue growth. The City's most recent Five-Year Financial Forecast (Fiscal Years 2013/14 to 2017/18) shows that the General Fund operating budget is balanced in Fiscal Year 2013/14 with the use of the Economic Contingency Reserve, and that in future years, personnel cost increases, rising insurance costs and substantial increases in employer pension rates projected by PERS (see "Retirement Programs" below) will create a budget imbalance that may need to be resolved through a deferral of certain costs, such as maintenance and equipment or vehicle replacement,if no offsetting revenue is received. Revenues and Expenditures The City's General Fund Budget includes programs which are provided on a largely city-wide basis. The programs and services are financed primarily by the City's share of property taxes, sales tax, revenues from the State,and charges for services provided. A comparison of the results for Fiscal Year 2011/12,the Fiscal Year 2012/13 budget and results for Fiscal Year 2012/13 and the budget for Fiscal Year 2013/14 is shown in Table No. 9. For Fiscal Year 2012/13, actual revenues and transfers exceeded budget by $5.4 million and actual expenditures and transfers out exceeded the original budget by$1.1 million. Revenues The largest components of estimated Fiscal Year 2013/14 General Fund revenues(including transfers)are sales tax(23.4%),property tax(20.3%)and property tax in lieu of motor vehicle license fees(12.9%). The revenues in Table No. 9 that follows are categorized as: • Property Taxes and Property Taxes In Lieu Motor Vehicle License Fees (see "State Legislative Shifts of Property Tax Allocation"below); • Sales Taxes, including the "triple flip" (see "State Legislative Shifts of Property Tax Allocation" below); • Other Taxes, detailed in Table No. 14 "Tax Revenues by Source,"which include utility users tax, transient occupancy tax, franchise fees, business licenses and other taxes such as documentary transfer tax; • Licenses and Permits,which includes construction building permits and engineering permits; • Fines,Forfeitures and Penalties,which includes municipal and vehicle code violations; • Use of Money and Property, which includes rental income for various City facilities and investment income; • Intergovernmental Revenue; • Charges for Services, comprised of charges such as plan checking, building inspection and other municipal services,animal shelter contracts, services to the Port of San Diego,recreation program fees and staff services reimbursement; • Other Revenue, which includes charges to other funds for overhead and administration, and reimbursements for costs relating to staffmg for open space and assessment district maintenance and capital improvements,and 32 2014-02-18 Agenda Packet Page 255 • Transfers In from the Gas Tax Fund, Traffic Safety Fund, Asset Seizure Fund, Proposition 42 Fund, Sewer Service Fund and other funds to reimburse for qualifying expenditures or overhead. Expenditures The expenditures in Table No. 9 that follows are categorized by governmental function. Each function generally includes salaries and benefits and materials and supplies. Salaries and Benefits include direct personnel costs, benefits, health insurance costs and workers' compensation and unemployment insurance costs. Materials and supplies include non-personnel operating costs and contract professional services. Operating Transfers Out are primarily transfers to the debt service funds for the General Fund share of payments on outstanding debt not paid for by the PFDIF. The City provides both police and fire services. These public safety expenditures represent approximately 52.8% of the total estimated General Fund expenditures (including transfers) for Fiscal Year 2013/14. As noted, Table No. 9 provides a comparison of results for Fiscal Year 2011/12, the Fiscal Year 2012/13 budget, the results for Fiscal Year 2012/13 and the budget for Fiscal Year 2013/14. Historical financial information is shown in Table No. 26. Fiscal Year 2013/14 Budget The estimated General Fund revenues for Fiscal Year 2013/14 General Fund total $130.25 million. This reflects an increase of $4.7 million (3.7%) when compared to the adopted revenues for Fiscal Year 2012/13 and a slight reduction from Fiscal Year 2012/13 actual results. The Fiscal Year 2013/14 budget does include the one-time use of$2.3 million from the Economic Contingency Fund (part of the General Fund Committed Fund Balance) in order to avoid service level impacts. The City ended Fiscal Year 2012/13 with an unassigned operating reserve fund balance of $10,790,135 (8.4% of operating expenditures) and projects to end Fiscal Year 2013/14 with an unassigned operating reserve fund balance of$11,266,967(8.7%of operating expenditures). The General Fund Adopted Operating Budget for Fiscal Year 2013/14 totals $130.53 million, which reflects an increase of$3.9 million(3.0%)when compared to the Adopted Budget for Fiscal Year 2012/13 and$2.8 million(2.0%)increase when compared to the Fiscal Year 2012/13 actual expenditures. The budgeted Fiscal Year 2013/14 increases or decreases from Fiscal Year 2012/13 (budget or actual) by revenue category are summarized as follows: • Sales Taxes - $2.0 million increase in Fiscal Year 2013/14 compared to Fiscal Year 2012/13 budget based on the most recent information provided by the City's sales tax consultants and the trend for the current fiscal year. This represents a 1.5% increase over actual sales tax for Fiscal Year 2012/13. • Property Taxes—This category reflects a net increase of$1.3 million in Fiscal Year 2013/14 from the Fiscal Year 2012/13 budget. This increase consists of$1.5 million improvement in secured, unsecured and unitary property tax revenues. The increase is offset by a decrease in revenues from delinquent taxes. Actual property taxes for Fiscal Year 2012/13 exceeded budget by $1.58 million. • Other Revenues — This category reflects an increase of $2.3 million in Fiscal Year 2013/14 compared to Fiscal Year 2012/13 budget, consisting of the use of Economic Contingency Reserves generated by savings from the prior fiscal year. 33 2014-02-18 Agenda Packet Page 256 • Franchise Fees — Franchise fee revenues in Fiscal Year 2013/14 are projected to increase by $500,000 from the Fiscal Year 2012/13 budgeted amount based on City projected growth and the continued administration of City franchise agreements. Actual franchise fees in Fiscal Year 2012/13 exceeded budget by$1.3 million. • Police Grants — Police Grants are increasing by $500,000 as result of increased federal grant revenue and CBAG program revenues. • Development Revenue — This category reflects an increase of$300,000 increase in Fiscal Year 2013/14 compared to Fiscal Year 2012/13 budget based on a projected increase in development activity for the 2013/14 Fiscal Year. • Licenses and Permits Revenue—This category reflects an increase of$300,000 increase in Fiscal Year 2013/14 compared to Fiscal Year 2012/13 budget based on projected increased fire permit revenues. • Transient Occupancy Taxes — Transient occupancy tax revenues in Fiscal Year 2013/14 were increased by $237,000 over the Fiscal Year 2012/13 budget reflecting the continued upward trend for this revenue source. Transient occupancy tax revenues have been increasing since Fiscal Year 2009/10 but have not yet recovered to pre-recession levels. Actual transient occupancy taxes for Fiscal Year 2012/13 exceeded budget by over$300,000. These revenue increases are offset by the decreases in the following revenue categories: • Transfers From Other Funds —This category reflects a decrease of$1.8 million from the Fiscal Year 2012/13 budget due to the elimination of the $2.0 million loan repayment from the Redevelopment Agency to the General Fund, a net $0.2 million reduction in Gas tax funds, and a net increase of$0.6 million from the Advance Life Support(ALS) Fund that will offset the costs of the ALS program. • Inter-fund Reimbursements — This category reflects a decrease of $1.3 million from the Fiscal Year 2012/13 budget. This decrease is attributed to a decrease in CIP reimbursements revenues $0.6 million that were not carried forward in the budget from the previous fiscal year as a result of project completion and a $0.5 million reduction from Non-Departmental CIP reimbursement revenues. The balance of the decrease consists of lower reimbursements from the Development Impact Fee,Redevelopment Agency and Other City funds. • Fines, Forfeitures & Penalties — This category reflects a decrease of $700,000 from the Fiscal Year 2012/13 budget. This change reflects decreases in Negligent Vehicle Impound Processing Fees,Code Enforcement Violations,and Library Fines. • Use of Money and Property - This category reflects a decrease of$200,000 from the Fiscal Year 2012/13 budget resulting from lower revenues from real property sales, investment earnings and revenues derived from the rental of City facilities. The budgeted Fiscal Year 2013/14 increases or decreases from Fiscal Year 2012/13 (budget or actual) by expenditure category are summarized as follows: Personnel-This category reflects the largest change for Fiscal Year 2013/14 when compared to the Fiscal Year 2012/13 budget,an increase of$2.4 million. Reflected in this increase is the following: • $1.3 million in salary costs that includes the addition of 12.65 positions and the annualized costs of IAFF and POA MOU negotiated salary increases and scheduled step increases. • A$1.0 million increase for retirement costs. 34 2014-02-18 Agenda Packet Page 257 • $500,000 for the Fire Department for differential pay for Paramedic and Emergency • Medical Technician personnel for the implementation of the Fire Department • Advance Life Support (ALS) program and increased constant minimum overtime costs. These costs are revenue offset through additional revenues generated from increased ambulance transport rates. • $300,000 for increased flex/insurance costs. • $200,000 in combined increases to other various personnel costs including hourly personnel, retirement costs,differential pay,overtime,and vacation-in-lieu expenses. These increases were partially offset by the following: • $500,000 decrease in Worker's Compensation insurance charges. • $102,000 decrease in various employee benefit expenses. • $100,000 decrease in reimbursed overtime expenses. Transfers Out—This category reflects an increase of$1.3 million over the 2012/13 adopted budget. This increase is largely attributable to increases in the transfer amounts to various city debt service funds as follows: • $500,000 for debt service related to the Civic Center and Corporation Yard projects. • $300,000 for debt service costs related to California Energy Commission (CEC) energy projects. Fiscal year 2012-13 debt service costs were paid with fund balance reserves from the CEC fund. Debt service costs for Fiscal Year 2013/14 resumes as a General Fund expense. • $200,000 for debt service payments related to the financing of City energy projects with Qualified Energy Conservation Bonds. This cost is offset from savings realized through energy savings and are reflected as commensurate deceases in in the utilities budget. Other Expenditures — Compared to the Fiscal Year 2012/13 budget, in Fiscal Year 2013/14, the City is budgeting $800,000 less in capital outlay and a $146,000 decrease in utilities resulting from the energy conservation measures being implemented, offset by a$208,000 increase in fleet maintenance costs to be paid from a transfer from the Asset Seizure Fund and$107,000 for software licenses and maintenance. Fund Balance —The June 30, 2012 unrestricted fund balance was restated downward by $3.35 million in Fiscal Year 2012/13 due to the correction of an accrual of sales tax relating to the "Triple Flip" that occurred in Fiscal Year 2005/06. See "State Legislative Shifts of Property Tax Allocation"below. Mid-Year Update In the first quarter of Fiscal Year 2013/14, there were a number of budget adjustments. Annual property tax and property tax in lieu of motor vehicle fees are now projected to exceed budget by a combined $0.9 million based on updated assessed value information upon which the tax is based(3.4% increase in city- wide assessed value). Franchise fees and transient occupancy taxes are now projected to exceed budget by $0.3 million based on additional historical information. Grant reimbursements are projected to decrease by $0.5 million as a result of decreased participation in grant-reimbursed tax force activities. Overall, the projected net increase in revenues for Fiscal Year 2013/14 compared to the original adopted budget is$0.7 million. 35 2014-02-18 Agenda Packet Page 258 A portion of the net$700,000 increase in budgeted revenues was applied to $415,000 of expenditures-- • Transfer an additional $150,000 to the Development Services Fund for permit subsidies encouraging energy efficiency related projects (staff now projects a shortfall in Fiscal Year 2013/14 budget based on Fiscal 2012/13 actual subsidies); • An increase of$65,000 in property insurance premiums based on actual billings;and • A$200,000 reduction in budgeted salary savings due to lower than anticipated turnover. There are no additional major changes in budgeted revenues or expenditures in the second quarter of Fiscal Year 2013/14. However, certain other expenditures will be monitored as the fiscal year progresses, especially (1) utilities impacted by impending rate increases during the fiscal year, (2) water costs for parks and public works that will exceed budget if drought conditions persist, and (3) repair costs in the public works and central garage. 36 2014-02-18 Agenda Packet Page 259 TABLE NO.9 CITY OF CHULA VISTA GENERAL FUND REVENUES AND EXPENDITURES 2011/12 2012/13 2012/13 2013/14 Actual Budget�'� Actual Budget Revenues: Property Tax $ 24,518,260 $ 24,665,351 $ 27,876,534 $ 25,952,576 Property Tax in Lieu of MVLF 16,288,377 16,125,085 16,253,826 16,487,870 Sales Tax 27,275,753 27,834,000 28,627,785 29,854,685 Other Taxes 21,631,533 15,590,658 18,552,688 16,486,252 Licenses and Permits 1,222,769 990,037 1,395,519 1,309,447 Intergovernmental Revenue 2,990,067 3,571,010 4,072,355 5,245,511 Fines,Forfeitures and Penalties 1,355,769 1,854,695 1,002,947 1,110,800 Use of Money&Property 2,916,634 2,474,690 2,201,490 2,281,640 Charges for Services 7,580,982 7,373,251 8,357,509 7,612,879 Other Revenue 3,370,932 2,372,664 2,291,179 4,083,334 Reimbursements from Other Funds 8,216,538 9,727,843 10,732,497 8,556,633 Transfers In 9,850,343 13,022,758 9,661,447 11,266,965 Total Revenues 127,217,957 125,602,042 131,025,775 130,248,592 Expenditures: General Government 16,899,170 19,957,342 20,217,446 21,315,300 Public Safety-Police 41,992,883 43,963,267 42,480,862 44,778,450 Public Safety-Fire 22,447,355 22,795,614 23,878,548 24,086,585 Public Works 25,219,618 23,824,259 26,014,418 23,794,645 Recreation and Library 6,679,611 6,783,803 6,545,041 7,085,574 Planning and Building 2,716,201 2,770,244 2,524,833 2,323,530 Capital Outlay 280,627 1,082,486 1,172,734 290,990 Transfers Out 13,390,590 5,459,763 4,910,795 6,851,003 Total Expenditures 129,626,055 126,636,778 127,744,677 130,526,077 Net Change in Fund Balances (2,408,098) (1,034,736) 3,281,098 (277,485) Beginning Unassigned Fund Balance 11,876,992 13,413,405 11,969,280 12,842,520 Restatement - - (3,350,981) - Change in Reserves 2,500,386 - (1,109,262) - Ending Fund Balance $ 11,969,280 $ 12,378,669 $ 10,790,135 $ 12,565,035 Source: City of Chula Vista. Budget figures include fund 234—Advanced Life Support Fund and fund 341 —Public Liability Trust Fund for consistent presentation with audited/actual figures. 2013/14 mid-year budget adjustments have increased projected unassigned fund by approximately $700,000. After reflecting the fund balance restatement in Fiscal Year 2012/13,actual fund balance at June 30,2013 is projected to be$11,266,967. 37 2014-02-18 Agenda Packet Page 260 Ad Valorem Property Taxes Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City as of the preceding January 1. For assessment and collection purposes, property is classified either as "secured" or"unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State assessed property and real property having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." Property taxes on the secured roll are due in two installments,on November 1 and February 1 of the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be prepaid by payment of the delinquent taxes and the delinquency penalty, plus a prepayment penalty of 1%2% per month to the time of prepayment. If taxes are unpaid for a period of five years or more,the property is subject to sale by the County Tax Collector. Property taxes on the unsecured roll become delinquent, if unpaid on August 31. A 10%penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1%2%per month begins to accrue on November 1 of the fiscal year. The County of San Diego has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3)filing a certificate of delinquency for record in the County Recorder's Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property,improvements or possessory interests belonging or assessed to the assessee. The Board of Supervisors of the County has approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the "Teeter Plan"), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State. Under the Teeter Plan, the County apportions secured property taxes and assessments on an accrual basis when due (irrespective of actual collections) to participating local political subdivisions for which the County acts as the levying or collecting agency. The City does not participate in the Teeter Plan. As a result, the County apportions to the City only the secured property taxes actually collected, including penalties and interest paid on delinquent installments of property taxes. Taxable Property and Assessed Valuation Set forth in Table No. 10 are assessed valuations for secured and unsecured property within the City of Chula Vista. Article XIIIA of the California Constitution prescribes the method for determining the full cash value of real property and the maximum ad valorem tax on real property. The full cash value, once established, is subject to annual adjustment to reflect inflation at a rate not to exceed 2% or a reduction in the California Consumer Price Index. There may also be declines in valuations if the California Consumer Price Index is negative. Proposition 8 provides for the assessment of real property at the lesser of its originally determined (base year)full cash value compounded annually by the inflation factor,or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The City saw significant Proposition 8 reductions in property values between 2008 and 2012, reducing assessed value by 19%. Assessed values increased by 2.2% in 2013. See "RISK FACTORS - Constitutional Limitation on Taxes and Expenditures -Article XIIIA" and "- Proposition 8 Adjustments"herein. 38 2014-02-18 Agenda Packet Page 261 TABLE NO. 10 CITY OF CHULA VISTA GROSS ASSESSED VALUE OF ALL TAXABLE PROPERTY Fiscal Year Secured Unsecured Total 2008/09 $24,321,226,598 $502,169,151 $24,823,395,749 2009/10 21,556,536,548 540,453,455 22,096,990,003 2010/11 20,727,034,672 508,410,557 21,235,445,229 2011/12 20,622,452,438 531,510,997 21,153,963,435 2012/13 20,459,110,877 483,686,031 20,942,796,908 2013/14 20,933,842,922 466,090,057 21,399,932,979 Source: County of San Diego Auditor-Controller. Property tax levies and collections for the City are set forth in Table No. 11. TABLE NO. 11 CITY OF CHULA VISTA TAX LEVIES AND COLLECTIONS Current Percentage Collections in Total Percentage Fiscal Total Tax Tax of Levy Subsequent Tax of Year Levy(1) Collections Collected Years(2) Collections Levy 2008/09 $29,304,771 $28,147,698 96.05% $765,703 $28,913,402 98.66% 2009/10 26,246,478 25,313,706 96.45% 538,429 25,852,135 98.50% 2010/11 25,325,126 24,773,002 97.82% 134,325 24,907,328 98.35% 2011/12 25,373,780 24,669,632 97.22% (35,474) 24,634,158 97.09% 2012/13 25,352,454 24,982,072 98.54% 117,973 25,100,045 99.00% Source: City of Chula Vista. (1) Levy amounts do not include supplemental taxes. (2) Collection amounts represent delinquencies collected for all prior years during the current tax year. Total delinquent collections are reduced by any refunds processed from prior year tax collections. 39 2014-02-18 Agenda Packet Page 262 Redevelopment Agencies The California Redevelopment Law (Part 1 of Division 24 of the Health & Safety Code of the State) authorized the redevelopment agency of any city or county to receive an allocation of tax revenues resulting from increases in assessed values of properties within designated redevelopment project areas (the "incremental value") occurring after the year the project area was formed. In effect, local taxing authorities, such as the City, realized tax revenues only on the assessed value of such property at the time the redevelopment project is created for the duration of such redevelopment project. There were two redevelopment projects in the City. Table No. 12 sets forth total assessed valuations and redevelopment agency incremental values. The State Legislature approved a bill, AB X1 26, during the 2011/12 State budget process. AB X1 26 eliminated redevelopment agencies State-wide. The California Redevelopment Association and the League of California Cities filed a petition with the California Supreme Court (the "Court"), requesting the Court to review the constitutionality of AB X1 26. On December 29, 2011, the Court issued its opinion and upheld AB X1 26. As a result of the decision, all California redevelopment agencies, including the City's Redevelopment Agency,were dissolved as of February 1, 2012. Certain tax revenues allocable to the former Redevelopment Agency will continue to be available to the City, as successor agency to the Redevelopment Agency, to pay certain obligations, and some of those revenues may be redirected to other taxing agencies, such as the County, school districts and the City. The City's General Fund was impacted by the implementation of AB X1 26 (and subsequent legislation AB 1484) and those impacts were incorporated into the City's 2012/13 and 2013/14 budgets. See "RISK FACTORS - State Budget; Redevelopment Agency Legislation." TABLE NO. 12 CITY OF CHULA VISTA TOTAL AND NET PROPERTY TAX VALUATIONS Total Redevelopment Fiscal Assessed Agency Net Percent Year Valuation Incremental Value Value Change 2008/09 $24,823,395,749 ($1,167,448,745) $23,655,947,004 2009/10 22,096,990,003 (1,225,949,135) 20,871,040,868 (11.8%) 2010/11 21,235,445,229 (1,172,995,829) 20,062,449,400 (3.9%) 2011/12 21,153,963,435 (1,212,102,912) 19,941,860,523 (0.6%) 2012/13 20,942,796,908 (1,143,033,852) 19,799,763,056 (0.7%) 2013/14 21,399,932,979 (1,255,372,303) 20,144,560,676 1.7% Source: County of San Diego Auditor-Controller. 40 2014-02-18 Agenda Packet Page 263 Largest Taxpayers The principal property taxpayers as of June 30,2013 are as shown in Table No. 13. TABLE NO. 13 CITY OF CHULA VISTA LARGEST PROPERTY TAXPAYERS Assessed Percent Taxpayer Valuation of Total Rohr Inc. $181,597,655 0.87% JPB Development 131,242,850 0.63 Equity Residential 118,922,698 0.57 GGP-Otay Ranch LP 118,496,741 0.57 Regulo Place Apartments Invest 92,893,489 0.44 Bre Properties Inc. 85,724,074 0.41 Corky McMillin Homes 74,138,192 0.35 Chula Vista Center LLC 74,126,926 0.35 Camden USA Inc. 64,164,161 0.31 Essel LP 51,942,960 0.25 Total $993,249,746 4.75% Source: City of Chula Vista. State Legislative Shifts of Property Tax Allocation Since 1992/93, the State has required that local agencies including cities remit a portion of property taxes received to augment school funding. These funds are deposited in each county's Education Revenue Augmentation Fund ("ERAF"). These property taxes (approximately 17.5%) are permanently excluded from the City's property tax revenues. On July 24, 2009, the California legislature approved amendments to the 2009/10 Budget to close its anticipated $26.3 billion budget shortfall. The approved amendments included borrowing from local governments by withholding of the equivalent of 8% of Fiscal Year 2008/09 property related tax revenues from cities' and counties' property tax collections under provisions of Proposition IA (approved by the voters in 2004), which the State was required to repay with interest within three years. The City participated in the Proposition IA securitization program undertaken by the California Statewide Community Development Authority, whereby the City sold the $4,488,610 receivable that resulted from the State borrowing of property tax revenues. In addition, certain other provisions in the State budget have resulted in a realignment of property tax revenues: On March 2, 2004, voters approved a bond initiative formally known as the "California Economic Recovery Act." This act authorized the issuance of $15 billion in bonds to finance the 2002/03 and 2003/04 State budget deficits, to be payable from a fund to be established by the redirection of tax revenues through the "Triple Flip." Under the "Triple Flip," one-quarter of local governments' 1% share of the sales tax imposed on taxable transactions within their jurisdiction is redirected to the State. In an effort to eliminate the adverse impact of the sales tax revenue redirection on local government, the 41 2014-02-18 Agenda Packet Page 264 legislation provides for property taxes in the ERAF to be redirected to local government. Because the ERAF moneys were previously earmarked for schools, the legislation provides for schools to receive other state general fund revenues. It is expected that the swap of sales taxes for property taxes will terminate once the deficit financing bonds are repaid. The amount estimated to be received through an in lieu payment from State property tax revenues, approximately $7.2 million, is included in sales taxes shown in Table No. 14. Because of the timing change in disbursing the Triple Flip money (twice a year instead of monthly like regular sales tax) in the first year of the Triple Flip, the City accrued six months of sales tax that was actually payable for the subsequent fiscal year. This accrual caused the General Fund unassigned fund balance to be overstated by$3.35 million until it was corrected in Fiscal Year 2012/13. The City received a portion of Department of Motor Vehicles license fees ("VLF") collected statewide. Several years ago, the State-wide VLF was reduced by approximately two-thirds. However, the State continued to remit to cities and counties the same amount that those local agencies would have received if the VLF had not been reduced,known as the "VLF backfill." The State VLF backfill was phased out and by 2011/12 all of the VLF is now received through an in lieu payment from State property tax revenues. In Fiscal Year 2011/12 the VLF is included in "Taxes" in the financial statements, but for all other years, the City included the VLF in"Intergovernmental Revenues"in the financial statements. Local Taxes In addition to ad valorem taxes on real property,the City receives the following non-real estate local taxes (see "RISK FACTORS - Constitutional Limitation on Taxes and Expenditures - Proposition 62" and "Proposition 218"herein). Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization. Each local jurisdiction receives an amount equal to 1% of taxable sales within their jurisdiction. In addition, the City receives a portion of a %2 cent sales tax increase approved by voters in 1993. Sales tax generated by this increase is used to offset certain expenses for public safety. Utility Users Tax. A utility users tax ("UUT") is levied on gas and electric customers based on usage (.01103 per therm for gas; .00300 per kilo watt for electricity) and telephone services based on gross receipts (up to 6% is authorized; to date the maximum rate imposed has been 5%). The UUT was first levied in 1970 and the last increase in tax rates was in 1979. A class action lawsuit was filed against the City contending that a tax on wireless phone use was not covered in the implementing UUT ordinance. A preliminary settlement agreement was entered into in April 2013 for rebates to affected wireless phone users who paid the UUT of their wireless phone bills from April 2010 to April 2013. Further, once the court approves the final settlement, the UUT rate on phone service will be reduced from 5% to 4.75%. Currently, the City has not budgeted any UUT from wireless phone use and all related receipts are being reserved when collected. The future annual revenues from the wireless phone portion of the UUT are approximately $3.5 million annually (assuming reduction in rate from 5% to 4.75%). It is possible that future lawsuit could be brought again seeking refunds of the wireless phone portion of the UUT. At June 30, 2012, the City had recorded $7.3 million of disputed UUT as "deferred revenue" on its balance sheet. As of June 30,2013,the City recorded another$4.1 million as"deferred revenues,"moved $8,000,000 of disputed UUT to a liability account in accordance with the settlement agreement, and recorded $900,000 of prior deferred revenue to pay expenses of the UUT litigation, leaving $2.5 million in UUT that has been collected in the "deferred revenue" account. Once the settlement has been finalized, a portion of the $8,000,000 will be paid to the claims administrator for disbursement to the affected class of wireless phone users. Pursuant to the settlement agreement,the balance of the funds will be earmarked as separate from the General Fund and used for the benefit of Chula Vista citizens to address communications,police services,fire services,libraries,parks and recreation services. 42 2014-02-18 Agenda Packet Page 265 There is no time limit established for the collection of the utility users tax or the transient occupancy tax. See"RISK FACTORS -The Lease Payments- Proposition 218"herein. Franchise Fees. The City levies a franchise fee on its cable television, trash collection and utility franchises. Business License Tax. The City levies a business license tax based on number of employees. Transient Occupancy Tax. The City levies a 10%transient occupancy tax on hotel and motel bills. Property Transfer Taxes. The City receives a documentary stamp tax which is assessed for recordation of real property transfers. TABLE NO. 14 CITY OF CHULA VISTA TAX REVENUES BY SOURCE Budget 2010 2011 2012 2013 2014 Property Tax $25,734,370 $24,711,851 $24,518,260 $27,876,534 $25,952,576 Property Tax In Lieu of VLF 17,702,062 16,942,835 16,288,377 16,253,826 16,487,870 Sales Tax 23,674,601 26,702,443 27,275,753 28,627,785 29,854,685 Franchise Fees 8,465,199 8,260,411 8,400,178 9,266,768 8,472,850 Utility Users Tax(2) 9,059,302 4,943,679 3,465,136 4,428,794 3,512,026 Transient Occupancy Tax 2,036,377 2,058,878 2,295,675 2,471,252 2,365,005 Business License Tax 1,177,539 1,085,247 1,169,307 1,260,622 1,335,889 Property Transfer Tax 893,116 777,016 779,981 1,125,252 800,482 Total $88,742,566 $85,482,360 $84,192,667 $91,310,833 $88,781,383 Source: City of Chula Vista. See "Motor Vehicle License Fees"below. For comparison purposes,these amounts are included in"Taxes"for all years. (2) The City began recording a portion of the utility users' tax as deferred revenue in Fiscal Year 2010/11. In 2012/13,the City recognized$900,000 of deferred revenue to pay expenses related to the settlement described above. Motor Vehicle License Fees As described above,the City receives a portion of VLF collected state-wide. The total VLF budgeted for Fiscal Year 2013/14 is $16.5 million, all of which is included in the City's Fiscal Year 2013/14 budget as intergovernmental revenues, but will be received through an in lieu payment from State property tax revenues. Although the VLF is shown in Table No. 14 in all years as "Property Tax In Lieu of VLF" for comparison purposes, the property tax portion of the VLF was phased in over several years, and in the City's financial statements(except for Fiscal Year 2011/12),is shown in"Intergovernmental Revenues." 43 2014-02-18 Agenda Packet Page 266 Public Facilities Development Impact Fees The City assesses certain fees on new development. One such fee is the Public Facilities Development Impact Fee, or "PFDIF." These revenues are recorded in a Development Impact Fee Fund. See "APPENDIX B - CITY AUDITED FINANCIAL STATEMENTS." The City utilizes the PFDIF to offset the cost of constructing or financing certain public facilities, such as the renovation of the Civic Center complex and the Police Headquarters, including paying a portion of the lease payments related to the financing of these improvements. See "Outstanding Indebtedness of the City"below. The receipt of the PFDIF is dependent upon building activity in the City and such revenues have been significantly reduced during the recession years. Over the last eight years PFDIF revenues have ranged from a high of$18 million in Fiscal Year 2005/06 to a low of$695,000 in Fiscal Year 2008/09. Such amounts have not always been adequate in recent years to pay lease payments as expected and such amounts have been funded with the PFDIF fund balance or interfund loans made to the PFDIF fund instead. The accumulated balance of PFDIF revenues at June 30,2013 was $10,712,383 and the interfund loans due to other funds is$14.6 million. Fiscal PFDIF Year Revenuescn 2005/06 $17,967,004 2006/07 2,130,561 2007/08 2,861,465 2008/09 695,793 2009/10 1,610,071 2010/11 4,208,203 2011/12 3,122,330 2012/13 6,808,865 2013/14 Budget 5,110,000 Does not include investment income/market value decline in investment value or reimbursements from other funds for prior expenditures. The City's budget for Fiscal Year 2013/14 includes $5.1 million in PFDIF fee revenues as compared to a total of approximately $5.2 million in lease payments on all City financings which could be paid from such revenues (see "Outstanding Indebtedness of the City"). More recent projections estimate that the PFDIF fee revenues for Fiscal Year 2013/14 will be closer to $4.8 million. While the City has projected that future development will stabilize and believes that annual PFDIF revenues, or accumulated PFDIF revenues, will be available to pay a portion of the lease payments referenced above, there can be no guarantee that building activity will occur as anticipated, and as a result, the City General Fund may be required to pay a greater share of lease payments than currently anticipated by the City. However, to mitigate future fluctuations in PFDIF revenues again impacting the General Fund, the City has reserved $5.9 million (one year's share of debt service on PFDIF —eligible projects) of the current $10.7 million fund balance. Personnel Employee salaries and benefits account for over 80%of the City's General Fund expenditures estimate for Fiscal Year 2013/14. Table No. 15 sets forth historical employee information for the City as of June 30 in each of the last five fiscal years and budgeted for 2013/14 based on authorized, budgeted full-time equivalent positions. 44 2014-02-18 Agenda Packet Page 267 TABLE NO. 15 CITY OF CHULA VISTA CITY PERSONNEL Number of Full Time Employees Per Fiscal Year Permanent Employees Thousand Population 2008/09 1,109 4.80 2009/10 1,005 4.31 2010/11 1,005 4.09 2011/12 923 3.72 2012/13 932 3.70 2013/14 950 3.78 Source: City of Chula Vista. Employee Relations and Collective Bargaining City employees are represented by five labor unions and associations: the Chula Vista Employees' Association(CVEA),the Chula Vista Police Officers'Association(POA),the International Association of Fire Fighters (IAFF), the Western Council of Engineers (WCE) and Mid Managers and Professional Association (MMPA). CVEA is the largest association, representing approximately 45.5% of all City employees. Currently 95% of all City employees are covered by negotiated agreements. Current negotiated agreements of CVEA, WCE and MMPA expire June 30, 2015. The agreement with POA expires June 30,2014 and the City has commenced negotiations for the next contract. The City continues to negotiate with the IAFF,whose contract expired June 30,2013. Retirement Programs The City contributes to the California Public Employees Retirement System("PERS"),an agent multiple- employer public employee defined benefit pension plan. The City's defined benefit pension plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Copies of PERS' annual financial report may be obtained from its executive office at 400"P" Street, Sacramento,California 95814. California Public Employees' Pension Reform Act of 2013. On September 12, 2012, the Governor signed into law the California Public Employees'Pension Reform Act of 2013 (the "Reform Act"),which makes changes to both PERS and California State Teachers' Retirement System ("CaISTRS"), most substantially affecting new employees hired after January 1,2013 (the "Implementation Date"). For non- safety PERS participants hired after the Implementation Date, the Reform Act changes the normal retirement age by increasing the eligibility for the 2% age factor from age 55 to 62 and increases the eligibility requirement for the maximum age factor of 2.5%to age 67. Among the other changes to PERS and CaISTRS,the Reform Act also: (i)requires all new participants enrolled in PERS and CaISTRS after the Implementation Date to contribute at least 50%of the total annual normal cost of their pension benefit each year as determined by an actuary, (ii) requires CaISTRS and PERS to determine the final compensation amount for employees based upon the highest annual compensation earnable averaged over a consecutive 36-month period as the basis for calculating retirement benefits for new participants enrolled after the Implementation Date, and (iii) caps "pensionable compensation" for new participants enrolled after the Implementation Date at 100% of the federal Social Security contribution and benefit base for members participating in Social Security or 120% for members not participating in social security, while excluding previously allowed forms of compensation under the formula such as payments 45 2014-02-18 Agenda Packet Page 268 for unused vacation, annual leave, personal leave, sick leave, or compensatory time off. Ultimately, the Reform Act is expected to reduce the City's long-term pension obligation as existing employees retire and new employees are hired to replace them. Funding Policy. The City has established two separately funded retirement plans, one for safety employees (Safety) and one for all other covered employees (Miscellaneous). The City has implemented a three-tiered structure and participants become members of a specific tier based on their date of membership to PERS. Participants in the Miscellaneous Plan are required to contribute 8%, 7% and 6.75% of their annual covered salary for tiers 1, 2 and 3, respectively. Participants in the Safety Plan contribute 9% of their annual covered salary regardless of PERS membership date or tier. The City employees make the required contributions. Under Governmental Accounting Standards Board ("GASB") Statement No. 27, an employer reports an annual pension cost ("APC") equal to the annual required contribution ("ARC") plus an adjustment for the cumulative difference between the APC and the employer's actual plan contributions for the year. The cumulative difference is called the net pension obligation. The ARC for the period July 1, 2012 to June 30, 2013 was determined by an actuarial valuation of the plan as of June 30, 2011. The contribution rate indicated for that period is 23.688% of payroll for the Miscellaneous Plan and 26.492% of payroll for the Safety Plan. In order to calculate the dollar value of the ARC for inclusion in financial statements prepared as of June 30, 2013,the contribution rate is multiplied by the payroll of covered employees that were paid during the period from July 1,2012 to June 30,2013. See below for a further discussion of GASB Statement No. 27 and the impact of GASB Statement No. 68 on pension reporting. Contribution Rates. The contribution requirements of plan members and the City are established by PERS. These rates are factored in to the City's 2013/14 budget. PERS set contribution rates for 2010/11 based on a 4.9% negative return on investments which occurred in 2007/08. For the Fiscal Year 2008/09, the PERS portfolio had lost more than 23% of its value. This loss began affecting PERS contribution rates in 2011/12. A history of the PERS portfolio rate of return is shown below. From July 1, 2013 to October 31, 2013, the PERS portfolio rate of return was a 8.1%. Future earnings performance and adjustments of assumptions may increase or decrease future contribution rates for plan participants,including the City. 46 2014-02-18 Agenda Packet Page 269 TABLE NO. 16 PERS HISTORICAL INVESTMENT RETURNS Year Ending Rate of June 30 Return 2004 16.7% 2005 12.6% 2006 12.3% 2007 19.1% 2008 (4.9)% 2009 (23.4)% 2010 11.6% 2011 20.9% 2012 1.0% 2013 13.2% Source: California Public Employees'Retirement System. The City's percentage of payroll for PERS payments for 2005/06 through 2013/14 and estimates for 2014/15 and for 2015/16 are shown in the table below. In March 2012, PERS voted to decrease the investment rate of return used in future actuarial valuations from the current 7.75%to 7.5%. This change was implemented over a two year period beginning with the 2013/14 contribution rates. TABLE NO. 17 CITY OF CHULA VISTA HISTORICAL AND PROJECTED PERS RATES Fiscal Year Miscellaneous Safetv 2007/08 18.267% 22.291% 2008/09 18.317% 23.936% 2009/10 18.152% 23.228% 2010/11 19.599% 22.654% 2011/12 22.702% 26.134% 2012/13 23.668% 26.492% 2013/14 25.437% 27.316% 2014/15 26.235% 28.857% 2015/16* 27.700% 30.600% * Projected by PERS at October 2013. The City's 2012/13 actual and its 2013/14 budgeted pension cost is $18.2 million and $18.7 million, respectively. In April 2013, PERS voted to raise employer rates roughly 50% over the next seven years, replacing current actuarial methods. Over five years, the new method increases employer rates to the level needed to project 100%funding in 30 years. Also in April 2013, PERS approved a recommendation to change the amortization and smoothing policies. Prior to this change, PERS employed an amortization and smoothing policy, which spread investment returns over a 15-year period while experience gains and losses were amortized over a rolling 47 2014-02-18 Agenda Packet Page 270 30-year period. Effective with the June 30, 2013 valuations, PERS will no longer use an actuarial value of assets and will employ an amortization and smoothing policy that will spread rate increases or decreases over a 5-year period, and will amortize all experience gains and losses over a fixed 30-year period. The new amortization and smoothing policy will be used for the first time in the June 30, 2013 actuarial valuations. These valuations will be performed in the fall of 2014 and will set employer contribution rates for the Fiscal Year 2015/16. PERS has told plan participants to expect that the new method would result in contribution rates from 3 to 6% (of pay) higher than the current methods would have produced at the end of either the six or seven- year period. PERS is also studying a recommendation regarding implementation of improved mortality rates. According to PERS, this could result in rates as much as 2%to 5%higher. The impact would be phased in and,if implemented,would affect rates for the Fiscal Year 2016/17. Annual Pension Costs. A ten-year history of the City's required annual pension cost and actual contribution is shown in the table below. The required contribution was determined as part of annual actuarial valuation using the entry age normal actuarial cost method. The current actuarial assumptions include (a) 7.50%investment rate of return(net of administrative expenses),(b)projected salary increases of 3.3% to 14.2%, and (c) 3.00% annual payroll growth. Both (a) and (b) included an inflation component of 2.75% The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments. PERS unfunded actuarial accrued liabilities (or surplus) is being amortized as a level percentage of projected payroll on a closed basis over 20 years. TABLE NO. 18 CITY OF CHULA VISTA TREND INFORMATION FOR EMPLOYER CONTRIBUTIONS (ALL PLANS COMBINED) (in$Thousands) Fiscal Annual Annual Required Percentage of Net Pension Year Pension Cost Contribution APC Contributed Oblieation 2003/04 $ 8,340,066 $ 8,340,066 100% - 2004/05 13,614,272 13,614,272 100% - 2005/06 17,893,117 17,893,117 100% - 2006/07 17,773,292 17,773,292 100% - 2007/08 19,084,940 19,084,940 100% - 2008/09 18,938,442 18,938,442 100% - 2009/10 17,865,618 17,865,618 100% - 2010/11 19,092,227 19,092,227 100% - 2011/12 23,996,289 23,996,289 100% - 2012/13 18,188,432 18,188,432 100% - Source: California Public Employees'Retirement System. 48 2014-02-18 Agenda Packet Page 271 Set forth below is a ten-year analysis of the actuarial value of assets as a percentage of the actuarial accrual liability and the unfunded actuarial accrued liability as a percentage of the annual covered payroll as of June 30 of each year indicated for the City's combined employee groups. The schedule presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. TABLE NO. 19 CITY OF CHULA VISTA HISTORICAL FUNDING PROGRESS(ACTUARIAL VALUE) (ALL PLANS COMBINED) (in$Thousands) Unfunded Entry Age Unfunded Liability as a Actuarial Actuarial Actuarial Actuarial Annual Percent of Valuation Valuation of Accrued Accrued Funded Covered Covered June 30 Date Assets Liability Liabili Ratio Payroll Payroll 2003 $291,237 $344,025 $ 52,789 84.7% $65,299 80.8% 2004 315,752 382,623 66,871 82.5% 70,333 95.1% 2005 348,894 428,428 79,534 81.4% 79,012 100.7% 2006 387,191 479,523 92,332 80.7% 88,655 104.1% 2007 431,716 521,653 89,937 82.8% 92,984 96.7% 2008 472,661 564,011 91,350 83.8% 83,391 109.5% 2009 499,169 617,013 117,844 80.9% 79,361 148.5% 2010 526,974 651,284 124,311 80.9% 77,797 159.8% 2011 561,694 701,421 139,727 80.1% 75,110 186.0% 2012 588,917 733,341 144,424 80.3% 74,422 194.1% Source: California Public Employees'Retirement System. 49 2014-02-18 Agenda Packet Page 272 A historical comparison of actuarial value of assets to the market value of assets in the plans is shown below. TABLE NO.20 CITY OF CHULA VISTA TREND INFORMATION FOR ASSET VALUES (ALL PLANS COMBINED) (in$Thousands) Actuarial Entry Age Valuation Actuarial Market %of Actuarial Actuarial Funded Funded Date Valuation of Value Value to Accrued Ratio Ratio June 30 Assets of Assets Market Value Liabili (Actuarial) Market 2003 $291,237 $264,761 110.0% $344,025 84.7% 77.0% 2004 315,752 311,170 101.5% 382,623 82.5% 81.3% 2005 348,894 359,233 97.1% 428,428 81.4% 83.8% 2006 387,191 410,175 94.4% 479,523 80.7% 85.5% 2007 431,716 498,631 86.6% 521,653 82.8% 95.6% 2008 472,661 479,849 98.5% 564,011 83.8% 85.1% 2009 499,169 362,945 137.5% 617,013 80.9% 58.8% 2010 526,974 412,394 127.8% 651,284 80.9% 63.3% 2011 561,694 499,961 112.3% 701,421 80.1% 71.3% 2012 588,917 492,528 119.6% 733,341 80.3% 67.2% Source: California Public Employees'Retirement System. GASB Statement No. 68. On June 25, 2012, GASB approved two new standards ("Statements") with respect to pension accounting and financial reporting standards for state and local governments and pension plans. The new Statements,No. 67 and No. 68,will replace GASB Statement No. 27 and most of Statements No. 25 and No. 50. The changes will impact the accounting treatment of pension plans in which state and local governments participate. Major changes include: 1) the inclusion of unfunded pension liabilities on the government's balance sheet (currently, such unfunded liabilities are typically included as notes to the government's financial statements); 2)more components of full pension costs will be shown as expenses regardless of actual contribution levels; 3) lower actuarial discount rates will be required to be used for underfunded plans in certain cases for purposes of the financial statements; 4) closed amortization periods for unfunded liabilities will be required to be used for certain purposes of the financial statements; and 5) the difference between expected and actual investment returns will be recognized over a closed five-year smoothing period. In addition, according to GASB, Statement No. 68 means that, for pensions within the scope of the Statement, a cost-sharing employer that does not have a special funding situation is required to recognize a net pension liability, deferred outflows of resources, deferred inflows of resources related to pensions and pension expense based on its proportionate share of the net pension liability for benefits provided through the pension plan. Because the accounting standards do not require changes in funding policies,the full extent of the effect of the new standards on the City is not known at this time. The reporting requirements for pension plans will take effect for the fiscal year beginning July 1, 2013 and the reporting requirements for government employers, including the City,will take effect for the fiscal year beginning July 1,2014. 50 2014-02-18 Agenda Packet Page 273 Defined Contribution Pension Plan The City provides pension plan benefits for all of its part-time employees through a defined contribution plan(Public Agency Retirement Plan). In a defined contribution plan,benefits depend solely on amounts contributed to the plan plus investment earnings. The plan is administered by Phase II Systems. All part- time employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council resolved to match the employees' contributions of 3.75%. The City's contributions for each employee (and interest earned by the accounts) are fully vested immediately. For the year ended June 30, 2013, the City's total payroll and covered payroll for the Public Agency Retirement Plan was $1,782,958. The City made employer contributions of$66,861 (3.75% of current covered payroll),and employees contributed$66,861 (3.75%of current covered payroll). Other Post Employment Benefits Plan Description. The City provides a Retiree Healthcare Plan, a single employer defined benefit plan, which allows retirees to purchase healthcare coverage under the City's medical plan. Retirees pay 100% of the premiums. Retirees not eligible for Medicare pay the same healthcare premiums as active employees, even though retiree's healthcare costs are greater than that of active employees. This results in an implied subsidy of retiree's healthcare costs by the City. In Fiscal Year 2010/11, the City entered into an agreement with various bargaining groups eliminating the subsidized retiree health care rates for employees hired under the Second or Third Tier PERS Retirement Plan. The postemployment benefit is a single-employer plan. The plan has not been audited and therefore,there is no audited benefit plan report available. Eligibility. Employees are eligible for retiree health benefits if they retire from the City on or after age 50 (unless disabled) and are eligible for PERS pension. The benefits are available only to employees who retired from the City. The benefits terminate at age 65. Membership of the plan consisted of the following at June 30,2013: Police Fire Miscellaneous Total Eligible active employee 201 124 558 883 Enrolled eligible retirees 19 9 192 220 The information above does not reflect current retirees that are not yet enrolled in the healthcare plan but are eligible to enroll in the plan at a later date. Funding Policy. The City offers an implied subsidy benefit paid from the City's General Fund. The City's contribution is based on pay-as-you-go. The retirees pay 100% of their individual premium except for the retirees who retire under the incentive plan. The City is contributing $452 monthly in premium on behalf of one employee who retired under the incentive plan in fiscal year 2012. Annual OPEB Cost and Net OPEB Obligation. The City's annual other post employment benefit ("OPEB") cost (expense) is calculated based on the ARC of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No.45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for Fiscal Years commencing 2009/10, the amount actually contributed to the plan, and changes in the City's net OPEB obligation for these benefits: 51 2014-02-18 Agenda Packet Page 274 TABLE NO.21 CITY OF CHULA VISTA ANNUAL OPEB COST AND NET OPEB OBLIGATION 2009/10 2010/11 2011/12 2012/13 Annual required contribution $1,423,000 $1,470,000 $1,803,000 $1,974,000 Interest on net OPEB obligation 74,790 108,000 151,000 187,000 Adjustment to the annual required contribution - - (285,000) (460,000) Net OPEB cost 1,497,790 1,578,000 1,669,000 1,701,000 Contribution made (702,598) (574,000) (537,000) (359,000) Increase in net OPEB liability 795,192 1,004,000 1,132,000 1,342,000 Net OPEB liability,beginning of the year 1,753,808 2,549,000 3,553,000 4,685,000 Net OPEB liability,end of year $2,549,000 $3,553,000 $4,685,000 $6,027,000 Source: City of Chula Vista Comprehensive Annual Financial Report. The City's annual OPEB cost and the percentage of annual OPEB cost contributed to the plan for Fiscal Years 2007/08 through 2012/13, and the net OPEB obligation as of June 30 of each Fiscal Year were as follows: TABLE NO.22 CITY OF CHULA VISTA OPEB COSTS AND NET OPEB OBLIGATION Percentage of Fiscal Annual Annual OPEB Cost Net OPEB Year OPEB Cost Contributed Oblieation 2007/08 $1,363,000 53% $ 638,752 2008/09 1,435,744 22% 1,753,808 2009/10 1,497,790 47% 2,549,000 2010/11 1,578,000 36% 3,553,000 2011/12 1,669,000 32% 4,685,000 2012/13 1,701,000 21% 6,027,000 Source: City of Chula Vista Comprehensive Annual Financial Report. Funded Status and Funding Progress. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress presents information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits. 52 2014-02-18 Agenda Packet Page 275 TABLE NO.23 CITY OF CHULA VISTA SCHEDULE OF FUNDING PROGRESS Actuarial Entry Age UAAL as a Valuation Actuarial Actuarial Unfunded Percentage of Date Accrued Value of AAL Funded Covered Covered June 30 Liability Assets (UAAL) Ratio Payroll Payroll 2007 $ 9,608,000 $ - $ 9,608,000 0.0% $93,172,648 10.3% 2009 11,885,000 - 11,885,000 0.0% 69,087,000 17.2% 2012 13,081,000 - 13,081,000 0.0% 62,923,000 20.8% Source: City of Chula Vista Comprehensive Annual Financial Report. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial assets,consistent with the long-term perspective of the calculations. The actuarial cost method used for determining the benefit obligation is the Entry Age Normal Cost Method. The current actuarial assumptions included a 4.0% discount rate, the inflation rate for HMO's starts at 8.5%(the increase in 2014 premiums over 2013) and grades down to 5.0%(2021 premiums over 2020) and remains at 5.0% into the future. This assumption means healthcare is assumed to increase, on the average, 6.75% a year for HMOs and 6.95% a year for PPOs a year for the next seven years after 2013. The general inflation assumption rate is 3% and is assumed that healthcare will level off at 1.5% over general inflation. The City's unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll over 30 years. Risk Management The City is self-insured for the first $500,000 per occurrence for its general liability losses including personal injury, property damage, errors and omissions, automobile liability and employment practices liability. For those losses between $500,000 and $2,000,000 per occurrence the City pools its liabilities through its membership in the San Diego Pooled Insurance Program Authority (SANDPIPA). Insurance for losses in excess of the $2,000,000 up to $45,000,000 is purchased on a group basis by the member cities. SANDPIPA is a joint powers authority comprised of twelve San Diego County cities. The Board of Directors consists of one staff representative (and an alternate) from each of the member cities as designated by the city's governing body. Each member city has equal representation on the Board of Directors. The Board of Directors is liable for all actions of SANDPIPA. The SANDPIPA Board of Directors establishes an Executive Committee that is responsible for the administration and operation of the risk management programs of SANDPIPA, subject to the control of the Board. The Executive Committee consists of the Board President, Vice-President, Treasurer and a member at-large nominated by the Board President and approved by a vote of the Board. The Executive Committee is responsible for the oversight of all SANDPIPA operations, including preparation and submittal of the Pool's annual budget to the Board for its review and approval. Annual pool premiums and assessments are approved by the Board of Directors and are adjusted annually based on the member city's incurred losses; the member's share of such losses and other expenses as a 53 2014-02-18 Agenda Packet Page 276 proportion of all member's losses; historical contributions to reserves (including reserves for IBNR losses); the cost to purchase excess liability insurance and other coverage and a proportionate share of administrative expenses. The City is self-insured for the first $1,000,000 per occurrence for workers' compensation liabilities. Excess workers' compensation coverage is obtained through participation in the CSAC Excess Insurance Authority's Excess Workers'Compensation Program. As of June 30, 2013,there are 160 member entities participating in the program that offers per occurrence coverage up to $5,000,000 through pooled resources and from $5,000,000 to statutory limits via group purchased excess insurance policies. Only the probable amounts of loss as estimated by the City's Risk Manager and Attorney, including an estimate of incurred-but-not reported losses, have been recorded as liabilities in the financial statements. There were no reductions in insurance from the prior year and there were no insurance settlements that exceeded coverage in each of the past three years. The aggregate change in the balance of claims payable as recorded in the Governmental Activities were as follows: Beginning of Claims and Balance at Fiscal Year Changes in Claims Fiscal Liability Estimates Payments Year End 2008/09 $15,667,881 $6,298,675 ($4,096,607) $17,869,949 2009/10 17,869,949 4,554,348 (3,622,693) 18,801,604 2010/11 18,801,604 7,960,587 (4,330,098) 22,432,093 2011/12 22,432,093 3,372,465 (3,614,694) 22,189,864 2012/13 22,189,864 3,288,127 (4,456,532) 21,021,459 Source: City of Chula Vista Comprehensive Annual Financial Report. City Investment Policy and Portfolio The City administers a pooled investment program, except for those funds which are managed separately by trustees appointed under bond indentures. This program enables the City to combine available cash from all funds and to invest cash that exceeds current needs. Under the City's Investment Policy and in accordance with the Government Code, the City may invest in the following types of investments subject to certain limitations on maturity and amount: Bankers' Acceptances, Negotiable Certificates of Deposits, Commercial Paper, State and Local Agency Bonds, U.S. Treasury Obligations, U.S. Agency Securities, Repurchase Agreements, Reverse-Purchase Agreements, Medium-Term Corporate Notes,Time Certificates of Deposits, Money Market Funds, Local Agency Investment Fund(LAIF)and the Investment Trust of California(CalTrust). As of December 31, 2013, the market value of the City Treasurer's investment portfolio (excluding funds held under bond indentures) was $204,664,953. The diversification of the City Treasurer's investment portfolio assets as of such date is shown in the following table. Type of Investment Market Value Book Value %of Combined Portfolio Federal Securities $117,595,540 $118,998,500 57.8% Pooled Investments 70,847,366 70,759,734 34.3 Cash/Time Deposits 16,222,047 16,222,047 7.9 $204,664,953 $205,980,281 100.0% 54 2014-02-18 Agenda Packet Page 277 The weighted average maturity of the investment portfolio was 2.12 years. The current yield of the investment portfolio at December 31,2013 was 0.66°/x. Outstanding Indebtedness of the City The City had the following outstanding indebtedness as of January 1, 2014, exclusive of obligations to be paid from specifically pledged revenues, such as revenue bonds, tax allocation bonds and assessment district or special tax bonds or Section 108 Loans. The City has never defaulted in the payment of any of its obligations. Original Amount Final Catmory of Indebtedness Obligation Outstanding Maturity (1) 2002 Certificates of Participation Police Facility $60,145,000 $48,410,000 2033 (2) 2004 Certificates of Participation,Civic Center I 37,240,000 30,430,000 2034 (3) 2006 Certificates of Participation,Civic Center II 20,325,000 16,960,000 2036 (4) 2010 Certificates of Participation(Capital Facilities Refunding) 29,355,000 29,355,000 2033 (5) Notes Payable 8,201,832 2026 (6) Capital Leases 2,809,405 279,913 2014 (7) Compensated Absences 6,739,216 6,739,216 N/A (1) In June 2002, the City delivered the 2002 Certificates to provide funds to construct the City's Police Headquarters. Proceeds of the Certificates will refund a portion of the 2002 Certificates. The Certificates and the 2002 Certificates to remain outstanding are to be repaid from Lease Payments to be made by the City to the Authority. After the prepayment of a portion of the 2002 Certificates, the Lease Payments until Fiscal Year 2027/28 will be approximately $3.65 million and thereafter will be approximately $3.9 million. The City expects that approximately 44.4%, of the annual lease payments will be funded from the PFDIF, subject to the availability of funds. (2) In September 2004,the City delivered its 2004 Certificates of Participation to provide funding for the first phase of the reconstruction, renovation, and equipping of the City's Civic Center Complex as well as approximately $9 million in infrastructure improvements throughout the City. The Certificates are to be repaid from lease payments to be made by the City to the Authority. Annual lease payments are approximately $2.4 million. The City expects that approximately 58.5%, of the annual lease payments will be funded from the PFDIF, subject to the availability of funds and an additional $680,000 will be funded from residential construction taxes. (3) In March 2006,the City delivered its 2006 Certificates of Participation to provide funding for the construction and equipping of certain improvements to the Civic Center Complex of the City of Chula Vista and other existing City facilities. Annual lease payments commence in Fiscal Year 2009-10 and begin at approximately $1,270,000 annually to $6,350,000 annually beginning in Fiscal Year 2014-15. Currently, 77.8% of the annual lease payments will be funded from the PFDIF, subject to the availability of funds. (4) In February 2010, the City delivered its 2010 Certificates of Participation to refinance its outstanding 2000 Certificates of Participation, Series A and to finance the final phase of certain improvements to the Civic Center Complex. The Certificates are to be repaid from lease payments to be made by the City to the Authority. Annual lease payments are approximately $2.5 million through 2031, with payments of approximately $1.1 million in the final two years. The City expects that approximately 71.5% of the annual lease payments will be funded from the PFDIF, subject to the availability of funds. 55 2014-02-18 Agenda Packet Page 278 (5) (a) In January 1994,the City entered into a note payable with a private party in order to purchase certain land and improvements for the ultimate purpose of constructing a three-level parking structure. As of January 1, 2014, the outstanding balance is $11,914 and the note matures in 2014. (b) In September, 2007, the City Council authorized the City's participation in the California Energy Commission (CEC) and the SDG&E On-Bill Financing program. These loans would bridge the financial gap between energy conservation project capital costs and the available rebates for energy conservation equipment. The debt service payment will be computed after the projects have been completed. As of January 1, 2014, the outstanding balance is $3,974,689. (c) In December 2012,the City entered into a lease purchase agreement to purchase energy conservation equipment relating to the Municipal Street Lighting Retrofit Project. As of January 1,2014,the outstanding balance is$2,093,729. (d) In August 2013,the City entered into a lease purchase agreement to purchase energy conservation equipment relating to the Municipal Solar Project. As of January 1, 2014, the outstanding balance is $2,121,500. Annual payments for these obligations total approximately$829,000. (6) The City has capitalized a certain lease for its share of the San Diego County Regional Communications System. The lease will be paid in full in Fiscal Year 2013/14. (7) Represents that portion of compensated absences not expected to be paid during the current year. 56 2014-02-18 Agenda Packet Page 279 Direct and Overlapping Debt Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal Statistics, Inc. as of June 30, 2013. The Debt Report is included for general information purposes only. The City has not reviewed the Debt report for completeness or accuracy and makes no representations in connection therewith. Any inquiries concerning the scope and methodology of procedures carried out to compile the information presented should be directed to California Municipal Statistics,Inc. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations are not payable from the City's General Fund nor are they necessarily obligations secured by property within the City. In many cases,long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. TABLE NO.24 CITY OF CHULA VISTA DIRECT AND OVERLAPPING DEBT AS OF JUNE 30,2013 2012/13 Assessed Valuation: $20,942,796,908 Total Debt City's Share of OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/13 %Applicable 0 Debt 6/30/13 Metropolitan Water District $ 165,085,000 0.996% $ 1,644,247 Otay Municipal Water District,I.D.No.27 6,235,000 99.995 6,234,688 Southwestern Community College District 235,884,345 50.575 119,298,507 Sweetwater Union High School District 361,299,415 60.436 218,354,914 Chula Vista City School District 64,215,000 86.933 55,824,026 Chula Vista City School District Schools Facilities Improvement Dist 1 31,000,000 80.949 25,094,190 City of Chula Vista Community Facilities Districts 205,885,000 100. 205,885,000 (2) Sweetwater Union High School District Community Facilities Districts 143,023,149 15.812-100. 133,865,124 Chula Vista City School District Community Facilities Districts 5,040,000 99.718 5,025,787 City of Chula Vista 1915 Act Bonds 22,945,015 100. 22,945,015 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 794,171,498 Continued on next page. 57 2014-02-18 Agenda Packet Page 280 Continued from previous page. Total Debt City's Share of DIRECT AND OVERLAPPING GENERAL FUND DEBT: 6/30/13 %Applicable 0) Debt 6/30/13 San Diego County General Fund Obligations $ 399,780,000 5.481% $ 21,911,942 San Diego County Pension Obligations 753,897,748 5.481 41,321,136 San Diego County Superintendent of Schools Obligations 17,462,500 5.481 957,120 Southwestern Community College Dist.Certificates of Participation 1,245,000 50.575 629,659 Sweetwater Union High School District General Fund Obligations 37,775,000 60.436 22,829,699 Chula Vista City School District Certificates of Participation 140,585,000 86.933 122,214,758 City of Chula Vista Certificates of Participation 128,375,000 100. 128,375,000 Otay Municipal Water District Certificates of Participation 48,145,000 62.920 30.292.834 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 368,532,148 Less: Otay Municipal Water District Certificates of Participation 30.292.834 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 338,239,314 OVERLAPPING TAX INCREMENT DEBT(Successor Agency): $ 41,985,000 99.038-100.% $ 41,776,968 TOTAL DIRECT DEBT $ 128,375,000 TOTAL GROSS OVERLAPPING DEBT $1,076,105,614 TOTAL NET OVERLAPPING DEBT $1,045,812,780 GROSS COMBINED TOTAL DEBT $1,204,480,614 (3) NET COMBINED TOTAL DEBT $1,174,187,780 0) The percentage of overlapping debt applicable to the City is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the City divided by the district's total taxable assessed value. (2) Excludes refunding issues dated 8/21/13. Includes issues to be refunded. (3) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity. Ratios to 2012/13 Assessed Valuation: Total Overlapping Tax and Assessment Debt..............................3.79% Total Direct Debt($128,375,000)...........................................0.61% Gross Combined Total Debt..................................................5.75% Net Combined Total Debt......................................................5.61% Ratios to Redevelopment Incremental Valuation($1.143.033.852): Total Overlapping Tax Increment Debt......................................3.65% Source: California Municipal Statistics,Inc. 58 2014-02-18 Agenda Packet Page 281 Financial Statements The City's accounting policies conform to generally accepted accounting principles and reporting standards set forth by the State Controller. The audited financial statements also conform to the principles and standards for public financial reporting established by the National Council of Government Accounting and the Governmental Accounting Standards Board. Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However,debt service expenditures are recorded only when payment is due. The City retained the firm of Pun&McGeady LLP, Certified Public Accountants and Business Advisors, San Diego, California, to examine the general purpose financial statements of the City as of and for the year ended June 30, 2013. The following tables summarize the audited Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance of the City's General Fund for the last five fiscal years. See "APPENDIX B" hereto for the audited financial statements for the fiscal year ended June 30, 2013. The City has not requested, and the auditor has not provided, any review or update of such statements in connection with the inclusion in this Official Statement. GASB Statement No. 54. The City was required to implement GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definition, for the Fiscal Year ending June 30, 2011. GASB Statement No. 54 establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The initial distinction that is made in reporting fund balance information is identifying amounts that are considered nonspendable, such as fund balance associated with inventories. GASB Statement No. 54 also provides for additional classification as "restricted," "committed," "assigned," and"unassigned"based on the relative strength of the constraints that control how specific amounts can be spent. GASB Statement No. 68. On June 25, 2012, GASB approved two new standards ("Statements") with respect to pension accounting and financial reporting standards for state and local governments and pension plans. The new Statements,No. 67 and No. 68,will replace GASB Statement No. 27 and most of Statements No. 25 and No. 50. The changes will impact the accounting treatment of pension plans in which state and local governments participate. Major changes include: 1) the inclusion of unfunded pension liabilities on the government's balance sheet (currently, such unfunded liabilities are typically included as notes to the government's financial statements); 2)more components of full pension costs will be shown as expenses regardless of actual contribution levels; 3) lower actuarial discount rates will be required to be used for underfunded plans in certain cases for purposes of the financial statements; 4) closed amortization periods for unfunded liabilities will be required to be used for certain purposes of the financial statements; and 5) the difference between expected and actual investment returns will be recognized over a closed five-year smoothing period. In addition, according to GASB, Statement No. 68 means that, for pensions within the scope of the Statement, a cost-sharing employer that does not have a special funding situation is required to recognize a net pension liability, deferred outflows of resources, 59 2014-02-18 Agenda Packet Page 282 deferred inflows of resources related to pensions and pension expense based on its proportionate share of the net pension liability for benefits provided through the pension plan. Because the accounting standards do not require changes in funding policies,the full extent of the effect of the new standards on the City is not known at this time. The reporting requirements for pension plans will take effect for the fiscal year beginning July 1, 2013 and the reporting requirements for government employers, including the City,will take effect for the fiscal year beginning July 1,2014. 60 2014-02-18 Agenda Packet Page 283 TABLE NO.25 CITY OF CHULA VISTA GENERAL FUND BALANCESHEET 2009 2010 2011 2012 2013 ASSETS Cash and investments $ 6,362,226 $ 9,949,021 $19,641,248 $17,403,991 $24,347,238 Receivables: Accounts 813,712 592,391 790,544 2,397,608 1,673,960 Taxes 10,008,394 9,284,601 9,379,494 9,560,463 7,911,510 Interest 87,419 - 21,885 26,988 25,816 Loans 118,750 106,250 106,531 92,874 79,182 Other 2,917 373,601 123,705 34,641 - Due from other funds - 259,666 3,717,477 3,006,662 4,073,822 Due from other governments 1,953,644 770,676 672,822 505,049 188,542 Due from Successor Agency - - - 10,207,797 9,002,419 Due from agency fund - - - - 94,016 Advances to other funds 27,770,339 25,805,005 14,150,004 1,581,814 1,621,446 Inventories and prepaid items 29,263 6,192 72,852 49,595 104,344 Total assets $47,146,664 $47,147,403 $48,676,562 $44,867,482 $44,122,295 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 5,530,444 $ 5,751,419 $ 5,964,280 $ 5,549,046 $ 6,154,223 Retention payable - 4,069 3351 - 212,667 Settlement payable - - - - 8,000,000 Deferred revenue 8,484,699 8,210,115 6,968,532 11,279,378 6,786,230 Total liabilities $14,015,143 $13,965,603 $12,936,163 $16,828,424 $21,153,120 Fund Balances 0): Reserved: Encumbrances $ 298,763 $ 733,798 $ - $ - $ - Long-term receivables and advances 20,404,390 18,738,506 - - - Inventories and prepaid items 29,263 6,192 - - - Total reserved $20,732,416 $19,478,496 $ - $ - $ - Unreserved: Designated for: General Fund $ - $ 3,269,899 $ - $ - $ - Contingency 2,982,950 - - - - Capital projects 741,736 - - - - Undesignated: General fund 8,692,419 10,433,405 Total unreserved $12,417,105 $13,703,304 $ - $ - $ - Nonspendable $ _ $ _ $11,258,150 $ 8,799,026 $ 7,481,079 Restricted - - 127,883 - 750,951 Committed - - 7,178,838 4,375,207 2,298,088 Assigned - - 5,298,536 2,895,545 6,648,922 Unassigned - - 11,876,992 11,969,280 10,790,135 Total fund balances $33,149,521 $33,181,800 $35,740,399 $28,039,058 $27,969,175 Total liabilities,fund balances $47.164.664 $47.147.403 $48.676 662 $44.867.482 $49.122 995 Source: City of Chula Vista Comprehensive Annual Financial Reports. �l> See"GASB Statement No 54"above. 61 2014-02-18 Agenda Packet Page 284 TABLE NO.26 CITY OF CHULA VISTA GENERAL FUND STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES 2009 2010 2011 2012 2013 REVENUES: Taxes $ 77,400,512 $ 71,911,179 $ 69,441,761 $ 85,167,221 $75,841,123 Intergovernmental 0) 24,021,395 20,092,610 18,748,469 2,029,529 19,542,065 Licenses and permits 1,987,734 2,193,524 2,777,946 1,222,769 1,395,519 Charges for services 10,534,277 9,928,213 9,721,746 7,794,981 8,357,509 Fines and forfeitures 2,357,044 2,311,527 1,708,846 1,355,769 1,002,946 Use of money and property 5,096,660 3,079,142 6,923,963 2,916,631 2,201,490 Other 19,127,752 19,903,642 16,689,172 11,587,469 13,023,676 Total revenues $140,525,374 $129,419,837 $126,011,903 $112,074,369 $121,364,328 EXPENDITURES: Current: General government $ 34,868,538 $ 30,663,963 $ 28,568,063 $ 19,615,371 $22,742,279 Public safety 68,365,801 65,793,509 64,872,225 64,440,238 66,359,410 Public works 26,860,757 26,706,211 26,071,616 25,219,618 26,014,418 Parks and recreation 5,761,607 5,255,812 4,030,767 3,244,286 3,362,558 Library 7,192,979 4,563,849 3,870,646 3,435,325 3,182,483 Capital outlay 104,941 454,786 428,936 280,627 1,172,734 Debt service: Principal 139,678 - - - - Interest and fiscal charges 865,892 - - - - Total expenditures $144,160,193 $133,438,130 $127,842,253 $116,235,465 $122,833,882 REVENUES OVER(UNDER) EXPENDITURES ($ 3,634,819)($ 4,018,293)($ 1,830,350) ($ 4,161,096)( $1,469,554) OTHER FINANCING SOURCES(USES): Transfers in $ 9,641,430 $ 10,403,068 $ 11,304,257 $ 9,850,345 9,661,447 Transfers out (6,933,232) (6,352,496) (6,915,308) (13,390,590) (4,910,795) Total other financing sources $ 2,708,198 $ 4,050,572 $ 4,388,949 ($ 3,540,245) $ 4,750,652 NET CHANGE IN FUND BALANCES ($ 926,621) $ 32,279 $ 2,558,599 ($ 7,701,341) $ 3,281,098 FUND BALANCE Beginning of year,as restated $ 34,076,142 $ 33,149,521 $ 33,181,800 $ 35,740,399 $ 24,688,077 End of year L13-149 L13-1 L35,740 L28 L11,969 Source: City of Chula Vista Comprehensive Annual Financial Reports. The City reflected the Motor Vehicle Fees and Property Taxes In-Lieu of Motor Vehicle Fees in "Intergovernmental Revenues"in all years except Fiscal Year 2011/12,when such revenue ($16,288,377)were included in"Taxes." See"Other Local Taxes"and"Motor Vehicle License Fees"above. 62 2014-02-18 Agenda Packet Page 285 RISK FACTORS The purchase of the Certificates involves investment risk. If a risk factor materializes to a sufficient degree, it could delay or prevent payment of principal of and/or interest on the Certificates. Such risk factors include, but are not limited to, the following matters and should be considered, along with other information in this Official Statement, by potential investors. The Lease Payments Lease Payments are Limited Obligations of the City. The Lease Payments and other payments due under the Lease (including a proportionate share of the costs of improvement, repair and maintenance of the Leased Premises and taxes, other governmental charges and assessments levied against the Leased Premises)are not secured by any pledge of taxes or other revenues of the City but are payable from yearly appropriations of any funds lawfully available to the City. In the event the City's revenue sources are less than its total obligations, the City could choose to fund other services before paying Lease Payments and other payments due under the Lease. The same result could occur if, because of State Constitutional limits on expenditures,the City is not permitted to appropriate and spend all of its available revenues(see "Constitutional Limitations on Taxes and Expenditures" below). To the extent these types of events or other events adversely affecting the funds available to the City occur in any year, the funds available to pay Lease Payments may be decreased. The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to the City to pay Lease Payments may be decreased (see "FINANCIAL INFORMATION - Outstanding Indebtedness of the City"herein). Abatement. Except to the extent that amounts are available (i)in the Reserve Fund or the Lease Payment Fund under the Trust Agreement, (ii) from proceeds of rental interruption insurance, or(iii) as payments due from third parties due to a delay in reconstructing the Leased Premises, the amount of Lease Payments and Additional Payments shall be abated during any period in which by reason of damage, destruction or taking by eminent domain or condemnation of the Leased Premises or defects in the title with respect to the Leased Premises there is substantial interference with the use and possession of all or a portion of the Leased Premises by the City. The amount of such abatement shall be such that the resulting Lease Payments, exclusive of the amounts described above, do not exceed the fair rental value (as determined by an independent real estate appraiser selected by the City, who is not an employee of the City) for the use and possession of the portion of the Leased Premises not damaged, destroyed, interfered with or taken. Such abatement shall continue for the period commencing with such damage, destruction, interference or taking and ending with the substantial completion of the replacement or work of repair or the removal of the title defect causing such interference with use. The Lease shall continue in full force and effect following an event of abatement and the City waives any right to terminate the Lease by virtue of an abatement event. In the event that such funds are insufficient to make all payments with respect to the Certificates during the period that the Leased Premises, or portion thereof, is being restored, then all or a portion of such payments may not be made and no remedy is available to the Trustee or the Owners under the Lease or Trust Agreement for nonpayment under such circumstances. Failure to pay principal,premium, if any, or interest on to the Certificates as a result of abatement of the City's obligation to make Lease Payments under the Lease is not an event of default under the Trust Agreement or the Lease. In the event that Lease Payments are abated due to damage caused by earthquake or flood, such abatement may continue indefinitely, as no insurance for such damages is required under the Lease and the City cannot be compelled to repair or replace the damaged Leased Premises or to prepay the Certificates but has covenanted in the Lease to use its best efforts to repair or replace the Leased Premises from other lawfully available funds to the extent that the Net Proceeds are insufficient. See "APPENDIX A- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS-Lease Agreement-Abatement." 63 2014-02-18 Agenda Packet Page 286 Notwithstanding the provisions of the Lease and the Indenture specifying the extent of abatement of Base Rental and the application of other funds in the event of the City's failure to have use and occupancy of the Leased Property, such provisions may be superseded by operation of law, and, in such event, the resulting Base Rental Payments of the City may not be sufficient to pay all of the remaining principal and interest represented by the Series 2014A Bonds. Earthquake Risk. According to the Public Safety Element of the City's General Plan,the City is located in a seismically active region and could be impacted by a major earthquake originating from the numerous faults in the area. The City is traversed by two potentially active faults, the Sweetwater Fault and La Nacion Fault and three inferred faults, the Otay River Fault, the Telegraph Canyon Fault and the San Diego Bay-Tijuana Fault. Seismic hazards encompass potential surface rupture, ground shaking, liquefaction and landslides. The City has adopted a Natural Hazards Mitigation Plan. This plan includes a hazard analysis for earthquake, flood, landslide and fire risk and is required to comply with FEMA requirements for disaster relief funding. A major earthquake could cause widespread destruction and significant loss of life in a populated area such as the City. If an earthquake were to substantially damage or destroy taxable property within the City, a reduction in taxable values of property in the City and a reduction in revenues available to the General Fund to make Lease Payments would be likely to occur. Seismic activity may also reduce or eliminate the use and occupancy of the Leased Property by the City. There is no assurance that, in the event of a natural disaster, sufficient City reserves or Federal Emergency Management Agency assistance would be available for the repair or replacement of any Leased Premises. Insurance. The Lease obligates the City to obtain and keep in force various forms of insurance,to assure repair or replacement of the Leased Premises in the event of damage or destruction to the Leased Premises (see "APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - THE LEASE - Insurance" herein). The Lease does not require earthquake or flood insurance unless the City, in its reasonable discretion, determines that such coverage is available from reputable insurers at commercially reasonable rates. The City currently does not maintain earthquake or flood insurance on the Leased Premises or other City facilities. The City makes no representation as to the ability of any insurer to fulfill its obligations under any insurance policy provided for in the Lease. In addition, certain risks may not be covered by such property insurance (see "SOURCES OF PAYMENT FOR THE CERTIFICATES - Insurance Relating to the Leased Premises"herein). In the event the Leased Premises is partially or completely damaged or destroyed due to any uninsured or underinsured event, it is likely that Lease Payments will be partially or completely abated. If any Leased Premises so damaged or destroyed is not repaired or replaced within the period during which the proceeds of rental interruption insurance are available, any such abatement could prevent the City from timely paying Lease Payments. Discovery of a Hazardous Substance That Would Limit the Beneficial Use of the Leased Premises. In general, the owners and lessees of a parcel may be required by law to remedy conditions of the property relating to the releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 sometimes referred to as CERCLA or the Superfund Act, is the most well-known and widely applicable of these laws but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws,the owner(or lessee)is obligated to remedy a hazardous substance condition of property whether or not the owner (or lessee) had any involvement in creating or handling the hazardous substance. The effect, therefore, should the Leased Premises be affected by a hazardous substance, might be to limit the beneficial use of the Leased Premises upon discovery and during remediation. The City is not aware of any such condition on the properties. 64 2014-02-18 Agenda Packet Page 287 State Budget; Redevelopment Agency Legislation The following information concerning the State's budgets has been obtained from publicly available information which the City believes to be reliable; however, the City does not guaranty the accuracy or completeness of this information and has not independently verified such information. Furthermore, it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds is payable by or the responsibility of the State of California. State Budget. Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading "California Budget." An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition,various State of California official statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City, and the City can take no responsibility for the continued accuracy of these internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. According to the State Constitution, the Governor of the State (the "Governor") is required to propose a budget to the State Legislature (the "Legislature") by no later than January 10 of each year, and a final budget must be adopted by the vote of each house of the Legislature no later than June 15, although this deadline has been routinely breached in the past. The State budget becomes law upon the signature of the Governor,who may veto specific items of expenditure. Prior to Fiscal Year 2010/11,the State budget had to be adopted by a two-thirds vote of each house of the Legislature. However, in November 2010, the voters of the State passed Proposition 25, which reduced the vote required to adopt a budget to a majority vote of each house and which provided that there would be no appropriation from the current budget or future budget to pay any salary or reimbursement for travel or living expenses for members of the Legislature for the period during which the budget was presented late to the Governor. Potential Impact of State of California Financial Condition on the City. For several fiscal years during the recent recession the State faced a structural deficit that resulted in substantial annual deficits and reductions in expenditures. Although the State is projecting a budget surplus in the current fiscal year, the State is still facing continuing financial challenges and unfunded long-term liabilities of more than $200 billion, which could result in future reductions or deferrals in amounts payable to the City. The State's financial condition and budget policies affect local public agencies throughout California. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budget. State budget policies can also impact conditions in the local economy and could have an adverse effect on the local economy and the City's major revenue sources. No prediction can be made by the City as to whether the State will encounter budgetary problems in future fiscal years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations,the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors, including the current economic downturn,over which the City has no control. 65 2014-02-18 Agenda Packet Page 288 Former Redevelopment Agency of the City of Chula Vista. In 1972, the City Council of the City created the Redevelopment Agency of the City of Chula Vista(the "Redevelopment Agency")pursuant to the Community Redevelopment Law, set forth in California Health and Safety Code ("HSC") commencing with Section 33000. The Redevelopment Agency undertook a program to redevelop project areas encompassing certain parts of the City. Pursuant to AB X1 26, as upheld (and modified as to certain deadlines)by the California Supreme Court in California Redevelopment Association, et al. a Ana Matosantos, et al. (53 CalAth 231(2011)), redevelopment agencies throughout the State were dissolved as of February 1, 2012. AB X1 26 was signed into State law in June 2011. Subsequently, AB 1484, which amended and supplemented the provisions of AB X1 26, was signed into State law in June 2012. Together,AB X1 26 and AB 1484 are referred to in this Official Statement as the "Dissolution Act." In accordance with the provisions of the Dissolution Act,the City elected to serve as the successor agency to the Redevelopment Agency (the "Successor Agency"). The Dissolution Act provides that the Successor Agency is a separate public entity from the City and none of the liabilities or assets of the Redevelopment Agency become liabilities or assets of the City. However,AB 1484,as set forth in Health and Safety Code section 34176, provided that the City may retain specified housing assets and housing functions and obligations of the former RDA and become a Successor Housing Entity. The City, via resolution, elected to do so and assigned such duties to the City's Housing Authority. The Successor Agency is charged with the responsibility of winding down the affairs of the former Redevelopment Agency. The Successor Agency's authority is limited to the extent needed to implement such wind down. The Dissolution Act requires the establishment of an Oversight Board (composed primarily of representatives of certain affected taxing entities) for the Successor Agency. The Oversight Board has the power to direct the Successor Agency to take certain actions and certain Successor Agency actions must first be approved by the Oversight Board,all as prescribed by the Dissolution Act. The Oversight Board's actions are subject to review by the State Department of Finance. Certain expenditures of the former Redevelopment Agency are now borne by the General Fund beginning with Fiscal Year 2012/13 to the extent that they are not considered either enforceable obligations or fall within a prescribed administrative allowance for the operation and wind down of the former Redevelopment Agency's activities. Prior to the Dissolution Act, the City was paid approximately $1.5 million per year on loans it had made to the former Redevelopment Agency. The Department did not approve the immediate payment of such amounts which were listed in certain Recognized Obligation Payment Schedules filed by the Successor Agency. The outstanding balance of loans total approximately $10.2 million. The Dissolution Act provides that after meeting certain criteria, such loan, with interest at the rate paid by the State's Local Agency Investment Fund, may be reinstated at some future date. The City has eliminated the existing interest and any loan repayment from its Fiscal Year 2013/14 budget, but intends to reinstate the loan repayment with approval of the Oversight Board and the Department. Repayment terms will be governed by the Dissolution Act. As noted above, the funding of the former Redevelopment Agency's budget and other payments to the City are subject to reduction or elimination based on the ultimate interpretations of the terms of the Dissolution Act. The City expects to assert that the loans to the former the Redevelopment Agency should be treated as "enforceable obligations," but if this treatment is not upheld, the City would lose in future fiscal years the related payments and other reimbursements. There can be no assurances that the Dissolution Act will not interfere with the receipt by the City from the former Redevelopment Agency of the amounts contemplated to be received by it. 66 2014-02-18 Agenda Packet Page 289 There are numerous lawsuits pending regarding various aspects of the Dissolution Act and it will be subject to legal challenge and judicial interpretation based on constitutional and other considerations. As with other elements of the State Budget, AB X1 26, AB No. 1484 and the legislative process, the City cannot predict the ultimate impact of any bill considered and adopted by the Legislature and enacted into law. Limited Recourse on Default; No Acceleration If an event of default occurs and is continuing under the Lease,there is no remedy of acceleration of any Lease Payments which have not come due and payable in accordance with the Lease. The City will continue to be liable for Lease Payments as they become due and payable in accordance with the Lease if the Trustee does not terminate the Lease, and the Trustee would be required to seek a separate judgment each year for that year's defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds or property needed to serve the public welfare and interest. In addition, the enforcement of any remedies provided in the Lease and the Trust Agreement could prove both expensive and time-consuming. The Lease permits the Trustee to take possession of and re-lease the Leased Premises in the event of a default by the City under the Lease. Even if the Trustee could readily re-lease the Leased Premises, the rents may not be sufficient to enable it to pay principal of and interest with respect to the Certificates in full when due. Enforcement of Remedies The enforcement of any remedies provided in the Lease and the Trust Agreement could prove both expensive and time consuming. The rights and remedies provided in the Lease and the Trust Agreement may be limited by and are subject to the limitations on legal remedies against cities, including State constitutional limits on expenditures, and limitations on the enforcement of judgments against funds needed to serve the public welfare and interest; by federal bankruptcy laws, as now or hereafter enacted; applicable bankruptcy, insolvency, reorganization,moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect (see "- Bankruptcy of the City" below); equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Constitution; the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose; and the limitations on remedies against municipal entities in the State. Bankruptcy proceedings or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the Certificates to judicial discretion and interpretation of their rights in bankruptcy or otherwise,and consequently may entail risks of delay,limitation or modification of their rights. The legal opinions to be delivered concurrently with the delivery of the Certificates (including Bond Counsel's legal opinion) will be qualified, as to the enforceability of the Certificates, the Trust Agreement, the Site Lease, the Lease, the Assignment Agreement and other related documents, by bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitation on legal remedies against charter cities and counties in the State. See "-Bankruptcy of the City"below. 67 2014-02-18 Agenda Packet Page 290 Bankruptcy of the City In addition to the limitations on remedies contained in the Trust Agreement and the Lease, the rights and remedies in the Lease may be limited and are subject to the provisions of federal bankruptcy laws, as now or hereafter enacted,and to other laws or equitable principles that may affect the enforcement of creditors' rights. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code) (the `Bankruptcy Code"), which governs bankruptcy proceedings of public entities such as the City, no involuntary bankruptcy petition may be filed against a public entity. However, upon satisfaction of certain prerequisite conditions, a voluntary bankruptcy petition may be filed by the City. The filing of a bankruptcy petition results in a stay against enforcement of certain remedies under agreements to which the bankrupt entity is a party. A bankruptcy filing by the City could thus limit remedies under the Lease. A bankruptcy debtor may choose to assume or reject executory contracts and leases, such as the Lease. However, a debtor may not assume or reject executory contracts to loan money or to make a financial accommodation, such as the Trust Agreement. In the event of rejection of a lease by debtor lessee, the leased property is returned to the lessor and the lessor has a claim for a limited amount of the resulting damages. Under the Trust Agreement, the Trustee holds a security interest in the revenues in the funds pledged thereunder, including Lease Payments, for the benefit of the Owners of the Certificates, but such security interest arises only when the Lease Payments are actually received by the Trustee following payment by the City. The Leased Premises itself is not subject to a security interest, mortgage or any other lien in favor of the Trustee for the benefit of Owners. In the event of a bankruptcy filed by the City and the subsequent rejection of the Lease by the City, the Trustee would recover possession of the Leased Premises and would have a claim for damages against the City. The Trustee's claim would constitute a secured claim only to the extent of revenues in the possession of the Trustee; the balance of such claim would be unsecured. In a bankruptcy of the City, if a material unpaid liability is owed to PERS or any other pension system (collectively the "Pension Systems") on the filing date, or accrues thereafter, such circumstances could create additional uncertainty as to the City's ability to make Lease Payments. Given that municipal pension systems in California are usually administered pursuant to state constitutional provisions and, as applicable, other state and/or city law, the Pension Systems may take the position, among other possible arguments, that their claims enjoy a higher priority than all other claims, that Pension Systems have the right to enforce payment by injunction or other proceedings outside of a City bankruptcy case, and that Pension System claims cannot be the subject of adjustment or other impairment under the Bankruptcy Code because that would purportedly constitute a violation of state statutory, constitutional and/or municipal law. It is uncertain how a bankruptcy judge in a City bankruptcy would rule on these matters. In addition, this area of law is presently very unsettled because issues of pension underfunding claim priority, pension contribution enforcement, and related bankruptcy plan treatment of such claims (among other pension-related matters) are presently the subject of litigation in the Chapter 9 cases of several California municipalities,including Stockton and San Bernardino. Constitutional Limitation on Taxes and Expenditures State Initiative Measures Generally. Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Voters have exercised this power through the adoption of Proposition 13 ("Article XIIIA") and similar measures, the most recent of which were approved as Propositions 22 and 26 in the general election held on November 2,2010. Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially 68 2014-02-18 Agenda Packet Page 291 and adversely affected by voter-approved initiatives,possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Lease. Article XIHA. Article XIIIA of the California Constitution limits the taxing powers of California public agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot exceed 1% of the "full cash value" of the property, and effectively prohibits the levying of any other ad valorem property tax except for taxes above that level required to pay debt service on voter-approved general obligation bonds. 'Tull cash value" is defined as "the County assessor's valuation of real property as shown on the 1975/76 tax bill under `full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." The "full cash value" is subject to annual adjustment to reflect inflation at a rate not to exceed 2% or a reduction in the consumer price index or comparable local data. Article XIIIA has subsequently been amended to permit reduction of the "full cash value"base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the "full cash value"base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. There may also be declines in valuations if the California Consumer Price Index is negative. The foregoing limitation does not apply to ad valorem taxes or special assessments to pay the interest and prepayment charges on any indebtedness approved by the voters before July 1, 1978 or any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of votes cast by the voters voting on the proposition. In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms "purchase" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of(1) real property between spouses, and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same city, to transfer the old residence's assessed value to the new residence. In the March 26, 1996 general election, voters approved Proposition 193, which extends the parents-children exception to the reappraisal of assessed value. Proposition 193 amended Article XIIIA so that grandparents may transfer to their grandchildren whose parents are deceased, their principal residences,and the first$1,000,000 of other property without a reappraisal of assessed value. Because the Revenue and Taxation Code does not distinguish between positive and negative changes in the California Consumer Price Index used for purposes of the inflation factor, there was a decrease of 0.237% in 2009/10 — applied to the 2010/11 tax roll — reflecting the actual change in the California Consumer Price Index, as reported by the State Department of Finance. For each fiscal year since Article XIIIA has become effective (the 1978/79 Fiscal Year), the annual increase for inflation has been at least 2%except in eight fiscal years(including for the future Fiscal Year 2014/15)as shown below: Tax Roll Percentage 1981/82 1.000% 1995/96 1.190% 1996/97 1.110% 1998/99 1.853% 2004/05 1.867% 2010/11 (0.237)% 2011/12 0.753% 2014/15 0.454% 69 2014-02-18 Agenda Packet Page 292 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined(base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. The City has seen Proposition 8 reductions in property values since 2009. See"FINANCIAL INFORMATION-Taxable Property and Assessed Valuation"herein. Article XIIIB. On November 6, 1979, California voters approved Proposition 4, or the Gann Initiative, which added Article XIIIB to the California Constitution. Article XIIIB limits the annual appropriations of the State and any city,county,city and county, school district,authority or other political subdivision of the State. The "base year" for establishing such appropriations limit is the 1978/79 Fiscal Year, and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by public agencies. Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by or for the entity and the proceeds of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. "Proceeds of taxes" include, but are not limited to, all tax revenues, certain State subventions, and the proceeds to an entity of government, from (1) regulatory licenses, user charges and user fees, to the extent that such charges and fees exceed the costs reasonably borne in providing the regulation, product or service, and (2) the investment of tax revenues. Article XIIIB includes a requirement that if an entity's revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules within the next two subsequent fiscal years. In the June 1990 election, the voters approved Proposition 111 amending the method of calculation of State and local appropriations limits. Proposition 111 made several changes to Article XIIIB. First, the term "change in the cost of living" was redefined as the change in the California per capita personal income ("CPCPI") for the preceding year. Previously, the lower of the CPCPI or the United States Consumer Price Index was used. Second, the appropriations limit for the fiscal year was recomputed by adjusting the 1986/87 limit by the CPCPI for the three subsequent years. Third and lastly,Proposition I I I excluded appropriations for"qualified capital outlay for fiscal 1990/91 as defined by the legislature"from proceeds of taxes. Section 7910 of the Government Code requires the City to adopt a formal appropriations limit for each fiscal year. The City's appropriations limit for 2013/14 is $710,187,628. The City's appropriations subject to the limit for 2013/14 are $80,465,230. Based on this,the appropriations limit is not expected to have any impact on the ability of the City to continue to budget and appropriate the Lease Payments as required by the Lease. Proposition 62. Proposition 62 was a statutory initiative adopted in the November 1986 general election. Proposition 62 added Sections 53720 to 53730, inclusive, to the California Government Code. It confirmed the distinction between a general tax and special tax,established by the State Supreme Court in 1982 in City and County of San Francisco a Farrell,by defining a general tax as one imposed for general governmental purposes and a special tax as one imposed for specific purposes. Proposition 62 further provided that no local government or district may impose (i) a general tax without prior approval of the electorate by majority vote or(ii) a special tax without such prior approval by two-thirds vote. It further provided that if any such tax is imposed without such prior written approval, the amount thereof must be withheld from the levying entity's allocation of annual property taxes for each year that the tax is collected. By its terms, Proposition 62 applies only to general and special taxes imposed on or after August 1, 1985. Proposition 62 was generally upheld in Santa Clara County Local Transportation Authority a Guardino,a California Supreme Court decision filed September 28, 1995. 70 2014-02-18 Agenda Packet Page 293 Proposition 218. On November 5, 1996, California voters approved Proposition 218 —Voter Approval for Local Government Taxes — Limitation on Fees,Assessments, and Charges — Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Proposition 218 states that all taxes imposed by local governments shall be deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have no power to levy general taxes. No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote. Proposition 218 also provides that no tax, assessment, fee or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (i)the ad valorem property tax imposed pursuant to Article XIII and Article XIIIA of the California Constitution, (ii) any special tax receiving a two-thirds vote pursuant to Section 4 of Article XIIIA the California Constitution, and (iii) assessments, fees, and charges for property related services as provided in Article XIIID. Proposition 218 added voter requirements for assessments and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of property ownership, including sewer, water, and refuse collection services, are subjected to various additional procedures, such as hearings and stricter and more individualized benefit requirements and findings. The effect of such provisions will presumably be to increase the difficulty a local agency will have in imposing, increasing or extending such assessments,fees and charges. Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairment of contracts. Proposition 218 provides that, effective July 1, 1997, fees that are charged "as an incident of property ownership"may not"exceed the funds required to provide the property related services" and may only be charged for services that are "immediately available to the owner of the property." The City levies a utility tax,which was first levied in 1970 and increased the tax(prior to the adoption of Proposition 62) in 1979, without voter approval. The total utility tax revenues, excluding revenues generated from cell phone usage, are estimated at $3,512,000 for the 2013/14 fiscal year, which is approximately 2.7% of the City's total General Fund Budget. See "FINANCIAL INFORMATION—Other Local Taxes—Utility Users Tax" for additional information regarding a class action lawsuit that was filed with respect to a portion of the utility users tax. [additional information regarding future collections of the UUT generated from cell phone usage to be completed] The City does not expect the application of Proposition 218 will have a material adverse impact on its ability to pay Lease Payments. Proposition IA. Proposition IA("Proposition IA"), proposed by the Legislature in connection with the 2004/05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004/05 and 2005/06. Proposition IA provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition IA generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, 71 2014-02-18 Agenda Packet Page 294 as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition IA provides, however, that beginning in Fiscal Year 2008/09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship,the shift is approved by two-thirds of both houses and certain other conditions are met. Such a shift may not occur more than twice in any 10-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. For Fiscal Year 2009/10, $4,488,610 of the City's property tax revenues were diverted to the State as a result of a Proposition IA suspension. The City participated in a Proposition IA Securitization Program (the "Program") sponsored by the California Statewide Communities Development Authority. The Program allowed the City to exchange its anticipated State property tax receivable for cash. Proposition IA also provides that if the State reduces the vehicle license fee rate below 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition IA requires the State to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Proposition 22. On November 2, 2010, voters in the State approved Proposition 22. Proposition 22, known as the "Local Taxpayer, Public Safety, and Transportation Protection Act of 2010," eliminates or reduces the State's authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State- mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government,(iv)use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues. Proposition 26. On November 2, 2010,voters in the State also approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of"tax" to include "any levy, charge, or exaction of any kind imposed by a local government" except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3)a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof, (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor's burdens on, or benefits received from, the governmental activity. The City does not expect the provisions of Proposition 26 to materially impede its ability to pay Lease Payments when due. 72 2014-02-18 Agenda Packet Page 295 Future Initiatives. From time to time other initiative measures could be adopted, affecting the ability of the City to increase revenues and appropriations. Early Prepayment Risk Early payment of the Lease Payments and early prepayment of the Certificates may occur in whole or in part without premium, on any date if the Leased Premises or a portion thereof is lost, destroyed or damaged beyond repair or taken by eminent domain and from the proceeds of title insurance (see "THE CERTIFICATES - Extraordinary Prepayment - Prepayment"), or if the City exercises its right to prepay Lease Payments in whole or in part pursuant to the provisions of the Lease and the Trust Agreement. Loss of Tax Exemption As discussed under the caption "LEGAL MATTERS - Tax Matters" herein, the interest component of the Lease Payments could become includable in gross income for purposes of federal income taxation retroactive to the date the Certificates were executed and delivered as a result of future acts or omissions of the City in violation of its covenants contained in the Trust Agreement and the Lease. Should such an event of taxability occur, the Certificates are not subject to special prepayment or any increase in interest rate and will remain outstanding until maturity or until prepaid under one of the prepayment provisions contained in the Trust Agreement. In addition, Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Certificates. Prospective purchasers of the Certificates should consult their own tax advisors regarding any pending or proposed federal tax legislation. The City can provide no assurance that federal tax law will not change while the Certificates are outstanding or that any such changes will not adversely affect the exclusion of the interest component of the Lease Payments from gross income for federal income tax purposes. If the exclusion of the interest component of Lease Payments from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Certificates would be adversely impacted. IRS Audit of Tax-Exempt Bond Issues The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Certificates will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Certificates might be affected as a result of such an audit of the Certificates(or by an audit of similar bonds). Secondary Market Risk There can be no assurance that there will be a secondary market for purchase or sale of the Certificates, and from time to time there may be no market for them, depending upon prevailing market conditions,the financial condition or market position of firms who may make the secondary market and the financial condition of the City. 73 2014-02-18 Agenda Packet Page 296 LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Certificates upon an event of default under the Trust Agreement, the Lease, the Site Lease, the Assignment Agreement or any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Certificates will be qualified to the extent that the enforceability of certain legal rights related to the Trust Agreement,the Lease,the Site and Facility Lease, the Assignment Agreement and other pertinent documents is subject to limitations imposed by bankruptcy,reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Special Counsel,will render an opinion which states that the Lease represents valid and binding obligations of the City and is enforceable against the City in accordance with its terms. The legal opinion of Special Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights and to the exercise of judicial discretion in accordance with general principles of equity. See "APPENDIX D"hereto for the proposed form of Special Counsel's opinion. The City has no knowledge of any fact or other information which would indicate that the Trust Agreement, the Lease or the Certificates are not so enforceable against the City, except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization,moratorium or creditors'rights generally. Certain legal matters will be passed on for the City by Stradling Yocca Carlson & Rauth, a Professional Corporation,Newport Beach,California,as Disclosure Counsel and by Glen R. Googins,as City Attorney and for the Underwriter by Nossaman LLP, Irvine, California, as Underwriters Counsel. Fees payable to Special Counsel, Disclosure Counsel,the Underwriter and Underwriter's Counsel are contingent upon the sale and delivery of the Certificates. Tax Matters In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Special Counsel, under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) with respect to the Certificates 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 and corporations. In the further opinion of Special Counsel, interest (and original issue discount) with respect to the Certificates is exempt from State of California personal income tax. Special Counsel notes that, with respect to corporations, interest (and original issue discount) with respect to the Certificates may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations. The difference between the issue price of a Certificate (the first price at which a substantial amount of the Certificates of the same series and maturity is to be sold to the public) and the stated payment price at maturity with respect to the Certificate constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to an owner of a Certificate (the "Certificate Owner") before receipt of cash attributable to such excludable income. The amount of 74 2014-02-18 Agenda Packet Page 297 original issue discount deemed received by a Certificate Owner will increase the Certificate Owner's basis in the applicable Certificate. In the opinion of Special Counsel, original issue discount that accrues to a Certificate Owner is excluded from 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 corporations,and is exempt from State of California personal income tax. Special Counsel's opinion as to the exclusion from gross income of interest (and original issue discount) with respect to the Certificates is based upon certain representations of fact and certifications made by the City and others and is subject to the condition that the City complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the execution and delivery of the Certificates to assure that the interest (and original issue discount) with respect to the Certificates will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest(and original issue discount)with respect to the Certificates to be included in gross income for federal income tax purposes retroactive to the date of execution and delivery of the Certificates. The City has covenanted to comply with all such requirements. The amount by which a Certificate Owner's original basis for determining loss on sale or exchange in the applicable Certificate (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date)constitutes amortizable Certificate premium,which must be amortized under Section 171 of the Code; such amortizable Certificate premium reduces the Certificate Owner's basis in the applicable Certificate (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 Certificate premium may result in a Certificate Owner realizing a taxable gain when a Certificate is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Certificate to the Owner. Purchasers of the Certificates should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Certificate 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 Certificates will be selected for audit by the IRS. It is also possible that the market value of the Certificates might be affected as a result of such an audit of the Certificates(or by an audit of similar certificates). 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 execution delivery of the Certificates to the extent that it adversely affects the exclusion from gross income for federal income tax purposes of interest (and original issue discount)with respect to the Certificates or their market value. SUBSEQUENT TO THE EXECUTION AND DELIVERY OF THE CERTIFICATES, THERE MIGHT BE FEDERAL, STATE OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE OR LOCAL TAX TREATMENT OF THE INTEREST ON THE CERTIFICATES OR THE MARKET VALUE OF THE CERTIFICATES. LEGISLATIVE CHANGES HAVE BEEN PROPOSED IN CONGRESS, WHICH, IF ENACTED, WOULD RESULT IN ADDITIONAL FEDERAL INCOME TAX BEING IMPOSED ON CERTAIN OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE CERTIFICATES. THE INTRODUCTION OR ENACTMENT OF ANY OF SUCH CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE CERTIFICATES. NO ASSURANCE CAN BE GIVEN THAT, SUBSEQUENT TO THE EXECUTION AND DELIVERY OF THE CERTIFICATES, SUCH CHANGES (OR OTHER CHANGES) WILL NOT BE INTRODUCED OR ENACTED OR INTERPRETATIONS WILL NOT OCCUR. BEFORE PURCHASING ANY OF THE CERTIFICATES,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 CERTIFICATES. 75 2014-02-18 Agenda Packet Page 298 Special Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Special Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Trust Agreement and the Tax Certificate relating to the Certificates permit certain actions to be taken or to be omitted if a favorable opinion of Special Counsel is provided with respect thereto. Special Counsel expresses no opinion as to the effect on the exclusion from gross income for federal income tax purposes of interest (and original issue discount) with respect to the Certificates if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson&Rauth, a Professional Corporation. Although Special Counsel will render an opinion that interest(and original issue discount)with respect to the Certificates is excluded from gross income for federal income tax purposes provided that the City continues to comply with certain requirements of the Code, the ownership of the Certificates and the accrual or receipt of interest (and original issue discount) with respect to the Certificates may otherwise affect the tax liability of certain persons. Special Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Certificates, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Certificates. Should interest (and original issue discount) with respect to the Certificates become includable in gross income for federal income tax purposes, the Certificates are not subject to early prepayment and will remain outstanding until maturity or until prepaid in accordance with the Trust Agreement. The complete text of the final opinion that Special Counsel expects to deliver upon the issuance of the Certificates is set forth in"APPENDIX D-PROPOSED FORM OF OPINION OF SPECIAL COUNSEL." Absence of Litigation The City and the Authority will furnish a certificate dated as of the date of delivery of the Certificates that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Trust Agreement, the Lease or the sale or delivery of the Certificates or in any manner questioning the proceedings and authority under which the Trust Agreement, the Certificates and the Lease are to be executed and delivered or affecting the validity thereof. 76 2014-02-18 Agenda Packet Page 299 CONCLUDING INFORMATION Ratings on the Certificates Standard & Poor's and Moody's Investors Service have assigned their municipal bond ratings of and' ',respectively to the Certificates. Such ratings reflects only the views of the rating agencies and any desired explanation of the significance of such ratings should be obtained from the rating agencies. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that the ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of the rating agencies, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price of the Certificates. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. Underwriting The Certificates were sold to De La Rosa & Co. (the "Underwriter"). The Underwriter is offering the Certificates at the prices set forth on the inside front cover page hereof. The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers,banks and others. The Underwriter will purchase the Certificates at a price equal to $ , which amount represents the principal amount of the Certificates, plus a net original issue premium of $ , and less an Underwriter's discount of$ The Underwriter will pay certain of its expenses relating to the offering. The Underwriter may offer and sell the Certificates to certain dealers and others at prices lower than the offering price stated on the inside front cover page hereof. The offering price may be changed from time to time by the Underwriter. On January 30, De La Rosa & Co. announced an agreement to sell its shares to Stifel Financial Corp. That sale is subject to regulatory approval which is expected to be granted no later than the end of March, 2014. Regulatory approval of the sale is expected but not guaranteed. Regardless of whether regulatory approval of the sale is granted, De La Rosa & Co. is able to serve as Underwriter under its existing licenses. The Financial Advisor The material contained in this Official Statement was prepared by the City with the assistance of the Harrell & Company Advisors, LLC, Orange, California, the City's Financial Advisor, who advised the City as to the financial structure and certain other financial matters relating to the Certificates. The information set forth herein has been obtained by the City from sources which are believed to be reliable, but such information is not guaranteed by the Financial Advisor as to accuracy or completeness,nor has it been independently verified. Fees paid to the Financial Advisor are contingent upon the sale and delivery of the Certificates. Continuing Disclosure The City will covenant to provide certain annual financial information (the "Annual Reports") and notices of the occurrence of certain enumerated events in accordance with Rule 15c2-12 of the Securities Exchange Act of 1934 as amended(the "Rule"). The Annual Reports and the notices will be filed by the City on the Electronic Municipal Market Access Website ("EMMA") operated by the Municipal Securities Rulemaking Board (www.emma.msrb.org). The required consent of the Annual Reports and the specific nature of the notices of enumerated events and certain other terms of the continuing 77 2014-02-18 Agenda Packet Page 300 disclosure obligation are included in "APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT." These covenants will be made in order to assist the Underwriter in complying with the Rule. Except as described in the following paragraph, in the past five years the City has complied, in all material respects,with its undertakings to provide continuing disclosure under the Rule. [describe any compliance issues] Verifications of Mathematical Computations Grant Thornton LLP will verify from the information provided to it the mathematical accuracy as of the date of the closing on the Certificates of(1) the computations contained in the provided schedules to determine that the cash deposits listed in the schedules prepared by the Financial Advisor, to be held in escrow,will be sufficient to pay,when due,the principal, prepayment premium and interest requirements of the 2002 Certificates maturing on or before August 1, 2027*, and (2) the computation of yield on the Certificates contained in the provided schedules used by Special Counsel in its determination that the interest with respect to the Certificates is exempt from federal taxation. Grant Thornton LLP will express no opinion on the assumptions provided to it, nor as to the exemption from taxation of the interest with respect to the Certificates. Additional Information The summaries and references contained herein with respect to the Trust Agreement, the Lease, the Site Lease, the Assignment Agreement, the Certificates, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Certificates are qualified in their entirety by reference to the form hereof included in the Trust Agreement. Copies of the Trust Agreement and the Lease are available for inspection during the period of initial offering on the Certificates at the offices of the Financial Advisor. Copies of these documents may be obtained after delivery of the Certificates from the City at 276 Fourth Avenue, Chula Vista,California 91910,telephone (619)691-5250. References Any statements in this Official Statement involving matters of opinion,whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or Owners of any of the Certificates. Execution The execution of this Official Statement by the Finance Director has been duly authorized by the City of Chula Vista. CITY OF CHULA VISTA By: Finance Director * Preliminary,subject to change. 78 2014-02-18 Agenda Packet Page 301 APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS The following are brief summaries of the provisions of the Lease, the Trust Agreement, the Site Lease and the Assignment Agreement. These summaries are not intended to be definitive. Reference is made to the actual documents (copies of which are available from the City) for the complete terms thereof. [to be provided by Special Counsel] A-1 2014-02-18 Agenda Packet Page 302 APPENDIX B CITY AUDITED FINANCIAL STATEMENTS B-1 2014-02-18 Agenda Packet Page 303 APPENDIX C FORM OF CONTINUING DISCLOSURE AGREEMENT [to be provided by Special Counsel] C-1 2014-02-18 Agenda Packet Page 304 APPENDIX D PROPOSED FORM OF OPINION OF SPECIAL COUNSEL [to be provided by Special Counsel] D-1 2014-02-18 Agenda Packet Page 305 APPENDIX E DTC AND THE BOOK-ENTRY-ONLY SYSTEM The following description of the Depository Trust Company ("DTC'), the procedures and record keeping with respect to beneficial ownership interests in the Certificates, payment of principal, interest and other payments on the Certificates to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Certificates and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the issuer of the Certificates (the `Issuer') nor the trustee,fiscal agent or paying agent appointed with respect to the Certificates (the `Agent') take any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Certificates, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Certificates, or(c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Certificates, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures"ofDTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company("DTC"),New York,NY,will act as securities depository for the Certificates (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If,however,the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. 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 E-1 2014-02-18 Agenda Packet Page 306 Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on these Internet sites is not incorporated herein by reference. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("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 Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities,except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities 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 Securities 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 Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities 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. 5. 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities 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. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds and distributions on the Securities 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 Issuer or Agent, 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,Agent, or E-2 2014-02-18 Agenda Packet Page 307 Issuer, 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 Issuer or Agent, 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. 9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. E-3 2014-02-18 Agenda Packet Page 308 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.01. Definitions and Rules of Construction...................................................................2 Section 1.02. Authorization........................................................................................................ 11 Section1.03. Equal Security....................................................................................................... 11 ARTICLE II TERMS OF THE CERTIFICATES AND ADDITIONAL CERTIFICATES Section 2.01. Authorization........................................................................................................ 11 Section 2.02. Description of Certificates.................................................................................... 12 Section 2.03. Form of Certificates.............................................................................................. 14 Section2.04. Execution.............................................................................................................. 14 Section 2.05. Application of Proceeds and Other Amounts....................................................... 14 Section 2.06. Transfer and Exchange......................................................................................... 14 Section 2.07. Certificates Mutilated, Lost, Destroyed or Stolen................................................ 15 Section 2.08. Execution of Documents and Proof of Ownership............................................... 15 Section 2.09. Certificate Register............................................................................................... 16 Section 2.10. Book-Entry System............................................................................................... 16 Section 2.11. Destruction of Cancelled Certificates................................................................... 19 Section 2.12. Additional Certificates.......................................................................................... 19 ARTICLE III PROJECT FUND Section 3.01. Establishment of Project Fund..............................................................................21 Section3.02. Purpose .................................................................................................................22 Section 3.03. Deposit of Moneys; Payment of Project Costs and Delivery Costs .....................22 Section 3.04. Transfers of Unexpended Proceeds......................................................................22 ARTICLE IV PREPAYMENT FUND Section 4.01. Establishment of Prepayment Fund......................................................................22 Section 4.02. Extraordinary Prepayment....................................................................................23 Section4.03. Prepayment...........................................................................................................23 Section 4.04. Selection of Certificates for Prepayment..............................................................26 Section 4.05. Notice of Prepayment...........................................................................................26 Section 4.06. Partial Prepayment of Certificates........................................................................27 i DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 309 TABLE OF CONTENTS (continued) Page Section 4.07. Effect of Notice of Prepayment............................................................................27 Section4.08. Surplus..................................................................................................................28 ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Security Provisions...............................................................................................28 Section 5.02. Establishment of Lease Payment Fund.................................................................29 Section5.03. Deposits................................................................................................................29 Section 5.04. Application of Moneys.........................................................................................29 Section5.05. Surplus..................................................................................................................30 ARTICLE VI RESERVE FUND Section 6.01. Establishment of Reserve Fund............................................................................30 Section6.02. Funding.................................................................................................................30 Section 6.03. Transfers of Excess...............................................................................................31 Section 6.04. Application of Reserve Fund in Event of Deficiency in Lease Payment Fund....31 Section 6.05. Transfer to Make All Lease Payments..................................................................32 ARTICLE VII NET PROCEEDS FUND Section 7.01. Establishment of Net Proceeds Fund: Deposits....................................................32 Section7.02. Cooperation...........................................................................................................33 ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section8.01. Held in Trust.........................................................................................................33 Section 8.02. Investments Authorized........................................................................................33 Section 8.03. Disposition of Investments...................................................................................34 Section8.04. Accounting............................................................................................................34 Section 8.05. Valuation and Disposition of Investments............................................................34 Section 8.06. Commingling of Moneys in Funds.......................................................................35 Section8.07. Tax Covenants......................................................................................................35 Section8.08. Rebate Fund..........................................................................................................36 ii DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 310 TABLE OF CONTENTS (continued) Page ARTICLE IX THE TRUSTEE Section 9.01. Appointment of Trustee........................................................................................38 Section 9.02. Merger or Consolidation.......................................................................................39 Section 9.03. Protection of the Trustee.......................................................................................39 Section 9.04. Rights of the Trustee.............................................................................................40 Section9.05. Standard of Care...................................................................................................40 Section 9.06. Compensation of the Trustee................................................................................40 Section 9.07. Limitations on Liability of Trustee.......................................................................41 Section 9.08. Trustee's Disclaimer of Warranties......................................................................42 ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted........................................................................................43 Section 10.02. Procedure for Amendment with Written Consent of the Owners.........................44 Section 10.03. Disqualified Certificates.......................................................................................45 Section 10.04. Effect of Supplemental Agreement......................................................................45 Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments.......45 Section 10.06. Amendatory Endorsement of Certificates.............................................................45 ARTICLE XI COVENANTS;NOTICES Section 11.01. Compliance With and Enforcement of the Lease.................................................45 Section 11.02. Payment of Taxes.................................................................................................46 Section 11.03. Observance of Laws and Regulations...................................................................46 Section 11.04. Prosecution and Defense of Suits.........................................................................46 Section11.05. City Budgets.........................................................................................................46 Section 11.06. Further Assurances...............................................................................................46 Section 11.07. Continuing Disclosure..........................................................................................46 ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of the City.................................................................................47 Section 12.02. No Liability of the City or Authority for Trustee Performance............................47 Section 12.03. Limitation of Rights to Parties and Certificate Owners........................................47 Section 12.04. No Liability of Authority to the Owners..............................................................48 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 311 TABLE OF CONTENTS (continued) Page ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights...........................................................................................48 Section 13.02. Events of Default..................................................................................................48 Section 13.03. Application of Funds............................................................................................48 Section 13.04. Institution of Legal Proceedings...........................................................................49 Section13.05. Non-Waiver..........................................................................................................49 Section 13.06. Remedies Not Exclusive.......................................................................................49 Section 13.07. Power of Trustee to Control Proceedings.............................................................50 Section 13.08. Limitation on Certificate Owners' Right to Sue...................................................50 Section 13.09. Agreement to Pay Attorneys' Fees and Expenses................................................50 Section 13.10. Insurers' Rights.....................................................................................................50 ARTICLE XIV MISCELLANEOUS Section14.01. Defeasance............................................................................................................51 Section 14.02. Non-Presentment of Certificates...........................................................................52 Section 14.03. Acquisition of Certificates by City.......................................................................53 Section14.04. Records.................................................................................................................53 Section14.05. Notices..................................................................................................................53 Section 14.06. Governing Law.....................................................................................................53 Section 14.07. Binding Effect: Successors...................................................................................53 Section 14.08. Execution in Counterparts....................................................................................54 Section14.09. Headings...............................................................................................................54 Section 14.10. Waiver of Notice...................................................................................................54 Section 14.11. Separability of Invalid Provisions ........................................................................54 Section 14.12. Insurers to be Deemed Owners; Rights of the Insurers........................................54 Section 14.13. Claims Under 2002 Insurance Policy: Payments by and to 2002 Insurer.............54 Section 14.14. Information to be Provided to the 2002 Insurer....................................................56 Section 14.15. Actions by Trustee................................................................................................56 Section 14.16. Interested Parties...................................................................................................57 EXHIBIT A-1 FORM OF 2002 CERTIFICATE................................................................... A-1-1 EXHIBIT A-2 FORM OF 2014 CERTIFICATE................................................................... A-2-1 EXHIBIT B-1 FORM OF WRITTEN DELIVERY COST REQUISITION..........................B-1-1 EXHIBIT B-2 FORM OF WRITTEN PROJECT COST REQUISITION..............................B-2-1 iv DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 312 AMENDED AND RESTATED TRUST AGREEMENT Dated as of March 1,2014 by and among U.S. BANK NATIONAL ASSOCIATION, as Trustee and the CHULA VISTA PUBLIC FINANCING AUTHORITY and the CITY OF CHULA VISTA relating to the $60,145,000 CITY OF CHULA VISTA 2002 CERTIFICATES OF PARTICIPATION (Police Facility Project) and [$AMOUNT] CITY OF CHULA VISTA 2014 REFUNDING CERTIFICATES OF PARTICIPATION (Police Facility Project) DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 313 AMENDED AND RESTATED TRUST AGREEMENT THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of March 1, 2014 (the "Trust Agreement"), by and among U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the "Trustee"), the CHULA VISTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority duly organized and existing under the laws of the State of California, as lessor under the Lease hereinafter referred to (the "Authority"), and the CITY OF CHULA VISTA, a municipal corporation and a charter city duly organized and existing under the Constitution and laws of the State of California, as lessee under the Lease (the "City"), amends and restates in its entirety that certain Trust Agreement, dated as of June 1, 2002, by and among the Trustee, the Authority and the City, and constitutes a supplemental agreement executed pursuant to Section 2.12 thereof for the purpose of facilitating the execution and delivery of the 2014 Refunding Certificates (as defined below); WITNESSETH: WHEREAS,the City and the Authority have entered into a Lease/Purchase Agreement, dated as of June 1, 2002, as amended by that First Amendment to Lease Agreement, dated as of March 1, 2014 (collectively, the "Lease"), whereby the City has leased the Leased Premises (defined below) from the Authority; and WHEREAS, in order to finance the Project, the City and the Authority authorized the sale of the $60,145,000 City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates")and now in order to reduce the amount of Lease Payments to be paid by the City desire to authorize the [$AMOUNT] City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "2014 Refunding Certificates"), each evidencing fractional interests in the Lease Payments and Prepayments made by the City under the Lease; and WHEREAS, as security for the 2002 Certificates, the 2014 Refunding Certificates and any Additional Certificates executed and delivered in accordance with this Trust Agreement, the Authority has assigned the rights to receive all Lease Payments described in the Lease, and the Authority and the City have granted a security interest in all moneys held by the Trustee hereunder (other than the Rebate Fund as described herein) to the Trustee for the benefit of the Owners of the 2002 Certificates, the 2014 Refunding Certificates and any Additional Certificates executed and delivered hereunder as and to the extent described herein; and WHEREAS, Section 5420 et seq. of the California Government Code (the "Government Code") provides statutory authority for pledging collateral for the payment of principal or prepayment price of, and interest on, any agreement, including certificates of participation, and the Government Code creates a continuing perfected security interest which shall attach immediately to such collateral irrespective of whether the parties to the pledge document have notice of the pledge and without the need for any physical delivery, recordation, filing or further act, and, therefore, the City and the Authority hereby warrant and represent that pursuant to the Lease,this Trust Agreement and the Government Code, the Trustee has a first priority perfected security interest in the Lease Payments described in the Lease pursuant to the Government Code; and 1 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 314 WHEREAS, the Trustee has agreed to apply the proceeds of the 2002 Certificates, the 2014 Refunding Certificates and any Additional Certificates as described herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions and Rules of Construction. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Trust Agreement, have the meanings herein specified. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa. The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this Trust Agreement, refer to this Trust Agreement as a whole. "Additional Certificates" means certificates of participation authorized by a supplemental Trust Agreement that are executed and delivered by the Trustee under and pursuant to Section 2.12. "Additional Pam" means all amounts payable by the City as Additional Payments as defined in Section 4.11 of the Lease. "Assignment Agreement" means the Amended and Restated Assignment Agreement, dated as of March 1, 2014, by and between the Trustee and the Authority, and any duly authorized and executed amendments thereto. "Authority" means the Chula Vista Public Financing Authority, a joint exercise of powers authority organized under the laws of the State, its successors and assigns. "Authority Representative" means the President, Vice President, Secretary, Treasurer, Executive Director,Assistant Executive Director or Assistant Treasurer of the Authority, or any other person authorized to act on behalf of the Authority under or with respect to the Lease. "Beneficial Owner" means any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal income tax purposes. "Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions in the State of New York or the State of California are authorized or required by law or executive order to remain closed. "Certificates" means the 2002 Certificates, the 2014 Refunding Certificates and each series of Additional Certificates executed and delivered pursuant to Section 2.12. "Certificate of Completion" means a certificate of the City Representative delivered pursuant to Section 3.4 of the Lease stating that all components of the Project being financed by a series of Certificates have been completed or concluded in conformity with the requirements of the Lease. 2 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 315 "Certificate Year" means the period extending from August 2 each year to August 1 of the subsequent calendar year, provided that the first Certificate Year for each series of Certificates shall commence on the Delivery Date for such series and end on the following August 1. "City" means the City of Chula Vista, a municipal corporation and a charter city organized and existing under the laws and Constitution of the State, and its successors and assigns. "City Representative" means the City Manager and Director of Finance of the City or any other person authorized by the City Manager of the City to act on behalf of the City with respect to the Lease or this Trust Agreement. "Code" means the Internal Revenue Code of 1986, and the regulations issued thereunder, as the same may be amended from time to time, and any successor provisions of law. Reference to a particular section of the Code shall be deemed to be a reference to any successor to any such section. "Continuing Disclosure Agreement"means(i)that certain Continuing Disclosure Agreement, dated as of June 1, 2002, by and between the City and U.S. Bank National Association, as Dissemination Agent, as it may be amended from time to time in accordance with the terms thereof, (ii) that certain Continuing Disclosure Agreement, dated as of March 1, 2014 by and between the City and NBS, as Dissemination Agent, as it may be amended from time to time in accordance with the terms thereof, and (iii) any agreement entered into by the City and a dissemination agent with respect to any Additional Certificates relating to compliance with Rule 15c2-12 adopted under the Securities Exchange Act of 1934. "Delivery Cost Requisition" means a written requisition substantially in the form attached hereto as Exhibit B-1. "Delivery Costs" means and includes all items of expense directly or indirectly payable by or reimbursable to the City or the Authority relating to the financing of the Project from the proceeds of the Certificates, including but not limited to costs provided in the contract of purchase with each Original Purchaser, the premium for the 2002 Insurance Policy, and any insurance policies purchased to insure any Additional Certificates or to satisfy the Reserve Requirement, filing and recording costs, settlement costs, printing costs, word processing costs, reproduction and binding costs, initial fees and charges of the Trustee, including its first annual administration fee and the fees of its counsel, legal fees and charges, financing and other professional consultant fees, fees of auctioning any Certificates, costs of rating agencies and costs of providing information to such rating agencies, any computer and other expenses incurred in connection with the Certificates, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Delivery Date" means the date on which a series of Certificates, duly executed by the Trustee, is delivered to the Original Purchaser thereof. "Depository" means the securities depository acting as depository pursuant to Section 2.10 hereof. "DTC"means The Depository Trust Company,New York,New York, a limited purpose trust company organized under the laws of the State of New York in its capacity as securities depository for the Certificates. 3 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 316 Escrow Agreement shall mean the Escrow Agreement, dated as of March 1, 2014, by and between the City and the Escrow Bank relating to the 2002 Certificates being refunded, and any duly authorized and executed amendments thereto. Escrow Bank shall mean U.S. Bank National Association, acting in its capacity as such under the Escrow Agreement, and any successor thereto. Escrow Fund shall mean the fund by that name which is established in the Escrow Agreement executed with respect to the 2002 Certificates being refunded. "Event of Default" means an event of default under the Lease, as defined in Section 9.1 thereof. "Financial Guaranty Agreement" means the Financial Guaranty Agreement, dated as of February 12, 2008, by and between the City and the 2002 Insurer pursuant to which the Surety Bond was delivered for deposit to the Reserve Fund, and any duly authorized and executed amendments thereto. "Fiscal Year" means the fiscal year of the City commencing July 1 and ending June 30 of the next year. "Government Obligations' means Permitted Investments of the type described in paragraph (A)of the definition thereof. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Authority,the Trustee or the City. "Insurance Business Day"means any day other than (i) a Saturday or Sunday, or(ii) a day on which the 2002 Insurance Trustee or lending institutions in the State of New York are authorized or required by law or executive order to remain closed. "Insurance Policies" means the municipal bond insurance policies issued by the Insurers insuring the payment when due of the principal and interest with respect to one or more series of the Certificates as provided therein. "Insurers" means, collectively, the municipal bond insurance companies insuring any of the Outstanding Certificates. "Interest Payment Date"means February 1 and August 1 of each year commencing February 1, 2003 for the 2002 Certificates, August 1, 2014 for the 2014 Refunding Certificates and for each series of Additional Certificates the February 1 or August 1 specified in the supplemental agreement executed in accordance with Section 2.12 hereof with respect to such Additional Certificates. "Lease" means the Lease/Purchase Agreement related to the Certificates, dated as of June 1, 2002, as amended by that certain First Amendment to Lease/Purchase Agreement, dated as of March 1, 2014, by and between the City and the Authority, and any additional duly authorized and executed amendments thereto. 4 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 317 "Lease Pam" means any payment required to be paid by the City to the Authority pursuant to Section 4.4 of the Lease. "Lease Payment Date"means the Lease Payment Date defined in Section 4.4(a) of the Lease, which shall be each January 15 and July 15 commencing July 15, 2005. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Article V hereof. "Leased Premises"has the meaning set forth in the Lease. "Letter of Representations" means the letter of the City delivered to and accepted by the Depository on or prior to delivery of the Certificates as book-entry certificates making reference to the DTC Operational Arrangements memorandum, as it may be amended from time to time, setting forth the basis on which the Depository serves as depository for such book-entry certificates, as such letters were originally executed or as they may be supplemented or revised or replaced by letters from the City and the Trustee delivered to and accepted by the Depository. "Mood"means Moody's Investors Service or any successors or assigns thereto. "Net Proceeds" means any proceeds of any insurance, performance bonds or taking by eminent domain or condemnation paid with respect to the Leased Premises remaining after payment therefrom of any expenses (including attorneys' fees) incurred in the collection thereof. "Net Proceeds Fund" means the fund by that name established and held by the Trustee pursuant to Article VII hereof. "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.10 hereof. "Original Purchaser" means the original purchaser of a series of the Certificates on the Delivery Date for such series. "Outstanding" when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 10.03 hereof) all Certificates theretofore executed and delivered by the Trustee under this Trust Agreement except: (1) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates for the payment or prepayment of which funds or Government Obligations, together with interest earned thereon, in the necessary amount shall have theretofore been deposited with the Trustee (whether upon or prior to the maturity or prepayment date of such Certificates), provided that, if such Certificates are to be prepaid prior to maturity, notice of such prepayment shall have been given as provided in Section 4.05 hereof or provision satisfactory to the Trustee shall have been made for the giving of such notice; and (3) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Sections 2.06 and 2.07 hereof. 5 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 318 Notwithstanding anything herein to the contrary, in the event that the principal and/or interest with respect to a Certificate shall be paid by an Insurer, pursuant to an Insurance Policy, such Certificate shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the City. "Owner" or"Certificate Owner" or"Owner of a Certificate", or any similar term, when used with respect to a Certificate means the person in whose name such Certificate is registered on the registration books maintained by the Trustee. "Participants" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds book-entry certificates as securities depository. "Permitted Investments" means, if and to the extent permitted by law and by any policy guidelines promulgated by the City: A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. Farmers Home Administration(FmHA) Certificates of beneficial ownership 2. Federal Housing Administration Debentures(FHA) 3. General Services Administration Participation certificates 4. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA-guaranteed mortgage-backed bonds GNMA-guaranteed pass-through obligations 5. U.S. Maritime Administration Guaranteed Title XI financing (qualified under the Ship Financing Act of 1972) 6. U.S. Department of Housing and Urban Development(HUD) Project Notes 6 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 319 Local Authority Bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation certificates Senior debt obligations 3. Federal National Mortgage Association(FNMA or"Fannie Mae") Mortgage-backed securities and senior debt obligations (excluding stripped mortgage securities which are valued greater than par on the portion of unpaid principal) 4. Student Loan Marketing Association (SLMA or"Sallie Mae") Senior debt obligations 5. Resolution Funding Corp (REFCORP) The interest only component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York 6. Farm Credit System Cora. - Consolidated system-wide bonds and notes D. Money market funds registered under the Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by Standard & Poor's of AAAm-G, AAAm, or AAm and by Moody's of Aaa, including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above and having a maturity of one year or less. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks whose short- term obligations are rated"A-1+" by Standard & Poor's, which may include the Trustee and its affiliates. The collateral must be held by a third party and the Bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC (including those of the Trustee and its affiliates). 7 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 320 G. Commercial paper rated at the time of investment "Prime - 1" by Moody's and"A-1+" or better by Standard&Poor's. H. Investment agreements, including guaranteed investment agreements, acceptable to the Insurers. I. Bonds or notes issued by any state or municipality which are rated by Moody's and Standard& Poor's in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured,uninsured or unguaranteed obligation rating of"Prime - 1" or"A3" or better by Moody's and "A-1+" or better by Standard& Poor's, including those of the Trustee and its affiliates. K. Repurchase agreements satisfying criteria acceptable to the Insurers that provide for the transfer of securities from a dealer bank or securities firm (seller/borrower)to the Trustee (buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee,in exchange for the securities at a specified date or dates. L. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard& Poor's. If,however,the issue is only rated by Standard& Poor's (i.e., there is no Moody's rating), then the pre-refunded bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy this condition. M. The Local Agency Investment Fund of the State, provided that the Trustee may deposit and withdraw monies in its own name. N. Any other investment which the City is permitted by law to make (including investment agreements and forward delivery or forward purchase agreements), but only with prior written consent of the Insurers. "Value" of the above investments shall be determined as of the end of each month, and the value of any investments shall be calculated as follows: (a) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination; (b) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; 8 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 321 (c) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; (d) as to any investment not specified above: the value thereof established by a methodology selected by the City and specified in writing to the Trustee; and (e) alternatively, the value of the above investments shall be determined as of the end of each month by the manner currently employed by the Trustee or any other manner consistent with industry standard. "Prepayment' means any payment made by the City pursuant to Article X of the Lease as a prepayment of Lease Payments. "Prepayment Fund" means the fund by that name established and held by the Trustee pursuant to Article IV hereof. "Principal Office" or"Corporate Trust Office"means the corporate trust office of the Trustee at 633 West Fifth Street, 24th Floor, Los Angeles, California 90071, Attention: Global Corporate Trust Services, or such other or additional offices as may be designated by the Trustee; provided, however, that for the purposes of payment, transfer or exchange of Certificates such term means the office or agency of the Trustee at which, at any particular time its corporate trust agency business shall be conducted. "Project"has the meaning set forth in the Lease. "Project Cost Requisition" means a written requisition substantially in the form attached hereto as Exhibit B-2. "Project Costs" means, with respect to any item or portion of the Project, the contract price paid or to be paid therefor upon acquisition, construction, procurement or improvement thereof, in accordance with a purchase order or contract therefor. Project Costs include, but are not limited to, the administrative, engineering, legal, financial and other costs incurred by the City and the Authority in connection with the acquisition, construction, procurement, remodeling or improvement of the Project, all applicable sales taxes and other charges resulting from such construction, procurement, remodeling or improvement of the Project and the costs associated with making rebate calculations required by the Code. Project Costs shall not include any costs of the City or the Authority to enforce remedies hereunder or under the Lease. "Project Fund" means the fund by that name established and held by the Trustee pursuant to Article III hereof. "Property"has the meaning set forth in the Lease. "Record Date" means the close of business on the fifteenth day of the month preceding each Interest Payment Date,whether or not such fifteenth day is a Business Day. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Article VI hereof. 9 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 322 "Reserve Requirement" means, as of any calculation date, the least of (1) the maximum aggregate annual Lease Payments (in any Certificate Year) then payable under the Lease (exclusive of Lease Payments attributable to Certificates that have been defeased), (2) 125% of the average annual aggregate Lease Payments (in any Certificate Year) then payable under the Lease (exclusive of Lease Payments attributable to Certificates that have been defeased), or (3) 10% of the face amount of the Certificates (less original issue discount if in excess of two percent of the stated prepayment amount at maturity); provided, however, on and after the date that the 2002 Certificates are no longer Outstanding, the Reserve Requirement shall be an amount equal to 50% of the maximum aggregate annual Lease Payments (in any Certificate Year) then payable under the Lease (exclusive of Lease Payments attributable to Certificates that have been defeased). "S&P" or"Standard& Poor's" means Standard & Poor's Ratings Services or any successors or assigns thereto. "Site Lease" means the Site Lease, dated as of June 1, 2002, as amended by that certain First Amendment to Site Lease, dated as of March 1, 2014, by and between the Authority and the City, and any additional duly authorized and executed amendments thereto. "Special Counsel" means Stradling Yocca Carlson & Rauth, a Professional Corporation, or any other attorney or firm of attorneys of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions and acceptable to the City. "State"means the State of California. "Surety Bond" means the debt service reserve fund surety bond issued by the 2002 Insurer with respect to the 2002 Certificates. "Tax Certificate" means the Tax Certificate, dated as of the Delivery Date for a series of Certificates, concerning matters pertaining to the use and investment of proceeds of such Certificates executed and delivered to the City on the date of execution and delivery of such Certificates, including any and all exhibits attached thereto. "Term" means the time during which the Lease is in effect, as provided in Section 4.2 of the Lease. "Term Certificates" means any Certificates the principal of which is to be paid from mandatory sinking account payments as set forth in Section 4.03(b) hereof or in any supplemental agreement relating to Additional Certificates. "Trustee" means U.S. Bank National Association, a national banking association, and any successor trustee. "Trust Agreement" or "Agreement" means this Amended and Restated Trust Agreement, together with any amendments hereof or supplements hereto permitted to be made hereunder. "2002 Certificates" means the $60,145,000 aggregate principal amount of City of Chula Vista 2002 Certificates of Participation (Police Facility Project) executed and delivered by the Trustee pursuant to this Trust Agreement. 10 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 323 "2002 Insurance Policy" means the municipal bond insurance policy issued by the 2002 Insurer insuring the payment when due of the principal and interest with respect to the 2002 Certificates as provided therein. "2002 Insurance Trustee"means U.S. Bank Trust National Association, or its successors. "2002 Insurer" means National Public Finance Guarantee Corp. as successor to MBIA Insurance Corporation, a stock insurance company domiciled in the State of New York, or any successor thereto or assignee thereof. "2014 Refunding Certificates" means the [$AMOUNT] aggregate principal amount of City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) executed and delivered by the Trustee pursuant to this Trust Agreement. Section 1.02. Authorization, Future Assignment of Authority's Rights and Duties. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement, and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it. In the event the Authority ceases to exist while any of the Certificates remain Outstanding hereunder or is unable in the future to perform any of its obligations under the Lease,the Site Lease, or the Assignment Agreement,then without further action on the part of the parties hereto,all of the rights, obligations and duties of the Authority hereunder shall be automatically assigned to the Chula Vista Municipal Financing Authority ("CVMFA") and,thereafter, CVMFA shall have all the rights and shall perform all duties and responsibilities of the Authority hereunder. Section 1.03. Equal Security. In consideration of the acceptance of the Certificates by the Owners, this Trust Agreement shall be deemed to be and shall constitute a contract between the Trustee and the Owners to secure the full and final payment of the interest, if any, and principal represented by the Certificates which may be executed and delivered hereunder, subject to each of the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit,protection and security of all Owners without distinction, preference or priority as to security or otherwise of any Certificates over any other Certificates by reason of the number or date thereof or the time of execution or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. All of the Certificates are equally secured as provided in this Section 1.03, except as may be otherwise expressly provided in this Trust Agreement. ARTICLE II TERMS OF THE CERTIFICATES AND ADDITIONAL CERTIFICATES Section 2.01. Authorization. Upon written request of the City Representative, the Trustee will execute and deliver to the Original Purchaser of each series of Certificates an aggregate principal amount of Certificates of the applicable series purchased by such Original Purchaser representing proportionate ownership interests in the Lease Payments and the Prepayments. 11 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 324 Section 2.02. Description of Certificates. (a) Each Certificate of a series shall be dated the Delivery Date for such series and shall mature on August 1 in each year, and shall bear interest (calculated on the basis of a 360- day year of twelve 30-day months)payable on each Interest Payment Date for such series. The 2002 Certificates shall mature on August 1 in each year of the years specified below and shall bear interest at the rates specified below: Maturity Principal Interest (August 1 Amount Rate 2005 $1,125,000 3.00% 2006 1,160,000 3.00% 2007 1,200,000 3.00% 2008 1,240,000 4.00% 2009 1,290,000 4.00% 2010 1,340,000 4.00% 2011 1,400,000 4.00% 2012 1,460,000 4.00% 2013 1,520,000 4.00% 2014 1,585,000 4.25% 2015 1,660,000 4.40% 2016 1,735,000 4.50% 2017 1,815,000 4.50% 2018 1,905,000 4.625% 2019 1,995,000 4.75% 2020 2,100,000 4.875% 2021 2,205,000 5.00% 2022 2,320,000 5.00% 2023 2,445,000 5.00% 2024 2,570,000 5.00% 2025 2,705,000 5.00% 2026 2,850,000 5.00% 2027 3,000,000 5.00% 2029 6,475,000 5.00% 2032 11,045,000 5.00% 12 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 325 The 2014 Refunding Certificates shall mature on August 1 in each year of the years specified below and shall bear interest at the rates specified below: Maturity Principal Interest (August 1 Amount Rate The Certificates of a series shall be delivered in fully registered form, numbered from one upwards in consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The Certificates shall be executed and delivered in the denominations of$5,000 and any integral multiple thereof. Each Certificate shall bear interest from the Interest Payment Date next preceding the date of execution thereof,unless (i)it is executed during the period from the day after the Record Date for an Interest Payment Date to and including such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is executed on or prior to the Record Date for the first Interest Payment Date, in which event interest shall be payable from the Delivery Date; provided, however, that if, at the time of execution of any Certificate interest with respect to such Certificate is in default, such Certificate shall bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Certificate. (b) Payment Provisions. Interest with respect to any Certificate shall be payable in lawful money of the United States of America by check or draft of the Trustee, mailed no later than the Interest Payment Date to the Owner at his address as it appears, on the Record Date, on the registration books maintained by the Trustee or at such other address as has been furnished to the Trustee in writing by the Owner on or prior to such Record Date; provided, however, that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Certificates filed with the Trustee prior to any Record Date, interest with respect to such Certificates shall be paid to such Owner on each succeeding Interest Payment Date (unless such request has been revoked in writing) by wire transfer of immediately available funds to an account in the continental United States designated in such written request. Payments of defaulted interest with respect to the Certificates shall be paid by check or draft to the registered Owners of the Certificates as of a special record date to be fixed by the Trustee, notice of which special record date shall be given to the registered Owners of the Certificates no less than ten days prior thereto. The principal of and premium, if any, on the Certificates is payable when due upon surrender thereof at the Principal Office in lawful money of the United States of America. 13 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 326 Section 2.03. Form of Certificates. The 2002 Certificates and the 2014 Refunding Certificates and the assignment to appear thereon shall be substantially in the forms set forth in Exhibits A-1 and A-2, respectfully, attached hereto and by this reference incorporated herein with such appropriate additions, modifications, and insertions as are permitted or required by this Trust Agreement or the 2002 Insurer in the case of the 2002 Certificates. Each series of Additional Certificates shall be in the form set forth in the supplemental agreement executed with respect to such Additional Certificates in accordance with Section 2.12 hereof. Pending the preparation of definitive Certificates the Certificates may be executed and delivered in temporary form exchangeable for definitive Certificates when ready for delivery. If the Trustee delivers temporary Certificates for a series, it shall execute and deliver definitive Certificates of such series in an equal aggregate principal amount of authorized denominations, when available, without additional charge, and thereupon the temporary Certificates shall be surrendered to the Trustee at its Principal Office. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Trust Agreement as definitive Certificates. Section 2.04. Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of any authorized signatory of the Trustee. The Trustee shall insert the date of execution of each Certificate in the place provided thereon. Section 2.05. Application of Proceeds and Other Amounts. (a) 2002 Certificates. The proceeds from the sale of the Certificates in the amount of$58,685,805.93 (representing the par amount of the Certificates of$60,145,000.00, less the Insurance Policy premium of$569,000.00, less the net original issue discount of$650,956.15, less Original Purchaser's discount of$239,237.92) shall be deposited with the Trustee as follows: $49,340,746.74 to the Project Fund (of which $275,000 shall be deposited to the Delivery Costs Account therein) for the payment of Project Costs and Delivery Costs, $5,281,559.19 to the Interest Account of the Lease Payment Fund and $4,063,500.00 to the Reserve Fund, which amount equals the initial Reserve Requirement. (b) 2014 Refunding Certificates. The proceeds from the sale of the 2014 Refunding Certificates in the amount of $ (representing the par amount of the 2014 Refunding Certificates of [$AMOUNT], plus/less the [net] original issue premium/discount of $ , less Original Purchaser's discount of$ ) shall be deposited with the Trustee and be applied as follows: $ shall be transferred to the Escrow Agent for deposit to the Escrow Fund and$ to the Delivery Costs Account of the Project Fund. The Trustee may, in its discretion, establish a temporary fund or account in its books or records to facilitate such deposits and transfers. Section 2.06. Transfer and Exchange. (a) Transfer of Certificates. Any Certificate may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.09 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificate for cancellation at the Principal Office accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for transfer, the Trustee shall execute and deliver a new Certificate or Certificates of the same series, tenor and maturity, for like aggregate principal amount 14 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 327 in authorized denominations. The cost of printing Certificates and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the City. The Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer, and there shall be no other charge to any Owner for any such transfer. (b) Exchange of Certificates. Certificates may be exchanged at the Principal Office for a like aggregate principal amount of Certificates of other authorized denominations of the same series, tenor and maturity. The Trustee may require the payment by the Certificate Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The cost of printing Certificates and any services rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by the City. All Certificates surrendered pursuant to the provisions of this Section shall be cancelled and destroyed by the Trustee and shall not be redelivered. (c) Time for Transfer or Exchange. The Trustee shall not be obligated to transfer or exchange any Certificate after a Record Date and before the following Interest Payment Date, or during the period in which it is selecting Certificates for prepayment, or after notice of prepayment has been given as provided in Section 4.05. Section 2.07. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like series, tenor, maturity and principal amount in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled by it. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and, if an indemnity, satisfactory to the Trustee indemnifying the Trustee, the Authority and the City, shall be given, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new Certificate of like series, tenor, maturity and principal amount and numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new Certificate delivered under this Section and of the expenses which may be incurred by the Trustee in carrying out the duties under this Section. Any Certificate executed under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other Certificates secured by this Trust Agreement. The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Certificate in place of one which has been mutilated, lost, destroyed or stolen, and which has matured, or has been called for prepayment, the Trustee may make payment with respect to such Certificate upon receipt of the above-mentioned indemnity. Section 2.08. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by Certificate Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their 15 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 328 attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Trust 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 attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. 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 certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person, the amount and numbers of such Certificates and the date of execution shall be proved by the registration books maintained pursuant to Section 2.09 hereof. Nothing contained in this Article II shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which the Trustee may deem sufficient. Any request or consent of the Owner of any Certificate shall bind every future Owner of the same Certificate in respect of anything done or to be done by the Trustee in pursuance of such request or consent. Section 2.09. Certificate Re ig ster. The Trustee will keep or cause to be kept at its Principal Office sufficient books for the registration and transfer of the Certificates which shall, during normal working hours and upon reasonable notice, be open to inspection by the City and the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Certificates as hereinbefore provided. The City, the Authority and the Trustee shall be entitled to treat the registered owner of a Certificate as the absolute owner thereof for all purposes, whether or not a Certificate shall be overdue and the City, the Authority and the Trustee shall not be affected by any notice to the contrary. Section 2.10. Book-Entry System. (a) Election of Book-Entry System. Prior to the execution and delivery of a series of the Certificates, the City may provide that such series of Certificates shall be initially executed and delivered as book-entry Certificates. If the City shall elect to deliver any series of Certificates in book-entry, then the City shall cause the delivery of a separate single fully registered Certificate for such series (which may be typewritten) for each maturity date of such Certificates in an authorized denomination corresponding to that total principal amount of the Certificates designated to mature on such date. Upon initial execution and delivery, the ownership of each such Certificate shall be registered in the Certificate register in the name of the Nominee, as nominee of the Depository, and ownership of the Certificates, or any portion thereof, may not thereafter be transferred except as provided in Section 2.10(d). 16 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 329 With respect to book-entry Certificates, the City and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such book-entry Certificates. Without limiting the immediately preceding sentence, the City and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in book-entry Certificates, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the Certificate register, of any notice with respect to book-entry Certificates, including any notice of prepayment, (iii) the selection by the Depository and its Participants of the beneficial interests in book-entry Certificates to be prepaid in the event the City prepays the Certificates in part, or (iv) the payment by the Depository or any Participant or any other person, of any amount with respect to principal, premium, if any, or interest evidenced and represented by book-entry Certificates. The City and the Trustee may treat and consider the person in whose name each book- entry Certificate is registered in the Certificate register as the absolute Owner of such book-entry Certificate for the purpose of payment of principal, premium and interest with respect to such Certificate, for the purpose of giving notices of prepayment and other matters with respect to such Certificate, for the purpose of registering transfers with respect to such Certificate, and for all other purposes whatsoever. The Trustee shall pay all principal, premium, if any, and interest evidenced and represented by the Certificates only to or upon the order of the respective Owner, as shown in the Certificate register, or his respective attorney 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, premium, if any, and interest evidenced and represented by the Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Certificate register, shall receive a Certificate evidencing the obligation to make payments of principal, premium, if any, and interest evidenced and represented by the Certificates. Upon delivery by the Depository to the Owner and the Trustee, of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates,the word"Nominee"in this Trust Agreement shall refer to such nominee of the Depository. (b) Delivery of Letter of Representations. In order to qualify the book-entry Certificates for the Depository's book-entry system, the City shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the City any obligation whatsoever with respect to persons having interests in such book-entry Certificates other than the Owners, as shown on the Certificate register. In addition to the execution and delivery of a Letter of Representations, the City shall take such other actions,not inconsistent with this Trust Agreement,as are reasonably necessary to qualify book-entry Certificates for the Depository's book-entry program. (c) Selection of Depository. In the event (i) the Depository determines not to continue to act as securities depository for book-entry Certificates, or (ii) the City determines that continuation of the book-entry system is not in the best interest of the beneficial owners of the Certificates or the City, then the City will discontinue the book-entry system with the Depository. If the City determines to replace the Depository with another qualified securities depository, the City shall prepare or direct the preparation of a new single, separate, fully registered Certificate for each of the maturity dates of such book-entry Certificates, registered in the name of such successor or substitute qualified securities depository or its Nominee as provided in subsection (d) hereof. If the City fails to identify another qualified securities depository to replace the Depository, then the Certificates shall no longer be restricted to being registered in such Certificate register in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or 17 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 330 exchanging such Certificates shall designate, in accordance with the provisions of Section 2.06 hereof. (d) Payments to Depository. Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all Outstanding Certificates of a series are held in book-entry and registered in the name of the Nominee, all payments with respect to principal, prepayment premium, if any, and interest evidenced and represented by such Certificate and all notices with respect to such Certificate shall be made and given, respectively to the Nominees, as provided in the Letter of Representations or as otherwise instructed by the Depository and agreed to by the Trustee notwithstanding any inconsistent provisions herein. (i) All book-entry Certificates shall be initially executed and delivered as provided in Section 2.01 hereof. If such Certificates are initially registered in the name of the Nominee, then registered ownership of such Certificates, or any portions thereof,may not thereafter be transferred except: (A) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to clause (B) of subsection (i) of this Section 2.10(d) ("Substitute Depository");provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any Substitute Depository, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (C) to any person as provided below, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the City that DTC or its successor (or Substitute Depository or its successor)is no longer able to carry out its functions as depository. (ii) In the case of any transfer pursuant to clause (A)or clause (B) of subsection (i) of this Section 2.10(d), upon receipt of all Outstanding Certificates of a series by the Trustee, together with a written request of the City to the Trustee designating the Substitute Depository, a single new Certificate, which the City shall prepare or cause to be prepared, shall be executed and delivered for each maturity of Certificates of such series then Outstanding, registered in the name of such successor or such Substitute Depository or their Nominees, as the case may be, all as specified in such written request of the City. In the case of any transfer pursuant to clause (C) of subsection (i) of this Section 2.10(d), upon receipt of all Outstanding Certificates of a series by the Trustee, together with a written request of the City to the Trustee, new Certificates of the applicable series, which the City 18 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 331 shall prepare or cause to be prepared, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such written request of the City, subject to the limitations of Section 2.01 hereof, provided that the Trustee shall not be required to deliver such new Certificates within a period of less than sixty (60) days from the date of receipt of such written request from the City. (iii) In the case of a partial prepayment or an advance refunding of any Certificates evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such Certificates indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee, all in accordance with the Letter of Representations. The Trustee shall not be liable for such Depository's failure to make such notations or errors in making such notations. (iv) The City and the Trustee shall be entitled to treat the person in whose name any Certificate is registered as the Owner thereof for all purposes of this Trust Agreement and any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the City; and the City and the Trustee shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the Certificates. Neither the City nor the Trustee shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any Certificates, and the Trustee may rely conclusively on its records as to the identity of the Owners of the Certificates. Section 2.11. Destruction of Cancelled Certificates. Whenever in this Trust Agreement provision is made for the surrender or cancellation by the Trustee and the delivery to the City of any Certificates, the Trustee will cancel and destroy such Certificates and deliver a certificate of such destruction to the City upon its request. Section 2.12. Additional Certificates. Subsequent to the execution and delivery by the Trustee of the 2002 Certificates and the 2014 Refunding Certificates, the Trustee shall, upon written request or requests of the City Representative and of the Authority Representative, execute and deliver from time to time one or more series of Additional Certificates in such aggregate principal amount as may be set forth in such written request or requests, provided that there shall have been compliance with all of the following conditions, which are hereby made conditions precedent to the preparation, execution and delivery of such Additional Certificates: (a) The parties to this Trust Agreement shall have executed a supplemental agreement which (i) sets forth the terms and provisions of such Additional Certificates, including the establishment of such funds and accounts, which may be separate and apart from the funds and accounts established hereunder for the 2002 Certificates and the 2014 Refunding Certificates, as shall be necessary or appropriate, and (ii)requires that prior to the delivery of such Additional Certificates the Reserve Requirement with respect to such Additional Certificates shall be on deposit in the 19 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 332 Reserve Fund established hereunder or in a reserve fund established under such supplemental agreement; (b) The scheduled principal and interest payable with respect to such Additional Certificates shall be payable only on Interest Payment Dates; (c) The Lease shall have been amended, if necessary, to (i) increase or adjust the Lease Payments due and payable on each Lease Payment Date to an amount sufficient to pay the principal, premium (if any) and interest payable with respect to all Outstanding Certificates, including the Additional Certificates to be executed and delivered as and when the same mature or become due and payable (except to the extent such principal, premium and interest may be payable out of moneys then in the Reserve Fund or otherwise on deposit with the Trustee in accordance with this Trust Agreement), (ii) if appropriate, amend the definition of"Leased Premises" to include as part of the Leased Premises all or any portion of additions, betterments, extensions, improvements or replacements, or such other real or personal property (whether or not located upon the Leased Premises as such Leased Premises are constituted as of the Delivery Date for the 2002 Certificates), to be financed, acquired or constructed by the preparation, execution and delivery of such Additional Certificates, and (iii) make such other revisions to the Lease as are necessitated by the execution and delivery of such Additional Certificates (provided, however, that such other revisions shall not prejudice the rights of the Owners of Outstanding Certificates as granted them under the terms of this Trust Agreement); (d) There shall have been delivered to the Trustee a counterpart of the amendments required by subsection 2.12(c)hereof, (e) The Trustee shall have received a certificate of the Authority Representative that there exists on the part of the Authority no Event of Default (or any event which, once all notice or grace periods have passed,would constitute an Event of Default); (f) The Trustee shall have received a certificate of the City Representative that (i) there exists on the part of the City no Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) and (ii) the Lease Payments as increased or adjusted do not exceed in any year the fair rental value of the Leased Premises (as such term is defined in the amended Lease); (g) The Trustee shall have received an opinion of Special Counsel substantially to the effect that (i) said supplemental agreement and said amendments to the Lease comply in all respects with the requirements of this Section 2.12, (ii) said supplemental agreement and said amendments to the Lease have been duly authorized, executed and delivered by each of the respective parties thereto (provided that said opinion of Special Counsel, in rendering the opinions set forth in this clause (ii), shall be entitled to rely upon one or more other opinions of counsel, including counsel to any of the respective parties to said supplemental agreement or said amendments to the Lease), (iii) assuming that no Event of Default has occurred and is continuing, this Trust Agreement, as amended by said supplemental agreement, and the Lease, as amended by the respective amendments thereto, constitute the legal, valid and binding obligations of the respective parties thereto, enforceable against said parties in accordance with their respective terms (except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, moratorium, debt adjustment or other laws affecting creditors' rights generally, and except to the extent that enforcement thereof may be limited by general principles of equity, regardless of whether 20 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 333 enforcement is sought in a legal or equitable proceeding) and (iv)the execution of such supplemental agreement and said amendments to the Lease, and performance by the parties thereunder, will not result in the inclusion of the interest portion of any Lease Payments payable with respect to any Certificates theretofore prepared, executed and delivered, in the gross income of the Owners of the Certificates or the owners of any Additional Certificates for purposes of federal income taxation; (h) The City shall have provided the Insurers written notice of the proposed execution and delivery of such Additional Certificates and shall have received prior written consent of the Insurers with respect to such Additional Certificates; provided that any Additional Certificates being delivered to refund any Outstanding Certificates shall not require the prior written consent of the Insurers if the aggregate maximum annual debt service with respect to the Certificates and the Additional Certificates during any remaining year that the Certificates will be Outstanding does not exceed maximum annual debt service with respect to the Certificates prior to such refunding, as evidenced by a Certificate of the City Representative. (i) There shall have been delivered to the Trustee an endorsement to or reissuance of the title insurance policy delivered under Section 5.5 of the Lease providing that the insured amount is at least equal to the aggregate principal amount of all of the Certificates including the Additional Certificates outstanding upon the execution and delivery of such Additional Certificates; 0) Upon the execution and delivery of such Additional Certificates, the amount on deposit in the Reserve Fund or in a reserve fund established under the supplemental agreement pursuant to which such Additional Certificates are executed and delivered shall be equal to the Reserve Requirement,taking into account the execution of the Additional Certificates; and (k) Such other conditions shall have been satisfied, and such other instruments shall have been duly executed and delivered to the Trustee (with a copy to the Insurers), as the City or the Authority shall have reasonably requested. Upon delivery to the Trustee of the foregoing instruments, the Trustee shall cause to be executed and delivered Additional Certificates representing the aggregate principal amount specified in such supplemental agreement, and such Additional Certificates shall be equally and ratably secured with all Outstanding Certificates theretofore prepared, executed and delivered, all without preference, priority or distinction (other than with respect to maturity, payment, prepayment or sinking fund payment (if any)) of any one Certificate, including Additional Certificates, over any other; provided, however, that no provision of this Trust Agreement shall require the City to consent to or otherwise permit the preparation, execution and delivery of Additional Certificates, it being understood and agreed that any such consent or other action of the City to permit the preparation, execution and delivery of Additional Certificates, or lack thereof, shall be in the sole discretion of the City. ARTICLE III PROJECT FUND Section 3.01. Establishment of Project Fund. The Trustee shall establish a special fund designated as the "City of Chula Vista (Police Facility Project) Project Fund," referred to herein as the "Project Fund" and shall establish a 2002 Certificates Account and Delivery Costs Account 21 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 334 therein; shall keep the Project Fund separate and apart from all other funds and moneys held by it; and shall administer such fund as herein provided. The Project Fund shall be held and applied by the Trustee in accordance herewith. Section 3.02. Purpose. Moneys in the Project Fund shall be expended for Project Costs and Delivery Costs. Section 3.03. Deposit of Moneys, Payment of Project Costs and Delivery Costs. (a) Deposits. There shall be credited to the Project Fund and each applicable Account therein the following amounts: (1) the proceeds of sale of the Certificates required to be deposited therein pursuant to Section 2.05 hereof, (2) all investment earnings on moneys held in each Account of the Project Fund,which shall be credited to each Account and remain in the Project Fund until expended for Project Costs or Delivery Costs or applied to the prepayment of Certificates, as described in Section 3.04 below; and (3) any other funds from time to time deposited with the Trustee to pay Project Costs. (b) Disbursements. The Trustee shall disburse moneys in the Project Fund from time to time to pay Project Costs directly or to reimburse the City for payment of Project Costs,upon receipt by the Trustee of a Project Cost Requisition signed by the City Representative. The Trustee shall have no duty or liability to monitor the application of any moneys disbursed hereunder. The Trustee shall disburse moneys from the Delivery Costs Account to pay Delivery Costs or to reimburse the City for payment of such Delivery Costs upon receipt by the Trustee of a Delivery Cost Requisition signed by the City Representative. The Trustee shall be absolutely protected in making any disbursement from the Project Fund in reliance upon a Project Cost Requisition or Delivery Cost Requisition signed by the City Representative. Each such Project Cost Requisition and Delivery Cost Requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Any remaining balance in the Delivery Costs Account shall be transferred by the Trustee to the Project Fund as directed in writing by City Representative. Section 3.04. Transfers of Unexpended Proceeds. Upon the filing with the Trustee of the Certificate of Completion with respect to a series of Certificates pursuant to Section 3.4 of the Lease, the Trustee shall withdraw all remaining moneys in the Accounts of the Project Fund related to such series (other than any moneys retained therein to pay Project Costs not then due and payable and certified by the City Representative) and shall transfer such moneys to the Lease Payment Fund to be applied to the payment of principal and interest with respect to the Certificates of such series as prescribed in Section 5.04 hereof or, at the written election of the City Representative delivered to the Trustee, together with an opinion of Special Counsel that such transfer will not cause interest due with respect to the Certificates to be included in gross income for federal income tax purposes, shall transfer such moneys to the City for the purpose of capital expenditures of the City, and following such transfer, such Accounts of the Project Fund shall be closed. ARTICLE IV PREPAYMENT FUND Section 4.01. Establishment of Prepayment Fund. The Trustee shall establish a special fund designated as the "City of Chula Vista (Police Facility Project) Prepayment Fund," referred to 22 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 335 herein as the "Prepayment Fund"; shall keep such fund separate and apart from all other funds and moneys held by it; and shall administer such fund as herein provided. Moneys to be used for prepayment of the Certificates shall be deposited into the Prepayment Fund and used solely for the purpose of prepaying the Certificates in advance of their maturity on the date designated for prepayment and upon presentation and surrender of such Certificates to the Trustee. Section 4.02. Extraordinary Prepayment. The Certificates are subject to prepayment prior to their respective maturity dates on any date, in whole or in part, from Net Proceeds which the Trustee shall deposit in the Prepayment Fund as provided in Section 6.1(c) of the Lease at least 45 days prior to the date fixed for prepayment and credited towards the prepayment made by the City pursuant to Section 10.2 of the Lease, at a prepayment price equal to the principal amount thereof together with accrued interest to the date fixed for prepayment,without premium. Section 4.03. Prepayment (a) Optional Prepayment of 2002 Certificates. The 2002 Certificates maturing on or after August 1, 2013 are subject to prepayment prior to maturity in whole or in part on any date on or after August 1, 2012, at the option of the City, in the event the City exercises its option under Section 10.3 of the Lease to prepay all or a portion of the principal component of the Lease Payments (in integral multiples of$5,000 but not in a principal amount of less than $20,000), at the following prepayment prices expressed as a percentage of the principal component to be prepaid), plus accrued interest to the date fixed for prepayment: Prepayment Date Prepayment Price August 1, 2012 through July 31, 2013 101.0% August 1, 2013 through July 31, 2014 100.5 August 1, 2014 and thereafter 100.0 In the event the City gives notice to the Trustee of its intention to exercise such option, but fails to deposit with the Trustee on or prior to the prepayment date an amount equal to the prepayment price, the City will continue to pay the Lease Payments as if no such notice had been given. (b) Mandatory Sinking Account Payment of 2002 Certificates. (i) The 2002 Certificates maturing August 1, 2029 (the "2029 Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 2029 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 2029 Term Certificates so prepaid. In addition, in lieu of prepayment thereof, the 2029 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions hereof. 23 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 336 Mandatory Prepayment Sinking Account Date Payment (August 1 2028 $ 3,155,000 2029* 3,320,000 * Final Maturity (ii) The 2002 Certificates maturing August 1, 2032 (the "2032 Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 2032 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 2032 Term Certificates so prepaid. In addition, in lieu of prepayment thereof, the 2032 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions hereof. 24 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 337 Mandatory Prepayment Date Sinking Account (August 1) Payment 2030 $ 3,495,000 2031 3,680,000 2032* 3,870,000 * Final Maturity If prior to one of the mandatory prepayment dates specified above the City purchases any 2029 Term Certificates or 2032 Term Certificates, then at least 45 days prior to the prepayment date the City shall notify the Trustee as to the principal amount purchased, and the amount of Certificates so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce the upcoming sinking account payment for the applicable maturity of the Certificates so purchased. All Certificates purchased pursuant to this subsection shall be cancelled pursuant to Section 14.03 hereof. (c) Optional Prepayment of 2014 Refunding Certificates. The 2014 Refunding Certificates maturing on or after August 1, 20 are subject to prepayment prior to maturity in whole or in part on any date on or after August 1, 20 , at the option of the City, in the event the City exercises its option under Section 10.3 of the Lease to prepay all or a portion of the principal component of the Lease Payments (in integral multiples of$5,000 but not in a principal amount of less than $20,000), at the prepayment price of the principal component to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. In the event the City gives notice to the Trustee of its intention to exercise such option, but fails to deposit with the Trustee on or prior to the prepayment date an amount equal to the prepayment price, any notice of prepayment mailed in accordance with Section 4.05 hereof shall be of no force and effect and the City will continue to pay the Lease Payments as if no such notice had been given. (d) Mandatory Sinking Account Payment of 2014 Refunding Certificates. (i) The 2014 Refunding Certificates maturing August 1, 20 (the "20— Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 20 Term Certificates so prepaid. In addition, in lieu of prepayment thereof, the 20 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions hereof. 25 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 338 Mandatory Prepayment Date Sinking Account (August]) Payment 20—* * Final Maturity If prior to one of the mandatory prepayment dates specified above the City purchases any 20 Term Certificates, then at least 45 days prior to the prepayment date the City shall notify the Trustee as to the principal amount purchased, and the amount of 2014 Refunding Certificates so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce the upcoming sinking account payment for the applicable maturity of the 2014 Refunding Certificates so purchased. All 2014 Refunding Certificates purchased pursuant to this subsection shall be cancelled pursuant to Section 14.03 hereof. Section 4.04. Selection of Certificates for Prepayment. Whenever provision is made in this Trust Agreement for the optional prepayment of a series of Certificates and less than all Outstanding Certificates of such series are called for optional prepayment, the Trustee shall select Certificates for optional prepayment from among maturities selected by the City and by lot within any maturity. For extraordinary prepayment of Certificates pursuant to Section 4.02 hereof, the Trustee shall select Certificates for prepayment as nearly as practicable on a pro rata basis among series and among maturities within a series and by lot within any maturity. The Trustee shall promptly notify the City and the Authority in writing of the Certificates so selected for prepayment by mailing to the City and the Authority copies of the notice of prepayment provided for in Section 4.05. The City shall provide the Trustee with a revised sinking fund schedule for the applicable series of Certificates upon any prepayments. Section 4.05. Notice of Prepayment. (a) Content. When prepayment[, other than mandatory sinking account prepayment,] is authorized or required pursuant to this Article IV, the Trustee shall give notice of the prepayment of the Certificates. Such notice shall specify: (a) the prepayment date, (b) the prepayment price, (c) if less than all of the Outstanding Certificates of a maturity are to be prepaid, the Certificate numbers (and in the case of partial prepayment, the respective principal amounts), (d) the series and CUSIP numbers of the Certificates to be prepaid, (e) the place or places where the prepayment will be made, (f) the original date of execution and delivery of the Certificates, and (g) any other descriptive information regarding the Certificates needed to identify accurately the Certificates being prepaid. Such notice shall further state that on the specified date there shall become due and payable upon each Certificate to be prepaid, the portion of the principal amount of such Certificate to be prepaid,together with interest accrued to said date,and that from and after such date, provided that moneys therefor have been deposited with the Trustee, interest with respect thereto shall cease to accrue and be payable. (b) Recipients: Timing. Notice of such prepayment shall be given to the respective Owners of any Certificates designated for prepayment by first class mail, postage prepaid at their addresses appearing on the Certificate registration books, at least thirty (30) days, but not more than sixty (60) days, prior to the prepayment date; provided that with respect to any Certificates held in book-entry form by the Depository, notice shall be provided in accordance with the 26 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 339 procedures of the Depository. Neither failure to receive such notice nor any defect in any notice so given shall affect the sufficiency of the proceedings for the prepayment of such Certificates. Notice shall also be given to the municipal Securities Depository (as defined below) and to the Information Services (defined below) on the date notice is given to the Owners, which notice shall be given by electronic or other means permitted under the procedures of each of such recipients. Under no circumstances shall the Trustee have any liability to any party for any inaccurate CUSIP number. The Securities Depository is The Depository Trust Company, 55 Water Street, New York, New York 10041, Fax (212) 855-7320; or, in accordance with the then current guidelines of the Securities and Exchange Commission to such other addresses and/or such other securities depositories or to no such depositories as the City may designate in writing to the Trustee. In addition, notice of such prepayment shall also be sent to one or more of the national information services (the "Information Services") that disseminate securities prepayment notices, when possible; provided, that neither failure to give such notice nor any defect in any notice so given shall affect the sufficiency of the proceedings for the prepayment of such Certificates. (c) With respect to the 2014 Refunding Certificates and any Additional Certificates, the City has the right to make any notice of the optional prepayment of such Certificates a conditional notice which may be rescinded by written notice to the Trustee on or prior to the date fixed for prepayment. Any notice of optional prepayment will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for prepayment for the payment in full of the 2014 Refunding Certificates or Additional Certificates then called for prepayment, and such cancellation will not constitute an Event of Default. The City and the Trustee shall have no liability to the Owners or any other parry related to or arising from such rescission of prepayment. The Trustee shall give notice of such rescission of prepayment in the same manner as the original notice of prepayment was sent. Section 4.06. Partial Prepayment of Certificates. Upon surrender by the Owner of a Certificate for partial prepayment at the Principal Office, payment of such partial prepayment of the principal amount of a Certificate will be paid to such Owner. Upon surrender of any Certificate prepaid in part only, the Trustee shall execute and deliver to the registered Owner thereof, at the expense of the City, a new Certificate or Certificates which shall be of authorized denominations equal in principal amount to the unprepaid portion of the Certificate surrendered and of the same series, tenor and maturity. Such partial prepayment shall be valid upon payment of the amount thereby required to be paid to such Owner, and the City, the Authority and the Trustee shall be released and discharged from all liability to the extent of such payment. Section 4.07. Effect of Notice of Prepayment. Notice having been given to the Owners of the Certificates as set forth in Section 4.05 hereof, and the moneys for the prepayment (including,the interest to the applicable date of prepayment), having been set aside in the Prepayment Fund, the Certificates for which notice was sent shall become due and payable on said date of prepayment, and, upon presentation and surrender thereof at the Principal Office, said Certificates shall be paid at the prepayment price with respect thereto,plus interest accrued and unpaid to said date of prepayment. If, on the date of a prepayment, moneys for the prepayment of all the Certificates to be prepaid, together with interest to said date of prepayment, shall be held by the Trustee so as to be available therefor on such date of prepayment, and, if notice of prepayment thereof shall have been given as set forth in Section 4.05 hereof, then, from and after said date of prepayment, interest with 27 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 340 respect to the Certificates to be prepaid shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the prepayment of Certificates shall be held in trust for the account of the Owners of the Certificates so to be prepaid,without liability for interest thereon. All Certificates paid at maturity or prepaid prior to maturity pursuant to the provisions of this Article shall be cancelled upon surrender thereof and destroyed. Section 4.08. Su lus. Any funds remaining in the Prepayment Fund after prepayment and payment of all Certificates Outstanding, including accrued interest and payment of any applicable fees and expenses to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments payable under the Lease or provision made therefor satisfactory to the Trustee, and provision for any amounts required to be transferred to the Rebate Fund pursuant to Sections 8.07 and 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City. ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Security Provisions. (a) Assignment of Rights in Lease. The Authority has, pursuant to the Assignment Agreement, absolutely assigned and set over to the Trustee certain of its rights in the Lease, including but not limited to all of the Authority's rights to receive and collect all of the Lease Payments, the Prepayments and all other amounts required to be deposited in the Lease Payment Fund pursuant to the Lease or pursuant hereto. All Lease Payments, Prepayments and such other amounts to which the Authority may at any time be entitled (other than amounts due to the Authority under Section 4.11 of the Lease) shall be paid directly to the Trustee, and all of the Lease Payments and Prepayments collected or received by the Authority shall be deemed to be held and to have been collected or received by the Authority as the agent of the Trustee and if received by the Authority at any time shall be deposited by the Authority with the Trustee within five (5) Business Days after the receipt thereof, and all such Lease Payments shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund, all such Prepayments shall be forthwith deposited by the Trustee upon the receipt thereof in the Prepayment Fund. If the City shall fail to deposit with the Trustee a Lease Payment on the applicable Lease Payment Date, the Trustee shall, within three Insurance Business Days after such Lease Payment Date, notify each Insurer of such failure. The Insurance Policies shall be held by the Trustee and, shall be deemed to be held in the Lease Payment Fund. (b) Security Interest in Moneys and Funds. The Authority and the City, as their interests may appear, hereby grant to the Trustee for the benefit of the Owners a lien on and a security interest in all moneys in the funds held by the Trustee under this Trust Agreement(excepting only the Rebate Fund and any moneys to be deposited into the Rebate Fund), including without limitation, the Lease Payment Fund, the Reserve Fund, the Prepayment Fund, the Project Fund and the Net Proceeds Fund, and all such moneys shall be held by the Trustee in trust and applied to the respective purposes specified herein and in the Lease; provided, however, that, notwithstanding any provision of the Trust Agreement to the contrary, the proceeds from an Insurance Policy for a series shall be pledged to and be applied to pay only the principal and interest due with respect to the series of Certificates to which such Insurance Policy relates. 28 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 341 (c) Pledge of Lease Payments and Proceeds. The Lease Payments and any proceeds from the re-letting or any other disposition of the Leased Premises pursuant to Article IX of the Lease (the"Lease Proceeds") are hereby irrevocably pledged to and shall be used for the punctual payment of the interest and principal represented by the Certificates and, except as permitted under Section 2.12 hereof with respect to Additional Certificates, the Lease Payments and Lease Proceeds shall not be used for any other purpose while any of the Certificates remain Outstanding. This pledge shall constitute a first lien on the Lease Payments and Lease Proceeds in accordance with the terms hereof, subject to Section 13.03 hereof and subject to Section 2.12 hereof, which provides that all Certificates and Additional Certificates shall be equally and ratably secured. Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "City of Chula Vista (Police Facility Project) Lease Payment Fund and shall establish an Interest Account therein. All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the Certificates as and to the extent set forth in Section 5.01. So long as any Certificates are Outstanding, neither the City nor the Authority shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Trust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. Section 5.03. Deposits. There shall be deposited in the Interest Account of the Lease Payment Fund the amount specified in Section 2.05 which shall be applied as a credit on the Lease Payments due on January 15, 2003, July 15, 2003, January 15, 2004 and July 15, 2004 to pay a portion of the interest due with respect to the 2002 Certificates on the Interest Payment Dates to and including August 1, 2004. There shall be deposited in the Lease Payment Fund all Lease Payments and in the Prepayment Fund all Prepayments received by the Trustee, including any moneys received by the Trustee for deposit therein pursuant to Section 2.05 hereof and Section 4.4 of the Lease, and any other moneys required to be deposited therein pursuant to the Lease, including, without limitation, Section 5.4(c) of the Lease (regarding proceeds of rental interruption insurance) or pursuant to this Trust Agreement, which moneys shall be applied as a credit towards any Lease Payment then due. Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal and interest with respect to the Certificates as the same shall become due and payable, in accordance with the provisions of Article II and Article IV hereof, subject to the requirement that certain investment earnings may be transferred to the Rebate Fund, as provided in Section 8.08 hereof. On or before each Interest Payment Date, the Trustee shall set aside an amount sufficient to pay the interest becoming due and payable on such Interest Payment Date on all Outstanding Certificates. Moneys so set aside shall be used and withdrawn by the Trustee solely for the purpose of paying the interest with respect to the Certificates as it shall become due and payable (including, accrued interest with respect to any Certificates prepaid prior to maturity). On or before each Interest Payment Date on which the principal of the Certificates shall be payable, the Trustee shall set aside an amount equal to (i) the principal amount of the Certificates coming due and payable on such Interest Payment Date pursuant to Section 2.02, and (ii) the principal amount of any Term Certificates to be paid by mandatory sinking account payment on such Interest Payment Date. Moneys so set aside shall be used and withdrawn by the Trustee solely for 29 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 342 the purpose of(i) paying the principal of the Certificates at the maturity thereof, or (ii) paying the principal of any Term Certificates upon the prepayment thereof. Section 5.05. Su lus. Any funds remaining in the Lease Payment Fund after payment of all Certificates Outstanding, including accrued interest and payment of any applicable fees to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease, or provision made therefor satisfactory to the Trustee, and provision for any amounts required to be transferred to the Rebate Fund pursuant to Section 8.08 hereof, shall be withdrawn by the Trustee and remitted to the City. ARTICLE VI RESERVE FUND Section 6.01. Establishment of Reserve Fund. The Trustee shall establish a special fund designated as the "City of Chula Vista (Police Facility Project) Reserve Fund," referred to herein as the "Reserve Fund" and there shall be established therein a "Cash Reserve Account" and a "Surety Bond Account." All moneys at any time on deposit in the Cash Reserve Account, shall be held by the Trustee in trust for the benefit of the Owners of the Certificates, as a reserve for the payment when due of all the Lease Payments to be paid pursuant to the Lease and of all payments on the Certificates and applied solely as provided herein. Moneys on deposit in the Surety Bond Account shall be held by the Trustee in trust for the benefit of the Owners of the 2002 Certificates only and shall be applied solely as provided herein. Section 6.02. Funding. (a) Reserve Requirement. On the Delivery Date for the 2014 Refunding Certificates, there shall be transferred to the Cash Reserve Account of the Reserve Fund $2,031,750 and the Surety Bond shall be deposited to the Surety Bond Account which, in combination, equals the Reserve Requirement. The Reserve Requirement, or any portion thereof, may be funded in cash and/or may be satisfied by the Surety Bond and by the City by crediting to the Reserve Fund moneys or, with the prior written consent of the Insurers and with notice to S&P, a letter of credit, a bond insurance policy, or any other comparable credit facility or any combination thereof which, in the aggregate, make funds available in the Reserve Fund in an amount equal to the Reserve Requirement; however, the long-term unsecured debt or claim-paying ability, as the case may be, of the provider of any such letter of credit, bond insurance policy or any other comparable credit facility, at the time of its delivery to the Trustee, must have a rating of at least no less than the current rating on the Certificates and a maturity date equal to the final maturity date of the Certificates or provide for a drawing, in full, in the event of a nonrenewal of any such instrument with a shorter maturity date. (b) Delinquent Lease Pam. The City hereby agrees that if at any time the balance in the Reserve Fund shall be reduced below the Reserve Requirement, the first payments of Lease Payments thereafter payable by the City and not needed to pay interest and principal components of Lease Payments payable to the Certificate Owners on the next Interest Payment Date shall be deposited into the Reserve Fund and credited first to the Surety Bond Account to reimburse the 2002 Insurer for amounts due under the Financial Guaranty Agreement and second to the Cash Reserve Account until each Account contains its proportionate share of the Reserve Requirement. 30 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 343 (c) Certain Net Proceeds. Net Proceeds of rental interruption insurance described in Section 5.4 of the Lease shall be deposited first to the Reserve Fund to make up any deficiencies therein and shall be credited to each Account in the manner described in Section 6.02(b) above and second to the Lease Payment Fund to be credited to the payment of the Lease Payments in the order in which they become due. Section 6.03. Transfers of Excess. The Trustee shall, on or before February 15 and August 15 of each year, provide written notice to the City of any moneys which will be on hand in each Account of the Reserve Fund (including investment earnings) in excess of the Reserve Requirement on the next succeeding February 1 or August 1, as the case may be, and one Business Day immediately preceding any Lease Payment Date, the Trustee shall transfer such excess moneys, to the Lease Payment Fund to be applied to the Lease Payment then due from the City. In the event of the partial Prepayment of Lease Payments, the City may instruct the Trustee to reduce the amounts on deposit in one or more Accounts of the Reserve Fund to the Reserve Requirement as of such date and may direct the Trustee to transfer excess amounts from one or more Accounts of the Reserve Fund for any lawful purpose. The transfers described above are in each case subject to the requirement that if the Certificate proceeds shall have become subject to the arbitrage rebate provisions of Section 148(f) of the Code as described in Section 8.08 hereof then certain investment earnings are to be transferred to the Rebate Fund at the direction of the City as provided in Section 8.08 hereof. Section 6.04. Application of Reserve Fund in Event of Deficiency in Lease Payment Fund. Whether or not Lease Payments are then in abatement, if three (3) days immediately preceding any Interest Payment Date, the moneys available in the Lease Payment Fund do not equal the amount of the principal and interest with respect to the Certificates then coming due and payable, the Trustee first shall apply the moneys available in the Cash Account of the Reserve Fund to make the payments due with respect to the Certificates on such Interest Payment Date by transferring the amount necessary for such purpose to the Lease Payment Fund. The Trustee shall take whatever action is necessary to liquidate or draw upon investments of funds held in the Reserve Fund or draw upon any surety bond, insurance policy, letter of credit or comparable credit facility on deposit in the Reserve Fund to make such funds available for application as provided hereunder on the Interest Payment Date. Before drawing upon any surety bond, insurance policy, letter of credit or comparable facility on deposit in the Reserve Fund, the Trustee shall first transfer all other amounts in the Cash Account of the Reserve Fund to make up any shortfall in the Lease Payment Fund. The Trustee shall deliver a Demand for Payment (as attached to the Surety Bond) at least three (3) days prior to any Interest Payment Date on which funds are required to pay principal and interest due with respect to the 2002 Certificates and shall demand payment on any other surety bond, insurance policy, letter of credit or comparable facility on deposit in the Reserve Fund as needed to provide required funds not later than the applicable Interest Payment Date. In the event the Reserve Fund contains multiple insurance policies, letters of credit or comparable credit facilities, the Trustee shall draw on each pro rata, except that the Surety Bond shall be drawn upon only to pay principal and interest due with respect to the 2002 Certificates. The Trustee shall maintain adequate records verified with the 2002 Insurer as to the amount available to be drawn under the Surety Bond and as to the amounts paid and owing to the Insurer under the terms of the Financial Guaranty Agreement. Additionally, there shall be no right to optionally prepay the 2002 Certificates pursuant to Section 4.03(a) hereof and the Trust Agreement shall not be deemed to have been discharged unless all amounts owed to the 2002 Insurer under the terms of the Financial Guaranty Agreement have been paid in full. The City agrees that 31 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 344 amounts owed to the 2002 Insurer under the terms of the Financial Guaranty Agreement in excess of the portion of such amounts that are payable from the Lease Payments, constitute Additional Payments payable under the Lease. Section 6.05. Transfer to Make All Lease Payments. If on any Interest Payment Date the moneys on deposit in the Cash Account of the Reserve Fund and the monies in the Lease Payment Fund(excluding amounts required for payment of principal or interest with respect to Certificates not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal, interest and prepayment premiums (if any), the Trustee shall, upon the written direction of the City Representative, transfer all amounts in the Cash Account of the Reserve Fund to the Lease Payment Fund to be applied to the payment of the Lease Payments or to the Prepayment Fund to make Prepayments on behalf of the City and such moneys shall be distributed to the Owners of the Certificates in accordance with Article II and Article IV of this Trust Agreement. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates and the Trustee's fees and expenses pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease, or upon provision for such payments as provided in Section 14.01 hereof and provisions for any amounts required to be transferred to the Rebate Fund pursuant to Section 8.08 hereof, shall at the written direction of the City Representative be withdrawn by the Trustee and paid to the City and the Surety Bond and any other letter of credit, bond insurance policy, or comparable credit facility comprising a portion of the Reserve Requirement shall be released to the applicable provider. ARTICLE VII NET PROCEEDS FUND Section 7.01. Establishment of Net Proceeds Fund: Deposits. The Trustee shall establish when required a special fund designated as the "City of Chula Vista (Police Facility Project) Net Proceeds Fund," referred to herein as the "Net Proceeds Fund," to be maintained and held in trust for the benefit of the Owners, subject to disbursement therefrom as provided herein. The Trustee shall deposit Net Proceeds in the Net Proceeds Fund as provided in Section 6.1(a) of the Lease. (a) Casualty Insurance. The Trustee shall disburse Net Proceeds for replacement or repair of the Leased Premises as provided in Section 6.1(b) of the Lease, or transfer such proceeds to the Prepayment Fund to be applied to the prepayment of Certificates in the manner provided in Section 4.02 hereof, upon notification of the City Representative as provided in Section 6.1(c) of the Lease. Pending such application, such Net Proceeds may be invested by the Trustee as directed by the City Representative in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. After all of the Certificates have been paid and the entire amount of principal and interest with respect to the Certificates has been paid in full, or provision made for payment satisfactory to the Trustee, including provision for all amounts required to be transferred to the Rebate Fund pursuant to Section 8.08 hereof, the Trustee shall pay any remaining moneys in the Net Proceeds Fund to the City after payment of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof and any other Additional Payments due under the Lease. (b) Title Insurance. Proceeds of any policy of title insurance received by the Trustee with respect to the Leased Premises shall be applied and disbursed by the Trustee upon the Written Request of the City as follows: 32 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 345 (i) If the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Leased Premises and will not result in an abatement of Lease Payments and Additional Payments payable by the City under the Lease (such determination to be certified by the City in writing), such proceeds shall, with the written approval of the Insurers, be remitted to the City and used for any lawful purpose thereof, or (ii) If the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Leased Premises and will result in an abatement of Lease Payments and Additional Payments payable by the City under the Lease; then the Trustee shall, with the written approval of the Insurers, immediately deposit such proceeds in the Prepayment Fund and such proceeds shall be applied to the prepayment of Certificates in the manner provided in Section 4.02 hereof. Section 7.02. Cooperation. The Authority and the Trustee shall cooperate fully with the City at the expense of the City in filing any proof of loss with respect to any insurance policy maintained pursuant to Article V of the Lease and in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Leased Premises or any item or portion thereof, provided, however, the Trustee shall not be obligated to take any action hereunder if it is not indemnified to its satisfaction from and against any liability or expense arising therefrom. ARTICLE VIII MONEYS IN FUNDS; INVESTMENT Section 8.01. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement, other than in the Rebate Fund, are irrevocably held in trust for the benefit of the Owners and, in the case of the Rebate Fund, for payment as required to the United States Treasury, and for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Trust Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Authority, the Trustee or the City, or any of them. Section 8.02. Investments Authorized. (a) By Trustee. Subject to the further provisions of this Article VIII, moneys held by the Trustee hereunder shall be invested and reinvested on maturity thereof by the Trustee pursuant to Section 8.02(b). The Trustee will report any such investments to the City on a monthly basis in its regular statements. (b) Upon Direction of the City. The City Representative shall direct by facsimile, to the designated trust officer responsible for the administration of this Trust Agreement, followed by oral notification and distribution by U.S. Mail or overnight courier service of such notice, such investment in specific Permitted Investments not less than two Business Days prior to the date that such Permitted Investment is to take effect. Such investments and reinvestments shall be made giving full consideration for the time at which funds are required to be available based among other things, scheduled completion of the various components of the Project. In the event that 33 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 346 the City Representative does not so direct the Trustee, the Trustee shall invest in the Permitted Investments described in paragraph (D) of the definition thereof contained in Section 1.01. Investments purchased with funds on deposit in the Lease Payment Fund and Prepayment Fund shall mature not later than the Interest Payment Date or prepayment date, as appropriate, immediately succeeding the investment. Investments purchased with funds on deposit in the Project Fund shall mature not later than the dates upon which such funds shall be needed to be expended for the payment of Project Costs. Notwithstanding anything to the contrary contained herein, investments purchased with funds on deposit in the Reserve Fund shall have an average aggregate weighted term to maturity of not greater than five years; provided that such amounts in an Account of the Reserve Fund may be invested in an investment agreement described in paragraph (H) of the definition of Permitted Investments to the date of the final maturity of the series of Certificates for which such Account was established so long as such amounts may be withdrawn at any time,without penalty, for application in accordance with Article VI hereof. (c) Registration. Such investments, if registrable, shall be registered in the name of the Trustee for the benefit of the Owners and held by the Trustee or its nominee. (d) Trustee as Purchaser or Agent. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section. The Trustee may act as purchaser or agent in the making or disposing of any investment. The Trustee or any of its affiliates may act as a sponsor of, or as an advisor to any provider of, Permitted Investments hereunder. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. (e) Trustee Standard of Care. Except as otherwise provided in Section 9.05, the Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds or sale of such investment made by it in accordance with this Section or disposition made by it in accordance with Section 8.05(b). Section 8.03. Disposition of Investments. Any income, profit or loss on the investment of moneys held by the Trustee hereunder shall be credited to the respective fund for which it is held, except as otherwise provided herein. Section 8.04. Accounting. The Trustee shall furnish to the City, not less than monthly, an accounting (which may be in the form of its regular statements) of all investments made by the Trustee and all funds and amounts held by the Trustee; provided, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (i) has a balance of zero and (ii) has not had any activity since the last reporting date. The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. Section 8.05. Valuation and Disposition of Investments. (a) Valuation. Subject to the provisions of Section 8.08 hereof, for the purpose of determining the amount in any fund, all Permitted Investments (except investment agreements) credited to such fund shall be valued at the lower of the cost or the Value thereof. With respect to all 34 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 347 funds and accounts, investments shall be valued by the Trustee (i) as frequently as deemed necessary by the Insurers but not less often than annually nor more often than monthly, and (ii) upon any draw upon the Reserve Fund. In making any such valuations, the Trustee may utilize, and conclusively rely upon such valuation services as may be available to the Trustee, including those within its regular accounting system. (b) Disposition. Subject to the provisions of Section 8.08 hereof, the Trustee shall sell, or present for prepayment, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited. Section 8.06. Commingling of Moneys in Funds. The Trustee may, and upon the written request of the City Representative shall, commingle any of the funds held by it pursuant to this Trust Agreement into a separate fund or funds for investment purposes only; provided, however, that all funds or accounts held by the Trustee hereunder shall be accounted for separately notwithstanding such commingling by the Trustee. The City shall ensure that any such commingling complies with Section 1.148-4 of the Treasury Regulations, and shall provide direction to the Trustee accordingly. Section 8.07. Tax Covenants. (a) General. The City and the Authority hereby covenant with the holders of the Certificates that, notwithstanding any other provisions of this Trust Agreement, they shall not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest with respect to the Certificates under Section 103 of the Code. The Authority hereby covenants with the holders of the of the Certificates that, notwithstanding any other provision of this Trust Agreement, to the extent that the Authority may have control over the Project or the proceeds of the Certificates, it shall not take any action that would adversely affect the exclusion from gross income of interest with respect to the Certificates under Section 103 of the Code. The City and the Authority (to the extent that the Authority may have control over the Project or the proceeds of the Certificates) shall not, directly or indirectly, use or permit the use of proceeds of the Certificates or the Project, or any portion thereof, by any person other than a governmental unit (as such term is used in Section 141 of the Code), in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest due with respect to the Certificates. (b) Use of Proceeds. The City and the Authority (to the extent that the Authority may have control over the Project or the proceeds of the Certificates) shall not take any action, or fail to take any action, if any such action or failure to take action would cause the Certificates to be "private activity bonds" within the meaning of Section 141 of the Code, and in furtherance thereof, shall not make any use of the proceeds of the Certificates or the Project, or any portion thereof, or any other funds of the City,that would cause the Certificates to be"private activity bonds"within the meaning of Section 141 of the Code. To that end, so long as any Certificates are outstanding, the City and the Authority, with respect to such proceeds and the Project and such other funds, will comply with applicable requirements of the Code and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Code,to the extent such requirements are, at the time, applicable and in effect. The City shall establish reasonable procedures necessary to ensure continued compliance with Section 141 of the Code and the continued qualification of the Certificates as"governmental bonds." 35 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 348 (c) Arbitrage. The City and the Authority (to the extent that the Authority may have control over the Project or the proceeds of the Certificates) shall not, directly or indirectly, use or permit the use of any proceeds of any Certificates, or of the Project, or other funds of the City, or take or omit to take any action, that would cause the Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code. To that end, the City and the Authority shall comply with all requirements of Section 148 of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent such requirements are,at the time, in effect and applicable to the Certificates. (d) Federal Guarantee. The City and the Authority (to the extent that the Authority may have control over the proceeds of the Certificates) shall not make any use of the proceeds of the Certificates or any other funds of the City, or take or omit to take any other action, that would cause the Certificates to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (e) Compliance with Tax Certificates. In furtherance of the foregoing tax covenants of this Section, the City covenants that it will comply with the provisions of each Tax Certificate, which is incorporated herein as if fully set forth herein. These covenants shall survive payment in full or defeasance of the Certificates. Section 8.08. Rebate Fund. (a) General. The Trustee shall establish a special fund designated the "City of Chula Vista(Police Facility Project) Rebate Fund" (the "Rebate Fund") and shall establish a separate account therein for each series of Certificates. All amounts at any time on deposit in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the requirement to make rebate payments to the United States (the "Rebate Requirement") pursuant to Section 148 of the Code and the Treasury Regulations promulgated thereunder(the "Treasury Regulations"). Such amounts shall be free and clear of any lien under this Trust Agreement and shall be governed by this Section and Section 8.07 of this Trust Agreement and by the respective Tax Certificate executed by the City. The Trustee shall be deemed conclusively to have complied with the Rebate Requirement if it follows the directions of the City, and shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the City with the Rebate Requirement. (i) Within 45 days of the end of the fifth Certificate Year for a series of Certificates and each fifth Certificate Year thereafter, (1) the City shall calculate or cause to be calculated with respect to the Certificates of such series the amount that would be considered the "rebate amount" within the meaning of Section 1.148-3 of the Treasury Regulations, and (2) the City shall make an Additional Payment under Section 4.11 of the Lease and transfer to the Trustee for deposit in the Account of the Rebate Fund established for such series, if and to the extent required, amounts sufficient to cause the balance in the Rebate Fund to be equal to the "rebate amount" so calculated. The City may direct the Trustee to transfer excess amounts on deposit in the Reserve Fund, as set forth in Section 6.03 hereof,to pay all or a portion of any"rebate amount" due hereunder. (ii) The City shall not be required to deposit any amount to the Rebate Fund in accordance with preceding sentence if the amount on deposit 36 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 349 in the Rebate Fund prior to the deposit required to be made under this subsection(a) equals or exceeds the"rebate amount" calculated in accordance with the preceding sentence. Such excess may be withdrawn from the Rebate Fund to the extent permitted under subsection (f) of this Section. (iii) The City shall not be required to calculate the "rebate amount," and shall not be required to deposit any amount to the Rebate Fund in accordance with this subsection (a), with respect to all or a portion of the proceeds of a series of the Certificates (including amounts treated as proceeds of the Certificates) (1) to the extent such proceeds satisfy the expenditure requirements of Section 148(f)(4)(B) or Section 148(f)(4)(C) of the Code or Section 1.148-7(d) of the Treasury Regulations, whichever is applicable, and otherwise qualify for the exception to the Rebate Requirement pursuant to whichever of said sections is applicable, (2) to the extent such proceeds are subject to an election by the City under Section 148(f)(4)(C)(vii) of the Code to pay a 1-1/2% penalty in lieu of arbitrage rebate in the event any of the percentage expenditure requirements of Section 148(f)(4)(C) are not satisfied, or(3) to the extent such proceeds qualify for the exception to arbitrage rebate under Section 148(f)(4)(A)(ii) of the Code for amounts in a "bona fide debt service fund." (b) Withdrawal Following Payment of Certificates. Any funds remaining in an Account of the Rebate Fund for a series of Certificates after prepayment of all the Certificates and any amounts described in paragraph (ii) of subsection (c) of this Section, or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees to the Trustee, shall be withdrawn by the Trustee and remitted to the City. (c) Withdrawal for Payment of Rebate. Upon the City's written direction, but subject to the exceptions contained in subsection (a) of this Section to the requirement to calculate the "rebate amount" and make deposits to the Rebate Fund, the Trustee shall pay to the United States with respect to the applicable series of Certificates, from amounts on deposit in the Rebate Fund, (i) not later than 60 days after the end of(1) the fifth Certificate Year, and (2) each fifth Certificate Year thereafter for such series, an amount that, together with all previous rebate payments, is equal to at least 90% of the "rebate amount" for such series calculated as of the end of such Certificate Year in accordance with Section 1.148-3 of the Treasury Regulations; and (ii) not later than 60 days after the payment of all Certificates, an amount equal to 100% of the "rebate amount" calculated as of the date of such payment (and any income attributable to the "rebate amount" determined to be due and payable) in accordance with Section 1.148-3 of the Treasury Regulations. (d) Rebate Payments. Each payment required to be made pursuant to subsection (c) of this Section 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 37 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 350 Form 8038-T, which shall be completed by the arbitrage rebate consultant for execution by the City and provided to the Trustee. (e) Deficiencies in the Rebate Fund. In the event that, prior to the time any payment is required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the City shall calculate the amount of such deficiency and direct the Trustee to deposit an amount received from the City equal to such deficiency into the applicable Account of the Rebate Fund prior to the time such payment is due. (f) Withdrawals of Excess Amounts. In the event that immediately following the calculation required by subsection (a) of this Section, but prior to any deposit made under said subsection, the amount on deposit in the applicable Account of the Rebate Fund exceeds the "rebate amount" calculated in accordance with said subsection, upon written instructions from the City, the Trustee shall withdraw the excess from the Rebate Fund and credit such excess to the Lease Payment Fund. (g) Record Keep. The City shall retain records of all determinations made hereunder until six years after the complete retirement of the Certificates. (h) Survival of Defeasance. Notwithstanding anything in this Trust Agreement to the contrary, the Rebate Requirement for a series of the Certificates shall survive the payment in full or defeasance of the Certificates of such series. ARTICLE IX THE TRUSTEE Section 9.01. Appointment of Trustee. (a) Appointment. U.S. Bank National Association, a national banking association organized under the laws of the United States of America, is hereby appointed Trustee by the Authority and the City. (b) Qualifications. The Authority and the City agree that they will maintain a Trustee having a corporate trust office in New York, New York, San Francisco, California, Seattle, Washington, or Los Angeles, California capable of exercising trust powers in the State of California, with a combined capital (exclusive of borrowed capital)and a surplus of at least Fifty Million Dollars ($50,000,000), or be a member of a bank holding company system, which shall have a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority, so long as any Certificates are Outstanding. If such bank, corporation or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purpose of this Section the combined capital and surplus of such bank, corporation or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (c) Removal. Each Insurer and, so long as there is no Event of Default, the City, may remove the Trustee initially appointed, and any successor thereto, and may appoint a successor or successors thereto. 38 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 351 (d) Resignation. The Trustee may, upon prior written notice to the City, the Insurers and the Authority, resign; provided that such resignation shall not take effect until the successor Trustee is appointed as provided in this Section 9.01. Upon receiving such notice of resignation, the City shall promptly appoint a successor Trustee subject to written approval of the Insurers. In the event the City does not name a successor Trustee within thirty (30)days of receipt of notice of the Trustee's resignation, then the Trustee may petition a federal or state court to seek the immediate appointment of a successor Trustee. (e) Successor. Any successor Trustee shall be a bank, corporation, national association or trust company meeting the qualifications as set forth in Subsection (b) above. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee and upon receipt of written approval of the Insurers. Upon such acceptance, the successor Trustee shall mail notice thereof to the Owners at their respective addresses set forth on the Certificate registration books maintained pursuant to Section 2.09. Section 9.02. Merger or Consolidation. Any company or banking association into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 9.01, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 9.03. Protection of the Trustee. (a) Reliance Upon Papers or Documents. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, facsimile, electronic mail, request, consent, direction, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it shall in good faith believe to be genuine and to have been passed or signed by the proper board or person or to have been prepared and furnished pursuant to any of the provisions of this Trust Agreement, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may, in the absence of bad faith on its part, accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. In the event the Trustee shall make any investigation into the content of any such certifications, the Trustee shall not thereby be deemed to have expanded the scope of its duties. (b) Reliance Upon Opinions of Counsel. The Trustee may consult with its counsel or counsel to the City,with regard to legal questions and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith in accordance therewith. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee which opinion shall be made available to the other parties hereto upon request,which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken by the Trustee in reliance thereon. (c) Reliance Upon Requested Certificates. Whenever in the administration of its duties under this Trust Agreement, the Trustee shall deem it necessary or desirable that a matter be 39 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 352 proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed), in the absence of bad faith on its part, shall be deemed to be conclusively proved and established by the certificate of the City Representative or the Authority Representative and such certificate shall be full warranty to the Trustee for any action taken or suffered under the provisions of this Trust Agreement in reliance thereon, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable, provided however that the duties and obligations of the Trustee shall not be deemed expanded thereby. Section 9.04. Rights of the Trustee. (a) Ownership of Certificates. The Trustee may become an Owner with the same rights it would have if it were not Trustee; 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 Trustee; 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 Certificates then Outstanding. (b) Attorneys. Agents, Receivers. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, shall not be responsible for the actions or omissions of such attorneys, agents or receivers if appointed by it with reasonable care, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder. (c) Funds and Accounts. In addition to the funds and accounts established or required to be established pursuant to this Trust Agreement, the Trustee may establish such additional funds and accounts as it deems necessary or appropriate to perform its duties hereunder, and shall have the right to close such accounts in its discretion. Section 9.05. Standard of Care. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall only perform those duties specifically set forth herein and no implied duties, covenants or obligations whatsoever shall be read into this Trust Agreement. In the event of and during the continuance of an Event of Default, the Trustee shall exercise such care in performing its duties hereunder as a prudent man would exercise in such event. Section 9.06. Compensation of the Trustee. As an Additional Payment under Section 4.11 of the Lease, the City shall, from time to time, pay such amounts as are specified in any written agreement with the City and, on demand, pay to the Trustee to the extent not covered by such agreement reasonable compensation for its services and the services of any accountants, consultants, attorneys and other experts as may be engaged by the Trustee to provide services under this Trust Agreement pursuant to a written agreement between the City and the Trustee. The City's obligation hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates or resignation and removal of the Trustee. 40 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 353 Section 9.07. Limitations on Liability of Trustee. (a) Indemnification. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors, agents, and employees harmless from and against (whether or not litigated) all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of(i) the use, maintenance, condition or management of, or from any work or thing done on, the Leased Premises by the City, (ii) any breach or default on the part of the City in the performance of any of its obligations under this Trust Agreement and any other agreement made and entered into for purposes of the Leased Premises, (iii) any act of negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Leased Premises, (iv) any act of negligence of any assignee of, or purchaser from,the City or of any of its or their agents, contractors, servants, employees or licensees with respect to the Leased Premises, (v) the construction or acquisition of the Project or the expenditure of Project Costs, (vi)the exercise and performance by the Trustee of its powers and duties hereunder or any related document, (vii)the sale of the Certificates and the carrying out of any of the transactions contemplated by the Certificates or this Trust Agreement, or (viii) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made in light of the circumstances in which they were made, not misleading in any official statement or other disclosure document utilized in connection with the sale of the Certificates. The indemnification set forth in this Section 9.07 shall extend to the Trustee's officers, agents, employees, successors and assigns. No indemnification will be made under this Section or elsewhere in this Trust Agreement or other agreements for willful misconduct or negligence by the Trustee, its officers, agents, employees, successors or assigns. The City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates, or the resignation or removal of the Trustee. (b) No Individual Liability. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and all persons, including, without limitation, the Owners, Authority and the City, having any claim against the Trustee arising from the Trust Agreement shall look only to the funds and accounts held by the Trustee hereunder for payment, except as otherwise provided herein or where the Trustee has breached its standard of care as described in Section 9.05 hereof. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Certificates. (c) No Risk of Own Funds. No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder or in the exercise of any of its rights or powers. (d) No Liability for Certain Actions. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Certificates at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or in the exercise of any right hereunder. (e) Execution of Assignment Agreement. The Trustee is authorized and directed to execute, in its capacity as Trustee,the Assignment Agreement. (f) No Liability for Unavoidable Delay. The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of 41 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 354 enforced delay ("unavoidable 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 a 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 project, 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 Trustee. (g) Directions to Trustee. The Trustee agrees to accept and act upon facsimile transmission of written instructions and/or directions pursuant to this Trust Agreement provided, however, that: (a) subsequent to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith receive the originally executed instructions and/or directions, (b) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (c) the Trustee shall have received a current incumbency certificate containing the specimen signature of such designated person. (h) Miscellaneous. Every provision of this Trust Agreement, the Lease, the Site Lease and the Assignment Agreement relating to the conduct or liability of the Trustee shall be subject to the provisions of this Trust Agreement, including without limitation,this Article IX. The Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Certificates. The Trustee shall not to be deemed to have knowledge of any Event of Default hereunder or under the Lease unless it has actual knowledge thereof at its Principal Office. Before taking any action under Article XIII or this Article at the request of the Owners or an Insurer, the Trustee may require that a satisfactory indemnity bond be furnished by the Owners or such Insurer for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken. Section 9.08. Trustee's Disclaimer of Warranties. THE TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE CITY OF THE LEASED PREMISES, OR ANY PORTION THEREOF. THE CITY ACKNOWLEDGES THAT THE CITY IS LEASING THE LEASED PREMISES AS IS. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of the Lease, the Site Lease, the Assignment Agreement or this Trust Agreement for the existence, furnishing, functioning or the City's use and possession of the Leased Premises. 42 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 355 ARTICLE X MODIFICATION OR AMENDMENT OF AGREEMENTS Section 10.01. Amendments Permitted. (a) With Consent. This Trust Agreement and the rights and obligations of the Owners, and the Lease and the rights and obligations of the parties thereto, may be modified or amended at any time, with notice to any rating agency then rating the Certificates by a supplemental agreement or amendment thereto which shall become effective when the written consents of each Insurer (exclusive of any Insurer which is in default in its payment obligations under its Insurance Policy) and Owners of a majority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 10.03 hereof, shall have been filed with the Trustee. No such modification or amendment shall: (i) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof or reducing any premium payable upon the prepayment thereof, or diminish the security afforded by an Insurance Policy without the express consent of the Owner of such Certificate and the Insurer issuing such Insurance Policy (exclusive of any Insurer which is in default in its payment obligations under its Insurance Policy), or (ii) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease, or (iii) modify any of the rights or obligations of the Trustee without its written assent thereto, or (iv) amend this Section 10.01 without the prior written consent of the Owners of all Certificates then outstanding and each Insurer(exclusive of any Insurer which is in default in its payment obligations under its Insurance Policy). The Trustee shall have the right to require such opinions of counsel as it deems necessary concerning (i) the lack of material adverse effect of the amendment on Owners and (ii) the fact that the amendment will not affect the tax status of interest with respect to the Certificates. Any such supplemental agreement or amendments thereto shall become effective as provided in Section 10.02 hereof. (b) Without Consent. This Trust Agreement and the rights and obligations of the Owners, and the Lease and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement or amendments thereto, with the prior written consent of each Insurer(exclusive of any Insurer which is in default in its payment obligations under its Insurance Policy)without the consent of any such Owners,but only to the extent permitted by law and only: (i) to add to the covenants and agreements of the City hereunder, 43 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 356 (ii) to cure, correct or supplement any ambiguous or defective provision contained herein or therein, (iii) in regard to matters arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable (which may be based upon opinions as provided in Section 9.03(b)), shall not adversely affect the interest of the Owners or the Insurers, (iv) to substitute the Leased Premises, or a portion thereof, in accordance with Sections 3.5 and 7.12 of the Lease, (v) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of the interest component of Lease Payments and the interest payable with respect to the Certificates, (vi) to add to the rights of the Trustee, or (vii) to provide for the execution and delivery of Additional Certificates in accordance with the provisions of Section 2.12 hereof. No such modification or amendment, however, shall modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. Section 10.02. Procedure for Amendment with Written Consent of the Owners. This Trust Agreement or the Lease may be amended by supplemental agreement as provided in this Section 10.02 in the event the consent of the Owners is required pursuant to Section 10.01(a) hereof. A copy of such supplemental agreement,together with a request to the Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth in the Certificate registration books maintained pursuant to Section 2.09 hereof, but failure to receive copies of such supplemental agreement and request so mailed shall not affect the validity of the supplemental agreement when assented to as in this Section provided. Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consent of the Owners of at least a majority in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 10.03 hereof) and notices shall have been mailed as hereinafter in this Section provided. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Certificates shall have filed their consent to such supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the manner hereinbefore provided in this Section for the mailing of such supplemental agreement, stating in substance that such supplemental agreement has been consented to by the Owners of the required percentage of Certificates and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A 44 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 357 record, consisting of the papers required by this Section to be filed with the Trustee, shall be proof of the matters therein stated until the contrary is proved. The Trustee may obtain and conclusively rely on an opinion of counsel with regard to such matters. Section 10.03. Disqualified Certificates. Certificates owned or held by or for the account of the City or the Authority or by any person directly or indirectly controlled or controlled by, or under direct or indirect common control with the City or the Authority (except any Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Trust Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement. The City or the Trustee may adopt appropriate regulations to require each Owner, before his consent provided for in this Article X shall be deemed effective, to reveal if the Certificates as to which such consent is given are disqualified as provided in this Section 10.03 hereof. Upon request of the Trustee, the City and Authority shall specify to the Trustee those Certificates disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate. Section 10.04. Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article X, this Trust Agreement or the Lease, as the case may be, shall be deemed to be modified and amended in accordance therewith,the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Trust Agreement or the Lease, as the case may be, for any and all purposes. Section 10.05. Endorsement or Replacement of Certificates Delivered After Amendments. The Trustee may determine that Certificates delivered after the effective date of any action taken as provided in this Article X shall bear a notation, by endorsement, in form approved by the Trustee, as to such action. In that case, upon demand of the Owner of any Outstanding Certificate at such effective date and presentation of his Certificate for such purpose at the Principal Office, a suitable notation shall be made on such Certificate. The Trustee may determine that new Certificates, so modified as in the opinion of the Trustee is necessary to conform to such Owner's action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such new Certificate shall be exchanged in the Principal Office without cost to such Owner, for a Certificate of the same character then Outstanding,upon surrender of such Certificate. Section 10.06. Amendatory Endorsement of Certificates. Subject to Section 10.01 hereof, the provisions of this Article X shall not prevent an Owner from accepting any amendment as to the particular Certificates held by him, provided that due notification thereof is made on such Certificates. ARTICLE XI COVENANTS;NOTICES Section 11.01. Compliance With and Enforcement of the Lease. The City covenants and agrees with the Owners to perform all obligations and duties imposed on it under the Lease. The 45 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 358 Authority covenants and agrees with the Owners to perform all obligations and duties imposed on it under the Lease. The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Lease by the Authority thereunder. The Authority and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Leased Premises, which may or can in any manner affect such estate of the City,will deliver the same, or a copy thereof,to the Trustee. Section 11.02. Payment of Taxes. The City shall pay all taxes as provided in Section 7.7(b) of the Lease. Section 11.03. Observance of Laws and Regulations. The City will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the City, including its right to exist and carry on business as a municipal corporation, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Section 11.04. Prosecution and Defense of Suits. The City shall promptly, and also upon request of the Trustee, an Insurer or any Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Leased Premises, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose. Section 11.05. City Budgets. In accordance with Section 4.7 of the Lease, the City Representative shall certify to the Trustee on or before August 1 of each year that the City has included all Lease Payments (other than Lease Payments of advance rental), Additional Payments due under the Lease in the Fiscal Year covered by its annual budget and the amount so included. If the City fails to certify that it has included all such Lease Payments and Additional Payments in such annual budget, the Trustee shall promptly provide the City written notice specifying that the City has failed to observe and perform its covenant and agreement in such Section 4.7 and requesting that such failure be remedied within 30 days, or such failure shall constitute an Event of Default under Section 9.1(b) of the Lease. The Trustee shall forward a copy of such notice to the Authority and to the Insurers. Upon receipt of such notice, the City shall notify the Trustee of the proceedings proposed to be taken by the City, and shall keep the Trustee advised of all proceedings thereafter taken by the City. Section 11.06. Further Assurances. The Authority and the City will 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 Trust Agreement, and for the better assuring and confirming unto the Owners the rights and benefits provided herein. Section 11.07. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. 46 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 359 Notwithstanding any other provision of this Trust Agreement, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder; 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 and the Continuing Disclosure Agreement. ARTICLE XII LIMITATION OF LIABILITY Section 12.01. Limited Liability of the City. Except for the payment of Lease Payments, Additional Payments and Prepayments when due in accordance with the Lease and the performance of the other covenants and agreements of the City contained herein and in the Lease, the City shall have no obligation or liability to any of the other parties hereto or to the Owners with respect to this Trust Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee. Section 12.02. No Liability of the City or Authority for Trustee Performance. Except as expressly provided herein, neither the City nor the Authority shall have any obligation or liability to any other parties hereto or to the Owners with respect to the performance by the Trustee of any duty imposed upon it under this Trust Agreement. (a) No Investment Advice. The Trustee shall have no obligation or responsibility for providing information to the Owners concerning the investment character of the Certificates. (b) Sufficiency of this Trust Agreement or Lease Payments. The Trustee makes no representations as to the validity or sufficiency of the Certificates, shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon it. The Trustee shall not be responsible or liable for the sufficiency or enforceability of the Lease, the Site Lease or the Assignment Agreement. The Trustee shall not be liable for the sufficiency or collection of any Lease Payments or other moneys required to be paid to it under the Lease (except as provided in this Trust Agreement), its right to receive moneys pursuant to said Lease, or the value of or title to the Leased Premises. (c) Actions of Authority and City. The Trustee shall have no obligation or liability to any of the other parties or the Owners with respect to this Trust Agreement or failure or refusal of any other party to perform any covenant or agreement made by any of them under this Trust Agreement or the Lease, but shall be responsible solely for the performance of the duties and obligations expressly imposed upon it hereunder as provided in Section 9.05. (d) Recitals and Agreements of Authority and City. The recitals of facts, covenants and agreements herein and in the Certificates shall be taken as statements, covenants and agreements of the City or the Authority (as the case may be), and the Trustee assumes no responsibility for the correctness of the same. Section 12.03. Limitation of Rights to Parties and Certificate Owners. Nothing in this Trust Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Authority, the Trustee, the Insurers and the Owners, any legal or equitable right, remedy or claim under or in respect of this Trust Agreement or any covenant, 47 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 360 condition or provision hereof, and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City,the Authority,the Trustee,the Insurers and the Owners. Section 12.04. No Liability of Authority to the Owners. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Owners with respect to the payment when due of the Lease Payments by the City or with respect to the observance or performance by the City of the other agreements, conditions, and covenant imposed upon the City by the Lease or by this Trust Agreement. ARTICLE XIII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 13.01. Assignment of Rights. The parties hereto acknowledge that pursuant to the Assignment Agreement the Authority has transferred, assigned and set over to the Trustee for the benefit of the Owners,certain of the Authority's rights under the Lease. Section 13.02. Events of Default. (a) Remedies. If an Event of Default shall happen, then, and in each and every such case during the continuance of such Event of Default, subject to the provisions of Section 13.04 hereof, the Trustee may exercise any and all remedies available pursuant to law or granted pursuant to the Lease;provided,however,that notwithstanding anything herein or in the Lease to the contrary, THERE SHALL BE NO RIGHT UNDER ANY CIRCUMSTANCES TO ACCELERATE THE MATURITIES OF THE CERTIFICATES OR OTHERWISE TO DECLARE ANY LEASE PAYMENTS NOT THEN IN DEFAULT TO BE IMMEDIATELY DUE AND PAYABLE. Section 9.2 of the Lease is hereby incorporated by reference. (b) Actual Knowledge. The Trustee shall not be deemed to have knowledge of any Event of Default unless and until the trust officer responsible for the administration of this Trust Agreement shall have actual knowledge thereof, or shall have received written notice thereof at the Principal Office. Section 13.03. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XIII or of Article IX of the Lease, shall be deposited into the Lease Payment Fund and be applied by the Trustee after payment of all amounts due and payable under Sections 9.06 and 9.07 hereof and Section 4.11 of the Lease in the following order upon presentation of the Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid- First, Costs and Expenses: to the payment of the costs, fees and expenses of the Trustee in declaring such Event of Default and in performing its duties hereunder, including reasonable compensation to its agents, attorneys and counsel and then to any such amounts incurred by the Owners; Second, Interest: to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installment, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the 48 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 361 payment thereof ratably according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; Third,Principal: to the payment to the persons entitled thereto of the unpaid principal with respect to any Certificates which shall have become due, whether at maturity or by call for prepayment, in the order of their due dates, with interest on the overdue principal and interest at a rate equal to the rate paid with respect to the Certificates and, if the amount available shall not be sufficient to pay in full all the amounts due with respect to the Certificates on any date, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto,without any discrimination or preference; and Fourth,Insurers: to the extent not included in clauses First, Second or Third above,to the payment of all amounts then due to the Insurers, as certified in writing to the Trustee, and, to the extent that the amount available is not sufficient to pay in full all the amounts due to the Insurers, then to the payment thereof to each Insurer ratably. Section 13.04. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, with the prior written consent of the Insurers not then in default under their Insurance Policies,the Trustee may, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or in the Lease, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder; provided that such written request shall not be otherwise than in accordance with provisions of law and this Trust Agreement and that the Trustee shall have the right to decline to follow any such written request if the Trustee shall be advised by counsel that the action or proceeding so requested may not be taken lawfully or if the Trustee in good faith shall determine that the action or proceeding so requested would be unjustly prejudicial to the Certificate Owners not a party to such written request or expose the Trustee to liability. In no event shall counsel to the Trustee be deemed counsel to the Owners, and any communications between the Trustee and its counsel shall be deemed confidential and privileged. Section 13.05. Non-Waiver. Nothing in this Article XIII or in any other provision of this Trust Agreement or in the Certificates shall affect or impair the obligation of the City to pay or prepay the Lease Payments as provided in the Lease. So long as an Insurer is not in default in its payment obligations under its Insurance Policy, the Trustee shall not waive any default or breach of duty or contract hereunder without the prior written consent of such Insurer. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XIII to the Trustee or to the Owners may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners. Section 13.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy, and 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. 49 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 362 Section 13.07. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion, upon the request of an Insurer, or upon the request of the Owners of a majority in principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interest of the Owners of the Certificates,with respect to the continuance, discontinuance,withdrawal,compromise, settlement or other disposal of such action; provided,however, that the Trustee shall not,unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of at least a majority in principal amount of the Outstanding Certificates hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Section 13.08. Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate executed hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default under the Lease; (b) so long as the Insurer of such Certificate is not in default in its payment obligations under its Insurance Policy, such Owner shall have obtained such Insurer's consent to such institution; (c)the Owners of a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (d) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (e) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (f) there shall have been a default in the payment of such Owner's proportionate interest in the Lease Payments as the same become due. Such notification, request, tender of indemnity, refusal or omission, and default are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. The right of any Owner of any Certificate to receive payment of said Owner's proportionate interest in the Lease Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Trust Agreement. Section 13.09. Agreement to Pay Attorneys' Fees and Expenses. In the event any party to this Trust Agreement should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or observance of any obligation or agreement on the part of the defaulting party contained herein, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting parry. Section 13.10. Insurers' Rights. Anything in this Trust Agreement to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default, each Insurer may exercise its rights as the deemed Owner of the Certificates insured by it as set forth in Section 14.12 50 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 363 hereof for purposes of directing the Trustee in the exercise of all rights and remedies granted to the Owners or to the Trustee for the benefit of the Owners under this Trust Agreement. ARTICLE XIV MISCELLANEOUS Section 14.01. Defeasance. (a) Methods. If and when any Outstanding Certificates shall be paid and discharged in any one or more of the following ways: (i) Payment or Prepayment: by well and truly paying or causing to be paid the principal, interest and prepayment premiums (if any) with respect to such Certificates Outstanding, as and when the same become due and payable; (ii) Cash: if prior to maturity and having given at least thirty (30) days prior written notice of prepayment by depositing with the Trustee, in trust, concurrent with the giving of such notice, an amount of cash which (together with cash then on deposit in the Lease Payment Fund and the Reserve Fund together with the interest to accrue thereon, in the event of payment or provision for payment of all Outstanding Certificates) is sufficient to pay such Certificates Outstanding, including all principal and interest and premium, if any; or (iii) Government Obligations: by irrevocably depositing with the Trustee, in trust, Government Obligations together with cash, if required, in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon (and, in the event of payment or provision for payment of all Outstanding Certificates, moneys then on deposit in the Lease Payment Fund and the Reserve Fund together with the interest to accrue thereon), be fully sufficient to pay and discharge such Certificates (including all principal and interest represented thereby and prepayment premiums if any)at or before their maturity or prepayment date; and all other amounts due hereunder have been paid in full, then, notwithstanding that any Certificates shall not have been surrendered for payment, all obligations of the Authority,the Trustee and the City with respect to such Certificates shall cease and terminate, except only the obligation of the City and the Authority to comply with the provisions of Sections 8.07 and 8.08 hereof and the obligation of the Trustee to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraphs (ii) and (iii) of this Section, to the Owners of the Certificates not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraphs (ii) and (iii) of this Section, the Certificates shall continue to represent direct and proportionate interests of the Owners thereof in Lease Payments under the Lease. Notwithstanding anything herein to the contrary, in the event that the principal and/or interest with respect to any Certificates shall be paid by an Insurer pursuant to an Insurance Policy, the Certificates so paid shall remain Outstanding for all purposes, not be defeased or otherwise satisfied 51 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 364 and not be considered paid by the City, and the assignment and pledge of the Lease Payments and all covenants, agreements and other obligations of the City to the Owners shall continue to exist and shall run to the benefit of such Insurer, and such Insurer shall be subrogated to the rights of such Owners. (b) Surplus Moneys. Any funds held by the Trustee, at the time of payment or provision for payment of all Outstanding Certificates pursuant to the one of the procedures described in paragraphs (a)(i) through (a)(iii) of this Section, which are not required for the payment to be made to the Owners, shall be paid over to the City, after the payment of any amounts due to the Trustee pursuant to Sections 9.06 and 9.07 hereof, any amounts due and owing to the Insurers, and any other Additional Payments due under the Lease. (c) Surviving Provisions. Notwithstanding the satisfaction and discharge hereof, the Trustee shall retain such rights, powers and privileges hereunder as may be necessary or convenient for the payment of the principal, interest and prepayment premium, if any, on the Certificates and for the registration,transfer and exchange of the Certificates. (d) Opinions and Reports. Prior to any defeasance becoming effective under this Section, the City shall cause to be delivered (i) an executed copy of a report, addressed to the Trustee, the City and the Insurer of the Certificates being defeased, in form and substance acceptable to the City and such Insurer, of a nationally recognized firm of certified public accountants, verifying that the Government Obligations and cash, if any, satisfy the requirements of Section 14.01(a) above, (ii) a copy of the escrow deposit agreement entered into in connection with such defeasance, which escrow deposit agreement shall be in form and substance acceptable to such Insurer, and (iii) a copy of an opinion of Special Counsel, dated the date of such defeasance and addressed to the Trustee,the City and such Insurer, in form and substance acceptable to the City and such Insurer, to the effect that such Certificates are no longer Outstanding under the Trust Agreement. Section 14.02. Non-Presentment of Certificates. In the event any Certificate shall not be presented for payment when the principal with respect thereto becomes due, either at maturity, or at the date fixed for prepayment thereof, if moneys sufficient to pay such Certificate shall have been deposited in the Prepayment Fund or Lease Payment Fund, as applicable, all liability of the City and the Trustee to the Owner thereof for payment of such Certificate shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys, without liability for interest thereon, for the benefit of the Owner of such Certificate who shall thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his or her part under this Trust Agreement or on, or with respect to, said Certificate. Any moneys so deposited with and held by the Trustee not so applied to the payment of Certificates within two (2) years after the date on which the same shall have become due shall be paid by the Trustee to the City, free from the trusts created by this Trust Agreement. Prior to forwarding any such moneys to the City, the Trustee may publish notice of its intention to transfer such funds in The Bond Buyer or another financial newspaper of general circulation in New York, New York. In addition, the Trustee shall be indemnified from and against any and all liabilities to third parties resulting from its actions under this Section. Thereafter, Owners shall be entitled to look only to the City for payment, and then only to the extent of the amount so repaid by the Trustee. The City shall not be liable for any interest on the sums paid to it pursuant to this section and shall not be regarded as a trustee or trustees of such money. 52 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 365 Section 14.03. Acquisition of Certificates by City. All Certificates acquired by the City, whether by purchase, gift or otherwise, shall be surrendered by the City to the Trustee for cancellation. Section 14.04. Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed by it under this Trust Agreement, which shall be available for inspection by the City, the Authority and any Owner, or the agent of any of them, at any time during regular business hours upon reasonable prior notice. Section 14.05. Notices. Except as specifically provided otherwise in this Trust Agreement, all written notices to be given under this Trust Agreement shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other parry in writing from time to time. Notice shall be deemed to have been received upon the earlier of actual receipt or five Business Days after deposit in the United States mail, in certified form, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: If to the City: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Director of Finance If to the Authority: Chula Vista Public Financing Authority 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services If to S&P: Standard&Poor's Ratings Services 55 Water Street New York,New York 10004 Attention: Public Finance Department If to the 2002 Insurer: National Public Finance Guaranty Corp. Attention: Surveillance Section 14.06. Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State. Section 14.07. Binding Effect: Successors. This Trust Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Trust Agreement either the Authority, the City or the Trustee is named or referred to, such reference shall 53 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 366 be deemed to include the successors or assigns thereof and all the covenants and agreements in this Trust Agreement contained by or on behalf of the Authority, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 14.08. Execution in Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Section 14.09. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Trust Agreement. All references herein to "Articles", "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; and the words"herein," "hereof," "hereunder"and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 14.10. Waiver of Notice. Whenever in this Trust Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 14.11. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Trust Agreement may be held illegal, invalid or unenforceable. Section 14.12. Insurers to be Deemed Owners: Rights of the Insurers. Each Insurer shall be recognized as the Owner of each Certificate insured by it for the purposes of exercising all rights and privileges available to Certificate Owners. An Insurer shall have the right to institute any suit, action or proceeding at law or in equity under the same terms as the Owners of the Certificates insured by it in accordance with applicable provisions hereof. The rights granted to an Insurer shall be deemed terminated and shall not be exercisable during any period during which such Insurer shall be in default under its Insurance Policy. Section 14.13. Claims Under 2002 Insurance Policy: Payments by and to 2002 Insurer. As long as the 2002 Insurance Policy shall be in full force and effect, the City and the Trustee agree to comply with the following provisions: (a) In the event that, on the second Business Day, and again on the Business Day, prior to any payment date on the 2002 Certificates, the Trustee has not received sufficient moneys to pay all principal of and interest on the 2002 Certificates due on the second following or following, as the case may be, Business Day, the Trustee shall immediately notify the 2002 Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. 54 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 367 (b) If the deficiency is made up in whole or in part prior to or on the payment date, the Trustee shall so notify the 2002 Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail. (c) In addition, if a responsible officer of the Trustee has written notice that any Owner has been required to disgorge payments of principal or interest on a 2002 Certificate to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes avoidable preference to such Owner within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the 2002 Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. (d) The Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Owners of the 2002 Certificates as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest due with respect to the 2002 Certificates, the Trustee shall (a) execute and deliver to 2002 Insurance Trustee, or its successors under the 2002 Insurance Policy, in form satisfactory to the 2002 Insurance Trustee, an instrument appointing the 2002 Insurer as agent for such Owners in any legal proceeding related to the payment of such interest and an assignment to the 2002 Insurer of the claims for interest to which such deficiency relates and which are paid by the 2002 Insurer, (b) receive as designee of the respective Owners of the 2002 Certificates (and not as Trustee) in accordance with the terms of the 2002 Insurance Policy payment from the 2002 Insurance Trustee with respect to the claims for interest so assigned, and (c) disburse the same to such respective Owners; and (ii) If and to the extent of a deficiency in amounts required to pay principal of the 2002 Certificates the Trustee shall (a) execute and deliver to the 2002 Insurance Trustee in form satisfactory to the 2002 Insurance Trustee an instrument appointing the 2002 Insurer as agent for such Owner in any legal proceeding relating to the payment of such principal and an assignment to the 2002 Insurer of any of the 2002 Certificates surrendered to the 2002 Insurance Trustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Trustee and available for such payment (but such assignment shall be delivered only if payment from the 2002 Insurance Trustee is received), (b)receive as designee of the respective Owners of the 2002 Certificates (and not as Trustee) in accordance with the tenor of the 2002 Insurance Policy payment therefor from the 2002 Insurance Trustee,and(c) disburse the same to such Owners. (e) Payments with respect to claims for interest and principal due with respect to the 2002 Certificates disbursed by the Trustee from proceeds of the 2002 Insurance Policy shall not be considered to discharge the obligation of the City to make the Lease Payments evidenced by such 2002 Certificates, and the 2002 Insurer shall become the owner of such unpaid 2002 Certificates and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. 55 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 368 (f) Irrespective of whether any such assignment is executed and delivered, the City and the Trustee hereby agree for the benefit of the 2002 Insurer that: (i) They recognize that to the extent the 2002 Insurer makes payments, directly or indirectly (as by paying through the Trustee), on account of principal of or interest due with respect to the 2002 Certificates, the 2002 Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest, with interest thereon as provided and solely from the sources stated in this Trust Agreement and the 2002 Certificates; and (ii) They will accordingly pay to the 2002 Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the 2002 Insurance Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Trust Agreement and the 2002 Certificates, but only from the sources and in the manner provided herein for the payment of principal of and interest due with respect to the 2002 Certificates to Owners, and will otherwise treat the 2002 Insurer as the owner of such rights to the amount of such principal and interest. Section 14.14. Information to be Provided to the 2002 Insurer. (a) The City shall deliver copies of any amendments made to the documents executed in connection with the execution and delivery of the 2002 Certificates which are consented to by the 2002 Insurer to S&P. (b) The City shall deliver to the 2002 Insurer notice of the resignation or removal of the Trustee and the appointment of a successor thereto. (c) The Trustee shall deliver to the 2002 Insurer copies of all notices required to be delivered to 2002 Certificate Owners from the Trustee and, on an annual basis, the City shall deliver to the 2002 Insurer copies of the City's audited financial statements and annual budget. (d) Any notice that is required to be given to an Owner of a 2002 Certificate by the Trustee or to the Trustee by the City pursuant to this Trust Agreement shall also be provided to the 2002 Insurer. (e) In connection with the issuance of Additional Certificates, the City shall deliver to the 2002 Insurer a copy of the disclosure document circulated with respect to such Additional Certificates. Section 14.15. Actions by Trustee. Notwithstanding any other provision of this Trust Agreement, in determining whether the rights of the Owners will be adversely affected by any action taken pursuant to the terms and provisions hereof,the Trustee shall consider the effect on the Owners as if there were no Insurance Policies. 56 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 369 Section 14.16. Interested Parties. (a) To the extent that this Trust Agreement confers upon or gives or grants to the 2002 Insurer any right,remedy or claim under or by reason of this Trust Agreement,the 2002 Insurer is hereby explicitly recognized as being a third-parry beneficiary hereunder and may enforce any such right,remedy or claim conferred, given or granted hereunder. (b) Nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the City, the Trustee, the Insurers and the Owners of the Certificates, any right, remedy or claim under or by reason of this Trust Agreement or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Trust Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the City,the Trustee and the Owners of the Certificates. 57 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 370 IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the date and year first above written. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Its: Authorized Officer CHULA VISTA PUBLIC FINANCING AUTHORITY By: Its: Executive Director ATTEST: Secretary CITY OF CHULA VISTA By: Its: Director of Finance ATTEST: City Clerk S-1 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 371 EXHIBIT A-1 FORM OF 2002 CERTIFICATE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE AMENDED AND RESTATED TRUST AGREEMENT) TO THE REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE 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. R- $ UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN DIEGO CITY OF CHULA VISTA CERTIFICATE OF PARTICIPATION SERIES A OF 2002 (Police Facility Project) Evidencing the Fractional Interest of the Owner Hereof In Lease Payments to be Made by CITY OF CHULA VISTA As Rental for Certain Project Pursuant to a Lease/Purchase Agreement With CHULA VISTA PUBLIC FINANCING AUTHORITY INTEREST RATE MATURITY DATE DELIVERY DATE CUSIP % August 1, June 20,2002 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS THIS IS TO CERTIFY THAT the registered owner named above, or registered assigns, as the Registered Owner of this Certificate of Participation (the "Certificate") is the owner of a A-1-1 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 372 fractional and undivided interest in the right to receive certain Lease Payments and Prepayments thereof under and as defined in that certain Lease/Purchase Agreement, dated as of June 1, 2002 as amended by the First Amendment to Lease/Purchase Agreement, dated as of March 1, 2014 (as amended, the "Lease"), by and between the Chula Vista Public Financing Authority, a joint exercise of powers authority duly organized and existing under the laws of the State of California (the "Authority") and the City of Chula Vista, a municipal corporation organized and existing under and by virtue of the laws and Constitution of the State of California (the "City"), which Lease Payments and Prepayments and certain other rights and interests under the Lease have been assigned to U.S. Bank National Association, as trustee (the "Trustee"). The Registered Owner of this Certificate is entitled to receive, subject to the terms of the Lease, on the maturity date specified above, the principal amount specified above, representing a portion of the Lease Payments designated as principal coming due during the preceding twelve months, and to receive semiannually on February 1 and August 1 of each year (the "Payment Dates"), commencing February 1, 2003, until payment in full of said portion of principal, the Registered Owner's portion of the Lease Payments designated as interest coming due during the six months immediately preceding each of the Payment Dates provided that interest with respect hereto shall be payable from the Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed during the period from the day after the fifteenth day of the month proceeding a Payment Date (the "Record Date") to and including such Payment Date, in which event interest shall be payable from such Payment Date, or (ii) unless this Certificate is executed on or prior to January 15, 2003, in which event interest shall be payable from the Dated Date hereof. The portion of the Lease Payments designated as interest is computed on the basis of a 360-day year of twelve 30-day months and is the result of the multiplication of the aforesaid portion of the Lease Payments designated as principal by the rate per annum identified above. Said amounts are payable in lawful money of the United States of America. The amount representing principal payable at maturity or upon prepayment in whole or in part is payable to the Registered Owner upon presentation and surrender of this Certificate at the Principal Office. The amounts representing interest are payable by check mailed by the Trustee by first class mail to the Registered Owner hereof as of the Record Date preceding the Payment Date at his address as it appears on the registration books of the Trustee. Interest with respect to any Certificates may, at the option of any Owner of Certificates in an aggregate principal amount of$1,000,000 or more evidenced by the written request of such Owner to the Trustee, be paid to such Owner by wire transfer to the bank and account number on file with the Trustee as of the Record Date. This Certificate is one of the $60,145,000 aggregate principal amount of the City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "Certificates")which have been executed and delivered by the Trustee pursuant to the terms of an Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), by and among the Trustee, the Authority and the City. The City is authorized to enter into the Lease and the Trust Agreement under the Constitution and laws of the State of California. Reference is hereby made to the Lease and the Trust Agreement(copies of which are on file at the Principal Office) for a description of the terms on which the Certificates are delivered, the rights thereunder of the Registered Owners of the Certificates,the rights, duties and immunities of the Trustee and the rights and obligations of the City under the Lease, to all of the provisions of which Lease and Trust Agreement the Registered Owner of this Certificate,by acceptance hereof, assents and agrees. The City is obligated to pay Lease Payments from any source of legally available funds, and the City has covenanted in the Lease to make the necessary annual appropriations therefor. The A-1-2 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 373 obligation of the City to pay the Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Lease Payments does not constitute a debt of the City, the State of California or any of its political subdivisions within the meaning of any Constitutional or statutory debt limitation or restriction. The City's obligation to pay Lease Payments may be abated during any period in which, by reason of noncompletion of any portion of the Project by the date specified in the Lease or material damage, destruction, title defect, or taking by eminent domain or condemnation there is substantial interference with the use and right of possession by the City of the Leased Premises. Failure of the City to pay Lease Payments during any such period shall not constitute a default under the Lease,the Trust Agreement or this Certificate. To the extent and in the manner permitted by the terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the Insurers so long as the Insurers are not in default in their payment obligations under their respective Insurance Policies and the Registered Owners of at least a majority in aggregate principal amount of the Certificates then Outstanding, and may be amended, with the consent of the Insurers and without such consent of the Registered Owners under certain circumstances,but in no event such that the interests of the Registered Owners of the Certificates are adversely affected. No such modification or amendment shall (i) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof or reducing any premium payable upon the prepayment thereof, without the express consent of the Registered Owner of such Certificate, or (ii) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease, (iii) modify any of the rights or obligations of the Trustee without its written assent thereto or (iv) amend the section of the Trust Agreement dealing with permitted amendments thereof without the prior written consent of the owners of all Certificates and the Insurers so long as the Insurers are not in default in their payment obligations under their respective Insurance Policies. This Certificate is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, at the Principal Office, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement and upon surrender and cancellation of this Certificate. Upon such transfer a new Certificate or Certificates, of an authorized denomination or denominations, for the same aggregate principal amount, maturity and interest rate, will be delivered to the transferee. This Certificate also may be exchanged for a like aggregate principal amount of Certificates of other authorized denominations as prescribed in the Trust Agreement. The City, the Authority, and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes whether or not this Certificate shall be overdue, and the City, the Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee shall not be required to transfer any Certificate selected for prepayment or be required to transfer any Certificate during the period in which the Trustee is selecting Certificates for prepayment. The Certificates are subject to prepayment, on any date, in whole or in part, from Net Proceeds deposited by the Trustee in the Prepayment Fund established under the Trust Agreement at least forty-five (45) days prior to the date fixed for prepayment, at a prepayment price equal to the principal amount thereof together with accrued interest to the dated fixed for prepayment, without premium. A-1-3 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 374 The Certificates maturing on or after August 1, 2013 are subject to prepayment prior to maturity in whole or in part on any date on or after August 1, 2012, at the option of the City, in the event the City exercises its option under the Lease to prepay all or a portion of the principal component of the Lease Payments (in integral multiples of$5,000 but not in a principal amount of less than $20,000), at the following prepayment prices, expressed as a percentage of the principal component to be prepaid),plus accrued interest to the date fixed for prepayment: Prepayment Date Prepayment Price August 1,2012 through July 31,2013 101.0% August 1,2013 through July 31,2014 100.5% August 1,2014 and thereafter 100.00% The Certificates maturing August 1, 2029 (the "2029 Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 2029 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 2029 Term Certificates so prepaid. In addition, in lieu of prepayment thereof,the 2029 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Date Sinking Account (August 1) Prepayment 2028 $ 3,155,000 2029* 3,320,000 * Final Maturity The Certificates maturing August 1, 2032 (the "2032 Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 2032 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 2032 Term Certificates so prepaid. In addition, in lieu of prepayment thereof,the 2032 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. A-1-4 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 375 Mandatory Prepayment Date Sinking Account (August 1) Prepayment 2030 $ 3,495,000 2031 3,680,000 2032* 3,870,000 * Final Maturity As provided in the Trust Agreement, notice of prepayment shall be mailed, not less than 30 nor more than 60 days before the prepayment date, to the Registered Owner of this Certificate, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for prepayment. If this Certificate is called for prepayment and payment is duly provided therefor as specified in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the date fixed for prepayment. The City has certified that all acts, conditions and things required by the statutes of the State of California and the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate, and that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. Terms used herein which are not otherwise defined shall have the respective meanings assigned thereto in the Trust Agreement. The Trustee has no obligation or liability to the Registered Owners to make payments of principal or interest with respect to this Certificate except from Lease Payments paid to the Trustee and from the various funds and accounts established under the Trust Agreement. The Trust Agreement provides that the recitals of facts, covenants and agreements in this Certificate shall be taken as statements, covenants and agreements of the City, and the Trustee assumes no responsibility for the correctness of the same. The Trustee has executed this Certificate solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES DEPOSITORY (AS DEFINED IN THE TRUST AGREEMENT) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES 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. A-1-5 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 376 IN WITNESS WHEREOF, this Certificate has been executed and delivered by U.S. Bank National Association, as Trustee, acting pursuant to the Trust Agreement. Date of Execution: U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Its: Authorized Officer A-1-6 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 377 (FORM OF STATEMENT OF INSURANCE) National Public Finance Guaranty Corp. (the "Insurer") has issued a policy containing the following provisions, such policy being on file at U.S. Bank National Association, Los Angeles, California. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to U.S. Bank National Association, or its successor(the "Trustee") of an amount equal to (i) the principal of(either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment)and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the"Insured Amounts." "Obligations" shall mean: $60,145,000 CITY OF CHULA VISTA 2002 CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT) Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Trustee or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to such owners or the Trustee payment of the Insured Amounts due on such Obligations, less any amount held by the Trustee for the payment of such Insured Amounts and legally available therefor. This policy does A-1-7 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 378 not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Trustee, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street,Armonk,New York 10504, and such service of process shall be valid and binding. This policy is non-cancelable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code. NATIONAL PUBLIC FINANCE GUARANTY CORP. A-1-8 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 379 (FORM OF ASSIGNMENT) FOR VALUE RECEIVED,the undersigned hereby sells, assigns and transfers unto (print or typewrite name, address, including postal zip code, and social security or other identifying number of Transferee) the within Certificate and all rights thereunder,and hereby irrevocably constitutes and appoints to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s)must be guaranteed by an NOTICE: The signature to this assignment must eligible guarantor institution. correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration or enlargement or any change whatever. A-1-9 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 380 EXHIBIT A-2 FORM OF 2014 CERTIFICATE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE TRUST AGREEMENT) TO THE REGISTRAR FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE 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 SAN DIEGO CITY OF CHULA VISTA 2014 REDUNDING CERTIFICATE OF PARTICIPATION (Police Facility Project) Evidencing the Fractional Interest of the Owner Hereof In Lease Payments to be Made by CITY OF CHULA VISTA As Rental for Certain Project Pursuant to a Lease/Purchase Agreement With CHULA VISTA PUBLIC FINANCING AUTHORITY INTEREST RATE MATURITY DATE DELIVERY DATE CUSIP % August 1 February__,2014 REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: AND NO/100 DOLLARS THIS IS TO CERTIFY THAT the registered owner named above, or registered assigns, as the Registered Owner of this Refunding Certificate of Participation (the"Certificate")is the owner of a fractional and undivided interest in the right to receive certain Lease Payments and Prepayments thereof under and as defined in that certain Lease/Purchase Agreement, dated as of June 1, 2002 as A-2-1 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 381 amended by the First Amendment to Lease/Purchase Agreement, dated as of March 1, 2014 (as amended, the "Lease"), by and between the Chula Vista Public Financing Authority, a joint exercise of powers authority duly organized and existing under the laws of the State of California (the "Authority") and the City of Chula Vista, a municipal corporation organized and existing under and by virtue of the laws and Constitution of the State of California (the "City"), which Lease Payments and Prepayments and certain other rights and interests under the Lease have been assigned to U.S. Bank National Association, as trustee (the "Trustee"). The Registered Owner of this Certificate is entitled to receive, subject to the terms of the Lease, on the maturity date specified above, the principal amount specified above, representing a portion of the Lease Payments designated as principal coming due during the preceding twelve months, and to receive on August 1, 2014, and semiannually thereafter on February 1 and August 1 of each year (the "Payment Dates") until payment in full of said portion of principal, the Registered Owner's portion of the Lease Payments designated as interest coming due during the six months immediately preceding each of the Payment Dates provided that interest with respect hereto shall be payable from the Payment Date next preceding the date of execution of this Certificate unless (i) this Certificate is executed during the period from the day after the fifteenth day of the month proceeding a Payment Date (the "Record Date") to and including such Payment Date, in which event interest shall be payable from such Payment Date, or (ii) unless this Certificate is executed on or prior to July 15, 2014, in which event interest shall be payable from the Dated Date hereof. The portion of the Lease Payments designated as interest is computed on the basis of a 360-day year of twelve 30- day months and is the result of the multiplication of the aforesaid portion of the Lease Payments designated as principal by the rate per annum identified above. Said amounts are payable in lawful money of the United States of America. The amount representing principal payable at maturity or upon prepayment in whole or in part is payable to the Registered Owner upon presentation and surrender of this Certificate at the Principal Office. The amounts representing interest are payable by check mailed by the Trustee by first class mail to the Registered Owner hereof as of the Record Date preceding the Payment Date at his address as it appears on the registration books of the Trustee. Interest with respect to any Certificates may, at the option of any Owner of Certificates in an aggregate principal amount of$1,000,000 or more evidenced by the written request of such Owner to the Trustee, be paid to such Owner by wire transfer to the bank and account number on file with the Trustee as of the Record Date. This Certificate is one of the $ aggregate principal amount of the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "Certificates")which have been executed and delivered by the Trustee pursuant to the terms of an Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"),by and among the Trustee,the Authority and the City. The City is authorized to enter into the Lease and the Trust Agreement under the Constitution and laws of the State of California. Reference is hereby made to the Lease and the Trust Agreement(copies of which are on file at the Principal Office) for a description of the terms on which the Certificates are delivered, the rights thereunder of the Registered Owners of the Certificates,the rights, duties and immunities of the Trustee and the rights and obligations of the City under the Lease, to all of the provisions of which Lease and Trust Agreement the Registered Owner of this Certificate,by acceptance hereof, assents and agrees. The City is obligated to pay Lease Payments from any source of legally available funds, and the City has covenanted in the Lease to make the necessary annual appropriations therefor. The obligation of the City to pay the Lease Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or A-2-2 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 382 pledged any form of taxation. The obligation of the City to pay Lease Payments does not constitute a debt of the City, the State of California or any of its political subdivisions within the meaning of any Constitutional or statutory debt limitation or restriction. The City's obligation to pay Lease Payments may be abated during any period in which, by reason of noncompletion of any portion of the Project by the date specified in the Lease or material damage, destruction, title defect, or taking by eminent domain or condemnation there is substantial interference with the use and right of possession by the City of the Leased Premises. Failure of the City to pay Lease Payments during any such period shall not constitute a default under the Lease,the Trust Agreement or this Certificate. To the extent and in the manner permitted by the terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the Insurers so long as the Insurers are not in default in their payment obligations under their respective Insurance Policies and the Registered Owners of at least a majority in aggregate principal amount of the Certificates then Outstanding, and may be amended, with the consent of the Insurers and without such consent of the Registered Owners under certain circumstances,but in no event such that the interests of the Registered Owners of the Certificates are adversely affected. No such modification or amendment shall (i) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof or reducing any premium payable upon the prepayment thereof, without the express consent of the Registered Owner of such Certificate, or (ii) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease, (iii) modify any of the rights or obligations of the Trustee without its written assent thereto or (iv) amend the section of the Trust Agreement dealing with permitted amendments thereof without the prior written consent of the owners of all Certificates and the Insurers so long as the Insurers are not in default in their payment obligations under their respective Insurance Policies. This Certificate is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, at the Principal Office, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement and upon surrender and cancellation of this Certificate. Upon such transfer a new Certificate or Certificates, of an authorized denomination or denominations, for the same aggregate principal amount, maturity and interest rate, will be delivered to the transferee. This Certificate also may be exchanged for a like aggregate principal amount of Certificates of other authorized denominations as prescribed in the Trust Agreement. The City, the Authority, and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes whether or not this Certificate shall be overdue, and the City, the Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee shall not be required to transfer any Certificate selected for prepayment or be required to transfer any Certificate during the period in which the Trustee is selecting Certificates for prepayment. The Certificates are subject to prepayment, on any date, in whole or in part, from Net Proceeds deposited by the Trustee in the Prepayment Fund established under the Trust Agreement at least forty-five (45) days prior to the date fixed for prepayment, at a prepayment price equal to the principal amount thereof together with accrued interest to the dated fixed for prepayment, without premium. A-2-3 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 383 The Certificates maturing on or after August 1, 20 are subject to prepayment prior to maturity in whole or in part on any date on or after August 1, 20 , at the option of the City, in the event the City exercises its option under the Lease to prepay all or a portion of the principal component of the Lease Payments (in integral multiples of$5,000 but not in a principal amount of less than $20,000), at the prepayment price of the principal component to be prepaid, plus accrued interest to the date fixed for prepayment,without premium. The Certificates maturing August 1, 20 (the "20— Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 20 Term Certificates so prepaid. In addition, in lieu of prepayment thereof,the 20 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Date Sinking Account (August 1) Prepayment 20 $ 20 * Final Maturity The Certificates maturing August 1, 20 (the "20— Term Certificates") are subject to prepayment in part by lot, on August 1 in each of the following years from sinking account payments as set forth below at a prepayment price equal to the principal amount thereof to be prepaid, without premium; provided, however, that if some but not all of the 20 Term Certificates have been prepaid pursuant to an optional or extraordinary prepayment, the total amount of all future sinking account payments will be reduced pro rata by the aggregate principal amount of the 20 Term Certificates so prepaid. In addition, in lieu of prepayment thereof,the 20 Term Certificates may be purchased by the City and tendered to the Trustee pursuant to the provisions of the Trust Agreement. Mandatory Prepayment Date Sinking Account (August 1) Prepayment 20 20 20 * Final Maturity As provided in the Trust Agreement, notice of prepayment shall be mailed, not less than 30 nor more than 60 days before the prepayment date, to the Registered Owner of this Certificate, but neither failure to receive such notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for prepayment. If this Certificate is called for prepayment and payment is duly A-2-4 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 384 provided therefor as specified in the Trust Agreement, interest shall cease to accrue with respect hereto from and after the date fixed for prepayment. The City has certified that all acts, conditions and things required by the statutes of the State of California and the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate, and that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. Terms used herein which are not otherwise defined shall have the respective meanings assigned thereto in the Trust Agreement. The Trustee has no obligation or liability to the Registered Owners to make payments of principal or interest with respect to this Certificate except from Lease Payments paid to the Trustee and from the various funds and accounts established under the Trust Agreement. The Trust Agreement provides that the recitals of facts, covenants and agreements in this Certificate shall be taken as statements, covenants and agreements of the City, and the Trustee assumes no responsibility for the correctness of the same. The Trustee has executed this Certificate solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES DEPOSITORY (AS DEFINED IN THE TRUST AGREEMENT) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES 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. A-2-5 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 385 IN WITNESS WHEREOF, this Certificate has been executed and delivered by U.S. Bank National Association, as Trustee, acting pursuant to the Trust Agreement. Date of Execution: U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Its: Authorized Officer FORM OF ASSIGNMENT FOR VALUE RECEIVED,the undersigned hereby sells, assigns and transfers unto (print or typewrite name, address, including postal zip code, and social security or other identifying number of Transferee) the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints to transfer the within Certificate on the books kept for registration thereof,with full power of substitution in the premises. Dated: Signature Guaranteed NOTICE: Signature(s) guarantee should be NOTICE: The signature to this assignment made by a guarantor institution participating must correspond with the name as it appears in the Securities Transfer agents Medallion upon the face of the within Certificate in Program or such other guarantee program every particular, without alteration or acceptable to the Trustee. enlargement or any change whatever. A-2-6 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 386 EXHIBIT B-1 FORM OF WRITTEN DELIVERY COST REQUISITION U.S. BANK NATIONAL ASSOCIATION,as Trustee RE: Disbursement from the Project Fund pursuant to Section 3.03 of the Amended and Restated Trust Agreement related to the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project), dated as of March 1, 2014 (the "Agreement"), by and among you as trustee, the Chula Vista Public Financing Authority and the City of Chula Vista(the "City") REQUISITION NO. You are hereby instructed to pay to the City, or to at $ as a Delivery Cost from the Project Fund as provided in Section 3.03 of the Agreement. This Delivery Cost has been properly incurred, is a proper charge against the Project Fund and has not been the basis of any previous disbursements. The amount remaining in the Project Fund, together with interest earnings on the Project Fund plus investment earnings on other funds that will be transferred into the Project Fund,will, after payment of the amount set forth in this requisition, be sufficient to pay all remaining Delivery Costs and Project Costs as presently estimated. Very truly yours, City Representative B-1-1 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 387 EXHIBIT B-2 FORM OF WRITTEN PROJECT COST REQUISITION U.S. BANK NATIONAL ASSOCIATION, as Trustee RE: Disbursement from the Project Fund pursuant to Section 3.03 of the Amended and Restated Trust Agreement related to the City of Chula Vista 2002 Certificates of Participation (Police Facility Project), and the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project), dated as of March 1, 2014 (the "Agreement"), by and among you as trustee,the Chula Vista Public Financing Authority and the City of Chula Vista (the"City") REQUISITION NO. You are hereby instructed to pay to the City, or to at $ as a Project Cost from the Account of the Project Fund as provided in Section 3.03 of the Agreement. This Project Cost has been properly incurred, is a proper charge against the Account of the Project Fund and has not been the basis of any previous disbursements. The amount remaining in the Project Fund, together with other moneys available to the City and together with interest earnings on the Project Fund plus investment earnings on other funds that will be transferred into the Project Fund, will, after payment of the amount set forth in this requisition, be sufficient to pay all remaining Delivery Costs and Project Costs as presently estimated. Very truly yours, City Representative B-2-1 DOCSOC/1647919x4/024036-0063 2014-02-18 Agenda Packet Page 388 RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) STRADLING YOCCA CARLSON&RAUTH ) 660 Newport Center Drive ) Suite 1600 ) Newport Beach, California 92660 ) Attn: Robert J. Whalen, Esq. ) [Space above for recorder.] This document is recorded for the benefit of the City of Chula Vista, and the recording is fee-exempt under Section 27383 of the Government Code. AMENDED AND RESTATED ASSIGNMENT AGREEMENT between CHULA VISTA PUBLIC FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of March 1, 2014 Relating to the City of Chula Vista 2002 Certificates of Participation (Police Facility Project) and the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) 1 DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 389 AMENDED AND RESTATED ASSIGNMENT AGREEMENT This AMENDED AND RESTATED ASSIGNMENT AGREEMENT (the "Assignment Agreement"), dated as of March 1, 2014, by the CHULA VISTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), and accepted by 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, as trustee under the Trust Agreement (defined below) (the "Trustee") amends and restates in its entirety that certain Assignment Agreement, dated as of June 1, 2002, and recorded in the official records of the County of San Diego (the"County")on June 19, 2002 as Document No. 2002-0520703; WITNESSETH: WHEREAS, the Authority and the City of Chula Vista, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California(the "City"),have executed and entered into a Site Lease, dated as of June 1, 2002 and recorded in the official records of the County of San Diego (the "County") on June 19, 2002 as Document No. 2002-0520701, as amended by the First Amendment to Site Lease, dated as of the date hereof and being recorded concurrently herewith (together, the "Site Lease") and a Lease/Purchase Agreement dated as of June 1, 2002 and recorded in the official records of the County of San Diego (the "County") on June 19, 2002 as Document No. 2002-0520702, as amended by the First Amendment to Lease/Purchase Agreement, dated as of the date hereof and being recorded concurrently herewith (together, the "Lease"), whereby, respectively, the City has agreed to lease certain real property of the City described in Exhibit A to the Site Lease and in Exhibit A hereto (the "Property")to the Authority and the Authority has agreed to lease back such Property and the improvements thereon (collectively, the "Leased Premises") to the City, as provided therein; and WHEREAS, under and pursuant to the Lease, the City is obligated to make Lease Payments, as defined therein, to the Authority for the lease of the Leased Premises; and WHEREAS,the Authority desires to assign absolutely without recourse all its rights to receive the Lease Payments scheduled to be paid by the City under and pursuant to the Lease to the Trustee and certain of its other rights, title and interest under the Lease as described herein; and WHEREAS, the Authority desires to assign absolutely without recourse all of its rights to,under and pursuant to the Site Lease to the Trustee; and WHEREAS, in consideration of such absolute assignment and the execution and entering into of an Amended and Restated Trust Agreement dated as of March 1, 2014 (the "Trust Agreement"), by and among the Trustee, the Authority and the City, the Trustee has executed and delivered certificates of participation designated the City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates") and the 2014-02-18 Agenda Packet Page 390 City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "2014 Certificates") in an aggregate principal amount equal to the aggregate principal components of such Lease Payments; and WHEREAS, each parry has determined that all acts conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with its execution and entering into of this Assignment Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law and it is now duly authorized to execute and enter into the Assignment Agreement. NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: Section 1. Assi nom. (a) Site Lease. The Authority hereby transfers, assigns, absolutely and sets over to the Trustee, for the benefit of the Owners (as defined in the Trust Agreement) of the 2002 Certificates, the 2014 Certificates and all Additional Certificates executed and delivered under the Trust Agreement from time to time, all of the Authority's rights, title, and interest under the Site Lease. (b) Lease. The Authority hereby transfers, assigns, absolutely and sets over to the Trustee, for the benefit of the Owners of the 2002 Certificates, the 2014 Certificates and all Additional Certificates executed and delivered under the Trust Agreement from time to time, all of the Authority's rights, title and interest under the Lease (excepting only the Authority's rights under Sections 2.1(e), 4.11, 7.14 and 9.4 of the Lease), including, without limitation, (1)the right to receive and collect all of the Lease Payments, Prepayments and Additional Payments (except to the extent payable to the Authority) (as such terms are defined in the Trust Agreement) from the City under the Lease or the Trust Agreement, as applicable, (2)the right to receive and collect any proceeds of any insurance maintained thereunder, or any condemnation award rendered with respect to the Leased Premises, or of any lease of the Leased Premises in the event of a default by the City under the Lease, (3)the right to take all actions and give all consents under the Lease, including without limitation, Section 7.8(b) (regarding liens), 8.2(b) (regarding subleases), Section 8.3 (regarding amendments of the Lease) and Section 9.2 (regarding defaults), (4)the right to exercise such rights and remedies conferred on the Authority pursuant to the Lease as may be necessary or convenient (i)to enforce payment of the Lease Payments, Prepayments and Additional Payments and any other amounts required to be deposited in the Lease Payment Fund, the Prepayment Fund, the Reserve Fund or the Net Proceeds Fund established under the Trust Agreement, or (ii)otherwise to protect the interests of the Authority in the event of a default by the City under the Lease, and (5)the right of the Authority to receive rental in excess of Lease Payments as compensation for re-leasing the Leased Premises upon events of default under the Lease, as provided in Section 9.2(a) and(b) of the Lease. (c) Assignment for Owners of the 2002 Certificates, the 2014 Certificates and all Additional Certificates. All rights assigned by the Authority shall be administered by the Trustee as assignee thereof according to the provisions of the Trust Agreement and for the 2014-02-18 Agenda Packet Page 391 equal and proportionate benefits of the Owners of the 2002 Certificates, the 2014 Certificates and all Additional Certificates executed and delivered under the Trust Agreement from time to time. Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment for the benefit of the Owners of the Certificates, subject to the conditions and terms of the Trust Agreement, and all such Lease Payments shall be applied and all such rights so assigned shall be exercised by the Trustee under and pursuant to the Trust Agreement. Section 3. Conditions. This Assignment Agreement shall confer no rights and shall impose no obligations upon the Trustee beyond those expressly provided in the Trust Agreement. The Trustee does not warrant the accuracy of the recitals hereto. The Trustee shall not be responsible for any representations, covenants or warranties of the Authority. The assignment hereunder is to the Trustee solely in its capacity as Trustee under the Trust Agreement and not in its individual or personal capacity. The Trustee is not responsible for any representations, warranties or covenants made by the assignor under the Lease or the Site Lease. Section 4. Subsequent Assignment. In the event the Authority ceases to exist while any of the 2002 Certificates, the 2014 Certificates or any Additional Certificates remain outstanding under the Trust Agreement or is unable in the future to perform any of its obligations under this Assignment Agreement or under the Site Lease, the Lease or the Trust Agreement, then without further action on the part of the parties hereto or the City, all of the rights, obligations and duties of the Authority hereunder shall be automatically assigned to the Chula Vista Municipal Financing Authority ("CVMFA") and, thereafter, CVMFA shall have all the rights and shall perform all duties and responsibilities of the Authority hereunder. Section 5. No Other Claim. The Authority hereby represents and warrants that there are no present and outstanding claims on Lease Payments or any other moneys assigned by the Authority to the Trustee hereunder. Section 6. Counterparts. This Assignment Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 2014-02-18 Agenda Packet Page 392 IN WITNESS WHEREOF, the parties have executed this Amended and Restated to Assignment Agreement by their officers thereunto duly authorized as of the day and year first written above. CHULA VISTA PUBLIC FINANCING AUTHORITY By: Chief Financial Officer ATTEST: Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer S-1 DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 393 CONSENT The City of Chula Vista hereby consents to the foregoing. CITY OF CHULA VISTA, as Lessee By: City Manager ATTEST: City Clerk DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 394 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 395 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 396 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY THAT REAL PROPERTY IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCEL L THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHEASTERLY LINE OF SAID LOT 17; SOUTH 71 WEST 323.75 FEET FROM THE SOUTHEASTERLY CORNER OF SAID LOT, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN DEED TO THE SAN DIEGO AND ARIZONA RAILWAY COMPANY, RECORDED JUNE 24, 1919 IN BOOK 789, PAGE 25 OF DEEDS; THENCE ALONG SAID NORTHEASTERLY LINE NORTH 54 DEG 06 MIN 30 SEC WEST TO THE NORTHERLY LINE OF THE SOUTHERLY 30.00 FEET OF SAID LOT 17, BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG THE NORTHEASTERLY LINE OF SAID RAILWAY COMPANY LAND, NORTH 54 DEG 06 MIN 30 SEC WEST TO THE BEGINNING OF A 479.27 FOOT RADIUS TANGENT CURVE IN SAID NORTHEASTERLY LINE; THENCE NORTHWESTERLY ALONG SAID CURVE, TO THE LEFT, 219.60 FEET TO A POINT IN THE NORTHWESTERLY LINE OF SAID LOT 17; THENCE NORTHEASTERLY ALONG SAID NORTHWESTERLY LINE TO THE NORTHEASTERLY CORNER OF SAID LOT 17; THENCE SOUTHERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT 17 TO THE NORTHERLY LINE OF THE SOUTHERLY 30.00 FEET OF SAID LOT 17; THENCE SOUTH 71 DEG WEST ALONG SAID NORTHERLY LINE TO THE TRUE POINT OF BEGINNING. APN: 568-270-03-00 PARCEL 2: THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT AT THE NORTHWESTERLY CORNER OF LOT 17 IN SAID QUARTER SECTION 137; THENCE NORTH 71 DEG EAST ALONG THE NORTHERLY LINE OF SAID LOT 17, 34 FEET TO A POINT; THENCE SOUTHEASTERLY ON A CURVE TO THE RIGHT, HAVING A RADIUS OF 479.27 FEET, 219.6 FEET TO A POINT; THENCE SOUTH 54 DEG 06 MIN 30 SEC EAST, TANGENT TO SAID CURVE, 177.96 FEET TO A POINT OF THE SOUTHERLY LINE OF SAID LOT 17, SAID POINT BEING 323.75 FEET SOUTH 71 DEG WEST FROM THE SOUTHEASTERLY CORNER OF SAID LOT 17; THENCE SOUTH 71 DEG ALONG THE SAID SOUTHERLY LINE OF SAID LOT 17, 48.88 FEET TO A POINT; THENCE A-1 DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 397 NORTH 54 DEG 06 MIN 30 SEC WEST, 149.84 FEET TO A POINT; THENCE NORTHWESTERLY ON A CURVE TO THE LEFT HAVING A RADIUS OF 439.27 FEET, 217.96 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 17; THENCE NORTH 19 DEG WEST ALONG THE WESTERLY LINE OF SAID LOT 17, 27.35 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION OF LOT 17 OF THE SOUTHWEST QUARTER SECTION 137 OF MAP OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 17, ALSO BEING THE TRUE POINT OF BEGINNING; THENCE EASTERLY ALONG THE NORTHERLY LOT LINE OF SAID LOT 17, ALSO BEING THE SOUTHERLY RIGHT OF WAY LINE OF "F" STREET, ACCORDING TO SAID MAP NO. 505, BEARING NORTH 71 DEG 24 MIN 59 SEC EAST, A DISTANCE OF 21.98 FEET TO THE TANGENT POINT OF A CURVE CONCAVE SOUTHEASTERLY WITH A RADIUS OF 22.00 FEET; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 89 DEG 56 MIN 17 SEC, A DISTANCE OF 34.53 FEET TO THE POINT OF TANGENCY TO THE EASTERLY RIGHT OF WAY LINE OF FOURTH AVENUE, ACCORDING TO SAID MAP NO. 505; THENCE NORTHERLY ALONG SAID LINE BEARING NORTH 18 DEG 31 MIN 18 SEC WEST, A DISTANCE OF 21.98 FEET TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM ALL MINERALS, COALS, OILS, PETROLEUM, GAS AND KINDRED SUBSTANCES UNDER AND IN SAID LAND BUT WITHOUT THE RIGHT OF ENTRY OF THE SURFACE THEREOF, BUT WITH THE RIGHT, HOWEVER, TO DRILL IN, THROUGH OR UNDER SAID LAND OR TO EXPLORE, DEVELOP OR TAKE ALL MINERALS, COALS, OILS, PETROLEUM, GAS AND OTHER KINDRED SUBSTANCES IN AND FROM SAID LAND, ALL SUCH OPERATIONS TO BE CONDUCTED BELOW A DEPTH OF 500 FEET BELOW THE SURFACE THEREOF, AS RESERVED IN DEED RECORDED MARCH 11, 1991 AS FILE NO. 91-0106385 OF OFFICIAL RECORDS. APN: 568-270-11-00 PARCEL 3: ALL THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHEASTERLY LINE OF LOT 17, DISTANT THEREON SOUTH 71° WEST, 372.63 FEET FROM THE SOUTHEASTERLY CORNER OF SAID LOT 17; SAID POINT BEING ON THE SOUTHWESTERLY LINE OF LAND DESCRIBED IN DEED FROM THE SAN DIEGO LAND CORPORATION, TO SAN DIEGO AND ARIZONA RAILWAY COMPANY, DATED JUNE 13, 1919 AND RECORDED IN BOOK 789, PAGE 25 OF DEEDS; THENCE NORTH 54 006'30" WEST ALONG THE SOUTHWESTERLY LINE OF THE LAND SO CONVEYED TO SAN DIEGO AND ARIZONA RAILWAY COMPANY 149.84 FEET TO A A-2 DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 398 POINT; THENCE NORTHWESTERLY ON A CURVE TO THE LEFT HAVING A RADIUS OF 439.27 FEET, A DISTANCE OF 217.96 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 17; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF SAID LOT TO THE SOUTHWESTERLY CORNER THEREOF; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID LOT TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION THEREOF LYING SOUTHERLY OF A LINE WHICH IS PARALLEL WITH AND 30.0 FEET NORTHERLY AT RIGHT ANGLES FROM THE SOUTHERLY LINE OF SAID LOT 17. APN: 568-270-10-00 A-3 DOCSOC/1647862x5/024036-0063 2014-02-18 Agenda Packet Page 399 RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) STRADLING,YOCCA, CARLSON&RAUTH ) 660 Newport Center Drive ) Suite 1600 ) Newport Beach, California 92660 ) Attn: Robert J. Whalen,Esq. ) l [Space above for recorder.] This document is recorded for the benefit of the City of Chula Vista, and the recording is fee-exempt under Section 27383 of the Government Code. FIRST AMENDMENT TO LEASE/PURCHASE AGREEMENT between CITY OF CHULA VISTA, as Lessee and CHULA VISTA PUBLIC FINANCING AUTHORITY, as Lessor Dated as of March 1, 2014 Relating to the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 400 FIRST AMENDMENT TO LEASE/PURCHASE AGREEMENT THIS FIRST AMENDMENT TO LEASE/PURCHASE AGREEMENT, dated as of March 1, 2014 ("First Amendment to Lease"), is entered into by and between the CITY OF CHULA VISTA PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State of California, as lessor (the "Authority"), and the CITY OF CHULA VISTA, a municipal corporation and a charter city duly organized and existing under and by virtue of the Constitution and laws of the State of California, as lessee (the "City"), and amends, in part, that certain Lease/Purchase Agreement between the City, as lessee, and the Authority, as lessor, dated as of June 1, 2002, and recorded in the official records of the County of San Diego (the "County") on June 19, 2002 as Document No. 2002-0520702 (the"Lease"); WITNESSETH : WHEREAS, the Authority entered into the Lease with the City for the purpose of leasing the real property (including all existing and future improvements thereon) described in Exhibit B thereto to the City, as lessee thereunder; and WHEREAS, the City and the Authority desire to enter into this First Amendment to Lease in order to facilitate the execution and delivery of those certain $ City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "2014 Certificates"), which are being executed and delivered as Additional Certificates under the terms of the Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), by and among U.S. Bank National Association, as Trustee (the "Trustee"), the Authority and the City, and will be secured on a parity thereunder with the City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates" and together with the 2014 Certificates,the "Certificates") WHEREAS, pursuant to Section 8.3 of the Lease, the City and the Authority reserved the right to amend the Lease from time to time with the written consent of the 2002 Insurer and the Trustee in accordance with Article X of the Trust Agreement; and WHEREAS, the Trustee and the 2002 Insurer have consented to this First Amendment to Lease; WHEREAS, to facilitate the execution and delivery of the 2014 Certificates, the City and the Authority desire to amend the Lease as described herein; and WHEREAS, the parties have determined that the amendments contained herein do not adversely affect the interests of the Owners of the 2002 Certificates; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: SECTION 1. Definitions. Unless the context otherwise requires, the capitalized terms used herein shall have the meanings specified in the Lease and the Trust Agreement. 1 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 401 SECTION 2. Schedule of Lease Payments. Exhibit A to the Lease is hereby deleted in its entirety and replaced by Exhibit 2 hereto. SECTION 3. References to Trust Agreement and Assignment Agreement. From and after the date of the execution and delivery of the 2014 Certificates, all references in the Lease to "Trust Agreement" shall refer to the Trust Agreement as defined above, as further amended from time to time, and all references in the Lease to "Assignment Agreement" shall refer to the Amended and Restated Assignment Agreement dated as of the date hereof, as further amended from time to time. SECTION 4. Subsequent Assignment. In the event the Authority ceases to exist while any of the 2002 Certificates, the 2014 Certificates or any Additional Certificates remain outstanding under the Trust Agreement or is unable in the future to perform any of its obligations under this Lease or under the Site Lease, the Amended and Restated Assignment Agreement or the Trust Agreement,then without further action on the part of the parties hereto or the Trustee, all of the rights, obligations and duties of the Authority hereunder shall be automatically assigned to the Chula Vista Municipal Financing Authority ("CVMFA") and, thereafter, CVMFA shall have all the rights and shall perform all duties and responsibilities of the Authority hereunder. SECTION 5. No Other Amendments. Except as expressly set forth in Sections 2 and 3 above, all other provisions of the Lease remain in full force and effect. SECTION 6. Counterparts. This First Amendment to Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 2 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 402 IN WITNESS WHEREOF, the Authority has caused this First Amendment to Lease to be executed in its name by its duly authorized officers, and the City has caused this First Amendment to Lease to be executed in its name by its duly authorized officers, as of the date first above written. CHULA VISTA PUBLIC FINANCING AUTHORITY, as Lessor By: Chief Financial Officer ATTEST: Secretary CITY OF CHULA VISTA, as Lessee By: City Manager ATTEST: City Clerk S-1 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 403 CONSENTED TO BY: U.S. BANK NATIONAL ASSOCIATION, as Trustee and Assignee By: Authorized Officer CONSENTED TO BY: NATIONAL PUBLIC FINANCE GUARANTEE CORP., as Insurer By: Authorized Officer S-2 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 404 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed under the foregoing to the City of Chula Vista (the "City"), a municipal corporation and a charter city duly organized and existing under and by virtue of the Constitution and laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the City Council of the City (the "City Council"), pursuant to authority conferred by resolution of the said City Council adopted on January 21, 2014, and the grantee consents to recordation thereof by its duly authorized officer. Dated: 12014 CITY OF CHULA VISTA By: Its: City Manager DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 405 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 406 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 407 EXHIBIT 1 DESCRIPTION OF THE LEASED PREMISES THAT REAL PROPERTY IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCEL L THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHEASTERLY LINE OF SAID LOT 17; SOUTH 71 WEST 323.75 FEET FROM THE SOUTHEASTERLY CORNER OF SAID LOT, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN DEED TO THE SAN DIEGO AND ARIZONA RAILWAY COMPANY, RECORDED JUNE 24, 1919 IN BOOK 789, PAGE 25 OF DEEDS; THENCE ALONG SAID NORTHEASTERLY LINE NORTH 54 DEG 06 MIN 30 SEC WEST TO THE NORTHERLY LINE OF THE SOUTHERLY 30.00 FEET OF SAID LOT 17, BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG THE NORTHEASTERLY LINE OF SAID RAILWAY COMPANY LAND, NORTH 54 DEG 06 MIN 30 SEC WEST TO THE BEGINNING OF A 479.27 FOOT RADIUS TANGENT CURVE IN SAID NORTHEASTERLY LINE; THENCE NORTHWESTERLY ALONG SAID CURVE, TO THE LEFT, 219.60 FEET TO A POINT IN THE NORTHWESTERLY LINE OF SAID LOT 17; THENCE NORTHEASTERLY ALONG SAID NORTHWESTERLY LINE TO THE NORTHEASTERLY CORNER OF SAID LOT 17; THENCE SOUTHERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT 17 TO THE NORTHERLY LINE OF THE SOUTHERLY 30.00 FEET OF SAID LOT 17; THENCE SOUTH 71 DEG WEST ALONG SAID NORTHERLY LINE TO THE TRUE POINT OF BEGINNING. APN: 568-270-03-00 PARCEL 2: THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT AT THE NORTHWESTERLY CORNER OF LOT 17 IN SAID QUARTER SECTION 137; THENCE NORTH 71 DEG EAST ALONG THE NORTHERLY LINE OF SAID LOT 17, 34 FEET TO A POINT; THENCE SOUTHEASTERLY ON A CURVE TO THE RIGHT, HAVING A RADIUS OF 479.27 FEET, 219.6 FEET TO A POINT; THENCE SOUTH 54 DEG 06 MIN 30 SEC EAST, TANGENT TO SAID CURVE, 177.96 FEET TO A POINT OF THE SOUTHERLY LINE OF SAID LOT 17, SAID POINT BEING 323.75 FEET SOUTH 71 DEG WEST FROM THE SOUTHEASTERLY CORNER OF SAID LOT 17; THENCE SOUTH 71 DEG Exhibit 1-1 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 408 ALONG THE SAID SOUTHERLY LINE OF SAID LOT 17, 48.88 FEET TO A POINT; THENCE NORTH 54 DEG 06 MIN 30 SEC WEST, 149.84 FEET TO A POINT; THENCE NORTHWESTERLY ON A CURVE TO THE LEFT HAVING A RADIUS OF 439.27 FEET, 217.96 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 17; THENCE NORTH 19 DEG WEST ALONG THE WESTERLY LINE OF SAID LOT 17, 27.35 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION OF LOT 17 OF THE SOUTHWEST QUARTER SECTION 137 OF MAP OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 17, ALSO BEING THE TRUE POINT OF BEGINNING; THENCE EASTERLY ALONG THE NORTHERLY LOT LINE OF SAID LOT 17, ALSO BEING THE SOUTHERLY RIGHT OF WAY LINE OF "F" STREET, ACCORDING TO SAID MAP NO. 505, BEARING NORTH 71 DEG 24 MIN 59 SEC EAST, A DISTANCE OF 21.98 FEET TO THE TANGENT POINT OF A CURVE CONCAVE SOUTHEASTERLY WITH A RADIUS OF 22.00 FEET; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 89 DEG 56 MIN 17 SEC, A DISTANCE OF 34.53 FEET TO THE POINT OF TANGENCY TO THE EASTERLY RIGHT OF WAY LINE OF FOURTH AVENUE, ACCORDING TO SAID MAP NO. 505; THENCE NORTHERLY ALONG SAID LINE BEARING NORTH 18 DEG 31 MIN 18 SEC WEST, A DISTANCE OF 21.98 FEET TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM ALL MINERALS, COALS, OILS, PETROLEUM, GAS AND KINDRED SUBSTANCES UNDER AND IN SAID LAND BUT WITHOUT THE RIGHT OF ENTRY OF THE SURFACE THEREOF, BUT WITH THE RIGHT, HOWEVER, TO DRILL IN, THROUGH OR UNDER SAID LAND OR TO EXPLORE, DEVELOP OR TAKE ALL MINERALS, COALS, OILS, PETROLEUM, GAS AND OTHER KINDRED SUBSTANCES IN AND FROM SAID LAND, ALL SUCH OPERATIONS TO BE CONDUCTED BELOW A DEPTH OF 500 FEET BELOW THE SURFACE THEREOF, AS RESERVED IN DEED RECORDED MARCH 11, 1991 AS FILE NO. 91-0106385 OF OFFICIAL RECORDS. APN: 568-270-11-00 PARCEL 3: ALL THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHEASTERLY LINE OF LOT 17, DISTANT THEREON SOUTH 71° WEST, 372.63 FEET FROM THE SOUTHEASTERLY CORNER OF SAID LOT 17; SAID POINT BEING ON THE SOUTHWESTERLY LINE OF LAND DESCRIBED IN DEED FROM THE SAN DIEGO LAND CORPORATION, TO SAN DIEGO AND ARIZONA RAILWAY COMPANY, DATED JUNE 13, 1919 AND RECORDED IN BOOK 789, PAGE 25 OF DEEDS; Exhibit 1-2 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 409 THENCE NORTH 54 006'30" WEST ALONG THE SOUTHWESTERLY LINE OF THE LAND SO CONVEYED TO SAN DIEGO AND ARIZONA RAILWAY COMPANY 149.84 FEET TO A POINT; THENCE NORTHWESTERLY ON A CURVE TO THE LEFT HAVING A RADIUS OF 439.27 FEET, A DISTANCE OF 217.96 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 17; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF SAID LOT TO THE SOUTHWESTERLY CORNER THEREOF; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID LOT TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION THEREOF LYING SOUTHERLY OF A LINE WHICH IS PARALLEL WITH AND 30.0 FEET NORTHERLY AT RIGHT ANGLES FROM THE SOUTHERLY LINE OF SAID LOT 17. APN: 568-270-10-00 Exhibit 1-3 DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 410 EXHIBIT 2 SCHEDULE OF LEASE PAYMENTS 2002 Principal 2002 Interest 2014 Principal 2014 Interest Total Lease Date Component Component Component Component Payments DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 411 2002 Principal 2002 Interest 2014 Principal 2014 Interest Total Lease Date Component Component Component Component Payments Total $ $ $ $ $ DOCSOC/1647861 v4/024036-0063 2014-02-18 Agenda Packet Page 412 Recording Requested By and ) When Recorded Mail To: ) Stradling Yocca Carlson&Rauth ) 660 Newport Center Drive, Suite 1600) Newport Beach, California 92660 ) Attention: Robert J. Whalen, Esq. ) [Space above for recorder.] This document is recorded for the benefit of the City of Chula Vista, and the recording is fee-exempt under Section 27383 of the Government Code. FIRST AMENDMENT TO SITE LEASE between CITY OF CHULA VISTA and CHULA VISTA PUBLIC FINANCING AUTHORITY Dated as of March 1, 2014 Relating to the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 413 FIRST AMENDMENT TO SITE LEASE This First Amendment to Site Lease (the "First Amendment to Site Lease") is made and entered into as of March 1, 2014, by and between the CITY OF CHULA VISTA, a municipal corporation and a charter city duly organized and existing under and by virtue of the laws of the State, as lessor (the "City"), and the CHULA VISTA PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized and existing under the laws of the State, as lessee (the "Authority"), and amends, in part, that certain Site Lease between the City, as lessor, and the Authority, as lessee, dated as of June 1, 2002 and recorded in the official records of the County of San Diego (the "County")on June 19, 2002 as Document No. 2002-0520701 (the"Site Lease"). WITNESSETH : WHEREAS, the City has entered into the Site Lease with the Authority for the purpose of leasing to the Authority, as lessee thereunder, the real property (including all existing improvements thereon)described in Exhibit A thereto; and WHEREAS, the City and the Authority desire to enter into this First Amendment to Site Lease in order to facilitate the execution and delivery of those certain $ City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "2014 Certificates"); and WHEREAS, the 2014 Certificates are being executed and delivered as Additional Certificates under that certain Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), by and among U.S. Bank National Association, as Trustee (the "Trustee"), the Authority and the City, and will be secured on a parity thereunder with the City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates" and together with the 2014 Certificates,the"Certificates"); and WHEREAS, pursuant to Section 18 of the Site Lease the City and the Authority reserved the right to amend the Site Lease as described therein; and WHEREAS, to facilitate the execution and delivery of the 2014 Certificates, the City and the Authority have determined to amend the Site Lease as described herein, and have further determined that such amendments do not adversely affect the interests of the Owners of the 2002 Certificates; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other valuable consideration, it is hereby mutually agreed as follows: SECTION 1. Definitions. Unless the context otherwise requires, the capitalized terms herein which are not defined herein shall have the meanings referenced in the Site Lease and the Trust Agreement. SECTION 2. References to Trust Agreement, Assignment Agreement and Certificates. From and after the date of the execution and delivery of the 2014 Certificates, all references in the Site Lease to "Trust Agreement" shall refer to the Trust Agreement as defined above, as further amended from time to time, all references in the Site Lease to "Assignment Agreement" shall refer to the Amended and Restated Assignment Agreement dated as of the date 2 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 414 hereof, as further amended from time to time, and all references to "Certificates" shall refer to the 2002 Certificates, the 2014 Certificates and any Additional Certificates executed and delivered in the future in accordance with the terms of the Trust Agreement. SECTION 3. Subsequent Assignment. In the event the Authority ceases to exist while any of the 2002 Certificates, the 2014 Certificates or any Additional Certificates remain outstanding under the Trust Agreement or is unable in the future to perform any of its obligations under this Site Lease or under the Lease, the Amended and Restated Assignment Agreement or the Trust Agreement,then without further action on the part of the parties hereto or the Trustee, all of the rights, obligations and duties of the Authority hereunder shall be automatically assigned to the Chula Vista Municipal Financing Authority ("CVMFA") and, thereafter, CVMFA shall have all the rights and shall perform all duties and responsibilities of the Authority hereunder. SECTION 4. No Other Amendments. Except as expressly set forth in Section 2 above, all other provisions of the Site Lease remain in full force and effect. SECTION 5. Counterparts. This First Amendment to Site Lease may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 3 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 415 IN WITNESS WHEREOF,the parties have caused this First Amendment to Site Lease to be executed by their duly authorized officers on the date and year first above written. CITY OF CHULA VISTA, as Lessor By: City Manager ATTEST: City Clerk CHULA VISTA PUBLIC FINANCING AUTHORITY, as Lessee By: Chief Financial Officer ATTEST: Secretary S-1 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 416 CONSENTED TO BY: U.S. BANK NATIONAL ASSOCIATION, as Trustee and Assignee By: Authorized Officer CONSENTED TO BY: NATIONAL PUBLIC FINANCE GUARANTEE CORP., as Insurer By: Authorized Officer S-2 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 417 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed under the foregoing to the Chula Vista Public Financing Authority (the "Authority"), a body corporate and politic, is hereby accepted by the undersigned officer or agent on behalf of the Board of the Authority (the "Board"),pursuant to authority conferred by resolution of the said Board adopted on January 21, 2014, and the grantee consents to recordation thereof by its duly authorized officer. Dated: 12014 CHULA VISTA PUBLIC FINANCING AUTHORITY By: Its: Chief Financial Officer DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 418 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 419 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose names(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 his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 420 EXHIBIT A DESCRIPTION OF THE LEASED PREMISES THAT REAL PROPERTY IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCEL L THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHEASTERLY LINE OF SAID LOT 17; SOUTH 71 WEST 323.75 FEET FROM THE SOUTHEASTERLY CORNER OF SAID LOT, SAID POINT BEING ON THE NORTHEASTERLY LINE OF THE LAND DESCRIBED IN DEED TO THE SAN DIEGO AND ARIZONA RAILWAY COMPANY, RECORDED JUNE 24, 1919 IN BOOK 789, PAGE 25 OF DEEDS; THENCE ALONG SAID NORTHEASTERLY LINE NORTH 54 DEG 06 MIN 30 SEC WEST TO THE NORTHERLY LINE OF THE SOUTHERLY 30.00 FEET OF SAID LOT 17, BEING THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG THE NORTHEASTERLY LINE OF SAID RAILWAY COMPANY LAND, NORTH 54 DEG 06 MIN 30 SEC WEST TO THE BEGINNING OF A 479.27 FOOT RADIUS TANGENT CURVE IN SAID NORTHEASTERLY LINE; THENCE NORTHWESTERLY ALONG SAID CURVE, TO THE LEFT, 219.60 FEET TO A POINT IN THE NORTHWESTERLY LINE OF SAID LOT 17; THENCE NORTHEASTERLY ALONG SAID NORTHWESTERLY LINE TO THE NORTHEASTERLY CORNER OF SAID LOT 17; THENCE SOUTHERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT 17 TO THE NORTHERLY LINE OF THE SOUTHERLY 30.00 FEET OF SAID LOT 17; THENCE SOUTH 71 DEG WEST ALONG SAID NORTHERLY LINE TO THE TRUE POINT OF BEGINNING. APN: 568-270-03-00 PARCEL 2: THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT AT THE NORTHWESTERLY CORNER OF LOT 17 IN SAID QUARTER SECTION 137; THENCE NORTH 71 DEG EAST ALONG THE NORTHERLY LINE OF SAID LOT 17, 34 FEET TO A POINT; THENCE SOUTHEASTERLY ON A CURVE TO THE RIGHT, HAVING A RADIUS OF 479.27 FEET, 219.6 FEET TO A POINT; THENCE SOUTH 54 DEG 06 MIN 30 SEC EAST, TANGENT TO SAID CURVE, 177.96 FEET TO A POINT OF THE SOUTHERLY LINE OF SAID LOT 17, SAID POINT BEING 323.75 FEET SOUTH 71 DEG WEST FROM THE SOUTHEASTERLY CORNER OF SAID LOT 17; THENCE SOUTH 71 DEG ALONG THE SAID SOUTHERLY LINE OF SAID LOT 17, 48.88 FEET TO A POINT; THENCE A-1 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 421 NORTH 54 DEG 06 MIN 30 SEC WEST, 149.84 FEET TO A POINT; THENCE NORTHWESTERLY ON A CURVE TO THE LEFT HAVING A RADIUS OF 439.27 FEET, 217.96 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 17; THENCE NORTH 19 DEG WEST ALONG THE WESTERLY LINE OF SAID LOT 17, 27.35 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION OF LOT 17 OF THE SOUTHWEST QUARTER SECTION 137 OF MAP OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 17, ALSO BEING THE TRUE POINT OF BEGINNING; THENCE EASTERLY ALONG THE NORTHERLY LOT LINE OF SAID LOT 17, ALSO BEING THE SOUTHERLY RIGHT OF WAY LINE OF "F" STREET, ACCORDING TO SAID MAP NO. 505, BEARING NORTH 71 DEG 24 MIN 59 SEC EAST, A DISTANCE OF 21.98 FEET TO THE TANGENT POINT OF A CURVE CONCAVE SOUTHEASTERLY WITH A RADIUS OF 22.00 FEET; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 89 DEG 56 MIN 17 SEC, A DISTANCE OF 34.53 FEET TO THE POINT OF TANGENCY TO THE EASTERLY RIGHT OF WAY LINE OF FOURTH AVENUE, ACCORDING TO SAID MAP NO. 505; THENCE NORTHERLY ALONG SAID LINE BEARING NORTH 18 DEG 31 MIN 18 SEC WEST, A DISTANCE OF 21.98 FEET TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM ALL MINERALS, COALS, OILS, PETROLEUM, GAS AND KINDRED SUBSTANCES UNDER AND IN SAID LAND BUT WITHOUT THE RIGHT OF ENTRY OF THE SURFACE THEREOF, BUT WITH THE RIGHT, HOWEVER, TO DRILL IN, THROUGH OR UNDER SAID LAND OR TO EXPLORE, DEVELOP OR TAKE ALL MINERALS, COALS, OILS, PETROLEUM, GAS AND OTHER KINDRED SUBSTANCES IN AND FROM SAID LAND, ALL SUCH OPERATIONS TO BE CONDUCTED BELOW A DEPTH OF 500 FEET BELOW THE SURFACE THEREOF, AS RESERVED IN DEED RECORDED MARCH 11, 1991 AS FILE NO. 91-0106385 OF OFFICIAL RECORDS. APN: 568-270-11-00 PARCEL 3: ALL THAT PORTION OF LOT 17 IN QUARTER SECTION 137 OF CHULA VISTA, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHEASTERLY LINE OF LOT 17, DISTANT THEREON SOUTH 71° WEST, 372.63 FEET FROM THE SOUTHEASTERLY CORNER OF SAID LOT 17; SAID POINT BEING ON THE SOUTHWESTERLY LINE OF LAND DESCRIBED IN DEED FROM THE SAN DIEGO LAND CORPORATION, TO SAN DIEGO AND ARIZONA RAILWAY COMPANY, DATED JUNE 13, 1919 AND RECORDED IN BOOK 789, PAGE 25 OF DEEDS; THENCE NORTH 54 006'30" WEST ALONG THE SOUTHWESTERLY LINE OF THE LAND SO CONVEYED TO SAN DIEGO AND ARIZONA RAILWAY COMPANY 149.84 FEET TO A A-2 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 422 POINT; THENCE NORTHWESTERLY ON A CURVE TO THE LEFT HAVING A RADIUS OF 439.27 FEET, A DISTANCE OF 217.96 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 17; THENCE SOUTHEASTERLY ALONG THE SOUTHWESTERLY LINE OF SAID LOT TO THE SOUTHWESTERLY CORNER THEREOF; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID LOT TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THAT PORTION THEREOF LYING SOUTHERLY OF A LINE WHICH IS PARALLEL WITH AND 30.0 FEET NORTHERLY AT RIGHT ANGLES FROM THE SOUTHERLY LINE OF SAID LOT 17. APN: 568-270-10-00 A-3 DOCSOC/1647860v4/024036-0063 2014-02-18 Agenda Packet Page 423 ESCROW AGREEMENT by and among CHULA VISTA PUBLIC FINANCING AUTHORITY and the CITY OF CHULA VISTA and U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank Dated as of March 1, 2014 Relating to CITY OF CHULA VISTA 2002 CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT) DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 424 ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of March 1, 2014 (this "Agreement"), is by and among the Chula Vista Public Financing Authority, a public body, corporate and politic, duly organized and existing under the laws of the State of California (the "Authority"); the City of Chula Vista, a municipal corporation and chartered city duly organized and existing under and pursuant to the Constitution and laws of the State of California (the "City") and U.S. Bank National Association, acting in its capacity as escrow bank(the "Escrow Bank")pursuant to this Agreement; WITNESSETH: WHEREAS, the City and the Authority have heretofore entered into that certain Lease/Purchase Agreement, dated as of June 1, 2002, as amended and supplemented (the "2002 Lease Agreement"), pursuant to which the Authority agreed to lease to the City certain land and the improvements located thereon; and WHEREAS, the City has previously caused the delivery of its $60,145,000 City of Chula Vista 2002 Certificates of Participation (Police Facility Project) (the "2002 Certificates"), which 2002 Certificates were secured by lease payments under and pursuant to the terms of the 2002 Lease Agreement; and WHEREAS, the City desires to prepay [a portion of] the Lease Payments evidenced by the 2002 Certificates as permitted by the 2002 Lease Agreement and to defease and prepay the outstanding 2002 Certificates maturing on and before August 1, 20 (the "Prepaid Certificates"); and WHEREAS, to provide the funds to prepay the Lease Payments and defease and prepay the Prepaid Certificates, the City has caused the execution and delivery of its 2014 Refunding Certificates of Participation (Police Facility Project) (the "2014 Certificates") in accordance with the Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), by and among the City, the Authority and U.S. Bank National Association as trustee (the "Prior Trustee"); and WHEREAS, the City proposes to make the deposit of moneys and Investment Securities to secure the prepayment of the Lease Payments under the 2002 Lease Agreement which are evidenced by the Prepaid Certificates, and to appoint the Escrow Bank as its agent for the purpose of applying said deposit in accordance with the instructions provided by this Escrow Agreement and the Escrow Bank desires to accept said appointment; and WHEREAS, the Escrow Bank has full powers to act with respect to the irrevocable escrow and trust created herein and to perform the duties and obligations to be undertaken pursuant to this Escrow Agreement; and WHEREAS, the Authority and the City have determined that all acts, conditions and things required by the Constitution and laws of the State to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 425 requirement of law,to consummate such financing for the purpose, in the manner and upon the terms herein provided. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,the City,the Authority and the Escrow Bank agree as follows: SECTION 1. Deposit of Moneys. (a) As used herein, the term "Investment Securities" means the investment securities set forth in Schedule A hereto which constitute direct noncallable nonprepayable obligations issued by the United States Treasury. The City hereby deposits with the Escrow Bank $ of the net sale proceeds of the 2014 Certificates to be held in irrevocable escrow by the Escrow Bank separate and apart from other funds of the City, the Authority, the Escrow Bank, and the Prior Trustee, in a fund hereby created and established and to be known as the "Escrow Fund", and to be applied solely as provided in this Agreement. Such moneys are at least equal to an amount sufficient to purchase the principal amount of Investment Securities set forth in Schedule A hereto; and the aggregate principal amount of Investment Securities described in Schedule A hereto, together with all interest due or to become due on such Investment Securities, plus $ held as cash, will be sufficient to pay on , 2014, the prepayment premium, principal and interest of the Prepaid Certificates maturing on and after August 1, 2014, as shown in the Escrow Fund Cash Flow set forth in Schedule A hereto. (b) The Escrow Bank hereby acknowledges receipt of the written opinion of Grant Thornton LLP, independent certified public accountants, dated , 2014 relating to the Investment Securities (the"Verification Report"). SECTION 2. Use and Investment of Moneys. The Escrow Bank acknowledges receipt of the moneys described in Section 1 and agrees: (a) immediately to invest $ of the monies described in Section 1(a) hereof in the Investment Securities all as set forth in Schedule A hereto and to deposit such Investment Securities in the Escrow Fund and to hold $ uninvested as cash in the Escrow Fund; and (b) to make the payments required under Section 3 hereof at the times set forth in Section 3 hereof. SECTION 3. Refunding of the Prepaid Certificates. The City and the Authority hereby direct the Escrow Bank to complete any and all actions necessary in connection with the prepayment of the Prepaid Certificates pursuant to the Trust Agreement on 12014. SECTION 4. Performance of Duties. The Escrow Bank agrees to perform the duties set forth herein. SECTION 5. No Reinvestment. The Escrow Bank may not reinvest any uninvested amounts held as cash under this Agreement. SECTION 6. Indemnity. The City hereby assumes liability for, and hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify,protect, save and keep harmless the Escrow Bank and its respective successors, assigns, directors, agents, employees 2 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 426 and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Escrow Bank at any time (whether or not also indemnified against the same by the City or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out of the execution, delivery and performance of this Agreement, the establishment hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the purchase of the Investment Securities, the retention of the Investment Securities or the proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the provisions of this Agreement; provided,however,that the City and the Authority shall not be required to indemnify the Escrow Bank against the Escrow Bank's own negligence or willful misconduct or the negligent or willful misconduct of the Escrow Bank's respective agents and employees or the breach by the Escrow Bank of the terms of this Agreement. In no event shall the City, the Authority or the Escrow Bank be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this Section 6. The indemnities contained in this Section 6 shall survive the termination of this Agreement. SECTION 7. Responsibilities of the Escrow Bank. The Escrow Bank and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or securities deposited therein, the purchase of the Investment Securities, the retention of the Investment Securities or the proceeds thereof, the sufficiency of the Investment Securities to accomplish the defeasance of the Prepaid Certificates or any payment, transfer or other application of moneys or obligations by the Escrow Bank in accordance with the provisions of this Agreement or by reason of any non-negligent act, non-negligent omission or non-negligent error of the Escrow Bank made in good faith in the conduct of its duties. The recitals of fact contained in the "Whereas" clauses herein shall be taken as the statements of the City and the Authority, and the Escrow Bank assumes no responsibility for the correctness thereof. The Escrow Bank makes no representation as to the sufficiency of the Investment Securities to accomplish the defeasance of the Prepaid Certificates or to the validity of this Agreement as to the City or the Authority and, except as otherwise provided herein, the Escrow Bank shall incur no liability with respect thereto. The Escrow Bank shall not be liable in connection with the performance of its duties under this Agreement except for its own negligence, willful misconduct or default, and the duties and obligations of the Escrow Bank shall be determined by the express provisions of this Agreement. The Escrow Bank may consult with counsel,who may or may not be counsel to the City, and in reliance upon the written opinion of such counsel shall have full and complete authorization and protection with respect to any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Bank shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the City. The Escrow Bank shall incur no liability for losses arising from any investment made pursuant to this Agreement. The liability of the Escrow Bank to make the payments required by this Agreement shall be limited to the moneys and Investment Securities in the Escrow Fund. 3 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 427 No provision of this Agreement shall require the Escrow Bank to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. The Escrow Bank shall not be liable for the accuracy of any calculations provided herein. Any company into which the Escrow Bank may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a parry or any company to which the Escrow Bank may sell or transfer all or substantially all of its corporate trust business shall be the successor to the Escrow Bank without the execution or filing of any paper or further act,anything herein to the contrary notwithstanding. The City shall pay the Escrow Bank full compensation for its duties under this Agreement, including out-of-pocket costs such as publication costs, prepayment or prepayment expenses, legal fees and other costs and expenses relating hereto and, in addition, fees, costs and expenses relating to the purchase of any Investment Securities after the date hereof. Under no circumstances shall amounts deposited in the Escrow Fund be deemed to be available for said purposes. SECTION 8. Substitution of Investment Securities. At the written request of the City and upon compliance with the conditions hereinafter set forth, the Escrow Bank shall have the power to sell,transfer,request the prepayment or otherwise dispose of some or all of the Investment Securities in the Escrow Fund and to substitute noncallable nonprepayable obligations (the "Substitute Investment Securities") constituting direct obligations issued by the United States Treasury or obligations which are unconditionally guaranteed as to full and timely payment by the United States of America. The foregoing may be effected only i£ (i)the substitution of Substitute Investment Securities for the Investment Securities (or Substitute Investment Securities) occurs simultaneously; (ii)the amounts of and dates on which the anticipated transfers from the Escrow Fund to the trustee for the payment of the principal and/or prepayment price and/or interest on Prepaid Certificates will not be diminished or postponed thereby; (iii)the Escrow Bank shall receive the unqualified opinion of nationally recognized bond counsel to the effect that such disposition and substitution would not adversely affect the exclusion from gross income of interest on Prepaid Certificates, and that the conditions of this Section 8 as to the disposition and substitution have been satisfied and that the substitution is permitted by this Agreement; and (iv)the Escrow Bank shall receive from an independent certified public accountant a certification that, immediately after such transaction, the principal of and interest on the Substitute Investment Securities in the Escrow Fund will, together with other cash on deposit in the Escrow Fund available for such purpose, be sufficient without reinvestment to pay,when due,the principal or prepayment price and interest on Prepaid Certificates. Any cash from the sale of Investment Securities (including U.S. Treasury Securities) received from the disposition and substitution of Substitute Investment Securities pursuant to this Section 8 to the extent such cash will not be required, in accordance with the Trust Agreement and this Agreement, and as demonstrated in the certification described in (iv) above, at any time for the payment when due of the principal or prepayment price or interest on Prepaid Certificates shall be paid to the City as received by the Escrow Bank free and clear of any trust, lien, pledge or assignment securing such Prepaid Certificates or otherwise existing under this Agreement. Any other substitution of securities in the Escrow Fund not described in the previous sentence must satisfy the requirements of this Section 8. In no event shall the Escrow Bank invest or reinvest monies held under this Agreement in mutual funds or unit investment trusts. 4 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 428 SECTION 9. Irrevocable Instructions as to Notice. The Escrow Bank hereby acknowledges that upon the funding of the Escrow Fund as provided in this Agreement,the receipt of the opinion described in Section 1(b) of this Agreement and the giving of irrevocable instructions to publish and mail as provided in the Irrevocable Instructions and Request to Prior Trustee attached hereto as Schedule B it is in receipt of the items constituting all of the conditions precedent to the defeasance of the Prepaid Certificates under the Trust Agreement. SECTION 10. Amendments. This Agreement is made for the benefit of the City and the holders from time to time of the Prepaid Certificates and it shall not be repealed, revoked, altered or amended without the written consent of all such holders, the Escrow Bank, the City and the Insurer, as defined in the Trust Agreement for the 2002 Certificates; provided, however, but only after the receipt by the Escrow Bank of an opinion of nationally recognized bond counsel that the exclusion from gross income of interest evidenced and represented by the Prepaid Certificates and the 2014 Certificates will not be adversely affected for federal income tax purposes, the City, the Authority and the Escrow Bank may, with the consent of the Insurer, without the consent of, or notice to, such holders, amend this Agreement or enter into such agreements supplemental to this Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent with the terms and provisions of this Agreement for any one or more of the following purposes: (i)to cure any ambiguity or formal defect or omission in this Agreement; (ii)to grant to, or confer upon, the Escrow Bank for the benefit of the holders of the Prepaid Certificates any additional rights,remedies, powers or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Bank; and (iii)to include under this Agreement additional funds, securities or properties. The Escrow Bank shall be entitled to rely conclusively upon an unqualified opinion of nationally recognized bond counsel with respect to compliance with this Section 10, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the holders of the Prepaid Certificates or that any instrument executed hereunder complies with the conditions and provisions of this Section 10. SECTION 11. Term. This Agreement shall commence upon its execution and delivery and shall terminate on the later to occur of either (i)the date upon which the Prepaid Certificates have been paid in accordance with this Agreement, or (ii)the date upon which no unclaimed moneys remain on deposit with the Escrow Bank and all amounts owed to the Escrow Bank shall have been paid in full. SECTION 12. Compensation. The Escrow Bank shall receive its reasonable fees and expenses as previously agreed to; provided, however, that under no circumstances shall the Escrow Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or obligations in the Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Bank under this Agreement. SECTION 13. Resignation or Removal of Escrow Bank. (a) The Escrow Bank may resign by giving 30 days prior written notice in writing to the City. The Escrow Bank may be removed (1)by (i) filing with the City and the Escrow Bank of an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of the Prepaid Certificates then remaining unpaid, and (ii)the City delivering written notice to the Escrow Bank, or (2)by a court of competent jurisdiction for failure to act in accordance with the provisions of this Agreement upon application by the City or the holders of 5% in aggregate principal amount of the Prepaid Certificates then remaining unpaid. 5 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 429 (b) No resignation or removal of the Escrow Bank shall become effective until a successor Escrow Bank has been appointed hereunder and until the cash and investments held under this Agreement are transferred to the new Escrow Bank. The City or the holders of a majority in principal amount of the Prepaid Certificates then remaining unpaid may, by an instrument or instruments filed with the City, appoint a successor Escrow Bank who shall supersede any Escrow Bank theretofore appointed by the City. If no successor Escrow Bank is appointed by the City or the holders of such Prepaid Certificates then remaining unpaid, within 45 days after notice of any such resignation or removal, the holder of any such Prepaid Certificates or any retiring Escrow Bank may apply to a court of competent jurisdiction for the appointment of a successor Escrow Bank. SECTION 14. Severability. If any one or more of the covenants or agreements provided in this Agreement on the part of the City or the Escrow Bank to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be null and void and shall be deemed separate from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. SECTION 15. Counterparts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. SECTION 16. Governing Law. This Agreement shall be construed under the laws of the State of California. SECTION 17. Holidays. 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, shall be a legal holiday or a day on which banking institutions in the city in which is located the principal office of the Escrow Bank are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Agreement, and no interest shall accrue for the period after such nominal date. SECTION 18. Assignment. This Agreement shall not be assigned by the Escrow Bank or any successor thereto without the prior written consent of the City. [REMAINDER OF PAGE INTENTIONALLYLEFT BLANK] 6 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 430 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers and attested as of the date and year first written above. CITY OF CHULA VISTA, CALIFORNIA By: Its: Director of Finance ATTEST: City Clerk CHULA VISTA PUBLIC FINANCING AUTHORITY By: Its: Executive Director ATTEST: Secretary U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank By: Its: Authorized Officer S-1 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 431 SCHEDULE A "Investment Securities" are defined to be,United States Treasury Securities - State and Local Government Series (the"SLGS"). Settlement Maturity Date Principal Interest Rate Date ESCROW FUND CASH FLOW Escrow Net Escrow Date Requirement Receipts Excess Receipts Excess Balance Schedule A-1 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 432 SCHEDULE B IRREVOCABLE INSTRUCTIONS AND REQUEST TO PRIOR TRUSTEE 12014 U.S. BANK NATIONAL ASSOCIATION ESCROW AGREEMENT RELATING TO A REFUNDING OF CITY OF CHULA VISTA 2002 CERTIFICATES OF PARTICIPATION, (POLICE FACILITY PROJECT) (the "2002 Certificates") Ladies and Gentlemen: As trustee under that certain Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), you are hereby notified of the irrevocable election of the Chula Vista Public Financing Authority (the "Authority") and the City of Chula Vista (the "City") to deposit funds concurrently with this notice to prepay on , 2014 all of the outstanding 2002 Certificates maturing on and prior to August 1, 2029 (the"Prepaid Certificates"). You are hereby irrevocably instructed to mail, as provided in the Trust Agreement, notice of prepayment of the Prepaid Certificates scheduled to be prepaid prior to maturity. You are hereby further irrevocably instructed to mail, as soon as practicable, a notice to the holders of the Prepaid Certificates (in the form annexed hereto as Exhibit X) that the deposit of investment securities and moneys has been made with U.S. Bank National Association as Escrow Bank and that the projected withdrawals from such escrow have been calculated by on behalf of the City and the Authority to be adequate to pay the principal, prepayment price and interest evidenced and represented by said Prepaid Certificates outstanding as such become due or are subject to prepayment. Schedule B-1 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 433 CITY OF CHULA VISTA By: Its: Director of Finance CHULA VISTA PUBLIC FINANCING AUTHORITY By: Its: Executive Director Receipt acknowledged and consented to: U.S. BANK NATIONAL ASSOCIATION as Trustee By: Authorized Officer Schedule B-2 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 434 EXHIBIT X NOTICE OF DEFEASANCE OF CITY OF CHULA VISTA 2002 CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT) (the "2002 Certificates") Notice is hereby given to the holders of the outstanding $ 2002 Certificates of Participation (Police Facility Project) maturing on and prior to August 1, 2029 (the "Prepaid Certificates") that (i) such Prepaid Certificates have been prepaid and defeased; (ii)there has been deposited with U.S. Bank National Association, as Escrow Bank, moneys and investment securities as permitted by the Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), relating to the Prepaid Certificates, in an amount sufficient to prepay all of the Prepaid Certificates maturing on and after August 1, 2014, at the applicable prepayment price contained in the Trust Agreement; and (iii)the Escrow Bank has been irrevocably instructed to prepay all outstanding Prepaid Certificates on 12014. On , 2014, in accordance with the terms of the Trust Agreement,the Trustee mailed a prepayment notice for the Prepaid Certificates. If you have any questions regarding this notice, please contact the Account Manager, Alicia Estrada, at(213) 615-6018. Dated this day of 12014. CITY OF CHULA VISTA U.S. BANK NATIONAL ASSOCIATION, as Trustee X-1 DOCSOC/1647866x3/024036-0063 2014-02-18 Agenda Packet Page 435 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement, dated as of March 1, 2014 (the "Disclosure Agreement") is executed and delivered by the City of Chula Vista (the "City") and NBS (the "Dissemination Agent") in connection with the execution and delivery of $ City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "Certificates"). The Certificates are being executed pursuant to an Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), by and among the City, U.S. Bank National Association, as trustee (the "Trustee") and the Chula Vista Public Financing Authority (the "Authority"). The City covenants as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with the Rule (defined below). SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, 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 Comprehensive Annual Financial Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which (a)has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries), or (b)is treated as the owner of any Certificates for federal income tax purposes. "Disclosure Representative" shall mean the City Manager of the City, the Administrative Services Director of the City or their designee, or such other officer or employee as the City shall designate in writing from time to time. "Dissemination Agent" shall mean NBS, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB. "Listed Events" shall mean any of the events listed in Sections 5(a) and 5(b) of this Disclosure Agreement. "MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. "Official Statement" shall mean the Official Statement relating to the Certificates, dated 12014. "Participating Underwriter" shall mean De La Rosa&Co. 1 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 436 "Repository" shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. "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. "State" shall mean the State of California. SECTION 3. Provision of Annual Reports. (a) The City shall, or, upon delivery of the Annual Report to the Dissemination Agent, shall cause the Dissemination Agent to, not later than April 1 of each year, commencing April 1, [2014], provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City 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 they are not available by that date. If the City's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report. (b) Not later than fifteen(15)days prior to the date for the filing of an Annual Report,the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by fifteen (15) days prior to such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to inquire if the City is in compliance with subsection(a). (c) If the City is unable to provide to the Repository an Annual Report by the date required in subsection(a), the Dissemination Agent shall send a notice to the Repository in the form required by the Repository stating that the Annual Report has not been filed. (d) The Dissemination Agent shall: (i) determine each year prior to date for providing the Annual Report the name and address of the Repository if other than the MSRB; and (ii) file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided. 2 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 437 SECTION 4. Content of Annual Reports. The first Annual Report will consist of the Official Statement which will be filed on or about the date of execution and delivery of the Certificates. Thereafter, the City's Annual Report shall contain or include by reference the following: (a) The City's audited financial statements, prepared in accordance with generally accepted auditing standards for municipalities in the State of California. If the City's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) To the extent not contained in the audited financial statements filed pursuant to the preceding subsection(a)by the date required by Section 3 hereof, updates of Tables 9, 10, 11, 14, 17 through 23, 25 and 26 set forth in the Official Statement. 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 City or related public entities, which have been submitted to each of 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 MSRB. The City 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 City shall give, or cause the Dissemination Agent to give, notice to the Repository of the occurrence of any of the following events with respect to the Certificates in a timely manner not more than ten (10) business days after the event: 1. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting financial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB); 6. tender offers; 7. defeasances; 8. ratings changes; and 9. bankruptcy, insolvency,receivership or similar proceedings. 3 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 438 Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if material, in a timely manner not in excess of ten(10) Business Days after the occurrence of such event: 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 Certificates or other material events affecting the tax status of the Certificates; 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 Certificates; 6. notices of prepayment; and 7. release, substitution or sale of property securing repayment of the Certificates. (c) Whenever the City obtains knowledge of the occurrence of a Listed Event under 5(b) above, the City shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the City determines that knowledge of the occurrence of a Listed Event under 5(b) above would be material under applicable federal securities laws, the City shall file a notice of such occurrence with the Repository in a timely manner not more than 10 business days after the event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(7) and (b)(6) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Certificates pursuant to the Trust Agreement. 4 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 439 (e) The City hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the City and that the Dissemination Agent shall not be responsible for determining whether the City's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5. SECTION 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. The Dissemination Agent may resign by providing thirty days written notice to the City and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the City and shall have no duty to review any information provided to it by the City. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the City in a timely manner and in a form suitable for filing. SECTION 8. Amendment, Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City 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 related to the provisions of Sections 3(a), 4, or 5, 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 Certificates, or the type of business conducted; (b) The undertaking hereunder, as amended or taking into account such waiver,would, in the opinion of nationally recognized Certificate counsel, have complied with the requirements of the Rule at the time of the original execution and delivery of the Certificates, after taking into account any amendments or interpretations of the Rule,as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Certificates in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Certificates. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment is related to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in 5 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 440 quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the formed accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City 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 City 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 City shall have no obligation hereunder 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 City to comply with any provision of this Disclosure Agreement, any Holder or Beneficial Owner of the Certificates 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 Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the City to comply with this Disclosure Agreement shall be an action to compel performance. No Holder or Beneficial Owner may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time of up to thirty (30) days. SECTION 11. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees, to the extent permitted by law, 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 attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. In performing its duties hereunder, the Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, the Certificate holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the City: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: City Manager 6 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 441 To the Dissemination Agent: NBS 32605 Temecula Parkway Temecula, California 92592 SECTION 13. Beneficiaries. This Disclosure Agreement solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity. 7 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 442 SECTION 14. Signature. This Disclosure Agreement has been executed by the undersigned on the date hereof, and such signature binds the City to the undertaking herein provided. CITY OF CHULA VISTA By: Its: City Manager NBS, as Dissemination Agent By: Its: Authorized Officer 8 DOCSOC/1647868x4/024036-0063 2014-02-18 Agenda Packet Page 443 CITY OF CHULA VISTA 2014 REFUNDING CERTIFICATES OF PARTICIPATION (POLICE FACILITY PROJECT) PURCHASE CONTRACT 201 City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Ladies and Gentlemen: The undersigned, E. J. De La Rosa & Co., Inc., as underwriter (the "Underwriter") hereby offers to enter into this Purchase Contract with you, the City of Chula Vista (the "City"), for the purchase by the Underwriter and the delivery by you of the Certificates of Participation specified below. The proceeds of the Certificates will be used to (i) to refinance a portion of a Lease/Purchase Agreement dated as of June 1, 2002, as amended by a First Amendment to Lease/Purchase Agreement (the "First Amendment to Lease") dated as of March 1, 2014, between the City and the Chula Vista Public Financing Authority (the "Authority") (as amended, the "Lease") and to current refund a portion of the City's outstanding 2002 Certificates of Participation (Police Facility Project) (the "Refunded 2002 Certificates"), and (ii) pay the costs incurred in connection with the execution and delivery of the Certificates. This offer is made subject to acceptance by you prior to 11:59 p.m., California time, on the date hereof. Upon such acceptance, this Purchase Contract shall be in full force and effect in accordance with its terms and shall be binding upon you and the Underwriter. All terms not defined herein shall have the meanings set forth in the Trust Agreement(defined below). 1. Upon the terms and conditions and upon the basis of the representations herein set forth, the Underwriter hereby agrees to purchase for offering to the public, and the City hereby agrees to cause the Trustee (defined below) to execute and deliver to the Underwriter, all (but not less than all) of the $ aggregate principal amount of the City of Chula Vista 2014 Refunding Certificates of Participation (Police Facility Project) (the "Certificates") to be dated the Closing Date (and more fully described in the Official Statement defined below), evidencing proportionate undivided interests of the Owners thereof in Lease Payments to be made by the City to the Authority pursuant to the Lease, at a price of $ , being the principal amount of the Certificates, less an Underwriter's discount of $ and [less net original issue discount] [plus net original issue premium] of 1 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 444 The Underwriter agrees to make a bona fide public offering of all the Certificates at the initial public offering price or prices (or yields) set forth on Exhibit A attached hereto and made a part hereof, provided, however, the Underwriter reserves the right to change such initial public offering price as the Underwriter deems necessary or desirable, in its sole discretion in connection with the marketing of the Certificates, and to sell the Certificates to certain dealers (including dealers depositing the Certificates into investment trusts) and others at prices lower than the initial offering prices or higher than the yields set forth in the Official Statement relating to the Bonds, dated as of , 2014 (the "Official Statement"). The Underwriter also reserves the right (a) to over-allot or effect transactions that stabilize or maintain the market price of the Certificates at a level above that which might otherwise prevail in the open market, and (b) to discontinue such stabilizing, if commenced, at any time. A "bona fide public offering" shall include an offering to institutional investors or registered investment companies, regardless of the number of such investors to which the Certificates are sold. The City acknowledges and agrees that (i) the purchase and sale of the Certificates pursuant to this Purchase Contract is an arm's-length commercial transaction between the City and the Underwriter, and that the Underwriter has financial and other interests that differ from those of the City, (ii) in connection with such transaction the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to the City or any other person or entity and has not assumed a fiduciary responsibility in favor of the City with respect to the offering of the Certificates or the process leading thereto (whether or not the Underwriter has advised or is currently advising the City on other matters), (iii) the only obligations the Underwriter has to the City with respect to the transaction contemplated hereby expressly are set forth in this Purchase Contract, and (iv) the City has consulted with its own legal and other professional advisors to the extent it deemed appropriate in connection with the offering of the Certificates. The City acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (the "MSRB"). The Certificates evidence the proportionate undivided interest of the owners thereof in Lease Payments to be paid with respect to the Leased Premises (as described in the Lease defined below) by the City (the "Lease Payments") pursuant to the Lease, between the City and the Authority. The Authority's rights to receive Lease Payments and to exercise remedies upon an Event of Default under the Lease have been assigned to U.S. Bank National Association, as trustee (the "Trustee") for the benefit of the Certificate owners pursuant to the Amended and Restated Assignment Agreement, dated as of March 1, 2014, between the Authority and the Trustee (the"Assignment Agreement"). The Certificates shall be as described in and shall be secured under and pursuant to an Amended and Restated Trust Agreement, dated as of March 1, 2014 (the "Trust Agreement"), among the City, the Authority and the Trustee. 2. The City has authorized the Underwriter to use and distribute, in connection with the offer and sale of the Certificates, the Preliminary Official Statement dated , 2014 relating to the Certificates, which, together with the cover page and all appendices thereto, is herein called the "Preliminary Official Statement." The City hereby certifies such Preliminary Official Statement to be final as of its date for purposes of SEC Rule 2 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 445 15c2-12 adopted by the Securities and Exchange Commission on August 28, 1986, as amended (the "Rule"), with the exception of certain final pricing and related information as is permitted to be omitted therefrom as provided in the Rule. The Underwriter acknowledges that the City will provide the Preliminary Official Statement in an electronic format only. The Underwriter agrees to provide acopy of the Preliminary Official Statement to any potential customer on request in accordance with the Rule. 3. The City shall deliver to the Underwriter a final Official Statement, which may be in an electronic format only, within seven (7) business days after the execution of this Purchase Contract and in sufficient time to accompany or precede any sales confirmation that requests payment from any customer of the Underwriter. The City further agrees, that until the End Date (defined below) it will deliver one or more supplements to the Official Statement to the Underwriter in accordance with Section 50) below. The Underwriter shall inform the City in writing of the End Date, and covenants to file the Official Statement with the MSRB on a timely basis. "End Date" as used herein is that date which is the earlier of: (a) ninety (90) days after the end of the underwriting period (as defined in the Rule; or (b) the time when the Official Statement becomes available from the MSRB, but in no event less than twenty-five (25) days after the underwriting period (as defined in the Rule) ends. 4. At 9:00 A.M., California time, on , 2014, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the City and the Underwriter, the City will deliver (i) the Certificates to, or otherwise in care of, The Depository Trust Company ("DTC") in New York, New York, and (ii) the closing documents hereinafter mentioned at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation,Newport Beach, California, or another place to be mutually agreed upon by the City and the Underwriter. The Underwriter will pay the purchase price of the Certificates as set forth in Section 1 hereof by wire transfer of immediately available funds. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the"Closing." 5. The City represents,warrants and covenants to the Underwriter that: (a) The City is a municipal corporation and charter city, duly organized and validly existing pursuant to the Constitution and laws of the State of California (the "State") , and has all necessary power and authority to enter into and perform its duties under the Lease, the Trust Agreement, the Site Lease dated as of June 1, 2002, as amended by a First Amendment to Site Lease (the "First Amendment to Site Lease) dated as of March 1, 2014, between the City and the Authority (as amended, the "Site Lease"), , the Continuing Disclosure Agreement, dated as of March 31, 2014 (the "Continuing Disclosure Agreement") by and between the City and NBS Government Finance Group, the Escrow Agreement, dated as of March 1, 2014, by and among the City, the Authority and U.S. National Association, acting as escrow bank (the 3 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 446 "Escrow Bank") relating to the 2002 Certificates, and this Purchase Contract (collectively, the "City Documents")- (b) To the best knowledge of the City, neither the execution and delivery of the City Documents, or the approval of the Official Statement, and compliance with the provisions on the City's part contained therein, nor the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment of the terms hereof and thereof, materially conflicts with or constitutes a material breach of or default under nor materially contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in the security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the City Documents. (c) The City Documents 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 the enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles if sought and by the limitations on legal remedies imposed on actions against cities in the State of California. (d) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory agency having jurisdiction over the City required for the execution and delivery of the Certificates or the consummation by the City of the other transactions contemplated by the Official Statement and this Purchase Contract. (e) Except as otherwise disclosed in the Official Statement, to the best of the knowledge of the City, there is, and on the Closing (as hereinafter defined) there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the City to restrain or enjoin the delivery of any of the Certificates, or the payments to be made pursuant to the Lease, or in any way contesting or affecting the validity of the City Documents or the Certificates or the authority of the City to approve this Purchase Contract, or enter into the City Documents or contesting the powers of the City to enter into or perform its obligations under any of the foregoing or in any way contesting the powers of the City in connection with any action contemplated by this Purchase Contract or to restrain or enjoin the execution, sale and delivery of the Certificates or, except as described in the Preliminary Official Statement and the Official Statement, the payment of Lease Payments, nor, to the best knowledge of the City, is there any basis for any such action, suit, proceeding or investigation. (f) The Preliminary Official Statement provided to the Underwriter has been deemed final by the City, as required by the Rule. As of the date thereof and at all times 4 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 447 subsequent thereto up to and including the End Date, the information relating to the City, the Certificates, the Leased Premises, the use of proceeds and the City Documents contained in the Official Statement was and will be materially complete for its intended purposes. As of the date thereof, the information relating to the City, the Certificates, the Leased Premises, the use of proceeds and the City Documents contained in the Preliminary Official Statement and Official Statement was, and at all times subsequent thereto up to the Closing will be, true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect. (g) The City agrees to cooperate with the Underwriter in endeavoring to qualify the Certificates for offering and sale under the securities or blue sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the City will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified. (h) By official action of the City prior to or concurrently with the execution hereof, the City has duly approved the distribution of the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the City Documents and the consummation by it of all other transactions contemplated by the Official Statement and this Purchase Contract. (i) Except as otherwise disclosed in the Official Statement, to the best knowledge of the City, it is not in breach of or default under any material applicable law or administrative regulation of the State of California or the United States or any material applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject and in connection with which the City is obligated to make payments from its own funds, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument the consequence of which could be the materially and adversely affect the performance of the City under the City Documents. (j) If between the date of this Purchase Contract and the End Date an event occurs, of which the City has knowledge, which might or would cause the information relating to the City, the Leased Premises, or the City's functions, duties and responsibilities contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading in any material respect, the City will notify the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld and all expenses thereby incurred will be paid for by the City. 5 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 448 (k) If the information relating to the Leased Premises, the City, its functions, duties and responsibilities contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date of the Closing, the portions of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading in any material respect. (1) The City covenants that it will comply with all tax covenants relating to it in the City Documents and the Tax Certificate of the City (m) Substantially all the proceeds from the sale of the Certificates (after deducting the expenses of issuance and sale of the Certificates paid for from such proceeds) will be used to refund the Refunded 2002 Certificates, and the City will not take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Certificates to be applied in a manner contrary to that provided in the Trust Agreement and the Lease, as amended from time to time. (n) The City will deliver all opinions, certificates, letters and other instruments and documents reasonably required by the Underwriter and this Purchase Contract. (o) Any certificate of the City delivered to the Underwriter shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (p) As of the time of acceptance hereof and as of the Closing the City does not and will not have outstanding any indebtedness which is secured by a lien on the City's general fund except as disclosed in the Official Statement. (q) Between the date of this Purchase Contract and the date of Closing, the City will not, without the prior written consent of the Underwriter, and except as disclosed in the Official Statement, offer or issue any certificates, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, secured by a lien on the City's general fund. (r) The financial statements of, and other financial information regarding, the City contained in the Official Statement fairly presents the financial position and results of the operations of the City as of the dates and for the periods therein set forth and except as set forth in the Official Statement, such other financial information regarding the City contained in the Official Statement has been determined on a basis substantially consistent with that of the City's audited financial statements included in the Official Statement. (s) Since June 30, 2013, no material adverse change has occurred in the financial condition, assets, properties or results of operation of the City which is not described in the Official Statement. 6 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 449 (t) No event affecting the City has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (u) At or prior to the Closing, the City shall have duly authorized, executed and delivered the Continuing Disclosure Agreement. The Continuing Disclosure Agreement shall be substantially in the form attached to the Official Statement. Based on a review of it prior undertakings with respect to the Rule, and except as otherwise described in the Official Statement, neither the City, nor any agency of which the City Council serves as the governing body, has failed in any material respect to comply with any undertaking of the City under the Rule in the previous five years. 6. [Reserved]. 7. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties and agreements of the City contained herein, and the opinions of Special Counsel, Counsel to the Trustee, Counsel to the City, Counsel to the Authority and Counsel to the Underwriter required hereby. The Underwriter's obligations under this Purchase Contract are and shall be subject to the following further conditions: (a) At the time of Closing, this Purchase Contract, the Trust Agreement, the Site Lease, the Assignment Agreement, the Continuing Disclosure Agreement and the Lease (collectively the "Legal Documents") all as described in the Official Statement, shall be in full force and effect as valid and binding agreements between or among the various parties thereto and the Legal Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and there shall be in full force and effect such resolutions as, in the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation (herein called "Special Counsel"), shall be necessary in connection with the transactions contemplated hereby. (b) At or prior to the Closing, the Underwriter shall receive the following documents, in each case satisfactory in form and substance to them and their counsel: (1) The unqualified approving opinion of Special Counsel, dated the date of Closing, addressed to the City, the Trustee and the Underwriter (or a reliance letter to the Underwriter and the Trustee), in substantially the form attached as APPENDIX D to the Official Statement; (2) A supplemental opinion of Special Counsel, addressed to the Underwriter, in form and substance to the effect that: (i) The statements and information contained in the Official Statement on the cover page and under the captions "INTRODUCTION," "THE CERTIFICATES", "SOURCES OF PAYMENT FOR THE CERTIFICATES" and "LEGAL MATTERS — Tax Matters," and in APPENDICES A, C and D, insofar as such statements purport to summarize certain provisions of the Certificates, the Legal Documents and such counsel's 7 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 450 opinion with respect to the validity of, and certain Federal and State of California tax matters relating to, the Certificates, are true and accurate in all material respects; (ii) The Certificates are exempt from registration under the Securities Act of 1933, as amended (the "1933 Act"), and the Trust Agreement is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended; and (iii) The Legal Documents have been duly authorized, executed and delivered by the City, and, assuming due authorization, execution and delivery by the other parties thereto, constitute the legal, valid and binding agreements of the City enforceable against it in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or other laws affecting the enforcement of creditors' rights generally and equitable remedies if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and limitations on remedies against cities, except that no opinion is expressed as to any provisions with respect to indemnification, penalty, contribution, choice of law, choice of forum or waiver provisions contained therein. (3) A defeasance opinion, dated the Closing Date and addressed to the City, the Underwriter and the Escrow Agent, of Special Counsel, in the form required by the Trust Agreement with respect to the outstanding Refunded 2002 Certificates. (4) An opinion of the City Attorney, dated as of the Closing and addressed to Bond Counsel and the Underwriter, in form and substance acceptable to Bond Counsel and counsel for the Underwriter, to the following effect: (i) The City is a municipal corporation and charter city, duly organized and validly existing under the Constitution and the laws of the State of California. (ii) The City Resolution approving and authorizing the execution and delivery of the First Amendment to Site Lease, the First Amendment to Lease, the Trust Agreement, the Continuing Disclosure Agreement, the Escrow Agreement and this Purchase Contract and approving the Official Statement was duly adopted at a meeting of the City Council which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout. (iii) Except as disclosed in the Official Statement, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending, or to the best of such counsel's knowledgethreatened, against or affecting the City, which would materially and adversely impact the City's ability to complete the transactions described in and 8 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 451 contemplated by the Official Statement, to restrain or enjoin the payments under the Lease or in any way contesting or affecting the validity of the City Documents, the City Resolution or the Certificates or the transactions relating to the Leased Premises as described and defined in the Official Statement. (iv) The execution and delivery of the City Documents, the adoption of the City Resolution and the approval of the Official Statement, and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law,regulation, court order or consent decree to which the City is subject. (v) The City Documents 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 obligations of the City enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally and by the application of equitable principles if equitable remedies are sought and by the limitations on legal remedies imposed on actions against cities in the State of California. (vi) No authorization, approval, consent, or other order of the State of California or any other governmental authority or agency within the State of California, other than the City Council, is required for the valid authorization, execution and delivery of the City Documents and the approval of the Official Statement. (vii) To the best of such counsel's knowledge, the information in the Official Statement under the caption "LEGAL MATTERS—Absence of Litigation" does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (5) The opinion of Counsel to the Authority, dated the date of Closing, in form and substance satisfactory to the Underwriter, addressed to the Underwriter, to the effect that: (i) The Authority is a joint exercise of powers agency organized under the laws of the State of California. (ii) The resolution of the Authority (the "Authority Resolution") approving and authorizing the execution and delivery by the Authority of the First Amendment to Lease, the Trust Agreement, the First Amendment to Site Lease and the Assignment Agreement (collectively, the 9 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 452 "Authority Documents") was duly adopted at a meeting of the Governing Board of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout. (iii) There is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best knowledge of such counsel threatened, against the Authority, to restrain or enjoin the receipt of or assignment of the Lease Payments under the Authority Documents, or in any way contesting or affecting the validity of the Certificates or the Authority Documents. (iv) The execution and delivery of the Authority Documents, the adoption of the Authority Resolution, and compliance by the Authority with the provisions of the foregoing, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the Authority a breach or default under any agreement or other instrument to which the Authority is a party or by which it is bound or, to the best knowledge of such counsel, any existing law, regulation, court order or consent decree to which the Authority is subject. (v) The Authority Documents have been duly authorized, executed and delivered by the Authority, and, assuming due authorization, execution and delivery by the other parties thereto constitute legal, valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally and by the application of equitable principles if equitable remedies are sought and by the limitations on legal remedies imposed on actions against public agencies in the State of California. (vi) No authorization, approval, consent, or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Authority is required for the valid authorization, execution, delivery and performance by the Authority of the Authority Documents, or for the adoption of the Authority Resolution, which has not been obtained. (6) The opinion of counsel to the Trustee and Escrow Agent (collectively, the `Bank"), dated the date of Closing and addressed to the City and the Underwriter, to the effect that: (i) the Bank is a national banking association, duly organized and validly existing under the laws of the United States, having full power and being qualified to enter, accept and administer the trust created under the Trust Agreement, the Escrow Agreement and the Assignment Agreement, and to execute and deliver the Certificates; 10 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 453 (ii) the Trust Agreement, the Escrow Agreement and the Assignment Agreement have been duly authorized, executed and delivered by the Bank and constitute the valid and binding obligations of the Bank in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or equitable principles relating to or limiting creditors' rights generally; (iii) the execution and delivery of the Certificates has been duly authorized by the Bank and the Bank has duly executed and delivered the Certificates in accordance with the Trust Agreement; (iv) No authorization, approval, consent or order of any governmental agency or any other person is required for the valid authorization, execution and delivery of the Trust Agreement, the Escrow Agreement or the Assignment Agreement or the execution and delivery of the Certificates; and (v) to the best knowledge of such counsel, after investigation, and except as disclosed in the Preliminary Official Statement and Official Statement, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or threatened against or affecting the Bank, in any way contesting or affecting the validity of the Trust Agreement, the Escrow Agreement or the Assignment Agreement, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity and enforceability of the Trust Agreement, the Escrow Agreement or the Assignment Agreement. (7) A letter of Stradling Yocca Carlson & Rauth, a Professional Corporation, as disclosure counsel to the City, addressed to the City and the Underwriter, to the effect that without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and making no representation that they have independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available to them in the course of their participation in the preparation of the Official Statement, nothing has come to such counsel's attention which would lead them to believe that the Official Statement, as of its date or as of the Closing Date, including the cover page (in each case except for financial statements, the information set forth in the Appendices to the Official Statement, any CUSIP numbers, financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book-entry, tax-exemption, or The Depository Trust Company included or referred to therein, which disclosure counsel expressly excludes from the scope of such letter and as to which disclosure counsel expresses no opinion or view) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. 11 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 454 (8) An opinion, dated the date of the Closing addressed to the Underwriter, of Nossaman LLP, counsel to the Underwriter, in such form as may be acceptable to the Underwriter. (9) A certificate, dated the date of Closing, signed by a duly authorized official of the City satisfactory in form and substance to the Underwriter, (a) confirming as of such date the representations and warranties of the City contained in this Purchase Contract; (b) certifying that the City has complied with all agreements, covenants and conditions to be complied with by the City at or prior to the Closing under the Legal Documents; (c) certifying that to the best of such official's knowledge, no event affecting the City has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing the statements or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; and (d) certifying that the City has authorized and consented to the inclusion in the Official Statement of the City's financial report and accountant's opinion for the year ended June 30, 2013, and no further consent of any party is required for such inclusion. (10) A certificate, dated the date of Closing, signed by a duly authorized official of the Authority satisfactory in form and substance to the Underwriter, to the effect that: (i) The Authority is a joint powers authority, duly organized and existing under the Constitution (the "Constitution") and laws of the State, including the Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State (the "JPA Act"), with full right, power and authority to enter into, execute and deliver the Authority Documents and to perform its obligations thereunder. (ii) By all necessary official action, the Authority has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in the Authority Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered by the parties hereto, the Authority Documents will constitute the legally valid and binding obligations of the Authority enforceable upon the Authority in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditor's rights generally. The Authority has complied, and will at the Closing be in compliance in all respects,with the terms of the Authority Documents. (iii) As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Authority is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or 12 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 455 the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach, default or event could have an adverse effect on the Authority's ability to perform its obligations under the Authority Documents; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the Authority Documents and compliance by the Authority with the provisions thereof do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Authority (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument except as provided in the Authority Documents. (iv) As of the date hereof and the Closing, except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending (notice of which has been received by the Authority), or to the best knowledge of the Authority threatened against the Authority: (i) in any way questioning the existence of the Authority as a joint powers authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the execution or delivery of any of the Certificates, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Authority Documents or the consummation of the transactions on the part of the Authority contemplated thereby, or contesting the powers of the Authority or its authority to assign the lease Payments pursuant to the Assignment Agreement; (v) All authorizations, approvals, licenses, permits, consents and orders of or filings with any governmental authority, legislative body, board, agency or commission having jurisdiction in the matters which are required for the due authorization of, which would constitute a condition precedent to or the absence of which would adversely affect the due performance by the Authority of its obligations in connection with, the Authority Documents have been duly obtained or made, except as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds. 13 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 456 (vi) Any certificate signed by any authorized officer of the Authority and delivered to the Underwriter shall be deemed to be a representation and warranty by the Authority to the Underwriter as to the statements made therein. (vii) As of the time of acceptance hereof and as of the date of Closing, except as otherwise disclosed in the Official Statement, the Authority has complied with the filing requirements of the JPA Act. (11) A copy of an ALTA or CLTA title insurance policy in an amount equal to the principal amount of the Certificates, insuring the City's leasehold interest in the Leased Premises subject only to permitted encumbrances or such other encumbrances approved in writing by the Underwriter. (12) Two executed or certified copies of the Legal Documents. (13) Two certified copies of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of documents such as the Certificates, the Trust Agreement and the Assignment Agreement. (14) Copies of the City Resolution certified by the City Clerk authorizing the execution and delivery of the City Documents and the Official Statement. (15) Copies of the Authority Resolution certified by the Secretary of the Authority, authorizing the execution and delivery of the Authority Documents. (16) Tax certifications by the City in form and substance acceptable to Special Counsel and counsel to the Underwriter. (17) A certificate of Harrell & Company Advisors, LLC, as Financial Advisor, dated the Closing Date and addressed to the City and the Underwriter, to the effect that while the Financial Advisor has not independently verified or undertaken an independent investigation of the information in the Preliminary Official Statement and the Official Statement, based on its participation in the preparation and review of the Preliminary Official Statement and Official Statement, no information has come to its attention which would lead it to believe that the information contained in the Preliminary Official Statement and Official Statement is as of the date of delivery of the Bonds, not true or correct in all material respects, or that the Preliminary Official Statement and the Official Statement contains any untrue statement of a material fact or omits to state a material fact where necessary to make a statement not misleading in light of the circumstances under which it was made. 14 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 457 (18) A Certificate of the Bank, dated the Closing Date to the effect that: (i) the Bank is duly organized and existing as a national banking association in good standing under the laws of the United States having the full power and authority to enter into and perform its duties under the Trust Agreement, the Escrow Agreement and the Assignment Agreement and to execute and deliver the Certificates to the Underwriter pursuant to this Purchase Contract; (ii) the Bank is duly authorized to enter into the Trust Agreement, the Escrow Agreement and the Assignment Agreement, and when the Trust Agreement, the Escrow Agreement and the Assignment Agreement are duly executed and delivered by the respective parties thereto, to execute and deliver the Certificates to the Underwriter pursuant to the Trust Agreement; (iii) no consent, approval, authorization or other action by any governmental or regulatory agency having jurisdiction over the Bank that has not been obtained is or will be required for the execution and delivery of the Certificates or the consummation by the Bank of the other transactions contemplated by this Purchase Contract, except as such may be required under the state securities or blue sky laws in connection with the distribution of the Certificates by the Underwriter; (iv) the execution and delivery by the Bank of the Trust Agreement, , the Escrow Agreement, the Certificates, the Assignment Agreement and compliance with the terms thereof 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 Bank 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 Bank or any of its activities or properties (except that no representation, warranty or agreement is made by the Bank with respect to any Federal or state securities or blue sky laws or regulations), or (except with respect to the lien of the Trust Agreement) result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Bank; (v) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending or to the best of the Bank's knowledge threatened against or affecting the existence of the Bank or seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates or the collection of Lease Payments to pay the principal and interest which are represented by the Certificates, or in any way contesting or affecting the validity or enforceability of the Certificates, the Trust Agreement, the Escrow Agreement or the Assignment Agreement or contesting the powers of the Bank or its authority to enter into and 15 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 458 perform its obligation under any of the foregoing, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated hereby, or which, in any way, would adversely affect the validity of the Certificates, the Trust Agreement, the Assignment Agreement, the Escrow Agreement or any agreement or instrument to which the Bank is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby; and (vi) subject to the provisions of the Trust Agreement, the Bank will apply the proceeds from the Certificates to the purposes specified in the Trust Agreement. (19) If required, the written consent of the City auditing firm to the inclusion of its opinions relating to the City's financial statements in the Preliminary Official Statement and the Official Statement. (20) A copy of the verification report of Grant Thornton LLP, concluding that the amounts on deposit under the Escrow Agreement, together with interest thereon, are sufficient to defease the Refunded 2002 Certificates. (21) Evidence that the federal tax information form 8038-G has been prepared for filing. (22) A copy of the Notice of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code. (23) Evidence that Standard & Poor's has assigned its municipal bond rating of " " to the Certificates, and that such rating continues in effect as of the Closing. (24) Such additional legal opinions, certificates, proceedings, instruments and other documents as Special Counsel and Counsel for the Underwriter may reasonably request to evidence compliance by the Trustee with legal requirements, the truth and accuracy, as of the time of Closing, of the representations contained herein and in the Official Statement and the due performance or satisfaction by the Trustee, the Authority and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied. (c) All matters relating to this Purchase Contract, the Certificates and the sale thereof, the Legal Documents and the consummation of the transactions contemplated by this Purchase Contract shall have been approved by the Underwriter and Counsel for the Underwriter. If the conditions to the Underwriter's obligations contained in this Purchase Contract are not satisfied or if the Underwriter's obligations shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the City shall have any further obligation hereunder. 16 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 459 8. The Underwriter shall have the right to terminate this Purchase Contract, without liability therefor, by written notification to the City if at any time at or prior to the Closing: (i) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made,not misleading in any material respect; or (ii) the marketability of the Certificates or the market price thereof, or the ability of the Underwriter to enforce contracts for the sale of the Certificates, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Contract in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any Federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other Federal or State authority materially adversely affecting the Federal or State tax status of the City, or the interest on the Certificates or notes or obligations of the general character of the Certificates; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the States or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Certificates, or the ability of the Underwriter to enforce contracts for the sale of the Certificates; or (iv) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Certificates, or the issuance, offering or sale of the Certificates, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Certificates, or the Certificates, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act 17 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 460 of 1933, as amended and as then in effect, or that the Trust Agreement needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (v) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority by any national securities exchange which restrictions materially adversely affect the Underwriter's ability to market the Certificates; or (vi) a general banking moratorium shall have been established by federal or State authorities; or (vii) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other escalation or outbreak of hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, calamity or crisis on the financial markets of the United States, being such as, in the reasonable opinion of the Underwriter, would materially affect the ability of the Underwriter to market the Certificates or the ability of the Underwriter to enforce contracts for the sale of the Certificates; or (viii) the commencement of any action, suit, investigation or proceeding which, in the judgment of the Underwriter, materially adversely affects the market price of the Certificates or the ability of the Underwriter to enforce contracts for the sale of the Certificates; or (ix) there shall be in force a general suspension of trading on the New York Stock Exchange; or (x) the market for the Certificates or the market prices of the Certificates or the ability of the Underwriter to enforce contracts for the sale of the Certificates shall have been materially and adversely affected, in the reasonable professional judgment of the Underwriter; or (xi) an event described in Section 50) hereof shall have occurred which, in the reasonable professional judgment of the Underwriter, requires the preparation and publication of a supplement or amendment to the Official Statement; or (xii) any rating of, or credit outlook on, the Certificates or other obligations of the City by a national rating agency shall have been withdrawn or downgraded; or 9. Performance by the City of its obligations under this Purchase Contract is conditioned upon (i) performance by the Underwriter of its obligations hereunder and (ii) receipt by the Underwriter of all opinions and certificates to be delivered at Closing by persons and entities other than the City. 10. After the Closing and until the End Date, if any event relating to or affecting the City shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to 18 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 461 an initial purchaser of the Certificates, the City will forthwith prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to an initial purchaser of the Certificates, not misleading. The costs of preparing any necessary amendment or supplement to the Official Statement to be utilized until the End Date shall be borne by the City. For the purposes of this section the City will furnish such information as the Underwriter may from time to time request. 11. In connection with the initial placement and underwriting, the City shall pay the following expenses from the proceeds of the Certificates: (a) the cost of preparation, printing, engraving, execution and delivery of the Certificates; (b) the acceptance fees of the Bank and any fees and expenses of the Bank's counsel; (c) any fees charged by any rating agency for rating the Certificates; (d) the fees and disbursements of Special Counsel, Disclosure Counsel, Counsel to the City and the Authority, Underwriter Counsel and any financial advisor or independent certified public accountant; (e) the cost of preparation, distribution, delivery, amendment or supplement of the Official Statement, the Blue Sky and Legal Investment Survey and this Purchase Agreement and expenses to qualify the Certificates for sale under any Blue Sky laws, and (f) as provided in the engagement agreement between the City and the Underwriter, any out-of-pocket disbursements of the City and of the Underwriter incurred in connection with the public offering and distribution of the Certificates, including any advertising expenses and expenses approved by the City (included in the expense component of the spread) incurred on behalf of the City's employees which are incidental to implementing this Purchase Contract, including, but not limited to, meals, transportation and lodging of those employees. All other out-of-pocket expenses of the Underwriter, shall be paid by the Underwriter. 12. Any notice or other communication to be given to the Underwriter may be given by delivering the same to E. J. De La Rosa & Co., Inc., 456 Montgomery Street, 19th Fl., San Francisco, CA 94104, Attention: Holly Vocal. Any notice or other communication to be given to the City may be given by delivering the same to addresses initially provided herein, Attention: Director of Finance. The approval of the Underwriter when required hereunder or the determination of satisfaction as to any document referred to herein shall be in writing signed by E. J. De La Rosa& Co. and delivered to you. 13. This Purchase Contract is made solely for the benefit of the Cityand the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof. 14. This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which such counterparts shall together constitute but one and the same instrument. 19 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 462 15. This Purchase Contract shall be governed by the laws of the State of California. E.J. DE LA ROSA & CO.,INC. By: Title: Accepted: CITY OF CHULA VISTA By: Authorized Officer Time of Execution: 20 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 463 EXHIBIT A MATURITY SCHEDULE Maturity Date Principal Interest Price or August 1 Amount Rate Yield EXHIBIT A 0019_10_Item 17-Chula Vista 2014 COP Bond Purchase Agreement 2014-02-18 Agenda Packet Page 464 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0097, Version: 1 RATIFICATION OF APPOINTMENT OF MAX ZAKER TO THE HOUSING ADVISORY COMMISSION City of Chula Vista Page 1 of 1 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 465 Mayor and City Council City Of Chula Vista 276 Fourth Avenue �--- Chula 1.55 Ca 619.4 MEMO UTY OF 619.691.5444—619.476.5379 Fax CHUTA VISTA Februaryy 13, 2014 TO:. Kerry Bigelow, Senior Deputy City Clerk Sheree Kansas, Deputy City Clerk CC: Jill Maland, Assistant City Attorney FROM: Jennifer Quijano, Constituent Services Manage t�� RE'' Housing Advisory Commission Mayor Cox would like to recommend Max Zaker for appointment to the Housing Advisory Commission. Max will replace Armida Martin Del Campo. Please place this item on the February 18, 2014 Council agenda for ratification and schedule the oath of office for the next available-City Council meeting. Thank you. 2014-02-18 Agenda Packet Page 466 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0086, Version: 1 COUNCILMEMBER RAMIREZ Consideration of City support of the International Friendship Games to be held at Mater Dei High School, June 7, 2014. City of Chula Vista Page 1 of 1 Printed on 2/13/2014 2014-02-18 Agenda Packet powered by Leg age 467 # City of Chula Vista t" Gry Of CHI)LAWTA Legislation Text File #: 14-0068, Version: 1 CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Government Code Section 54956.9 (b) One Case. There is an ongoing disagreement that between the "Participating Agencies" (including the City of Chula Vista), on the one hand, and the City of San Diego and Padre Dam Municipal Water District, on the other hand, over responsibility for reimbursing Padre Dam for its overpayment of wastewater fees dating back to 1998 under the terms of the Master Wastewater Disposal Agreement between the parties. City of Chula Vista Page 1 of 1 Printed on 2/13/2014 istar 2014-02-18 Agenda Packet powered by Leg age 468