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2014-05-20 Agenda Packet
I declare under penalty of perjury that I am 2mployed by the City of Chula Vista i� the ;�-- - �_-_� Office of the City Cterk and that I posted Ihis _�,�..,....-cY"=�Y�'= ' doc�ment on the bulletin board accordin o a.._ —:;w' Brown Act requirements. `�4 r� . ...._ _... :�- _ . ; r �.a-�.t:� __�-"�' at � 16 �� Signe . :�- ' � vr.�:' cnv oF , � �� , -�� CHULA VISfA . , • - • _�� - . � e � :;_ _ � � Cheryl Cox, Mayor Patricia Aguilar, Councilmember James D. Sandoval, City Manager Pamela Bensoussan, Councilmember Glen R. Googins, CityAttorney Rudy Ramirez, Councilmember ponna R. Norris, City Clerk Mary Salas, Councilmember Tuesday, May 20, 2014 2:00 PM Council Chambers 276 4th Avenue, Building A Chula Vista, CA 91910 SPECIAL MEETINGS OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY AND THE HOUSING AUTHORITY MEETING JOINTLY WITH THE CITY COUNCIL OF THE CITY OF CHULA VISTA REVISED 5/16/14 Nolice is he�eby given that the Mayor of the City of Chula Vista has called and will convene Speaal MeeGngs of the Suxessor Agency to the Redevelopment Agency and the. Housing Authonty meeting jointly with the City Council on Tuesday, May 20, 2014, at 2:00 p.m. in the Council Chambers, locafed at 276 Fourth Avenue, Building A, Chula Usta, Califomia to consider items on fhis agenda. 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. 14-0302 PRESENTATION BY MARKETING AND COMMUNICATIONS MANAGER ANNE STEINBERGER ANNOUNCING THE LEAGUE OF AMERICAN BICYCLISTS' DESIGNATION OF CHULA VISTA AS A BICYCLE FRIENDLY COMMUNITY, BRONZELEVEL Ciry o/Chu/a Yuta Page 1 Prinied an 5/1fi/1010 City Council Agenda May 20, 2014 CONSENT CALENDAR (Items 1 - 7) 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 �emoved for discussion. If you wish to speak on one of these items, p/ease fill out a "Request to Speak' form (available in the lobby) and submit it to the City Clerlc prior to the meeting. Items pulled from the Consent Calendar will be discussed immediately following the Consent Calendar. 1. 14-0303 WRITTEN COMMUNICATIONS Letter of resignation from Sandra Villegas-Zuniga, Civil Service Commission, effective December 1, 2014. srar�ae�omme„aaso,,: Council accept the resignation effective December 1, 2014. 2. 14-0211 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING THE 2014 GMOC ANNUAL REPORT, AND DIRECTING THE CITY MANAGER TO UNDERTAKE ACTIONS NECESSARY TO IMPLEMENT REPORT RECOMMENDATIONS AS PRESENTED IN THE STAFF RESPONSES AND PROPOSED IMPLEMENTING ACTIONS SUMMARY oePa�e�r: Development Services Department - Advance Planning Division StaflRecommendaGon: COUf1Cl� BC�Opt th2 f2S0�UtI01l. Ciry o/Chula Ysia Page 1 Pnntetl an 5/7fi'107a City Council � Agenda May 20, 2014 3. 14-0274 RESOLUTION OF THE CHULA VISTA HOUSING AUTHORITY OF THE CITY OF CHULA VISTA AUTHORIZING THE • ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS IN ONE OR MORE SERIES IN A CUMULATIVE AND AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $8 MILLION FOR THE PURPOSE OF FINANCING THE ACQUISITION AND REHABILITATION OF THE KIKU GARDENS (GARDEN VILLAS) HOUSING PROJECT; APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF ANY AND ALL DOCUMENTS NECESSARY TO ISSUE THE BONDS, COMPLETE THE TRANSACTION AND IMPLEMENT THIS RESOLUTION, AND RATIFYING AND APPROVING ANY ACTION HERETOFORE TAKEN IN CONNECTION WITH THE BONDS oe�,vne�r: Development Services Department - Housing Division StaNRecommendatlon: AUthOfl�/ BC�OPt th8 f2SO�UtlOf1. 4. 14-0249 RESOLUTION OF THE CITY COIJNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR SERVICES TO WINBOURNE CONSULTING, LLC TO PROVIDE PROJECT MANAGEMENT SERVICES oepart"'e"�: police Department StaHRecommendaUon: COUf1Cl� BdOPt th@ feSO�UtIOfI. � 5. 14-0241 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING CERTAIN ADDITIONAL SERVICES IN ACCORDANCE WITH ARTICLE I OF THE EXISTING AGREEMENT DATED NOVEMBER 9, 2010, APPROVED IN ACCORDANCE WITH COUNCIL RESOLUTION NO. 2010-263, BETWEEN THE CITY OF CHULA VISTA AND RICK ENGINEERING COMPANY IN THE AMOUNT OF $121 ,000 FOR �REPARING AND PERMITTING THE ENVIRONMENTAL MITIGATION FOR BONITA CANYON EMERGENCY REPAIR PROJECT (DR189) (This item was continued from the May 13, 2014 meeting.) � oe��e�r: public Works Department SwHRecommendatlon: COU�CI� BdOPt th2 f@SO�UfIOfI. Ciry o/Chula Vsfa Page 3 Pnnretl on Y1fi�I01d Ci� Council Agenda May 20, 2074 6. 14-0225 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE PERFORMING AND VISUAL ARTS GRANT TASK FORCE'S SELECTION OF THE FISCAL YEAR 2014 PERFORMING AND VISUAL ARTS GRANTS RECIPIENTS AND MONETARY GRANT AWARDS TOTALING $71,037 oepa.vne�r: Library Department StaHRecommendation: COUf1Cl� BC�Opt thB �2SO�UtI0f1. 7. 14-0278 QUARTERLY FINANCIAL REPORT FOR THE QUARTER ENDING MARCH 31, 2014 AND CONSIDERATION OF AMENDMENTS TO THE FISCAL YEAR 2013/2014 BUDGET A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA MAKING VARIOUS AMENDMENTS TO THE FISCAL YEAR 2013/2014 BUDGET TO ADJUST FOR VARIANCES AND APPROPRIATING FUNDS THEREFOR (4/5 VOTE REQUIRED) B. RESOLUTION OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AMENDING THE REDEVELOPMENT OBLIGATION RETIREMENT FUND BY TRANSFERRING $45,660 FROM THE PERSONNEL SERVICES CATEGORY TO THE OTHER EXPENSES CATEGORY (4/5 VOTE REQUIRED) oe��e�r: Finance Department sraflRecomme�dauo�: CounCil/AgenCy accept the report. Council adopt resolution A and Agency adopt resolution B. 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 faking 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. Clry o1 Chula Ysia Page 0 Pnn[ed on 5/16�'1014 City Council Agenda May 20, 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. 8. 14-0266 CONSIDERATION OF ACCEPTING THE 2014 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT FUNDS RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $52,296 FROM THE BUREAU OF JUSTICE ASSISTANCE FOR THE 2014 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT °ePa'v"e"r: police Department sranae�ommenaa�o�: Council conduct the public hearing and adopt the resolution. 9. 14-0316 CONSIDERATION OF ADOPTION OF ORDINANCES AMENDING TITLE 19 (REGULATING PLANNING AND ZONING) AND CHAPTER 9.13 (REGULATING LICENSING AND OPERATIONAL STANDARDS) OF THE CHULA VISTA MUNICIPAL CODE CONCERNING SEXUALLY ORIENTED BUSINESSES . Deparvnent CI�/AttOfflBy � StaffRecommendatlon: COUf1CII open the public hearing and continue to a date to be specified. ACTION ITEMS The Item(s) listed in this section of the agenda will be considered individually by the Council and a�e 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 Cih� Cler;:prior to the meeting. 10. 14-0306 PRESENTATION OF THE CITY MANAGER'S PROPOSED BUDGET FOR FISCAL YEAR 2014-15 oePa'tr"e"c Finance Department staARecommendadon: COUf1Cll/Ag2f1Cy/AuthOfity hear the presentation and provide comments. Ciry o1 Chula YSYa Page 5 Pnnfed on SH62011 City Council Agenda May 20,2014 CITY MANAGER'S REPORTS MAYOR'S REPORTS COUNCILMEMBERS' COMMENTS 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 o�ce in accordance with the Ralph M. Brown Act (Government Code 54957.7). 11. 14-0313 CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9 (a) City of Chula Vista v. Bay & E, Inc., et al., San Diego Superior Court, Case No. 37-2013-00055103-CU-MC-CTL. 12. 14-0315 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. 13. 14-0317 PUBLIC EMPLOYEE APPOINTMENT PURSUANT TO GOVERNMENT CODE SECTION 54957(b) Title: City Manager City o/Chula Vsia Page 6 Pnntetl on 5/16/20f1 City Council Agenda May 20,2014 ADJOURNMENT to the Regular City Council Meeting on May 27, 2014, at 2:00 p.m., in the Council Chambers. Materials provrded to the City Council related to any open-session item on this agenda are available for public review at the City Clerk's O�ce, located in City Hall at 276 Fourth Avenue, Building A, during normal business hours. In compliance with fhe AMERICANS WITH DISABILITIESACT The City of Chula Vista requests individuals who require special accommodations to access, attend, and/or participate in a City meetrng, activity, or service, contact the City Clerk's O�ce at(619) 691-5041(Califomia Relay Service is available for the hearing impaired by dialing 711) at least forty-eight hours in advance of the meeting. Sign up at www.chulavistaca.gov to receive email notifications when City Councrl agendas are published online. Cfty o/Chula Ysta Page 7 Pnnted on 5/1Y10f1 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0302, Item#: A. PRESENTATION BY MARKETING AND COMMUNICATIONS MANAGER ANNE STEINBERGER ANNOUNCING THE LEAGUE OF AMERICAN BICYCLISTS' DESIGNATION OF CHULA VISTA AS A BICYCLE FRIENDLY COMMUNITY, BRONZE LEVEL City of Chula Vista Page 1 of 1 Printed on 5/15/2014 powered by Legis 2014-05-20 Agenda Packet Page 8 City of Chula Vista OF CHU�LAVISTA Staff Report File#: 14-0303, Item#: 1. WRITTEN COMMUNICATIONS Letter of resignation from Sandra Villegas-Zuniga, Civil Service Commission, effective December 1, 2014. RECOMMENDED ACTION Council accept the resignation effective December 1, 2014. City of Chula Vista Page 1 of 1 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 9 May 7, 2014 Ms. Irene Mosley Staff Liaison to Civil Service Commission City of Chula Vista Human Resources Department 276 Fourth Avenue, Bldg. C Chula Vista,CA 91910 Dear Ms_Moslev: _ It is with deep regret that I submit my resignation as Commissioner on the Civil Service Commission effective December 1, 2014. It has been a distinct pleasure serving the City of Chula Vista in my capacity as Commissioner. This experience provided me with greater awareness and first hand information about our great City. I also had the opportunity to serve with outstanding fellow Commissioners and learned so much from them. In addition, I witnessed the loyal commitment of the Human Resources Department staff to the City and citizens of Chula Vista. They are all to be commended for such dedication. In particular, you, Irene, have been highly instrumental in providing me with much assistance during my service on the Commission. I will be retiring in December 2014 and residing in both California and Texas during the year. It will be challenging to attend all Commission meetings on a monthly basis. It would be much more beneficial to the City to select a replacement that can consistently attend all meetings and related commitments. Please extend my appreciation to your HR staff for all of their assistance. Sin rely, SandraNillegas-Zuniga 2014-05-20 Agenda Packet Page 10 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0211, Item#: 2. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING THE 2014 GMOC ANNUAL REPORT, AND DIRECTING THE CITY MANAGER TO UNDERTAKE ACTIONS NECESSARY TO IMPLEMENT REPORT RECOMMENDATIONS AS PRESENTED IN THE STAFF RESPONSES AND PROPOSED IMPLEMENTING ACTIONS SUMMARY RECOMMENDED ACTION Council adopt the resolution. SUMMARY Each year, the GMOC submits its Annual Report to the Planning Commission and City Council regarding compliance with threshold standards for the Growth Management Program's eleven quality -of-life indicators. The 2014 Annual Report covers the period from July 1 , 2012 through June 30, 2013; identifies current issues in the second half of 2013 and early 2014; and assesses threshold compliance concerns looking forward over the next five years. The report discusses each threshold in terms of current compliance, issues, and corresponding recommendations. A summary table of the GMOC's recommendations and staff's proposed implementing actions is included as Attachment 1 . The 2014 Annual Report is included as Attachment 2 and the Report's Appendices are Attachment 3. BOARD/COMMISSION RECOMMENDATION The GMOC's 2014 Annual Report was submitted to the Planning Commission and City Council in a public meeting on May 1 , 2014. (The original staff report from the May 1 , 2014 Joint Workshop is included for background, Attachment 4.) However, due to lack of a Planning Commission quorum, no action was taken on this item by either the Planning Commission or the City Council. The item was rescheduled to the May 14, 2014 Planning Commission meeting so that the Planning Commission could make its formal recommendation; the Planning Commission, upon considering the Report, recommended that the City Council accept the Report. ATTACHMENTS 1 - 2014 GMOC Staff Responses and Implementing Actions Summary 2 - 2014 GMOC Annual Report, including the Chair Cover Memo 3 - 2014 GMOC Annual Report Appendices A and B 4 - Original Agenda Statement from May 1 , 2014 Joint Workshop 5 - City Council Resolution 6 - Exhibit A to Council Resolution City of Chula Vista Page 1 of 1 Printed on 5/15/2014 powered by Leg 2014-05-20 Agenda Packet Page 11 N rl bD f� 0 ++ n 0 +o y ai 3: 0 Z a� L � � = o ° -cW0 O c0 ++ � � � L (U a0 � a� 000 ' ° s y y a) L y 0 — a) y s ?r s � � � ++ � a) c a, E +°+ co off a o � aria � N c°� 0 3 � � 3 Q y C +°+ O L ++ O C +L+ U U' Q Z �OW a3 � m0 o O O X O ° _ `a- �O' a., O + M O Z 0 ayi 0 3 c�i � s N L y 0 LL 0 - V �, L Q O y O V L O O 0 C Z O C 3 Q al L O y 0 ++ ° - O ~ W L y C O G) ,` L E o H a ate_ � � � � � O a � ayic a o c m °� 0 > o r = V O Q m V H a>i r L 0 N ~ L '0 `~ Z � F N M M W w M N M M M M W W 22 / c a) 0 O O L O O U s >'2 H 3 c 0 ci � c H Za MM � = v ° 0 H W ° V a) O Y y > a) Q N z l 0 S o 0 Eo yEfn � ._ �OZ ° E -Ow 'EEL L •- � L 0 M � S- c 0) 00 � E O r�C ° O O ° C C Q +' 4a r y -w i O 1w y M L L L O ++ U W C O O L i LL > L — O t 0) O 0 o = c .� C.) —0 U � � Q �U � cv -� aa) c � a� � o t J HQOC� sUC — N � � O aE 0i Q Qv N 0 c M w L 0 a. ++ c _cy 0 a H cH C W+ m CO 0 0 _ s a) � u r N r N r N M M o r M N M M M M un 0 d' r 0 N M rl bD ++ O ++ V V L O ±+ LO 4 ++ c Z O ++ Y L O L M y > c a1 0 L O .� N O L O o O o c c o �L O ° 4) 3 Oc > od Q � y OQ C N = Cj) n r a U t V I L O p O O W z a > � O ++ O ` N O O O v v >, 5W L M N m N c V — G 5 y G LL z � O O r ++ ' N N ++ O r— m = L a ,n Z Y N � O d > O C M 04->% ° H IM 0 -0 y i Q� V t_ L y Y O O O w J 4-- V ff= y } ' U) v U= O O- } 3 (1)o ° o c N ° c O o C/) ° o N L V v L O O W +� a F `F y ++ c O O �= Z Q Q i y O O O +, O O }' - = c �, O cam ° � c � Y r U~2 U a ao( V O ai c a� LL L 3 a Vaa- 3 >�+acc+i� c Q n O aO 0)•y O + C O O ° a Eo oo 0Q o ` aL0) >cv 30 a i -0 z - L c M a. z C/) F- M LQ W W M M Lri M WW _ > 2 U Owe J " L V1 ° 3 zap, > � 3 Q Z o c o 3 L V O y N C7z Q } (1) 0. -W L. 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The written and verbal reports presented to the GMOC demonstrate the commitment of these dedicated professionals to serving the citizens of Chula Vista. Special thanks to Kim Vander Bie and Patricia Salvacion who provided direct staff support to the Commission. For the period under review, threshold standards for eight of the eleven quality of life topics were in compliance, including: 3.2 Police, Priority 1 3.5 Parks and Recreation 3.6 Fiscal 3.7 Drainage 3.8 Schools 3.9 Sewer 3.10 Air Quality 3.11 Water In GMOC's 2013 Annual Report, we expressed concern that there was potential non- compliance with the Parks and Recreation threshold standard by the end of that year, based on population and development projections. We are pleased that the Parks and Recreation threshold standard was not out of compliance and that there are several parks in the pipeline to help keep it that way. Threshold standards for the following four topics were out of compliance for this year's period under review: 3.1 Libraries 3.2 Police, Priority 2 3.3 Traffic 3.4 Fire and Emergency Services The details of each of the above are outlined in the attached report, while summaries of the topics that were out of compliance are highlighted below: 2014 Annual Report 1 May 2014 2014-05-20 Agenda Packet Page 20 Libraries — The Libraries threshold standard is non-compliant for the 10th successive year. The delivery of a library must remain a priority. The Millenia Development Agreement clearly requires a phasing plan for delivery of a library within one year of adopting an updated Libraries Master Plan and the GMOC urges the adoption of this Master Plan when it goes before City Council this spring. Police - The Police Priority 2 threshold standard is non-compliant for the 16th year in a row. As mentioned in last year's report, both the GMOC and the Police Department agree that modifications to the Police threshold standards are necessary, and the Top-to-Bottom review of the Growth Management Program produced proposed changes that will be brought before Council for adoption. Once the Priority 2 threshold standard is changed, the GMOC believes that the Police Department will be able to comply with it. Traffic — This year, one arterial segment was noncompliant with the threshold standard -- the chronically noncompliant Heritage Road between Olympic Parkway and Telegraph Canyon Road. The GMOC is concerned that this segment does not comply year after year and that the construction of Heritage Road to Main Street continues to be delayed. The Traffic Forum that the GMOC sponsored last fall was informative and beneficial to the public in providing insights on planning and expanding the circulation system, and ongoing Traffic threshold compliance conditions. Fire — Response times failed to comply with the threshold standard for the third consecutive year. The Fire Department indicated that this is largely due to an increase in call volume but no change in staffing, resources and facilities. Top-to-Bottom — The GMOC has an underlying concern about the status of the Growth Management Program's Top-to-Bottom review. Considerable strides had been made by this Commission towards bringing the review to completion. However, the project seems to have been sidetracked and we are concerned that all of our efforts may fade into the background. We believe it is important to adopt and incorporate the proposed changes as quickly as possible so that the Growth Management Program can function optimally. Conclusion — The Commission recognizes its role in measuring the impact of growth on the quality of life in Chula Vista and believes that key components to a high quality of life are the economic development strategies and sustainability of the City in the face of continued growth. The GMOC appreciates the focus the City is showing towards attracting high quality jobs and companies to the City and urges continued emphasis in that endeavor. As the improving economy provides more resources to apply towards long-neglected city services, the GMOC looks forward to continued improvement in all non-compliant thresholds. 2014 Annual Report 2 May 2014 2014-05-20 Agenda Packet Page 21 C It y Of C_k4_-1 V 4fo_ GMOC 2014 AK*L.gal. Re f"-vt Tam of GMOC CHAIR COVER MEMO ............................................................................ 1-2 TABLE OF CONTENTS .................................................................................... 3 1.0 INTRODUCTION ................................................................................... 4-5 1.1 Threshold Standards 4 1.2 The Growth Management Oversight Commission (GMOC) 4 1.3 GMOC 2014 Annual Review Process 5 1.4 Growth Forecast 5 2.0 THRESHOLD COMPLIANCE SUMMARY ................................................. 6 3.0 THRESHOLD COMPLIANCE DISCUSSIONS ........................................... 7-25 3.1 Libraries................................................................................... 7-8 3.1.1 Non-Compliant Threshold Standard 7-8 3.2 Police ............................................................................... 8-11 3.2.1 Priority 1 Threshold Standard Compliance 9-10 3.2.2 Non-Compliant Priority 2 Threshold Standard 10-11 3.3 Traffic ..................................................................................... 11-13 3.3.1 Non-Compliant Threshold Standard 11-12 3.3.2 Construction of Heritage Road to Main Street 12 3.3.3 Grade Separation of Palomar Street/LRT Crossing 12-13 3.4 Fire and Emergency Services...................................................... 13-14 3.4.1 Non-Compliant Threshold Standard 13-14 3.5 Parks and Recreation................................................................. 14-15 3.5.1 Parks and Recreation Facilities Master Plan 14-15 3.5.2 Revenue Generating Capital Improvements 15 3.6 Fiscal ..................................................................................... 15 3.6.1 Threshold Compliance 15 3.7 Drainage ................................................................................... 16 3.7.1 Maintenance of Existing Drainage Channels 16 3.8 Schools............................................................................ 17-18 3.8.1 School Districts Updates 17-18 3.9 Sewer.................................................................................. 18-19 3.9.1 Long-Term Treatment Capacity 18-19 3.10 Air Quality ................................................................. 19-20 3.10.1 Threshold Compliance 19-20 3.11 Water ..................................................................................... 20-21 3.11.1 Meeting Water Demands 20-21 4.0 TRAFFIC FORUM 21 5.0 FIELD TRIP 21 6.0 APPENDICES ..................................................................................... 21 6.1 Appendix A— Growth Forecast 2014 Annual Report 3 May 2014 2014-05-20 Agenda Packet Page 22 6.2 Appendix B— Threshold Compliance Questionnaires 1 .0 INTRODUCTION 1 .1 The Threshold Standards In November 1987, the Chula Vista City Council adopted the Threshold Standards Policy, establishing threshold standards, or "quality-of-life" indicators, for eleven public facility and service topics, including: Air Quality, Drainage, Fire and Emergency Services, Fiscal, Libraries, Parks and Recreation, Police, Schools, Sewer, Traffic and Water. The Policy addresses each indicator in terms of a goal, objective(s), threshold standard(s), and implementation measures. Adherence to the threshold standards is intended to preserve and enhance the quality of life and environment of Chula Vista residents, as growth occurs. 1 .2 The Growth Management Oversight Commission (GMOC) The 1987 Threshold Standards Policy also established the creation of the Growth Management Oversight Commission (GMOC), a body appointed by City Council to provide an independent, annual review of threshold standards compliance. The GMOC is composed of nine members who represent each of the city's four major geographic areas; a cross-section of interests, including education, environment, business, and development; and a member of the Planning Commission. All of these citizens are volunteers and this report could not have been written without the time and effort that they have put into it. The GMOC commissioners are: Leslie Bunker, Vice Chair (Education); David Danciu (Southwest); Zaneta Encarnacion (Southeast); Carl Harry (Development); Mark Livag (Planning Commission); Eric Mosolgo (Environmental); Javier Rosales (Northeast); and Armida Torres, Chair (Business). The Northwest position, most recently held by Russ Hall, has been vacant during this review period. The GMOC's review is structured around three timeframes: 1. A Fiscal Year cycle to accommodate City Council review of GMOC recommendations that may have budget implications. The 2014 Annual Report focuses on Fiscal Year July 1, 2012 through June 30, 2013; 2. The second half of 2013 and beginning of 2014 to identify and address pertinent issues identified during this timeframe, and to assure that the GMOC can and does respond to current events; and 3. A five-year forecast to assure that the GMOC has a future orientation. The period from January 2014 through December 2018 is assessed for potential threshold compliance concerns. The GMOC annually distributes questionnaires to relevant city departments and public facility and service agencies to monitor the status of threshold standards compliance. When the questionnaires are completed, the GMOC reviews them and deliberates 2014 Annual Report 4 May 2014 2014-05-20 Agenda Packet Page 23 issues of compliance. They also evaluate the appropriateness of the threshold standards, whether they should be amended, and whether any new threshold standards should be considered. 1 .3 GMOC 2014 Annual Review Process The GMOC held nine regular meetings, one traffic forum and one field trip between October 2013 and April 2014; all were open to the public. At the regular meetings, representatives from the city departments and public agencies associated with the threshold compliance questionnaires gave presentations to the Commission and discussed the completed questionnaires (attached in Appendix B) with them. Through this process, city staff and the GMOC identified issues and recommendations, which are discussed in this report. The final GMOC annual report is required to be transmitted through the Planning Commission to the City Council at a joint meeting, which is scheduled for Mayl, 2014. 1 .4 Growth Forecast The Development Services Department annually prepares a Five-Year Growth Forecast, the latest of which was issued in September 2013. The Forecast provides departments and outside agencies with an estimate of the maximum amount of residential growth anticipated over the next five years. Copies of the Forecast were distributed with the GMOC questionnaires to help the departments and agencies determine if their respective public facilities/services would be able to accommodate the forecasted growth. The growth projections from September 2013 through December 2018 indicated an additional 10,115 residential units could be permitted for construction in the city over the next five years, (8,757 units in the east and 1,358 units in the west), for an annual average of 1,751 units in the east and 272 units in the west, or 2,023 housing units permitted per year on average, citywide. 2014 Annual Report 5 May 2014 2014-05-20 Agenda Packet Page 24 2.0 THRESHOLD COMPLIANCE SUMMARY The following table indicates a summary of the GMOC's conclusions regarding threshold standards for the 2013 annual review cycle. Seven thresholds were met and four were not. 2013 ANNUAL THRESHOLD STANDARD REVIEW SUMMARY REVIEW PERIOD 7/1/12 THROUGH 6/30/13 Potential of AdopVFund Threshold Threshold Met Threshold Not Future Non- Tactics to Met compliance Achieve Compliance 1. Libraries X X X 2. Police Priority I X Priority 11 X X X 3. Traffic X X X 4. Fire/EMS X X X 5. Parks and Recreation Land X X Facilities X X 6. Fiscal X 7. Drainage X 8. Schools CV Elementary X School District Sweetwater X Union High School District 9. Sewer X 10. Air Quality X 11. Water X 2014 Annual Report 6 May 2014 2014-05-20 Agenda Packet Page 25 3.0 THRESHOLD COMPLIANCE DISCUSSIONS 3.1 Libraries Threshold Standard: Population ratio: 500 square feet (gross) of adequately equipped and staffed library facility per 1,000 population. The city shall construct 60,000 gross square feet (GSF) of additional library space, over the June 30, 2000 GSF total, in the area east of Interstate 805 by build-out. The construction of said facilities shall be phased such that the city will not fall below the city-wide ratio of 500 GSF per 1,000 population. Library facilities are to be adequately equipped and staffed. Threshold Finding: Non-Compliant 3.1.1 Non-Compliant Threshold Standard LIBRARIES Total Gross Square Gross Square Feet of Population Footage of Library Library Facilities Per 1000 Facilities Population Threshold X X 500 Sq. Ft. 5-Year Projection 284,366 97,412t 343 (2018) 12-Month Projection 258,664 97,412*** 377 (12/31/14) FY 2012-13 251,613 95,412 379 FY 2011-12 249,382 92,000/95,412 369/383** FY 2010-11 246,496 102,000/92,000* 414/387* FY 2009-10 233,692 102,000 436 FY 2008-09 233,108 102,000 437 FY 2007-08 231,305 102,000 441 FY 2006-07 227,723 102,000 448 FY 2005-06 223,423 102,000 457 FY 2004-05 220,000 102,000 464 FY 2003-04 211,800 102,000 482 FY 2002-03 203,000 102,000 502 *After closure of Eastlake Library in June 2011 tlf the Millenia library is delivered this figure would be higher. **After opening of Otay Ranch Town Center Branch Library in April 2012 ***After addition of 2000 sf at Otay Ranch Town Center Branch Library in July 2014. 2014 Annual Report 7 May 2014 2014-05-20 Agenda Packet Page 26 Issue: The Libraries threshold standard has not been met for the tenth consecutive year. Discussion: As Chula Vista's population increases, so does the gap between the amount of library square footage required by the Libraries threshold standard and the actual amount of library square footage in Chula Vista. By the end of 2014, a deficit of 123 square feet per 1,000 population is projected —that is a total of approximately 32,000 square feet. With the recent acquisition of 2,000 more square feet for the widely popular Otay Ranch Town Center Library, the projected deficit is just two square feet per 1,000 population higher than last year. The additional space is currently being converted into an area for story time, classes, community meetings and passport processing, and will have a rotating collection of books. It should be completed by summer. As reported previously, construction of the 30,000 square foot Rancho del Rey library branch is several years away due to insufficient Public Facilities Development Impact Fees (PFDIF) funding. And the timeline for the 30,000 square-foot Millenia (EUC) library is uncertain. Per the Millenia Development Agreement, a phasing plan for delivery of the library is due within one year of adoption of an updated Libraries Master Plan, which was approved by City Council on April 81h. If neither of these future libraries is constructed within five years, the projected square footage deficit would be approximately 46,000 square feet. In addition to shortfalls in square footage, Libraries reported that there will be insufficient staff to serve forecasted growth in the next 18 months and in five years. According to California Library Statistics 2012, published by the California State Library, Chula Vista's library staffing ratio per capita is in the bottom 15% of public libraries in California. Recommendation: That City Council direct the City Manager to work with the developers of Millenia to establish a phasing plan that accelerates delivery of the Millenia library using creative financing. Recommendation: That City Council direct the City Manager to initiate a campaign for library grants, endowments, partnerships and other funding mechanisms to support library needs. 3.2 Police Threshold Standard: Priority 1 Emergency Response: Properly equipped and staffed police units shall respond to 81% of the Priority 1 emergency calls throughout the city within seven minutes and shall maintain an average response time to all Priority 1 calls of five minutes and thirty seconds (5.5 minutes) or less. 2014 Annual Report 8 May 2014 2014-05-20 Agenda Packet Page 27 Priority 2 Urgent Response: Respond to 57% of the Priority 2 urgent calls throughout the city within seven minutes and shall maintain an average response time to all Priority 2 calls of seven minutes and thirty seconds (7.5 minutes) or less. Threshold Finding: Priority 1 : Compliant Priority 2: Non-Compliant Threshold Standard Percent Time Average Time Emergency Response 81.0% 7 minutes 5:30 min./sec. (Priority 1 Urgent Response 57.0% 7 minutes 7:30 min./sec (Priority 2 Actual Percent Time Average Time Emergency Response 81.5% 7 minutes 4:57 min./sec. (Priority 1 Urgent Response 42.7% 7 minutes 11:37 min./sec. (Priority 2 3.2.1 Priority 1 Threshold Standard Compliance Priority 1 — Emergency Response Calls for Service Call Volume % of Call Responses Average Within 7 Minutes Response Time Threshold 81.0% 5:30 FY 2012-13 738 of 65,741 81.5% 4:57 FY 2011-12 726 of 64,386 78.4% 5:01 FY 2010-11 657 of 64,695 85.7% 4:40 FY 2009-10 673 of 68,145 85.1% 4:28 FY 2008-09 788 of 70,051 84.6% 4:26 FY 2007-08 1,006 of 74,192 87.9% 4:19 FY 2006-07 976 of 74,277 84.5% 4:59 FY 2005-06 1,068 of 73,075 82.3% 4:51 FY 2004-05 1,289 of 74,106 80.0% 5:11 FY 2003-04 1,322 of 71,000 82.1% 4:52 FY 2002-03 1,424 of 71,268 80.8% 4:55 Issue: None. 2014 Annual Report 9 May 2014 2014-05-20 Agenda Packet Page 28 Discussion: The GMOC is pleased that the Priority 1 threshold standard was met in Fiscal Year 2013 after being non-compliant in Fiscal Year 2012. Slightly ahead of the 81 percent threshold standard, the Priority 1 response time of 81.5 percent of calls within 7 minutes was an improvement of 2.6 percent from last year. The "Average Response Time" component of the threshold standard has consistently been met and at 4 minutes and 57 seconds was a four- second improvement in Fiscal Year 2013. Although the Police Department is in compliance with the Priority 1 threshold standard, they reported that "staffing levels are still a serious concern." They have a proactive policing goal of 40%; the Patrol Division is currently at approximately 22%. Recommendation: None. 3.2.2. Non-Compliant Priority 2 Threshold Standard PRIORITY 2 — Urgent Response Calls for Service Call Volume % of Call Responses Average Within 7 Minutes Response Time Threshold 57.0% 7:30 FY 2012-13 18,505 of 65,741 42.7% 11:37 FY 2011-2012 22,121 of 64,386 41.9% 11:54 FY 2010-11 21,500 of 64,695 49.8% 10:06 FY 2009-10 22,240 of 68,145 49.8% 9:55 FY 2008-09 22,686 of 70,051 53.5% 9:16 FY 2007-08 23,955 of 74,192 53.1% 9:18 FY 2006-07 24,407 of 74,277 43.3% 11:18 FY 2005-06 24,876 of 73,075 40.0% 12:33 FY 2004-05 24,923 of 74,106 40.5% 11:40 FY 2003-04 24,741 of 71,000 48.4% 9:50 FY 2002-03 22,871 of 71,268 50.2% 9:24 These figures do not include responses to false alarms, beginning in FY 2002-03. Issue: The Police Priority 2 threshold standard has not been met for the 16`h consecutive year. Discussion: There were 3,600 less Priority 2 calls in Fiscal Year 2013 than in Fiscal Year 2012; however, the threshold standard of responding to 57 percent of calls within 7 minutes was not met. At 42.7 percent, the percentage of calls improved by nearly one percent from the previous year, but is still 14.3 percent below the threshold standard. 2014 Annual Report 10 May 2014 2014-05-20 Agenda Packet Page 29 The average response time of 11 minutes and 37 seconds was a 17- second improvement, but still 4 minutes and 7 seconds above the threshold standard of 7 minutes and 30 seconds. During top-to-bottom review, the Police Department and the GMOC agreed that the 7-minute threshold standard is not the correct indicator for reporting response times and should be amended. Under the proposed changes, the Fiscal Year 2013 response time of 11 minutes and 37 seconds would comply with the proposed change of 12 minutes. The Police Department continues to make procedural, staff and equipment improvements wherever possible to improve efficiency and strive for threshold compliance. They reported that an updated Security Alarm Ordinance that took effect January 1, 2014 should reduce the number of responses to false alarms "by at least 50 to 80W. They are hiring additional Community Service Officers (CSOs) to help free up officer time and are hoping to add a full-time IT manager, as well. The mobile data computers (MDCs) in the Patrol fleet are being updated and an Automated Vehicle Locating (AVL) system for the Computer Aided Dispatch (CAD) system is being implemented. The AVL and the new MDCs should aid dispatchers in dispatching the nearest available unit to a call. Recommendation: That City Council direct the City Manager to work with the Police Chief to continue to monitor procedures and programs to improve response times and achieve threshold compliance. 3.3 Traffic Threshold Standard: Citywide: Maintain Level of Service (LOS) "C" or better as measured by observed average travel speed on all signalized arterial segments, except that during peak hours a LOS "D" can occur for no more than two hours of the day. West of 1-805: Those intersections which do not meet the standard above, may continue to operate at their current (year 1991) LOS, but shall not worsen. Threshold Finding: Non-Compliant 3.3.1 Non-Compliant Threshold Standard Issue: One arterial segment was non-compliant with the threshold standard. Discussion: Between Fiscal Years 2012 and 2013, there was no change in the status of northbound Heritage Road from Olympic Parkway to Telegraph Canyon Road, which was the one arterial segment that continued to be 2014 Annual Report 11 May 2014 2014-05-20 Agenda Packet Page 30 noncompliant. It exceeded the Level of Service (LOS) threshold standard by four hours (three hours at LOS D and one hour at LOS E). LOS 2012 LOS 2013 SEGMENT (Limits) DIR (Hours) (Hours) CHANGE Heritage Road NB D(5) E(1) D(5) E(1) None (Olympic Parkway to Telegraph Non-Compliant Non-Compliant Canyon Road ) In an effort to combat the non-compliance issue, City traffic engineers coordinated and implemented a new signal timing plan last April. However, it was not enough, so a revised timing plan is being developed. Recommendation: That City Council direct the City Manager to continue to support City engineers in their efforts to implement improvements that will result in threshold compliance, including funding to monitor corridor timing on a continual basis. 3.3.2 Construction of Heritage Road to Main Street Issue: Heritage Road needs to be extended to Main Street. Discussion: According to City engineers, regional traffic modeling confirms that when the City's roadway network is completed in accordance with build-out plans, the system will operate within the growth management threshold standards. An important link in this ultimate plan is the extension of Heritage Road as a 6-lane arterial between Olympic Parkway and Main Street. Two lanes of Heritage Road were recently opened between Olympic Parkway and Santa Victoria Road; however the road needs to be extended to Main Street to help relieve some of the delays that have been occurring to varying degrees on Olympic Parkway. Recommendation: That City Council direct the City Manager to support City engineers in their efforts to ensure that a minimum of two lanes of Heritage Road be constructed from Santa Victoria Road to Main Street by the end of calendar year 2014. 3.3.3 Grade Separation of Palomar Street/LRT Crossing Issue: Funding is needed to complete the Palomar Street/Light Rail Trolley grade separation improvements that will improve traffic flow. Discussion: As reported in GMOC's 2013 Annual Report, an August 2012 combined technical study report between the City and SANDAG identified the Palomar Street/Light Rail Trolley (LRT) Crossing as Priority 1 for improvements. 2014 Annual Report 12 May 2014 2014-05-20 Agenda Packet Page 31 Palomar Street is a major east/west arterial where vehicular traffic is increasing and the current at-grade crossing requires traffic to stop each time a train passes the crossing. In December 2012, the SANDAG Transportation Committee and the Board of Directors approved a Memorandum of Understanding between SANDAG and the City of Chula Vista to commence work on the environmental document for grade separating the Palomar Street LRT crossing between Broadway and Interstate 5. Design and construction funding have not yet been identified. Recommendation: That City Council and staff work with SANDAG on securing complete funding for the Palomar Street/Light Rail Trolley grade separation. 3.4 Fire and Emergency Medical Services Threshold Standard: Emergency response: Properly equipped and staffed fire and medical units shall respond to calls throughout the city within seven (7) minutes in 80% (current service to be verified) of the cases (measured annually). Threshold Finding: Non-Compliant 3.4.1 Non-Compliant Threshold Standard FIRE and EMS Response Times Call %of All Calls Average Average Average Review Period Responded Response Average Dispatch Turn-out Volume to Within 7 Minutes Time Travel Time Time Time for all Calls2 Threshold Standard: 8 0.0 FY 2013 12,316 75.7% 6:02 3:48 1:05 1:08 FY 2012 11,132 76.4% 5:59 3:43 FY 2011 9,916 78.1% 6:46 3:41 FY 2010 10,296 85.0% 5:09 3:40 FY 2009 9,363 84.0% 4:46 3:33 FY 2008 9,883 86.9% 6:31 3:17 FY 2007 10,020 88.1% 6:24 3:30 CY 2006 10,390 85.2% 6:43 3:36 CY 2005 9,907 81.6% 7:05 3:31 FY 2003-04 8,420 72.9% 7:38 3:32 FY 2002-03' 8,088 75.5% 7:35 3:43 FY 2001-02' 7,626 69.7% 7:53 3:39 FY 2000-01 7,128 80.8% 7:02 3:18 FY 1999-00 6,654 79.7% 3:29 Note ': Reporting period for FY 2001-02 and 2002-03 is for October 1, 2002 to September 30, 2003. The difference in 2004 performance when compared to 2003 is within the 2.5% range of expected yearly variation and not statistically significant. Note 2: Through FY 2012,the data was for"Average Response Time for 80%of Calls." 2014 Annual Report 13 May 2014 2014-05-20 Agenda Packet Page 32 Issue: The Fire threshold standard has not been met for the third consecutive year. Discussion: The percentage of calls responded to within 7 minutes dropped less than one percent between Fiscal Year 2012 (76.4%) and Fiscal Year 2013 (75.7%). However, that is down a total of 9.3% in the past three years, and 4.3% below the threshold standard of 80%. The Fire Department attributed the decline to an increase in call volume (1,184 more). Between Fiscal Year 2012 and Fiscal Year 2013, the number of fire calls decreased by 2.4% for a total of 4.8%, and the number of medical calls decreased by .9% for a total of 83.7%. The number of calls categorized as "Other" increased by 3.28% for a total of 11.5%. The Fire Department has been monitoring and addressing response times with the companies that are not meeting the standard. In addition, they purchased the FirstWatch real time data and notification program to help address concerns related to dispatch and turnout. Recommendation: That City Council direct the City Manager to continue to direct the Fire Department to implement effective measures that will ensure that the threshold standard will be met. 3.5 Parks and Recreation Threshold Standard: Population Ratio: Three acres of neighborhood and community park land with appropriate facilities per 1,000 residents east of 1-805. Threshold Finding: Compliant 3.5.1 Parks and Recreation Facilities Master Plan Issue: A council-approved Parks and Recreation Master Plan update continues to be delayed. Discussion: City staff had anticipated bringing the draft Parks and Recreation Master Plan (PRMP) update to City Council in 2013. Since that did not occur, they are aiming for the end of 2014, but it is subject to completing park planning efforts within the Otay Ranch's future University Villages that are still being processed for entitlement approvals. Those villages (3, 8 East, 9 and 10) anticipate new park acreages and park locations beyond what was envisioned in the former draft PRMP from December 2010. Since unforeseen delays in the entitlement processes could continue to postpone adoption of an updated Master Plan, the GMOC would prefer 2014 Annual Report 14 May 2014 2014-05-20 Agenda Packet Page 33 that the most recent draft of the updated plan be approved, and additional updates be made as necessary. Recommendation: That City Council approve the updated Parks and Recreation Master Plan by the end of 2014 and make additional updates as necessary. 3.5.2 Revenue Generating Capital Improvements Issue: The City needs to continue maximizing opportunities to generate revenue for parks and expansion of recreation services. Discussion: The GMOC is pleased that reservations for gazebos and picnic shelters continue to increase and that the City leases recreation facilities on Sundays to increase revenue. However, we would like the Recreation Department to continue to explore programs and/or capital improvements that would help generate recurring revenue. Recommendation: That City Council direct the City Manager to seek opportunities for potential capital improvements that will provide new services and recreation to the community while generating revenue to offset recurring costs for new and existing parks. 3.6 Fiscal Threshold Standards: 1. The GMOC shall be provided with an annual fiscal impact report which provides an evaluation of the impacts of growth on the City, both in terms of operations and capital improvements. This report should evaluate actual growth over the previous 12-month period, as well as projected growth over the next 12- to 18-month period, and 5- to 7- year period. 2. The GMOC shall be provided with an annual Development Impact Fee (DIF) Report, which provides an analysis of development impact fees collected and expended over the previous 12-month period. Threshold Finding: Compliant 3.6.1 Threshold Compliance Issue: None. Discussion: In last year's GMOC report, the Commission recommended that City Council adopt a debt service payment policy, and we are pleased that this recommendation was fulfilled last January. 2014 Annual Report 15 May 2014 2014-05-20 Agenda Packet Page 34 3.7 Drainage Threshold Standards: 1. Storm water flows and volumes shall not exceed city engineering standards as set forth in the subdivision manual adopted by city council Resolution No. 11175 on February 23, 1983, as may be amended from time to time. 2. The GMOC shall annually review the performance of the city's storm drain system to determine its ability to meet the goals and objectives above. Threshold Finding: Compliant 3.7.1 Maintenance of Existing Drainage Channels Issue: Adequate funding for channel maintenance continues to be a problem. Discussion: Increased maintenance of the City's storm water conveyance system would provide a higher level of service. However, additional funding is necessary. In June 2013, new Regional Water Quality Control Board regulations (Permit No. R9-2013-0001) became effective and the City began a two- year transition period to identify the best strategies to meet the new requirements, which may necessitate increased storm drain maintenance activities; baseline water quality levels are being monitored to determine the extent. Additional funds and resources will be necessary for the City to implement the new regulations within 18 months of the reissued permit. Recommendation:.That City Council direct the City Manager to support engineering staff to closely monitor the status of the storm water conveyance system to ensure sufficient operation and continued threshold standard compliance. Recommendation: That City Council identify funding to 1) implement locally mandated storm water flow regulations designed to avoid potential flooding and/or health issues; and 2) to stay in compliance with Regional Water Quality Control Board requirements. 2014 Annual Report 16 May 2014 2014-05-20 Agenda Packet Page 35 3.8 Schools Threshold Standard: The city shall annually provide the two local school districts with a 12- to 18-month development forecast and request an evaluation of their ability to accommodate the forecast and continuing growth. The districts' replies should address the following: 1. Amount of current capacity now used or committed; 2. Ability to absorb forecasted growth in affected facilities; 3. Evaluation of funding and site availability for projected new facilities; 4. Other relevant information the district(s) desire(s) to communicate to the city and the Growth Management Oversight Commission (GMOC). The growth forecast and school district response letters shall be provided to the GMOC for inclusion in its review. Threshold Finding: CVESD — Compliant SUHSD — Compliant 3.8.1 School Districts Updates Issue: New schools will be needed in the next 2-3 years to accommodate projected growth. Discussion: Chula Vista Elementary School District and Sweetwater Union High School District are starting to feel some growing pains in eastern Chula Vista, and both districts reported that new schools will be needed by 2016 or 2017. Summaries of the schools are below. Chula Vista Elementary School District Based on current growth projections, a K-6 school in Otay Ranch Village 2 will be necessary by the 2016/17 school year. However, the school district indicated that the cost of the school site is more expensive than they had planned and they are continuing to negotiate with the developer so that they can acquire the necessary land for the school. Sweetwater Union High School District For the first time in five years, enrollment has increased in the Sweetwater Union High School District. And, based on the amount of growth projected over the next five years, construction of Middle School No. 12 and High School No. 14 at Hunte Parkway and Eastlake Parkway will be necessary by 2017. Plans are already complete for this proposed joint facility on school sites that have already been acquired. However, 2014 Annual Report 17 May 2014 2014-05-20 Agenda Packet Page 36 since the plans are five years old, they need to be updated to accommodate common core curriculum changes and building code amendments. Recommendation: That City Council encourage the school districts to continue being proactive in identifying funding and school sites so that schools will be constructed before the need becomes more critical. 3.9 Sewer Threshold Standards: 1. Sewage flows and volumes shall not exceed City Engineering Standards as set forth in the subdivision manual adopted by city council Resolution No. 11175 on February 12, 1983, as may be amended from time to time. 2. The city shall annually provide the San Diego Metropolitan Sewer Authority with a 12- to 18-month development forecast and request confirmation that the projection is within the city's purchased capacity rights and an evaluation of their ability to accommodate the forecast and continuing growth, or the city engineering department staff shall gather the necessary data. The information provided to the GMOC shall include the following: a. Amount of current capacity now used or committed; b. Ability of affected facilities to absorb forecasted growth; C. Evaluation of funding and site availability for projected new facilities; d. Other relevant information. The growth forecast and authority response letters shall be provided to the GMOC for inclusion in its review. Threshold Finding: Compliant 3.9.1 Long-Term Treatment Capacity Sewage Flow and Treatment Capacity Million Gallons 18-month 5-year "Build-out" per Day (MGD) FY 11/12 FY 12/13 projection Projection Projection* Average Flow 15.935 15.734 16.870** 18.583** 26.2* Capacity 20.864 j 20.864 j 20.864 j 20.864 j 20.864 *Buildout Projection based on 2005 Chula Vista Wastewater Master Plan **Growth rate per the"Residential Growth Forecast Years 2013 through 2018" 2014 Annual Report 18 May 2014 2014-05-20 Agenda Packet Page 37 Issue: None. Discussion: Once again, Sewer is in compliance with the threshold standard and is projected to remain in compliance for the next ten years. As the city begins to approach build-out projections, however, additional treatment capacity will need to be obtained. Staff is working on updating the 2005 Master Plan in order to verify the build-out treatment capacity needs of the City. Two "cost per gallon" options for acquiring additional treatment capacity are being considered: 1) Constructing a sewer treatment facility in Chula Vista; or 2) Purchasing additional treatment capacity rights from other agencies within the San Diego Metropolitan System. Recommendation: None. 3.10 Air Quality Threshold Standard: The GMOC shall be provided with an Annual Report which: 1. Provides an overview and evaluation of local development projects approved during the prior year to determine to what extent they implemented measures designed to foster air quality improvement pursuant to relevant regional and local air quality improvement strategies. 2. Identifies whether the city's development regulations, policies, and procedures relate to, and/are consistent with current, applicable federal, state, and regional air quality regulations and programs. 3. Identifies non-development related activities being undertaken by the city toward compliance with relevant federal, state, and local regulations regarding air quality, and whether the city has achieved compliance. The city shall provide a copy of said report to the Air Pollution Control District (APCD) for review and comment. In addition, the APCD shall report on overall regional and local air quality conditions, the status of regional air quality improvement implementation efforts under the Regional Air Quality Strategy and related federal and state programs, and the effect of those efforts/programs on the city of Chula Vista and local planning and development activities. Threshold Finding: Compliant 3.10.1 Threshold Compliance Issue: Additional air monitoring is desired. Discussion: During the period under review, Chula Vista's development standards continued to meet or exceed regional, state, and federal air quality regulations. 2014 Annual Report 19 May 2014 2014-05-20 Agenda Packet Page 38 In December 2012, the Environmental Protection Agency tightened the annual standard for fine particles PM2.5 (the smallest inhalable particles) from 15 to 12 micrograms per cubic meter and this stricter standard has been met throughout San Diego County. The San Diego Air Pollution Control District (APCD) operates nine real- time, ambient air quality monitoring stations throughout the region, including one station in Chula Vista. However, the GMOC would like more monitoring stations in the Chula Vista area to obtain more data. Recommendation: That the City advocate for at least one more air monitoring station in Chula Vista. 3.11 Water Threshold Standards: 1. Developer will request and deliver to the city a service availability letter from the water district for each project. 2. The city shall annually provide the San Diego County Water Authority, the Sweetwater Authority, and the Otay Municipal Water District with a 12- to 18-month development forecast and request evaluation of their ability to accommodate the forecast and continuing growth. The districts' replies should address the following: a. Water availability to the city and planning area, considering both short- and long- term perspectives; b. Amount of current capacity, including storage capacity, now used or committed; C. Ability of affected facilities to absorb forecast growth; d. Evaluation of funding and site availability for projected new facilities; e. Other relevant information the district(s) desire to communicate to the city and GMOC. Threshold Finding: Compliant 3.11.1 Meeting Water Demands Issue: None. Discussion: Otay Water District and Sweetwater Authority serve the City of Chula Vista, and both reported that they will be able to meet the water demands of anticipated growth over the next five years. Specific data is available in the Otay Water District and Sweetwater Authority questionnaires, located in Appendix B of this report. Otay Water District The Otay Water District (OWD) provided a list of the maintenance, replacement, and/or upgrade projects within the Fiscal Year 2014 six-year 2014 Annual Report 20 May 2014 2014-05-20 Agenda Packet Page 39 Otay Water District capital improvement program (CIP) that are planned and anticipated to be needed to serve the City of Chula Vista. They have effectively anticipated growth, managed the addition of new facilities, and documented water supply needs. Additional water supply sources are continually under investigation by OWD, with the most significant potential source being the Rosarito, Mexico desalination facility. Projected to ultimately produce 100 MGD of potable water, there is the potential for up to 50 MGD to be purchased by Otay Water District. Significant regulatory and permitting issues need to be resolved before this project can be deemed viable, but the current outlook is promising. The Presidential permit process is underway as well as discussions with the State of California regarding treatment requirements. Sweetwater Authority The majority of Sweetwater Authority's planned improvements to pipelines, valves and other facilities are listed in the 2010 Water Distribution System Master Plan. This includes the Desalination Facility Expansion project that has been designed and is ready for construction to begin in early 2015. In addition, Sweetwater plans to replace approximately three miles of 36-inch water transmission pipeline through Bonita Valley, which is critical for continued long-term water supply to the City of Chula Vista. Recommendation: None. 4.0 TRAFFIC FORUM On October 24, 2013, the GMOC sponsored a traffic forum for the citizens of Chula Vista to update them on threshold standard compliance and road improvements that are currently underway or planned in the short-term (18 months) and long-term (five years). Several members of the public attended and viewed presentations given by City staff and representatives from Caltrans and SANDAG. 5.0 FIELD TRIP On January 11, 2014, City staff and Mayor Cox took the GMOC and a few members of the public on a field trip that covered every corner of the City. The itinerary included sites of future development, projects currently being developed, and projects that have been completed. 6.0 APPENDICES 6.1 Appendix A — Growth Forecast 6.2 Appendix B — Threshold Compliance Questionnaires 2014 Annual Report 21 May 2014 2014-05-20 Agenda Packet Page 40 El 0) 0) ( 0 t0 ED o ED 2014-05-20 Agenda Packet Page 41 El 21 z o o (� pp �onto K ZA elr(D\IH\ qh - (:DT(@C2O 2014-05-20 Agenda Packet Page 42 Aw"00 r � My of: CHULAVISTA 2013 ANNUAL RESIDENTIAL GROWTH FORECAST Years 2013 Through 2018 September 19, 2013 2014-05-20 Agenda Packet Page 43 INTRODUCTION As a component of the City of Chula Vista's Growth Management Program, the city's Development Services Department provides annual residential growth forecasts looking out five years. This year's growth forecast covers the period from September 2013 through December 2018. As part of the city's annual growth management review process, the growth forecast is provided to assist city departments and other service agencies in assessing potential impacts that growth may have on maintaining compliance with quality of life threshold standards associated with each of the facilities or improvements listed below: 1. Air Quality 2. Drainage 3. Fire and Emergency Medical Services 4. Fiscal 5. Libraries 6. Parks and Recreation 7. Police 8. Schools 9. Sewer 10. Traffic 11. Water The Chula Vista Growth Management Oversight Commission (GMOC) annually sends out the growth forecast and compliance questionnaires to city departments and service agencies, soliciting information regarding past, current and projected compliance with the quality of life threshold standards for the facilities and services listed above. The responses to the questionnaires form a basis for the GMOC's annual report, which includes a set of recommendations to the City Council regarding threshold maintenance and/or the need for revisions to any of the city's threshold standards. Recommendations may include such actions as adding or accelerating capital projects; hiring personnel; changing management practices; slowing the pace of growth; or considering a moratorium. The City Council ultimately decides what course of action to take. To prepare the growth forecast, the city solicits projections from developers and builders, which encompasses residential projects that have been or are undergoing the entitlement process, and could potentially be approved and permitted for construction within the next five years. The numbers reflect consideration of the city's standard entitlement process and permitting time frames, and, as such, do not reflect market or other economic conditions outside the city's control. Commonly referred to as the "growth management" or "GMOC" forecast, it is important to note that the housing market is influenced by a variety of factors outside the city's control, and this forecast: ■ Does not represent a goal or desired growth rate; ■ Is what may occur given a set of assumptions listed on page 3; ■ Is produced by the city and not necessarily endorsed by home builders; and ■ Represents a "worst-case" or more liberal estimate to assess maximum possible effects to the city's threshold standards. 2014-05-20 Agenda Packet 2 Page 44 For example, last year's growth forecast estimated that 367 building permits would be issued for single-family units in 2013. As of September 13, 2013, 210 permits had been pulled. For multi- family units, 1,043 building permits were projected, and 319 had been pulled. Nearly all of the building activity was in the master planned communities in eastern Chula Vista (the area east of Interstate 805). Less than ten residential permits were pulled for infill and redevelopment in western Chula Vista, where 21 units were projected. FORECAST SUMMARY Between September 2013 and December 2014, as many as 1,450 housing units could be permitted for construction in eastern Chula Vista, and 323 in western Chula Vista (see Figure 1). In the five-year forecast period (calendar years 2014 through 2018), eastern Chula Vista could have as many as 8,757 housing units permitted (averaging 1,751 annually), and development in western Chula Vista could pick up significantly, with as many as 1,358 units permitted (averaging 272 annually). The total number of units permitted citywide could be 10,115, with an annual average of 2,023 housing units permitted per year(see Tables 1 and 2). Using more aggressive development figures in this forecast allows the city and service providers to evaluate the maximum potential effect on maintaining quality of life, and the ability to provide concurrent development of necessary public facilities and services. The following discussions and figures describe the context, conditions and assumptions behind the forecast, and are provided to further qualify that this forecast is a "worst case" planning tool and not a prediction or specific expectation. FORECAST INFORMATION Projections are derived primarily from approved development plans, and estimated project processing schedules for plan reviews, subdivision maps, and building plans. The forecast is predicated upon the following five assumptions: 1. That public policy regarding development remains otherwise unchanged; 2. That the Growth Management Program's threshold standards are not exceeded; 3. That the housing market continues to revive; 4. That entitlement processing for Otay Ranch areas subject to recent Land Offer Agreements is completed as anticipated; and 5. That projects follow normal project regulatory processing schedules. Eastern Chula Vista As noted above, most of the city's growth has been and will continue to be in eastern Chula Vista (see Figure 2) for the next several years. The majority of building activity (1,450 units) in 2014 is projected to occur in Eastlake Vistas, Otay Ranch Village 2, and the Otay Ranch Eastern Urban Center (EUC) "Millenia" (see Table 1). Following is a summary of the projects included in the forecast: 2014-05-20 Agenda Packet 3 Page 45 Eastlake—"Lake Pointe" in Eastlake Vistas is a 221-unit multi-family project across from the Olympic Training Center, and is the final residential project in the Eastlake Master Planned Community (other than 28 single-family custom homes still unbuilt in "The Gates"). Lennar Homes is projecting to pull building permits for all 221 units in 2014. Otay Ranch Village 2 — Baldwin & Sons is projecting the bulk of development in Village 2 over the next five years, including 187 single-family and 486 multi-family units in 2014. Many of these units, including 300 multi-family units in Neighborhood R-12a, are carry-overs from their projections for calendar year 2013. JPB is projecting around 98 single-family and 96 multi-family units in Village 2 by the end of 2015, also carry-overs from their projections for calendar year 2013. Otay Ranch Village 3 North—JPB is currently in the entitlement process for development in Village 3 North. They have moved a combination of 255 single- and multi-family units back to 2015 from 2014, and project several hundred more units in subsequent years. Otay Ranch Village 6 — In 2014, Oakwood Communities is planning to pull permits for the final project in Village 6, 108 multi-family units formerly named "Marquis II" and now called "Contessa at Otay Ranch". Otay Ranch Village 7 — By the end of 2014, JPB plans to pull the final permits for "Monte Sereno" in Village 7 (16 single-family units), while Shea intends to pull the last permits for "Mosaic" (34 multi- family units). Otay Ranch Village 8 West — Otay Land Company is nearing completion of the zoning and map entitlement process, with hearings anticipated in late 2013/early 2014. Construction start-up is targeted for 2015, when 178 units are projected. An additional 653 units are projected by the end of 2018. Otay Ranch Village 8 East and Village 10 —JPB is in the entitlement process for Villages 8 East and Village 10, and is projecting a total of 1,355 units between 2016 and 2018 for the two villages. Otay Ranch Village 9 — Otay Land Company is working on completing zoning and map entitlements for Village 9 in early 2014 and is projecting to begin construction in 2017. The five-year projection is 175 single-family units and 437 multi-family units. Otay Ranch Eastern Urban Center (EUC) "Millenia" — McMillin is projecting 769 multi-family units in Millenia by 2018; 310 of those units are projected for 2014 and include their "Genesis" project, and the 273-unit "Fairfield Apartments" at the corner of Birch Road and Eastlake Parkway. This projection is down 529 units from last year's growth forecast, which projected 1,298 units by 2017. Otay Ranch Freeway Commercial — Baldwin & Sons is going through the entitlement process and is projecting 448 multi-family units in 2015. Bella Lago —This 140-unit single-family development is approximately 60 percent built out, with 83 units completed and 20 under construction. In 2014, Shea is projecting to build 18 more units and Bella Lago LLC projects to pull building permits for the remaining units between 2016 and 2018. 2014-05-20 Agenda Packet 4 Page 46 Rolling Hills Ranch — Besides the 60-unit active care senior facility currently under construction, the final project in Rolling Hills Ranch is "Verona", a 77-unit single-family development that is approximately 49% complete. With 20 units currently under construction, McMillin is projecting to pull the final 15 building permits for this project in 2014. As of September 2013, the remaining capacity for residential units that could be permitted in eastern Chula Vista is approximately 19,687, based on the city's 2005 General Plan. If 8,757 units were permitted over the next five-year forecasted period, approximately 10,930 units would remain. Assuming that continued rate of growth, the capacity could potentially be built out around 2030, although changes in actual growth rates and/or future revisions to plans will affect that timing. Western Chula Vista Western Chula Vista has not shown significant increases in housing since the city's growth management program was instituted in the late 1980's; however, that is projected to change with a number of multi-family projects on the horizon, along with a 16-unit single-family development projected at 35 Tamarindo Way in 2014, and eight second accessory units per year projected over the five-year forecast. Projected multi-family projects include 299 units in 2014 and 411 units in 2015, with bayfront development beginning in 2016. "Urbana", a 266-unit multi-family project at H Street between Third and Fourth Avenues, is projected for 2014, along with the 33-unit "Lofts on Landis" at 240 Landis Avenue "The Colony" at 435 Third Avenue (162 units) is currently projected for 2015. Two other large multi-family projects are also projected for 2015, including "Creekside Point" at 944 Third Avenue (119 units) and "El Dorado Ridge" on Brandywine Avenue (104 units). In August 2012, the San Diego Unified Port District/City of Chula Vista Bayfront Master Plan was approved by the California Coastal Commission, and the Chula Vista City Council approved the Local Coastal Plan (LCP) in September 2012. The plans include a total of 1,500 multi-family units located on land owned by the Pacifica Companies,where the first 200 units are projected in 2016. Residential Construction History As depicted on Table 3, the number of building permits issued for housing units in Chula Vista has fluctuated from a few hundred units a year to over 3,000, with an average of approximately 1,238 units per year over the last 30 years. Several market cycles, including recessions, have contributed to the various number of units, broken down as follows: 1980's—averaged 330 units/year; 1990's— averaged 693 units/year; and 2000's—averaged 1,885 units/year. Between the years 1996 and 2001, the number of building permits issued annually for housing units steadily increased from about 1,000 units to 3,525 units, a peak that is not likely to return. A significant cause of the growth was the onset of construction in Eastlake, Otay Ranch and other eastern Chula Vista master planned communities. During the construction boom years from 2001- 2004, the average annual number of units receiving permits for construction was approximately 2,200. 2014-05-20 Agenda Packet 5 Page 47 The number of building permits issued began to taper off in 2005, when 1,654 residential permits were issued, and hit a low in 2009, when 275 permits were issued. The number of permits has been on an upward trend for the past four years, however, with 798 units being issued in 2013. Through September 13, 2013, 529 residential building permits have been issued (see Figure 3), with one more quarter to go this calendar year. FORECASTED POPULATION This forecast focuses on the projected number of residential units as the primary indicator to measure future population increases. Western Chula Vista (as evidenced by U.S. Census data) has been undergoing growth in the form of demographic changes as the average household size increases; however, such growth is difficult to track on a year-to-year basis and is not reflected in this report's future population forecast. The California State Department of Finance estimates that Chula Vista has an average of 3.24 persons per household. Assuming this estimate over the next five years, and assuming a 4.9% vacancy rate, Chula Vista can expect a total population of approximately 284,366 persons by the end of 2018. This is based on the following: • The California State Department of Finance (DOF) estimated Chula Vista's population on January 1, 2013 as 251,613; • An additional 515 units were occupied from January 1, 2013 to September 2013; and • An additional 10,115 units may be permitted between September 2013 and December 2018. This is only a rough estimate for planning purposes, as the vacancy rate, persons per unit factors, and the number of actual units completed may vary. 2014-05-20 Agenda Packet 6 Page 48 Figure 1 Number of Units 4000 Actual Forecast 3500 3,525 3.300 3.143 3000 2,618 2500 2.505 2,250 2000 1,902 1,8681,845 1,654 1,692 1500 1,450 1,180 11700 728 798 576 500 5�. 500 411 � 3255 323 208 208 208 0 1999 2000 2001 2102 2003 2004 2005 2006 2007 2008 2009 2010 3711 2012 2013 2014 2015 2016 2017 2018 �Through September 13,2013 O Eastern Chula Vista r Western Chula Vista GMOC 2013 Residential Units Receiving Building Permits Issued 1999-2013,and Forecast 2014 2018 2014-05-20 Agenda Packet 7 Page 49 Q N0 c� 00 00 o _ a a� LU O> N O > > > > > > c Ln p o LI)V� 0 c c .� O c N = o °o = U ° 3 a� J V LL. 'IT N D C N 0 0 0 N N U FO- Q m 0 U` —w J 0 0 0 o 0 > o m 0 J 000000000000 ® 0000000 I � 3.Ir s� LA <eQ � L._. 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O o O O O O O O O N w L W m UW � U) N a LU LL (A O O O O O O O O W co C C a a h 0 N LL O o O O O O O O O N W * m W W � O 2 c N LL 0 0 0 0 0 0 0 0 W 00 a Z a O kj N o o O O O O O O O N Q Q W f W O N Yd W w 2 m D W 0 0 0 0 0 0 0 0 00 00 Z N LU � � D M L Q 0 N O °�' CD 0 0 � 0 0 N W f W r� LU W co V x D U ~ J W LL 0 0 0 0 0 0 0 0 0 00 u� a Z � 0 r,ww N O O O O M O O N O N W W C W M M � N N w m O O O O O O O W N LU H a W N a ,. s L > a {L o O Z c ; = a of = a 'U C O1 y IA M O y) 6, i O '0 2 'O M - U - c m 0 W U —° ul N O J -O C Z U O O i O 'i O = C w u w Y 0 0 U m o Table 3 HISTORIC HOUSING AND POPULATION GROWTH CITY OF CHULA VISTA 1980 - SEPTEMBER 2013 CALENDAR Units Authorized for Units Completed Certified Year End Population YEAR Construction (Issued) (Finaled) (State D.O.F.) (1) No. No. No. % Change 1980 407 374 84,364 1981 195 496 86,597 2.6% 1982 232 129 88,023 1.6% 1983 479 279 89,370 1.5% 1984 1,200 521 91,166 2.0% 1985 1,048 1,552 116,325 27.6% 2 1986 2,076 1,120 120,265 3.4% 1987 1,168 2,490 124,253 3.3% 1988 1,413 829 128,028 3.0% 1989 1,680 11321 134,337 4.9% 1990 664 1,552 138,262 2.9% 1991 747 701 141,015 2.0% 1992 560 725 144,466 2.4% 1993 435 462 146,525 1.4% 1994 700 936 149,791 2.2% 1995 833 718 153,164 2.3% 1996 914 820 156,148 1.9% 1997 1,028 955 162,106 3.8% 1998 1,339 1,093 167,103 3.1% 1999 2,505 1,715 174,319 4.3% 2000 2,618 27652 181,613 4.2% 2001 3,525 3,222 191,220 5.3% 2002 2,250 27923 200,798 5.0% 2003 3,143 2,697 208,997 4.1% 2004 3,300 3,043 217,512 4.1% 2005 1,654 2,525 224,006 3.0% 2006 1,180 1,448 227,850 1.7% 2007 576 837 231,157 1.5% 2008 325 518 234,011 1.2% 2009 275 398 244,269 4.4% 2010 517 422 245,987 0.7% 2011 728 631 249,382 1.4% 2012 798 847 251,613 0.9% 2013 529 515 253,201 0.6% 3 Annual Average 1,207 17220 4,966 2.5% 4 (1) Reflects Department of Finance(DOF)comprehensively revised population figures for the end of the referenced year. (2) Montgomery Annexation (3) Population estimates are subject to change and refinement. They assume a 4.9%vacancy rate and 3.24 persons per unit,and are estimated prior to California Department of Finance(DOF)estimates,available in 2014. (4) The annual average percentage is adjusted for the anomaly of the Montgomery Annexation. 2014-05-20 Agenda Packet Page o oi� 0 nED 'Th1ra,)Oh (nwo.f. Coo» nclnc�;c QQ u (�@o Q) n n s [M)o 2014-05-20 Agenda Packet Page 54 Air Qualit y - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please provide brief responses to the following: 1 . Regarding development that occurred during the period under review, please provide an overview of how measures designed to foster air quality improvement, pursuant to relevant regional and local air quality improvement strategies, were implemented. Development within Chula Vista is guided by a number of planning documents and review processes to help improve local air quality. The Chula Vista General Plan,which provides a blueprint for future development, highlights the City's goal to "improve local air quality by minimizing the production and emission of air pollutants and toxic air contaminants and limit the exposure of people to such pollutants (Objective E6)." At a project level, new developments are evaluated through the California Environmental Quality Act (CEQA) review process for the following air quality impacts: CRITERIA AIR POLLUTANTS GREENHOUSE GASES AQ Standards: Based on South AQ Standards: Based on Assembly Coast Air Quality District Bill 32/Climate Action Plan Ozone Carbon Dioxide Particulate Matter Methane Lead Nitrous Oxide Carbon Monoxide Sulfur Hexafluoride Sulfur Oxide Hydrofluorocarbons Nitrogen Oxide Perfluorocarbons During FY13, three development projects underwent formal CEQA review for their contribution to local criteria air pollutants and greenhouse gases. In addition, two new development projects within the Urban Core Specific Plan (UCSP) area were found to be in compliance with the UCSP's original air quality analyses. In all cases, development projects were either found to have air quality impacts below a level of significance or were required to incorporate mitigation measures into their construction and operation, such as integrating dust control, energy efficiency technologies,water-wise landscaping, and pedestrian/bicycle- friendly design. Approximately 1,100 new/remodeled building units were permitted in FY13,which meet the City's green building and enhanced energy efficiency standards, which require levels of efficiency 15-20% higher than state codes. Chula Vista also began work, in partnership with San Diego Gas& Electric and the US Green Building Council (San Diego Chapter), on a new 2014-05-20Qfe "Wv/2014 1 Page 55 tool to assist developers in achieving the City's enhanced energy efficiency standard. Using the LEED-Neighborhood Development rating system as a framework, the tool would allow developers to quantify the energy savings through community-scale sustainable design features, such as more walkable streets and proximity to community services, in order to provide an alternative (and potentially more cost effective) approach to enhanced energy efficiency standard compliance. The creation of the new tool, which is currently in a beta stage, has been informed by a stakeholder working group. 2. Are Chula Vista's development regulations, policies and procedures consistent with current applicable federal, state and regional air quality regulations and programs? If not, please explain any inconsistencies and indicate actions needed to bring development regulations, policies and/or procedures into compliance. Yes X No The City of Chula Vista's development standards continue to meet and/or exceed regional, state, and federal air quality regulations. In addition, City staff has drafted new Electrical Generating Facilities (EGFs) guidelines to help further protect public health. The draft guidelines promote the transition towards "cleaner" fuel sources and provide explicit siting and performance standards for new back-up, private, peaker, and baseload generation facilities. The draft guidelines have been developed through an extensive two-year stakeholder engagement process with both industry and environmental representatives. It is expected that the EGF guidelines will be presented to the City Council for consideration in October 2013. 3. Are there any new non-development-related air quality programs/actions that the city is implementing or participating in? If so, please list and provide an explanation of each. Energy Efficiency, Water Conservation, & Renewable Energy Energy end use within Chula Vista's existing building stock is responsible for almost 50% of the community's greenhouse gas emissions. To assist property owners with implementing energy and water efficiency improvements and renewable energy installations, the City began the process to establish a Property Assessed Clean Energy (PACE) program in FY13. PACE programs allow property-owners to voluntarily finance energy and water upgrades through a tax assessment on their property and the resulting utility savings are used to help offset the new assessment. Assessment obligations generally transferwith the property upon sale, because the new owner continues to benefit from the efficiency improvements. PACE programs have successfully facilitated building energy and water upgrades in a number of California communities (such as Sonoma County, western Riverside County, City of Palm Desert, and City of Sacramento), while creating local economic development benefits. Chula Vista expects to launch its PACE program in March 2014. Alternative Fuel Vehicles The City of Chula Vista leveraged two public-private partnerships in FY13 to promote cleaner transportation options and to expand alternative fuel infrastructure within the community. At no cost to the City, over 25 electric vehicle charging stations were installed at the Civic Center, Parkway Recreation Center, Loma Verde Recreation Center, and Montevalle Recreation Center. The new chargers provide convenient refueling options for residents, visitors, and municipal employees, who own or lease electric vehicles. The new chargers also enabled City staff to partner with Car2Go to expand their all-electric car 2014-05-20Q$etftet 2014 2 Page 56 sharing service into Chula Vista. Car sharing allows community members to rent vehicles by the minute and provides a convenient, cleaner alternative to owning a second vehicle for households. Finally, the City of Chula Vista served on the "Regional Electric Vehicle Infrastructure" (REVI)working group and helped to develop a new comprehensive regional readiness plan for plug-in electric vehicles. Smart Growth & Transportation Chula Vista implemented a number of projects to facilitate non-motorized transportation and improve local air quality in FY13. New infrastructure improvements along Third Avenue between H and Madrona streets were completed, which provide safer mobility for pedestrians and bicyclists including crossings and lane markings. In coordination with CalTrans and SANDAG, new High Occupancy and Direct Access Ramps are being constructed on Interstate 805 in both directions within the City's boundaries. The specialty lanes will offer expedited travel for carpools, vanpools, and buses. Finally, the Palomar Gateway District Specific Plan was finalized in FY13, which outlines future transit-oriented, mixed use development. The District, which is considered the major southern gateway to the City, encompasses approximately 100 acres surrounding the Palomar Transit Station and is one of the busiest traffic interchanges in Chula Vista. 4. Identify any significant reductions in air quality emissions. During FY13, there were no significant reductions in local air quality emissions. 5. How many residents and/or commercial facilities have added solar panels in the last year? Over the last year, approximately 390 solar photovoltaic permits were issued for residential and commercial properties. 6. Are there any new non-development-related program efforts that the city needs to undertake pursuant to federal, state or regional air quality regulations? Yes No X If so, please list and provide a brief explanation of each. 7. Please provide a "side-by-side" comparison of what neighboring communities are doing for climate control. 2014-05-20Qfe "th/2014 3 Page 57 LOCAL CEQA Climate Pedestrian/ Green Free Energy JURISDICTIONS GHG Action Bicycle Building Energy Upgrade Review* Plan Plans Standards Evaluations Financing City of Chula Vista X X X X X X City of Imperial Beach X X City of National City X X X City of Coronado X X City of San Diego X X X X X County of San Diego X X Port of San Diego X I Progress X *As a result of CEQA review, development projects in all jurisdictions have to mitigate GHG emission impacts 8. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the city council. Greenhouse gas (GHG) emissions are one of the "proxies"that the City of Chula Vista, like many jurisdictions, utilize to generally assess local air quality. Typically, as GHG emissions decrease (due to direct and indirect reductions in fossil fuel burning), criteria air pollutants also decrease. As such, the City of Chula Vista recently completed a preliminary 2012 Greenhouse Gas Emissions Inventory to identify local carbon-producing sources and activities. The results show that community-wide emissions have increased by 37% since 1990 levels, but only have increased by 1% since 2005. In addition, per capita emissions continue to decrease and are currently 27% below 1990 levels. This information will help guide the formal update of the City's Climate Action Plan over the next year and help the community prioritize actions to lower greenhouse gas and criteria air pollutant emissions. PREPARED BY: Name: Brendan Reed Title: Environmental Resource Manager Date: October 7, 2013 AIR QUALITY THRESHOLD STANDARD The GMOC shall be provided with an annual report which: 1. Provides an overview and evaluation of local development projects approved during the prior year to determine to what extent they implemented measures designed to foster air quality improvement pursuant to relevant regional and local air quality improvement strategies. 2. Identifies whether the city's development regulations,policies and procedures relate to,and/or are consistent with current applicable federal,state and regional air quality regulations and programs. 3. Identifies non-development related activities being undertaken by the city toward compliance with relevant federal,state and local regulations regarding air quality,and whether the city has achieved compliance. The city shall provide a copy of said report to the Air Quality Pollution Control District(APCD)for review and comment. In addition,the APCD shall report on overall regional and local air quality conditions,the status of regional air quality improvement implementation efforts under the Regional Air Quality Strategy and related federal and state programs, and the effect of those efforts/programs on the City of Chula Vista and local planning and development activities. 2014-05-20Qfe "th/2014 4 Page 58 APCD - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please update the table below. SMOG TRENDS - Number of Days Over Standards 2008 2009 2010 2011 2012 2013 STATE STANDARDS San Diego Region 18 8 7 5 2 2 Chula Vista 1 1 1 0 0 0 FEDERAL STDS San Diego Region 11 4 1 3 0 0 Chula Vista 0 0 0 0 0 0 Please provide brief responses to the following: 1 . How does air quality in areas that surround Chula Vista affect Chula Vista's air quality? Monitoring data show that ozone levels in Chula Vista are generally lower than in many other areas of the region. Therefore, it appears that Chula Vista is not disproportionately impacted by ozone-precursor emissions from surrounding areas. 2. Please note any additional information relevant to regional and local air quality conditions during the period under review. As of 2009-2011 , San Diego County's air quality attained the ozone national ambient air quality standard that the U.S. EPA established in 1997. 2013 continued attainment and was the second year in a row with no days exceeding the 1997 ozone standard countywide. 3. Were there any changes in federal or state programs, during the period under review that could affect Chula Vista? If yes, please explain. Yes X No Effective July 20, 2012, based on the same ozone air quality data monitored in 2009- 201 San Diego County was designated and classified as a Marginal nonattainment area for the more stringent national ozone standard of 75 parts per million that the U.S. EPA established in 2008. APCD - 2014 1 2014-05-20 Agenda Packet Page 59 On December 14, 2012, EPA tightened the annual standard for fine particles PM2.5 from 15 to 12 micrograms per cubic meter, but the tighter standard is met throughout San Diego County, so the County will remain an attainment area for PM2.5. 4. Are there existing or future RAQS programs that Chula Vista needs to be aware of? If yes, please explain. Yes No X 5. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. PREPARED BY: Name: Carl Selnick Title: Air Quality Specialist Date: September 20, 2013 AIR QUALITY THRESHOLD STANDARD The GMOC shall be provided with an annual report which: 1. Provides an overview and evaluation of local development projects approved during the prior year to determine to what extent they implemented measures designed to foster air quality improvement pursuant to relevant regional and local air quality improvement strategies. 2. Identifies whether the city's development regulations,policies and procedures relate to,and/or are consistent with current applicable federal,state and regional air quality regulations and programs. 3. Identifies non-development specific activities being undertaken by the city toward compliance with relevant federal,state and local regulations regarding air quality,and whether the city has achieved compliance. The city shall provide a copy of said report to the Air Pollution Control District (APCD) for review and comment. In addition,the APCD shall report on overall regional and local air quality conditions,the status of regional air quality improvement implementation efforts under the Regional Air Quality Strategy and related federal and state programs, and the effect of those efforts/programs on the City of Chula Vista and local planning and development activities. APCD - 2014 2 2014-05-20 Agenda Packet Page 60 Chula Vista Elementary School District (CVESD) - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 —June 30, 2013 to Present Time and 5-Year Forecast 1. Please complete the tables below, adding schools where appropriate. EXISTING CONDITIONS - JANUARY 2014 Schools Enrollment Building Capacity Amount Overflow % Residing in Enrollment Under/Over Boundaries 1/14 Capacity* Permanent Portables In Out NORTHWEST Cook 454 438 75 -59 0 32 58.28% Feaster-Edison 1060 425 764 -129 0 0 90.40% Hilltop Drive 574 488 88 -2 0 0 63.56% Mueller 850 500 400 -50 52 0 79.17% Rosebank 593 450 277 -134 0 4 74.79% Vista Square 1 6421 363 1 363 1 -841 11 01 81.36% SOUTHWEST Learning Comm. 821 775 50 -4 0 0 No Att.Boundary Castle Park 424 476 25 -77 0 2 84.67% Harborside 619 513 376 1 -270 13 0 76.85% Kellogg 314 439 75 -200 0 0 58.73% Lauderbach 823 488 526 -191 17 0 90.51% Loma Verde 542 450 175 -83 1 0 68.19% Montgomery 374 413 100 -139 0 0 87.43% Otay 596 500 275 -179 8 0 82.67% Palomar 3911 468 0 -771 1 01 67.68% Rice 1 686 550 202 -66 0 0 85.25% Rohr 350 451 38 1 -139 0 0 73.85% *(-)denotes amount under capacity 7q4 j f6 a A It a Packet Pa&je 61 Current Building Capacity Amount Overflow % Residing in Schools Enrollment Under/Over Boundaries Capacity* In Out Permanent Portables SOUTHEAST Arroyo Vista 884 750 100 34 1 0 69.45% Camarena 952 800 100 52 28 0 95.87% Olympic View 804 500 300 4 26 0 88.38% Parkview 365 518 50 -203 0 0 62.64% Rogers 467 613 0 -146 0 0 63.00% Valle Lindo 528 500 189 -161 6 0 91.65% Hedenkamp 1072 1,000 0 72 21 0 87.52% Heritage 913 750 150 13 17 0 71.88% Veterans 885 727 150 8 45 0 78.35% McMillin 843 750 100 -7 36 0 89.99% Wolf Canyon 657 764 150 -257 0 0 76.79% NORTHEAST Allen/Ann Daly 428 503 0 -75 2 0 49.39% Casillas 595 564 150 -119 0 35 55.67% Chula Vista Hills 563 488 100 -25 0 0 57.40% Clear View 513 418 150 -55 13 0 54.19% Discovery 789 600 300 -111 0 0 65.69% Eastlake 665 475 239 -49 0 132 52.31% Halecrest 522 501 88 -67 0 38 39.85% Liberty 729 764 0 -35 7 0 62.55% Marshall 725 593 100 32 0 0 85.91% Salt Creek 1022 800 150 72 17 0 87.77% Tiffany 587 514 175 -102 1 0 71.40% TOTAL 25621 22,079 6,550 -3008 313 243 *(-)denotes amount under capacity 2. Please complete the tables below (insert new schools into the tables, as appropriate) to indicate the projected conditions for (a) December 2014 and (b) December 2018, based on the city's 2013 Residential Growth Forecast. 7 q4jf�6 a A It a Packet Pa Pale 62 2 a. SHORT-TERM FORECASTED CONDITIONS -- DECEMBER 2014 Schools Projected Projected Capacity Amount Overflow Overflow %Residing in Enrollment Permanent Portables Over/Under Out In Boundaries 12/31/14 Capacity* NORTHWEST Cook 421 438 75 -92 Feaster-Edison 1096 425 764 -93 Hilltop Drive 564 488 88 -12 Mueller 872 500 400 -28 Rosebank 586 450 277 -141 Vista Square 1 6301 363 1 363 1 -96 SOUTHWEST Learning Comm. 847 775 50 22 Castle Park 422 476 25 -79 Harborside 615 513 376 -274 Kellogg 309 439 75 -205 Lauderbach 803 488 526 -211 Loma Verde 503 450 175 -122 Montgomery 364 413 100 -149 Otay 576 500 275 -199 Palomar 386 468 0 -82 Rice 664 550 202 -88 Rohr 324 451 38 -165 SOUTHEAST Arroyo Vista 755 750 100 -95 Camarena 992 800 100 92 Olympic View 686 500 300 -114 Parkview 338 518 50 -230 Rogers 416 613 0 -197 Valle Lindo 600 500 189 -89 Hedenkamp 914 1,000 0 -86 Heritage 980 750 150 80 Veterans 857 727 150 -20 McMillin 666 750 100 -184 Wolf Canyon 2707 764 150 1793 NORTHEAST Allen/Ann Daly 415 502 1 0 1 -87 2q4j 60 My$a Packet Pa&g 63 Casillas 577 564 150 -137 CV Hills 548 488 100 -40 Clear View 489 418 150 -79 Discovery 762 600 300 -138 Eastlake 632 475 239 -82 Halecrest 530 501 88 -59 Liberty 739 764 0 -25 Marshall 640 593 100 -53 Salt Creek 976 800 150 26 Tiffany 576 514 1 175 1 -113 ITOTAL 24865 22,014 6,550 -3699 *(-)denotes amount under capacity 2.b FIVE-YEAR FORECASTED CONDITIONS -- DECEMBER 2018 Schools Projected Projected Capacity Amount Overflow Out Overflow %Residing in Enrollment permanent Portables Over/Under In Boundaries 12/31/18 Capacity* NORTHWEST Cook 365 438 75 -148 Feaster-Edison 701 425 764 -488 Hilltop Drive 471 488 88 -105 Mueller 987 500 400 87 Rosebank 501 450 277 -226 Vista Square 670 363 363 -56 SOUTHWEST Learning Comm. 1022 775 50 197 Castle Park 394 476 25 -107 Harborside 582 513 376 -307 Kellogg 310 439 75 -204 Lauderbach 739 488 526 -275 Loma Verde 475 450 175 -150 Montgomery 347 413 100 -166 Otay 538 500 275 -237 Palomar 341 468 0 -127 Rice 1 618 550 202 -134 Rohr 291 451 1 38 1 -198 7q4jf�6 a A It a Packet Pa&14e 64 SOUTHEAST Arroyo Vista 755 750 100 -95 Camarena 992 800 100 92 Olympic View 686 500 300 -114 Parkview 338 518 50 -230 Rogers 416 613 0 -197 Valle Lindo 600 500 189 -89 Hedenkamp 914 1,000 0 -86 Heritage 980 750 150 80 Veterans 857 727 150 -20 McMillin 6661 750 100 -184 Wolf Canyon 2707 764 150 1793 NORTHEAST Allen/Ann Daly 364 438 0 -74 Casillas 505 564 150 -209 Chula Vista Hills 532 488 100 -56 Clear View 395 418 150 -173 Discovery 667 600 300 -233 Eastlake 626 475 239 -88 Halecrest 499 501 88 -90 Liberty 743 764 0 -21 Marshall 471 593 100 -222 Salt Creek 818 800 150 -132 Tiffany 526 514 175 -163 254091 22,0141 6,550 -3155 *(-)denotes amount under capacity 3. Please complete the table below. ENROLLMENT HISTORY 2013-2014 2012-2013 2011-2012 2010-2011 2009-10 NORTHWEST SCHOOLS Total Enrollment 4,173 4,179 4,287 4,414 4,537 of Change Over the -0.14% -2.5% -2.88% -2.9% 2% Previous Year % of Enrollment from Chula Vista SOUTHWEST SCHOOLS Total Enrollment 5,940 5,895 5,878 5,955 6,208 2q4j 60 A My$a Packet Pa&se 65 of Change Over the 0.76% 0.29% -1.29% -4% 5% Previous Year % of Enrollment from Chula Vista SOUTHEAST SCHOOLS Total Enrollment 8,370 7,901 7,807 7,243 7,328 of Change Over the 5.94% 1.2% 7.79% -1% 6% Previous Year % of Enrollment from Chula Vista NORTHEAST SCHOOLS Total Enrollment 7,138 7,114 6,884 7,021 7,252 of Change Over the 0.34$ 3.34% -1.95% -3% 2% Previous Year % of Enrollment from Chula Vista DISTRICT-WIDE Total Enrollment 28,442 27,328 27,765 27,521 28,224 of Change Over the 4.08% -1.6% .89% -2.6% 3% Previous Year % of Enrollment from Chula Vista Please provide brief responses to the following: 4. Are existing facilities/schools able to accommodate forecasted growth for the next 12 to 18 months? If not, please explain. Yes No 5. Are existing facilities/schools able to accommodate forecasted growth for the next five years? If not,please explain. Yes_ _ No 7q4jf�6 a A It a Packet Pa Pp$e 66 6. Please complete the table below. NEW SCHOOLS STATUS School Site Architectural Commencement Service Commencement Time Selection Review/Funding of Site Preparation by of Construction Needed ID for Land and Utilities By Construction and Road Village 2 X TBD TBD TBD Est. Spring of 2016 dependent on CFD bonding capacity 7. Is adequate funding secured and/or identified for maintenance of new and existing facilities? If not, please explain. Yes No 8. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the city council. PREPARED BY: Name: Carolyn Scholl Title: Facilities Planning Manager Date: February 10, 2014 "SCHOOLS"THRESHOLD STANDARD The city shall annually provide the two local school districts with a 12-to 18-month forecast and request an evaluation of their abilities to accommodate the forecast and continuing growth. The districts replies should address the following: 1. Amount of current capacity now used or committed; 2. Ability to absorb forecasted growth in affected facilities; 3. Evaluation of funding and site availability for projected new facilities;and 4. Other relevant information the districts desire to communicate to the city and GMOC. 7q4jf�6 a A It a Packet Pa Pale 67 t ��.aY x r • �! Y t Po iL w P U) �"Y LO N i m U) 1 L+- .. lL It It r U) • LO • + o a` Y •tk. �• Y,.a- -p•.. EL m U) + q ... � LO /S O 1. f y Drainage - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1, 2012-June 30, 2013 to Present Time and 5-Year Forecast Please provide brief responses to the following: 1. Have storm water flows or volumes exceeded City Engineering Standards at any time during the period under review? Yes No X If yes: a. Where did this occur? b. Why did this occur? C. What has been, or is being done to correct the situation? 2. Will any new facilities be required to accommodate the 12- to 18-month growth forecast? If so, please explain. Yes No X 3. Will any new facilities be required to accommodate the 5-year growth forecast? If so, please explain. Yes No X Growth will not directly impact current channel operation. Developers in eastern Chula Vista will be required to provide all necessary facilities and their respective share of maintenance costs of facilities they may impact. Developers may need to construct additional facilities or reconstruct existing facilities in order to accommodate new development in western Chula Vista where the parcels are redeveloped at a higher density. This will be reviewed with respect to the Hydro-modification Plan,in effect as of January 2011,as development and redevelopment occurs. 4. What channel maintenance procedures are being used that are acceptable to resource agencies and that facilitate obtaining environmental permits? The removal of trash, debris, invasive plants,and sediment, as required under the City's NPDES Municipal Storm water Discharge Permit,supports water quality and ensures proper flood control functioning within open channels and basins.Although the Regional Water Quality Control Board has allowed municipalities to remove trash, debris, and dead vegetation by hand from these flood control facilities without an environmental permit,the City is precluded from equipment-assisted activities or removing native wetland and Drainage-2014 10/31/2013 2014-05-20 Agenda Packet Page 69 riparian plant materials and sediment unless the proper, and costly, environmental permits and mitigations (i.e., streambed mitigation, wetland and riparian habitat mitigation, etc.)are first in place. In addition, if threatened or endangered species are present, channel and detention basin cleaning and maintenance activities must take place during a narrow time window-September through February,five months of which are within the official rainy season of October 15} through April 30th. Therefore the maintenance procedures used to facilitate environmental permits are limited to controlling vegetation overgrowth and trash removal. All maintenance activities are done without mechanical equipment. 5. Do we have appropriate staffing levels and budget resources to keep up with the maintenance schedule? If not, please explain. Yes No_X The current Public Works storm drain maintenance-operating budget is$900,000. The current staff level consists of a Supervisor, a Public Works Specialist,three Senior Maintenance Workers and two Maintenance Workers to inspect and maintain the current storm drain infrastructure of 276 miles of pipes, 296 miles of lined and unlined channels,over 20 detention basins and 13,894 storm structures(see attached exhibit). The City allocates resources to address all the other areas throughout the City with storm drain infrastructure that require structural maintenance or replacement, routine weed abatement and silt and debris removal to maintain channel and detention basin capacity. The city has to consider costs of the time-consuming multi-agency permit process for each segment where crews or contractors need remove vegetation and debris. Increase levels of maintenance could always bring the drainage system to a higher level of service if additional funding became available New growth has not appeared to impact current capacity as developers are required to mitigate the impacts they create. In addition,current maintenance level has not resulted in any flooding impacts. On May 8,2013,the San Diego Regional Water Quality Control Board adopted Order NO. R9-2013-0001 (Permit),which became effective on June 27,2013. Section E.5.b.(1).(c).(ii) of the new Permit mandates the following for Operations and Maintenance of Municipal Separate Storm Sewer System (MS4)and Structural Controls: Each Copermittee must implement a schedule of operation and maintenance activities for its MS4 and related structures(including but not limited to catch basins, storm drain inlets, detention basins, etc.), and verify proper operation of all its municipal structural treatment controls designed to reduce pollutants (including floatables) in storm water discharges to or from its MS4s and related drainage structures. Operation and maintenance activities may include, but is not limited to,the following: [a]Inspections of the MS4 and related structures; [b]Cleaning of the MS4 and related structures;and [c] Proper disposal of materials removed from cleaning of the MS4 and related structures. Drainage-2014 10/31/2013 2014-05-20 Agenda Packet Page 70 In addition, the City is required to effectively prohibit non-storm water discharges and ensure that storm water discharges from MS4s meet water quality standards in the Basin Plan. Compared to the previous Permit,the Regional Board has provided some flexibility to the Copermittees in establishing their own priority maintenance activities, frequencies, and areas. However, in order for the Copermittees to meet water quality standards in their discharges,most probably the Copermittees will have to maintain or even increase storm drain maintenance activities, depending on monitoring results. The City began a two year transition to the new permit on June 27, 2013. During this time, baseline water quality levels are being developed through monitoring and assessments.The goal for the two year period is to able to identify the best strategies to meet the new permit requirements. The City will continue to evaluate staffing levels as the best strategies to meet the new permit requirements are identified. 6. Please provide any other relevant information,recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. Lack of appropriate resources may result in an increased potential for flooding, particularly in western Chula Vista, for collapse of corroded CMP and for erosion, particularly in natural channels and canyons. This could result in impairment of water quality within receiving waters and create a condition of non-compliance with the Municipal Permit, exposing the City to penalties. PREPARED BY: Roberto N.Yano, Sr. Civil Engineer Dave McRoberts,Wastewater Collections Manager Khosro Amnipour, Sr. Civil Engineer THRESHOLD STANDARDS 1. Storm water flows and volumes shall not exceed City Engineering Standards. 2. The GMOC shall annually review the performance of the city's storm drain system to determine its ability to meet the goals and objectives above. Drainage-2014 10/31/2013 2014-05-20 Agenda Packet Page 71 Fire & EMS - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please complete the following tables: FIRE and EMS Response Times Call %of All Calls Average Average Average Average Travel Time Review Period Responded Response Time g Dispatch Turn-out Volume to Within 7 Minutes for all Calls2 Time Time Threshold Standard: 80.0% FY 2013 12,316 75.7 6:02 3:48 1:05 1:08 FY 2012 11,132 76.4% 5:59 3:43 FY 2011 9,916 78.1% 6:46 3:41 FY 2010 10,296 85.0% 5:09 3:40 FY 2009 9,363 84.0% 4:46 3:33 FY 2008 9,883 86.9% 6:31 3:17 FY 2007 10,020 88.1% 6:24 3:30 CY 2006 10,390 85.2% 6:43 3:36 CY 2005 9,907 81.6% 7:05 3:31 FY 2003-04 8,420 72.9% 7:38 3:32 FY 2002-031 8,088 75.5% 7:35 3:43 FY 2001-021 7,626 69.7% 7:53 3:39 FY 2000-01 7,128 80.8% 7:02 3:18 FY 1999-00 6,654 79.7% 3:29 Note 1: Reporting period for FY 2001-02 and 2002-03 is for October 1,2002 to September 30,2003. The difference in 2004 performance when compared to 2003 is within the 2.5%range of expected yearly variation and not statistically significant. Note 2: Through FY 2012,the data was for"Average Response Time for 80%of Calls." Please provide brief responses to the following: 1 . During the period under review, were 80% of calls responded to within the threshold standard of seven minutes? If not, what is required to meet the threshold standard? Yes No _X Over the last two years the Fire Department has seen an increase in our turnout times. We have been monitoring and addressing these times with companies that are not meeting the standard. In addition the department purchased the FirstWatch real time data and notification program to help address concerns related to dispatch, turnout and travel times. Last year our call volume increased by 1493 calls and this year our call volume increased again by an additional 1184 calls marking two consecutive years. In comparison, our available resources staffing and facilities remained the same. This resulted in a higher demand on available resources Page 1 Fire - 2014 2014-05-20 Agenda Packet Page 72 and personnel making meeting the standard increasingly difficult. 2. During the period under review, did the Fire Department have sufficient properly equipped fire and medical units to maintain threshold standard service levels? If not, please explain. Yes No _X Our aging fleet of fire apparatus combined with a reduction in public works support staff (radio technicians and mechanics) continues to hamper our ability to meet the standards. Older open cab fire apparatus are forced into service daily resulting in increased response times. In October of 2013 the city council approved our request to enter into a Lease/Purchase agreement for one new fire engine. This new engine was ordered and is expected to be placed into service in December of 2014. We are still planning to take the National Fire Protection (NFPA) 1901 Standard for Fire Apparatus Maintenance and Replacement to council for adoption however we do not currently have the funding to execute the plan. 3. During the period under review, did the Fire Department have adequate staffing citywide for fire and medical units to maintain threshold standard service levels? If not, please explain. Yes X No 4. Are current facilities,equipment and staff able to accommodate forecasted growth for the next 12 to 18 months? If not, please explain. Yes No _X Aging fire apparatus continue to hamper our ability to respond. Our department still needs to identify funding to replace an additional apparatus. 5. Are current facilities,equipment and staff able to accommodate forecasted growth for the next five years? If not, please explain. Yes No _X_ Aging fire apparatus continue to hamper our ability to respond. Our department still needs to identify funding to replace an additional apparatus. 6. Please report the status of adoption of the Fire Facility Master Plan. The Fire Facility Master Plan is complete as is the fiscal analysis. The Fire Department completed a series of public information meetings and will be asking the city council to adopt the plan on December 10, 2013. Page 2 Fire - 2014 2014-05-20 Agenda Packet Page 73 7. On the table below, please provide data on response times and calls for service by geography, specifically by calls east of 1-805 ("East"), calls west of 1-805 ("West") and calls that straddle the 1-805 corridor. FIRE and EMS Response Times (By Geography) %of All Calls Average Response Average Call Responded to Time Travel Time Average Average Volume Within 7 Minutes for all Calls2 Dispatch Time Turn-out Time Threshold = 80% East West E/W East West E/W East West E/W East West E/W East West E/W East Wes E/W FY 1,976 6,670 3,670 54.3 85.9 68.7 7:06 5:29 6:27 4:48 3:16 4:15 1:08 1:05 1:04 1:12 1:06 1:09 2013 Note: "East" =Calls responded to east of 1-805(Fire Stations 6, 7 and 8). "West" = Calls responded to west of 1-805(Fire Stations 1 and 5). "E/W" =Calls responded to citywide(Fire Stations 2,3,4 and 9). B. What percentage of calls received were for fire services, and what percentage were for emergency medical services? Call Type Percentage of Calls Fire 4.8% Medical 83.7% Other 11.5% 9. Please report on the performance of the 911"FirstWatch"dashboard program that the Fire Department purchased earlier this year to alert Senior Staff and Battalion Chiefs anytime one of the citywide or GMOC threshold standards was not being met. Has it been successful in allowing staff to take immediate action to address and resolve any issues related to these parameters? The 911"FirstWatch" dashboard program was purchased in April of 2013. We have been working with the City of San Diego whom manages our Computer Aided Dispatch (CAD)system and FirstWatch on the implementation and testing phase of the program. In October we delivered department wide training to all personnel on the use of the program and we are set to go live on December 1 , 2013. 10. Please complete the National Fire Protection Association (NFPA) table below. Page 3 Fire - 2014 2014-05-20 Agenda Packet Page 74 NFPA COMPLIANCE TABLE— FY 2013 #of Calls Dispatch Turnout Travel Total Response Time*** Time** Time* Time EMS' - 1st BLS2 Unit 11739 NFPA Standard 1:00 1:00 4:00 6:00 Average Time 0:55 1:08 3:47 5:58 % Compliance 71.8 44.8 61.9 76.7 EMS' - 1st ALS3 Unit 0 NFPA Standard 1:00 1:00 6:00 8:00 Average Time % Compliance Fire- 1st Unit 577 NFPA Standard 1:00 1:20 4:00 6:00 Average Time 1:15 1:19 4:26 8:50 % Compliance 28.8 61.8 50.1 54.1 Effective Fire Force 114 (EFF) - 14FF NFPA Standard 1:00 1:20 8:00 10:00 Average Time 1:28 1:24 4:55 10:21 Compliance 10.2 52.6 95.4 54.4 "Dispatch Time"(Alarm Processing): Phone pick-up in communications center to unit assigned to incident "Turnout Time": Unit assigned to unit en route to location "Travel Time": Unit en route to unit arrival at scene "Total Response Time": Phone pick-up in communication center to unit arrival at scene ***Standard for all incident types-1 minute/80%of the time **Standard for EMS-1 minute/90%of the time;Standard for Fire-80 seconds/90%of the time *Standard for EMS BLS and Fire 1 I Unit Arrival-4 minutes/90%of the time;Standard for EMS ALS and Fire EFF-8 minutes/90%of the time 'EMS = Emergency Medical Services 2BLS= Basic Life Support 3ALS=Advanced Life Support 11. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. PREPARED BY: Name: Dave Hanneman Title: Fire Chief Date: 11/13/13 THRESHOLD STANDARD Emergency response: Properly equipped and staffed fire and medical units shall respond to calls throughout the city within seven (7) minutes in 80%(current service to be verified)of the cases(measured annually). Page 4 Fire - 2014 2014-05-20 Agenda Packet Page 75 Fiscal - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1, 2012- June 30, 2013 to Present Time and 5-Year Forecast Please provide brief responses to the following: 1. Please provide an updated Fiscal Impact Report showing an evaluation of the impacts of growth on the city's Operations and Capital. The evaluation should include the following three time frames: a. The last fiscal year(07-01-12 to 06-30-13); b. The current fiscal year, 2013-2014;and c. What is anticipated in the coming five years. FISCAL IMPACT REPORT a. Fiscal Year 2012-13(last fiscal year,07-01-12 to 06-30-13) On June 28, 2012, the City Council adopted the fiscal year 2012-13 operating and capital budgets. The adopted all funds budget totaled $274.5 million, including a General Fund operating budget of $123.8 million, a Capital Improvement Program (CIP) budget of $20.1 million, $34.0 million in interfund transfers, and $96.6 million in operating budgets for other City funds, including Sewer, Successor Agency to the Redevelopment Agency, Development Services, Transit and Fleet. The fiscal year 2012-13 budget assumed all funds revenues totaling $260.1 million, including $124.3 million in General Fund revenues. At the commencement of the budget process, the City's General Fund was projected to have a deficit of $3.0 million in fiscal year 2012-13. During General Fund budget development, staff focused on the following budget development goals: • Maintain the service levels established in Council's 2011-12 budget • Fund the highest level of municipal services possible based on available resources • Make significant progress on key programs and projects • Continue stabilizing Chula Vista's financial base • Continue to improve efficiency and effectiveness of government services through Continuous Improvement principles Staff made a number of adjustments in order to mitigate the deficit. A balanced General Fund operating budget was adopted, with no reductions in service levels anticipated to result from making these adjustments. In comparison to the fiscal year 2011-12 adopted budget, the total all funds expenditure budget for fiscal year 2012-13 reflected a decrease of$25.2 million. The largest portion of this decrease was due to the elimination of the Redevelopment Agency and the final debt service payment related to the 1994 Pension Obligation Bond,which was made during fiscal year 2011-12. The following tables summarize and compare revenues, expenditures and staffing for all funds in fiscal years 2011-12 and 2012-13. Fiscal - 2014 Page 1 2014-05-20 Agenda Packet Page 76 ALL FUNDS SUMMARY(in Thousands) FY 2011-12 FY 2012-13 Increase/ Actual Actual (Decrease) Revenues Property Taxes $ 35,706 $ 32,333 $ (3,373) Sales Taxes 27,276 28,628 1,352 Other Local Taxes 19,857 25,797 5,940 Licenses and Permits 2,973 3,877 903 Fines, Forfeitures, Penalties 2,065 1,640 (425) Use of Money& Property 6,526 3,261 (3,264) Revenue from Other Agencies 44,243 44,834 591 Charges for Services 56,549 59,144 2,596 Development Impact Fees 5,619 14,667 9,048 Other Revenue 37,652 36,660 (993) Transfers In 82,248 32,027 (50,220) Total Revenues $ 320,713 $ 282,868 $ (37,846) Expenditures Personnel Services $ 113,576 $ 115,792 $ 2,216 Supplies & Services 52,147 54,214 2,066 Other Expenses 49,047 41,684 (7,363) Capital 2,549 1,724 (825) Transfers Out 82,248 32,027 (50,220) CIP Project Expenditures 17,486 23,253 5,767 Non-CIP Project Expenditures 2,036 5,319 3,282 Utilities 6,433 7,001 568 Total Expenditures $ 325,522 $ 281,013 $ (44,509) STAFFING SUMMARY(FTEs) FY 2011-12 FY 2012-13 Increase/ Actual Actual (Decrease) General Fund Legislative/Administrative 99.00 101.00 2.00 Development/ Maintenance 199.75 201.75 2.00 Public Safety 440.50 448.00 7.50 Community Services 38.00 38.10 0.10 General Fund Subtotal 777.25 788.85 11.60 Other Funds Development Services 39.00 41.50 2.50 Police Grants/CBAG 32.00 34.00 2.00 ARRA 4.50 - (4.50) Environmental Services 4.00 5.00 1.00 Housing Authority 7.00 7.00 - Successor Agency - 1.00 1.00 Fleet Management 8.00 8.00 - Transit 1.00 1.00 - Sewer 46.00 46.00 - Redevelopment Agency 4.00 - (4.00) Other Funds Subtotal 145.50 143.50 (2.00) Total All Funds 922.75 932.35 9.60 Population (as of January 1) 248,185 251,613 3,428 FTEs per 1,000 population 3.72 3.71 (0.01) Fiscal - 2014 Page 2 2014-05-20 Agenda Packet Page 77 b. Fiscal Year 2013-14(current fiscal year,07-01-13 to 06-30-14) On June 11, 2013, the City Council adopted the fiscal year 2013-14 operating and capital budgets. The adopted all funds budget totaled $268.8 million, including a General Fund operating budget of $127.8 million, a Capital Improvement Program (CIP) budget of $15.4 million, $32.4 million in interfund transfers, and $93.2 million in operating budgets for other City funds, including Sewer, Successor Agency to the Redevelopment Agency, Development Services, Transit, and Fleet. The fiscal year 2013-14 budget assumed all funds revenues totaling $261.1 million, including $127.8 million in General Fund revenues with the use of$2.3 million in one-time contingency reserves. The City continues to make progress toward implementing a priority based budget process. In the development of the fiscal year 2013-14 budget, staff not only considered normal operating costs, but also evaluated funding needs in relation to the Program Summary (an assessment of current service levels for key functions in each department), Critical Needs List (crucial one-time expenditure requests separate from normal operating costs), and Strategic Plan. In future budgets, the use of these planning tools will be integrated to a greater degree with the budget process. In comparison to the fiscal year 2012-13 adopted budget,the total all funds expenditure budget for fiscal year 2013-14 reflected a net decrease of$5.8 million. The all funds revenue budget of$261.1 million reflected a net increase of$1.0 million when compared to the fiscal year 2012-13 adopted budget. The following tables summarize and compare revenues, expenditures and staffing for all funds in fiscal years 2012-13 (actual) and 2013-14(adopted budget). ALL FUNDS SUMMARY(in Thousands) FY 2012-13 FY 2013-14 Increase/ Actual Budget (Decrease) Revenues Property Taxes $ 32,333 $ 32,195 $ (138) Sales Taxes 28,628 29,855 1,227 Other Local Taxes 25,797 22,799 (2,998) Licenses and Permits 3,877 3,151 (726) Fines, Forfeitures, Penalties 1,640 1,753 114 Use of Money& Property 3,261 3,117 (145) Revenue from Other Agencies 44,834 45,636 803 Charges for Services 59,144 51,552 (7,593) Development Impact Fees 14,667 6,717 (7,950) Other Revenue 36,660 31,887 (4,773) Transfers In 32,027 32,437 409 Total Revenues $ 282,868 $ 261,099 $ (21,769) Expenditures Personnel Services $ 115,792 $ 121,333 $ 5,541 Supplies & Services 54,214 59,289 5,075 Other Expenses 41,684 28,824 (12,860) Capital 1,724 1,476 (248) Transfers Out 32,027 32,437 409 CIP Project Expenditures 23,253 15,376 (7,877) Non-CIP Project Expenditures 5,319 2,903 (2,415) Utilities 7,001 7,201 200 Total Expenditures $ 281,013 $ 268,838 $ (12,175) Fiscal - 2014 Page 3 2014-05-20 Agenda Packet Page 78 STAFFING SUMMARY(FTEs) FY 2012-13 FY 2013-14 Increase/ Actual Budget (Decrease) General Fund Legislative/Administrative 101.00 105.00 4.00 Development/ Maintenance 201.75 203.00 1.25 Public Safety 448.00 455.00 7.00 Community Services 38.10 38.50 0.40 General Fund Subtotal 788.85 801.50 12.65 Other Funds Advanced Life Support - 1.00 1.00 Development Services 41.50 44.50 3.00 Police Grants/CBAG 34.00 37.00 3.00 UAS I - 1.00 1.00 Environmental Services 5.00 5.00 - Housing Authority 7.00 4.00 (3.00) Successor Agency 1.00 1.00 - Fleet Management 8.00 8.00 - Transit 1.00 1.00 - Sewer 46.00 46.00 - Other Funds Subtotal 143.50 148.50 5.00 Total All Funds 932.35 950.00 17.65 Population (as of January 1) 251,613 251,613 - FTEs per 1,000 population 3.71 3.78 0.07 C. Five Year Forecast(fiscal year 2014-15 through 2018-19) A Five Year Financial Forecast for fiscal years 2013-14 through 2017-18 was developed in conjunction with the fiscal year 2013-14 budget. The forecast serves as a tool to identify financial trends, shortfalls, and issues so that the City can proactively address them. The goal of the forecast is to assess the City's ability over the next five years to continue current service levels based on projected growth, preserve the City's long-term fiscal health by aligning operating revenues and costs, and slowly rebuild the operating reserves. The key assumptions applied in the financial forecast are as follows: Economic& Population Growth • Inflation is a measure of the increase in costs of goods and services. Inflation impacts many revenues, such as rents and leases, and most expenditure categories throughout the five-year forecast and is projected to average 2% per year. • The regional economies will begin to recover at very moderate levels. • City population will continue to reflect modest increases. • Millenia Project (Eastern Urban Center) and Bayfront Development - No additional revenues or operating expenses are assumed related to the Millenia Project or the Bayfront project area. As timing of development becomes more certain the revenues and operating expenses related to additional service demands will be added to the forecast. Major Revenues • Sales tax revenues will increase throughout the forecast period. • Base assessed value will increase by 2% in fiscal year 2014-15 due to anticipated improvements in the housing market. Beginning in fiscal year 2015-16 and 2016-17 assessed values are assumed to increase by 4%annually. • No Utility Users Tax (UUT) wireless telecommunications revenues are assumed in the Fiscal - 2014 Page 4 2014-05-20 Agenda Packet Page 79 forecast. Expenditures • Expenditures related to salary increases are reflected in the forecast based on currently negotiated Memoranda of Understanding. • Flex Plan increases based on 10% health care premium increases per fiscal year based on historical trends. • CalPERS retirement contribution rates will continue to increase due to market losses over the last five years and recent program changes approved by CalPERS. • 1%salary savings(vacancies)are assumed in the forecast. • No additional personnel are assumed in the forecast with the exception of Police grant funded positions, which will be absorbed by the General Fund as the grant funding phases out. The following table presents the updated Five Year Financial Forecast for fiscal years 2013-14 to 2017-18 as presented to the City Council in May 2013 and updated to reflect the final fiscal year 2013-14 adopted budget. The adopted budget reflects the use of $2.3 million in General Fund contingency reserves in order to avoid additional service level impacts in fiscal year 2013-14. The Forecast reflects the continuing fiscal challenges that are projected for the City. As noted in the table below, deficits are projected throughout the forecast period, primarily resulting from recent changes imposed by CalPERS(PERS Amortization). Five Year Financial Forecast(FY 2013-14 through FY 2017-18) FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 Description Adopted Forecast Forecast Forecast Forecast Major Discretionary Revenues $ 86,646,000 $ 89,354,000 $ 92,570,000 $ 95,909,000 $ 99,377,000 Other Revenues 38,810,000 38,206,000 38,326,000 38,562,000 38,814,000 Total Revenues $ 125,456,000 $ 127,560,000 $ 130,896,000 $ 134,471,000 $ 138,191,000 Personnel Services $ 73,390,000 $ 74,159,000 $ 74,155,000 $ 74,152,000 $ 74,275,000 Flex/Insurance 10,856,000 11,635,000 12,491,000 13,417,000 14,420,000 PERS 18,571,000 19,567,000 19,877,000 20,187,000 20,428,000 PERS Amortization - - 1,361,900 2,724,000 4,086,000 Other Expenditures 24,937,000 25,405,000 25,926,000 26,462,000 27,070,000 Total Expenditures $ 127,754,000 $ 130,766,000 $ 133,810,900 $ 136,942,000 $ 140,279,000 Economic Contingency Reserve $ 2,298,000 $ - $ - $ - $ - Surplus/(Deficit) $ - $ (3,206,000) $ (2,914,900) $ (2,471,000) $ (2,088,000) 2. According to the updated Fiscal Impact Report, how is the city's current fiscal health and what are the primary growth-related fiscal issues facing the city? The City is beginning to see economic recovery; however, the impacts of the recession continue to challenge the City to find new and creative ways to deliver high quality services and maintain a balanced operating budget. The General Fund budget for fiscal year 2013-14 was balanced with the use of$2.3 million in Economic Contingency Reserves, allowing the City to continue to provide current service levels and to better evaluate the City's financial picture over the next few years. At this time, as a result of the significant slowdown in development, we do not anticipate fiscal issues resulting from new development. The fiscal challenges the City has faced over the last seven years are the result of the significant issues around the housing market, the slowdown in the overall economy, and the loss of wireless Telecommunications Users Tax(TUT) revenues. Fiscal - 2014 Page 5 2014-05-20 Agenda Packet Page 80 3. Is the city in the position to continue maintaining current and projected level of service consistent with the threshold standards? The City's current and projected service levels are determined by both the resources available and the efficient application of those resources. As summarized in the Five Year Forecast table provided on page 5, the City anticipates continuing challenges throughout the forecast period, primarily resulting from recent changes imposed by CalPERS. As noted in the forecast table, General Fund deficits are indicated throughout the forecast period, though at a significantly reduced level when compared to previous forecasts. Staff anticipates addressing these deficits without further impacts to service levels. Despite the financial challenges the City has faced, additional steps are proposed to strengthen the City's economic base and to operate in a cost effective manner. In the coming year, City staff will focus on the following programs: 1. Continuous Improvement 2. Quality Workforce Program 3. Strategic Plan Continuous Improvement The City remains a strong advocate for Continuous Improvement. In 2008, the City partnered with UTC Aerospace Systems (formerly Goodrich Aerostructures) to train employees in Continuous Improvement. Since that time, the City has worked diligently to implement Continuous Improvement principles in the City with the goal of providing public services in the most efficient and cost effective manner. Quality Workforce Program Over the past year, staff has also worked on two major initiatives that will help the City move towards long-term financial stability—the Quality Workforce Program and the development of a strategic plan. The Quality Workforce Program seeks to comprehensively address employee compensation, training, and performance evaluations with a continued focus on customer service. This program will continue to be developed and implemented in the coming fiscal year. Strategic Plan During fiscal year 2012-13, the City developed a Strategic Plan that took previous long-term planning efforts and synthesized them into five Citywide goals, aimed at improving service delivery. The plan will be reviewed throughout the year so that it encourages focused, meaningful service delivery to benefit all of Chula Vista. Simply put,the Strategic Plan is a road map that identifies where we want to go and includes concrete steps of how the City will get there. City Goals and Initiatives: 1. Operational Excellence 2. Economic Vitality • Fiscal Health • Strong Vibrant City • Continuously Improve • Prosperous Residents and Businesses • Positive Experience Fiscal - 2014 Page 6 2014-05-20 Agenda Packet Page 81 3. Healthy Community 4. Strong and Secure Neighborhoods • Environment Fosters Health and • Public Infrastructure Maintenance Wellness • Crime Prevention and Emergency • Restore and Protect Natural Resources Preparedness • Assets and Facilities • Response and Recovery 5. Connected Community • Civic Engagement • Enrichment Programming 4. Please complete the table below: REVENUE COLLECTED FOR GENERAL FUND(Millions) SOURCE FY 13 FY 12 FY 11 FY 10 FY 091 FY 082 FY 07 FY 06 FY 05 FY 04 FY 03 Sales Tax 28.63 27.28 26.70 23.67 25.59 28.30 28.83 26.72 23.60 21.42 19.61 Property Taxes 27.88 24.52 24.71 25.73 29.26 29.31 26.67 22.19 18.13 16.36 14.65 Motor Vehicle 16.25 16.29 16.94 17.70 19.90 19.80 17.68 18.35 13.94 9.14 11.01 License Fees Franchise Fees 9.27 8.40 8.26 8.47 9.38 9.66 8.81 9.49 9.84 7.82 4.30 Charges for Srvcs. 8.36 7.58 6.45 7.17 7.00 14.47 16.26 15.23 14.48 14.40 13.40 Utility Users Tax 4.43 3.471 4.94 9.06 7.85 7.38 6.98 6.36 6.58 5.62 4.77 Other 36.00 34.17 40.73 38.97 41.53 45.02 56.34 59.46 51.19 48.01 45.28 SUM $ (Millions) 130.81 121.70 128.74 130.78 140.50 153.941 161.561 157.81 137.761 122.771 113.03 PER CAPITA$ 519.89 490.35 523.38 536.60 586.97 652.921 697.611 695.69 626.371 581.781 559.28 EXPENSES FROM GENERAL FUND(Millions) FY 13 FY 12 FY 11 FY 10 FY 09 FY 08 FY 07 FY 06 FY 05 FY 04 FY 03 Police 42.66 41.99 43.10 43.70 45.40 47.77 49.63 45.34 42.54 37.15 33.45 Public Works 23.82 22.97 23.80 24.62 26.86 32.58 38.27 37.04 31.86 29.97 25.65 Fire 24.03 22.43 21.81 22.09 23.13 24.35 22.72 21.31 17.93 14.31 10.92 Support3 8.211 8.10 9.56 9.631 11.34 11.61 12.311 12.10 9.96 9.41 8.49 Community Svcs4. 8.92 8.93 10.17 11.90 12.95 15.07 16.91 15.89 14.23 12.27 12.34 Non-Dprtmntl.* 10.93 14.07 10.49 9.81 10.10 5.31 3.60 5.47 3.17 4.14 9.40 Admin/Legislative' 6.43 5.83 5.61 5.64 8.15 8.16 8.90 9.04 8.97 8.571 8.49 Other 2.52 2.72 3.351 3.85 2.421 10.17 13.72 14.64 13.52 12.291 10.30 SUM $ (Millions) 127.531 127.03 127.89 131.241 140.37 155.021 166.061 160.83 142.20 128.11 119.04 PER CAPITA$ 1 506.841 511.83 519.91 538.511 586.40 657.521 717.011 708.99 646.52 607.09 589.04 *Non-Departmental=Debt Service,Insurance,Transfers Out) 1 In fiscal years 2008 and 2009 the City restructured the General fund budget. This restructuring included budgeting of non-General funded positions directly in their respective funding sources. In prior years,these positions were budgeted in the General fund,which was then reimbursed through a series of inter-fund transfers and staff time reimbursements from the respective funding sources. Positions transferred in fiscal year 2008 include wastewater engineering and wastewater maintenance crews transferred to the Sewer Service fund (Public Works). Positions transferred in fiscal year 2009 include staff in environmental services(Public Works),redevelopment and housing (Other),and development services(Other). In addition to impacting the expenditure budgets for these years, revenues associated with the transferred staff were also moved to their respective new funds(Charges for Services and Other). z See footnote#1. 3 Support includes ITS,HR and Finance. 4 Community Services includes Recreation and Library. 5 Admin/Legislative includes City Council, Boards&Commissions,City Clerk,City Attorney,and Administration. 6 Other includes Animal Care Facility and Development Services Fiscal - 2014 Page 7 2014-05-20 Agenda Packet Page 82 5. Please update the Development Impact Fee(DIF)table below. During Reporting Period FUND Date DIF Last Date of Next CURRENT Amount Amount BALANCE Comprehensively Last DIF Scheduled DIF FUND DIF7 Collected Expended (Audited) Updated Adjustment DIF Update Eastern Transportation DIF 12,480/EDU 2,453,265 2,817,876 24,473,313 Dec-05 Oct-13 Oct-14 Western Transportation DIF 3,476/EDU 67,181 - 130,625 Mar-08 Jul-13 Jul-14 Traffic Signal 33.45/Trip 251,404 948,417 1,955,213 Oct-02 Oct-13 Oct-14 Telegraph Canyon Drainage 4,579/Acre (32,730) 14,045 6,067,612 Apr-98 N/A Unscheduled Telegraph Canyon 216.50/EDU 60,000 3,083,267 Sep-98 N/A Unscheduled Gravity Sewer (5,932) Salt Creek Sewer Basin 1,330/EDU 556,577 312,927 1,761,203 Aug-04 N/A 2014 Poggi Canyon Sewer Basin 265/EDU 45,755 - 2,230,138 Jun-09 N/A Unscheduled Pedestrian Bridges - Otay Ranch Villages 1,2,5&6 1,114/SFDU 194,065 - 568,320 Feb-07 N/A Unscheduled - Otay Ranch Village 11 2,241/SFDU 39,595 - 2,994,253 Sep-05 Oct-13 Oct-14 Public Facilities - Administration 596/SFDU 548,557 233,007 4,294,287 Nov-06 Oct-13 Oct-14 Civic Center Expansion 2,708/SFDU 1,136,135 2,438,514 8,615,472 Police Facility 1,656/SFDU 1,242,685 1,723,283 (1,823,414) Corp.Yard Relocation 446/SFDU 317,502 - 2,887,338 Libraries 1,555/SFDU 1,294,730 59,545 11,310,590 - Fire Suppression 1,369/SFDU 11006,194 - (10,494,601) Systems Recreation Facilities 1,180/SFDU 1,042,757 - (4,077,291) PUBLIC FACILITIES e 9,510/SFDU 6,588,559 4,454,349 10,712,379 Nov-06 Oct-13 Oct-14 TOTAL For each of the DIF funds: a. Are the available funds adequate to complete projects needed in the next 12 to 18 months? If the funds are inadequate, is the city able to borrow necessary funds to complete the projects? b. Are the available funds adequate to complete projects needed in the next five years? If the funds are inadequate, is the city able to borrow necessary funds to complete the projects? Adequacy of Funds Under normal circumstances, additional revenues are received by DIF funds in times of development. These funds are then available to mitigate the impacts of the development paying the fees. This timeline is impacted by the need to construct large facilities, such as Equivalent Dwelling Unit(EDU)shown. Fee varies by type of residential unit,and for commercial and industrial development—see various fee schedules included in Attachment 1. 8 On a separate sheet of paper list the projects to be funded and/or completed over the next twelve months. See Attachment 1. 9 Approximately half of the Public Facilities DIF fund balance($5.9 million)is reserved for debt service payments(Debt Service Reserve). Debt Service Reserve funds are not available for project expenditures. Fiscal - 2014 Page 8 2014-05-20 Agenda Packet Page 83 the civic center complex, police facility and fire stations in advance of development. DIF projects are constructed via three financing scenarios: 1. Cash-on-hand 2. External debt financing 3. Developer construction If a facility is constructed or acquired using cash-on-hand, the fund provides direct financing using developer fees. This means of project financing avoids financing costs while creating the greatest short term impact upon fund balance. If the project is constructed via external debt financing, the fund does not directly finance the project, but instead makes debt service payments over a given period of time. As development occurs,their DIF fees go toward repaying these debt obligations. This means of project financing has the smallest short term impact on fund balance. The financing costs incurred in securing external financing increase overall project costs, and thereby increase the fees charged to developers. As DIF funds are unable to guarantee the debt,all DIF debt obligations are secured by the City's General Fund. The Public Facilities Development Impact Fee (PFDIF) program is the only DIF program to use external debt financing. The recent slowdown in development activity has significantly reduced the fees collected by the PFDIF, impacting the City's ability to meet these debt obligations. This issue is discussed in greater detail in the'Ability to Borrow Funds' section of this response. In the instance of developer construction, the required facilities are constructed by the developer in exchange for credit against their fee obligation. In this scenario, no fees are received by the City. The majority of Eastern Transportation Development Impact Fee (TDIF) projects are constructed in this manner. For these projects, the Eastern TDIF's fund balance has a negligible impact on the timing of project construction. A new factor impacting the timing relationship between development and the construction of facilities is the City's 'Development Processing and Impact Fee Deferral Program'. The program was proposed in light of the economic downturn, with the intent of stimulating development activity. In December 2008, the City Council adopted Ordinance 3120, establishing a payment plan program for certain development fees. In April 2009, the City Council adopted Ordinance 3126, expanding the program to include the deferral of Park Acquisition and Development Fees. In August 2010, the City Council adopted Ordinance 3163, further amending the fee deferral program to allow the payment of fees at building permit final inspection, rather than at building permit issuance. This Ordinance included a December 31, 2011 sunset. In November 2011, and again in November 2012 and November 2013, the fee deferral program was extended for an additional year. The current version of the ordinance includes a sunset date of December 31, 2014, at which time the fees will revert back to their traditional triggers: building permit issuance or final map approval. The only exception to the December 31, 2014 sunset is the Eastern Urban Center (EUC)/ Millenia project. This project will be eligible to defer impact fees to occupancy through project build-out,with no set expiration date. Cash flow impacts of the fee deferral program are difficult to determine. For every building permit which defers fees to final inspection, receipt of development impact fee revenues are also deferred, reducing short term revenues. Conversely, according to the development community(and anecdotal evidence), if the fee deferral program were not in place, we would not be issuing as many building permits, also reducing short term revenues. The relative success of this program can be seen in the $6.8 million in PFDIF revenues collected in fiscal year 2012-13. Fiscal - 2014 Page 9 2014-05-20 Agenda Packet Page 84 For each of the funds, the available fund balance as of June 30, 2013 is listed on the Development Impact Fee Overview table on page 8. The adequacy of these funds to complete projects necessitated by either the 12-to-18-month or the 5-year forecasted growth will be determined by a number of factors, including the actual rate of development (likely to fall significantly below the rate of development projected in the GMOC Forecast Report); and other fund obligations. These other obligations include debt service, capital acquisitions, and program administration costs. In addition to these obligations, the City has created a debt service reserve in the PFDIF fund, which has a significant future debt service obligation. The creation and anticipated use of this debt service reserve is shown in the 'PFDIF Projected Cash Flow: FY 2005-06 through Build-out' included as Attachment 2 to this report. The debt service reserve funding target is equivalent to the PFDIF's maximum future annual external debt service obligation (currently $5.9 million). As shown in the PFDIF cash flow, the debt service reserve was fully funded as of the end of fiscal year 2011-12. This reserve will mitigate the impacts of future swings in the development market on the PFDIF's ability to meet its debt service obligations. The continued reserve of these funds reduces the funds available for project expenditures. Ability to Borrow Funds The only development impact fee program which has historically borrowed funds outside the City is the Public Facilities Development Impact Fee(PFDIF). As detailed in the table on page 8, the PFDIF ended fiscal year 2012-13 with a fund balance of $10.7 million ($5.9 million in Debt Service Reserve). As a result of the successful debt restructuring plan implemented by the City in 2010, the PFDIF is anticipated to meet its debt obligations without impacting the General Fund through build-out, as shown in the PFDIF projected cash flow(Attachment 2). Prior to the 2010 debt restructuring, the PFDIF had an annual debt service obligation of approximately $5.2 million annually. The restructuring resulted in increased debt payments in the future of approximately $0.7 million annually, for a total annual debt payment of$5.9 million. In addition to its external debt obligations, the PFDIF fund must repay two interfund loans from the Eastern TDIF as soon as practical, in order to avoid impacts to TDIF project timing. The Eastern TDIF loaned the PFDIF $5.2 million in fiscal year 2008-09 and an additional $5.3 million in fiscal year 2009-10, for a total of $10.5 million in interfund loans. These loans were necessary for the PFDIF to meet its external debt obligation while the City pursued restructuring the PFDIF's external debt. The PFDIF's annual payment to repay the$10.5 million in interfund loans from the Eastern TDIF is projected to range from $0.4 million to $1.1 million, with an average payment of $1.0 million over a 10-year repayment period. The actual annual debt payment will vary depending on the repayment period (may be greater than 10 years if available funds are insufficient) and the City's pooled cash interest rate. When combined with the annual external debt obligation of $5.9 million, a $1.1 million annual internal debt obligation results in a total annual debt obligation of$7.0 million. The first payment from the PFDIF to the TDIF repaying this loan was included in the fiscal year 2013-14 budget. Minimum development activity required to meet the PFDIF's internal and external debt obligations is summarized in the table below. Fiscal - 2014 Page 10 2014-05-20 Agenda Packet Page 85 PFDIF Annual Debt Payment Obligation, Minimum Development Requirements Minimum Building Permit Description Average Annual Payment Activity(Multi-Family) External Debt(COPS) $ 5,900,000 650 Internal Debt (TDIF) $ 1,100,000 120 Total Debt 1 $7,000,000 770 Based upon existing debt obligations, the City will not seek financing to construct additional facilities in the near future. It is also important to note that the General Fund guarantees all PFDIF debt. If the PFDIF is unable to meet its debt obligations, the obligation shifts to the General Fund. In light of recent challenges in the General Fund,this additional risk is not advisable at this time. In the future, as economic conditions continue to change,the appropriateness of financing additional facilities will be reviewed. C. In the table below, please indicate whether the existing DIF fund is adequate or needs to be revised. DIF FUND ADEQUATE/ REVISE TRANSPORTATION ADEQUATE TRAFFIC SIGNAL ADEQUATE TELEGRAPH CANYON DRAINAGE ADEQUATE TELEGRAPH CANYON GRAVITY SEWER ADEQUATE SALT CREEK SEWER BASIN ADEQUATE POGGI CANYON SEWER BASIN ADEQUATE PEDESTRIAN BRIDGES Otay Ranch Villages 1, 2, 5 &6 ADEQUATE Otay Ranch Village 11 ADEQUATE PUBLIC FACILITIES REVISE Administration Civic Center Expansion Police Facility Corp.Yard Relocation Libraries Fire Suppression Systems Recreation Facilities 6. Please provide a comprehensive list,through build-out, of the PFDIF-funded facilities that remain to be constructed and estimated date of delivery. There are five (5) major facilities planned for construction using PFDIF funds. These projects are as follows(listed in order of construction priority): 1. Rancho del Rey Library 2. EUC Fire Station 3. EUC Library 4./5. Otay Ranch Village 4 Aquatics Center and Recreation Facility In light of current budgetary constraints resulting from the economic downturn, the City's ability to staff and operate these facilities is very limited in the short term. Prior to staffing any new Fiscal - 2014 Page 11 2014-05-20 Agenda Packet Page 86 facilities, the City will likely seek to restore services at existing facilities. Once the staffing/operational budgetary issues are addressed, the construction of the facilities themselves will be a function of the PFDIF's available fund balance (taking into account existing debt obligations and the need to maintain the debt service reserve). 7. What is the amount of debt service for this year compared to last year? Fiscal year 2012-13 all funds debt service expenditures totaled $10.1 million. The fiscal year 2013- 14 debt service expenditure budget totals $10.3 million, an increase of $0.2 million or 1.8%. This minor net increase reflects the payoff of the 2003 Refunding COP (parking structure) and the ramping up of debt service payments for the 2010 COP (per the original payment terms, designed to provide cash flow relief to the PFDIF fund at the height of the recession). Please note,the above figures reflect the following assumptions: • Includes bonded debt • Excludes equipment leases • Excludes interfund loan repayments • Includes principal, interest and arbitrage payments • Includes monies expended by the trustee and directly out of City funds • Includes debt service expenditures in all City funds, including General Fund, PFDIF and Residential Construction Tax(RCT). 8. Please provide any progress made in developing a debt service payment policy. Bond covenants for the individual debt issuances detail terms of the obligation (payment terms). The Finance Department presented the City Council with a proposed Debt Policy on January 9, 2014. A comprehensive written debt management policy that is approved by the governing body provides transparency and ensures a common understanding among elected officials and staff regarding the City's approach to debt financing. Establishing a carefully considered policy improves the quality of decisions, articulates policy goals, provides guidelines for the structure of debt issuance, and demonstrates a commitment to long- term capital and financial planning. Adherence to a debt policy also indicates to rating agencies and the capital markets that the City is well managed and is therefore likely to meet its debt obligations in a timely manner. The main objectives of the City's debt policy are: • To establish conditions for the use of debt; • To ensure that debt capacity and affordability are adequately considered; • To minimize the City's interest and issuance costs; • To maintain the highest possible credit rating; • To provide complete financial disclosure and reporting;and • To maintain financial flexibility for the City. The debt policy has six main components: 1. General Policies: this component of the Policy describes general guidelines for the use of debt and selection and descriptions of the Finance Team leading the debt issuance. 2. Types of Debt Instruments: this section describes various types of debt that may be used as financing options, however,does not limit the City to those described. 3. Debt Affordability and Limitations: describes how debt capacity and affordability will be determined. 4. Debt Structuring: describes allowable debt structure methods (not limited to those listed) and the maximum maturity of the debt obligation. 5. Debt Issuance: provides guidance regarding the issuance process such as criteria for Fiscal - 2014 Page 12 2014-05-20 Agenda Packet Page 87 determining a bond sale method. 6. Debt Management Practices: includes descriptions for ongoing administrative activities such as disclosure practices, investment of bond proceeds, and records retention requirements. A copy of the new Debt Management Policy is included as Attachment 3. Also attached for your information is the City's Debt Portfolio (Attachment 4), a summary of the City's outstanding bonded indebtedness by issuance. 9. How much government bonds debt does the city have? As of the end of the fiscal year 2012-13,the City had$128.4 million in outstanding debt in the form of Certificates of Participation (COPS). The City has no outstanding general obligation debt. During fiscal year 2012-13, the City was upgraded from an "A-"to an "A" rating by Standard and Poors for Certificates of Participation,which represents a stable outlook. This credit rating was subsequently upgraded to an "AA-" in October 2013. 10. Are PAD fees adequate to construct necessary parks? All residential development in the City pays a PAD fee to fund acquisition and development of parkland. The development portion of the PAD fee is tied to an inflationary index with annual adjustments occurring each October. The index ensures that the development fees collected keep pace with the cost of constructing facilities. Both the development and acquisition components of the fee will be reviewed in the next comprehensive update of the PAD program (currently unscheduled). While adequate mechanisms are in place to ensure the City collects sufficient fees to acquire and develop parkland, there are some issues related to the availability of these funds that should be noted. As previously reported to the GMOC, the City applied one-time revenues to balance the General Fund budget in fiscal year 2009-10. The majority of these one-time revenues($9.6 million) were the result of the Redevelopment Agency repaying an outstanding debt owed to the General Fund. The Agency generated the $9.6 million used to repay the City by selling Agency-owned parkland to the PAD fund. At a March 2, 2010 joint meeting, the City Council and the Redevelopment Agency approved the purchase of a 14.25-acre site from the Agency using PAD funds totaling $9.6 million. The City has worked to identify potential suitable park sites in western Chula Vista, generally identified in the 2005 General Plan Update and the 2007 Draft Park and Recreation Master Plan. The property sold by the Agency to the PAD fund is one of the locations identified as being a suitable park site, and is a large step toward meeting the City's goal of providing 3 acres of parkland per 1,000 residents citywide. The property is now referred to as Lower Sweetwater Community Park. The resolution adopted that evening also authorized a $9.6 million interfund loan between the Eastern PAD fund and the Western PAD fund. The Lower Sweetwater Community Park will serve and be funded by future western Chula Vista residents, including residents of the Urban Core Specific Planning Area. As a result, the PAD fund has not yet collected sufficient funds from the development in western Chula Vista to finance the purchase of the park site. It was therefore necessary to internally borrow the funds from the Eastern PAD fund (monies collected for the 60 Acre Otay Ranch Community Park). At the time that the loan was approved, the loan was to be repaid as funds become available, either as a result of credit acquisitions by the Redevelopment Agency or the payment of PAD fees by developers in western Chula Vista. The Agency was to ensure that PAD funds are repaid to fully fund the development of the park for which they were originally collected. With the State's elimination of the Redevelopment Agency,this obligation was rejected, leaving the ability of the Western PAD to repay the Eastern PAD solely dependent on actual western residential development. Fiscal - 2014 Page 13 2014-05-20 Agenda Packet Page 88 An additional interfund loan from the Eastern PAD to the Western PAD in the amount of$310,000 was authorized by the City Council at its December 6, 2011 meeting. The loan funds were combined with the Western PAD fund's available balance of $630,000 to finance the $940,000 purchase of 1.89-acre parcel located in the Chula Vista Auto Park. The 1.89-acre parcel in the Auto Park will be exchanged for a 1.89-acre parcel located adjacent to the 14.25-acre Lower Sweetwater Community Park site purchased per the March 2010 Council action and $9.6 million loan from the Eastern PAD to the Western PAD. The PAD interfund loans and related parkland acquisition are summarized in the table below. PAD Interfund Loans, Park Site Acquisition Loan from West Loan East to West PAD Funds Park Acreage Approved PAD Applied Purchase Price Acquired March 2010 $ 9,600,000 $ 0 $ 9,600,000 14.25 acres December 2011 $ 310,000 $ 630,000 $ $940,000 1.89 acres Total $ 9,910,000 $ 630,000 $ 10,540,000 16.14 acres The repayment schedule for the December 2011 loan will vary based upon the rate at which PAD fee paying development occurs in western Chula Vista. As Western PAD funds are collected, the first priority for the use of the funds will be the repayment of the outstanding loans. Slow development may impact the ability of the Western PAD fund to repay the Eastern PAD fund, potentially impacting the timing of Eastern PAD project construction. The interest rate applied to the outstanding 2011 loan balance will be based upon the City's pooled interest rate (currently 0.265%). Assuming a 10-year repayment schedule and recent pooled interest rates, the annual debt payment from the Western PAD to the Eastern PAD would total $31,660. In order to meet this annual debt service obligation, the City would have to collect PAD fees from four to five residential units each year, depending on the land use classification of the units permitted. In addition to the authorization for the$310,000 PAD interfund loan,the purchase of the 1.89-acre parcel in the Auto Park, and the exchange of the Auto Park parcel for the 1.89-acre Lower Sweetwater Community Park parcel, this Council action also authorized an option agreement to exchange a 9.3-acre City owned parcel adjacent to the SR-125 and Eastlake Drive for a 3.94-acre parcel located adjacent to the Lower Sweetwater Community Park site. 11. What is the city's strategy for job creation through community and industrial development, and what are the most viable industries for the city to recruit? The City's Economic Development Department recently oversaw the preparation of a Business Cluster Analysis Study. The study identified six industry clusters with the best potential for success in expansion and attraction: 1. Advanced Manufacturing 2. Headquarters and Administrative Offices 3. Information and Communication Technology 4. Education & Innovation Centers 5. Clean Tech 6. Health and Wellness, and Sports Medicine Next steps identified in the study to achieve a robust and successful economic development plan include: 1. Real estate readiness for target industries as well as protecting and preserving business park and industrial land use designations; Fiscal - 2014 Page 14 2014-05-20 Agenda Packet Page 89 2. Ensure a permitting process, fee structure and incentive policy that is competitive in the region; 3. Become a key player in the Cali-Baja Mega-Region Initiative and with CONNECT; 4. Strengthen Chula Vista's unique bi-national position by building cross-border partnerships; 5. Package Chula Vista's value proposition to specific target clusters;and 6. Implement focused recruitment around industry clusters and opportunity sites. The Executive Summary of the Business Cluster Analysis is included as Attachment 5. 12. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. Development activity has returned at modest levels, generating increased cash flows to development impact fee programs. These revenues provide additional security for external debt and reduce future risk of impacting the General Fund to meet DIF debt obligations. A cautious, conservative approach in the future is essential. Protecting debt service reserves is critical in ensuring we continue to avoid General Fund impacts from DIF fee shortfalls. City staff is considering two minor modifications of existing development fee programs. The first modification under consideration is an update of the Traffic Signal Fee to exclude non- profit Community Purpose Facilities from assessment of the fee. This modification would make the Traffic Signal Fee program consistent with the Public Facilities and Transportation Development Impact Fee Programs. Community Purpose Facilities are facilities which serve one of the following purposes: 1. Social service activities, including such services as Boy Scouts and Girl Scouts, Boys and Girls Club,Alcoholics Anonymous and services for the homeless; 2. Public schools; 3. Private schools; 4. Day care; 5. Senior care and recreation; 6. Worship,spiritual growth and development. The second modification under consideration is an update of the Park Acquisition and Development (PAD) Fee program to exclude hotels and motels (transient residents) from the fee program. This modification will make the fee program consistent with the GMOC parkland threshold, which does not consider transient residents (hotel/motel rooms) in the calculation of threshold performance. This fee is not charged to this land use in any other San Diego County jurisdictions,and has yet to be charged to this land use in the City of Chula Vista. For each of the above proposed modifications, it is important to note that no change in the current fee rate will be required. Neither fee calculation is based on the projected future development, but each is instead based on a flat fee per unit(Traffic Signal Fee per average daily trip, PAD fee per acre assuming average acquisition and development costs). ATTACHMENTS 1. Fiscal Year 2012-13 Financial Schedules for all DIFs 2. Public Facilities Development Impact Fee(PFDIF)Cash Flow: Fiscal Year 2005-06 through Build-Out 3. Debt Management Policy 4. Debt Portfolio 5. Business Cluster Analysis Executive Summary Fiscal - 2014 Page 15 2014-05-20 Agenda Packet Page 90 PREPARED BY: Name: Maria Kachadoorian Title: Finance Director/Treasurer Name: Tiffany Allen Title: Treasury Manager Date: January 15, 2013 THRESHOLD STANDARDS 1. The GMOC shall be provided with an annual Fiscal Impact Report which provides an evaluation of the impacts of growth on the city, both in terms of operations and capital improvements. This report should evaluate actual growth over the previous 12- month period,as well as projected growth over the next 12-18-month period,and 5-7-year period. 2. The GMOC shall be provided with an annual development impact fee report,which provides an analysis of development impact fees collected and expended over the previous 12-month period. 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'6 bD O N N O d' H O N ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 1 of 8 ADOPTED BY: Resolution No. TDATED: January 9,2014 AMENDED BY: BACKGROUND The following policies have been developed to provide guidance in the issuance and management of debt by the City of Chula Vista. The main objectives are to establish conditions for the use of debt; to ensure that debt capacity and affordability are adequately considered; to minimize the City's interest and issuance costs; to maintain the highest possible credit rating; to provide complete financial disclosure and reporting and; to maintain financial flexibility for the City. Debt, properly issued and managed, is a critical element in any financial management program. It assists in the City's effort to allocate limited resources to provide the highest quality of service to the public. The City understands that poor debt management can have ripple effects that hurt other areas of the City. On the other hand, a properly managed debt program promotes economic growth and enhances the vitality of the City of Chula Vista for its residents and businesses. PURPOSE To establish a formal City debt policy. POLICY GENERAL POLICIES The Finance Team All debt issued by the City of Chula Vista shall be under the direction of the City Manager or Finance Director/Treasurer, with the Mayor and City Council providing final approval at a public meeting. The City Manager or Finance Director/Treasurer will determine the composition of the "Finance Team" involved in each issuance. The Finance Team may consist of both City Staff and outside finance professionals. The Finance Director/Treasurer shall decide which City Staff to include on the Finance Team. Critical outside finance professionals include: • Underwriter: markets and sells debt to investors • Financial Advisor: independent financial expert providing advice to the City on all aspects of debt • Bond Counsel: legal counsel that prepares the resolutions, ordinances, agreements and other legal documents required • Disclosure Counsel: provides legal advice on all disclosure documents and issues in connection to the financing. May be same entity that provides Bond Counsel services. • Trustee: typically a commercial bank or trust company responsible for the collection and repayment of principal and interest to bondholders, as well as administering the investment of reserve funds, accounting and disbursement of bond proceeds • District Consultant: provide special district expertise, statistics, data analysis, and disclosure 2014-05-20 Agenda Packet Page 110 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 2of8 ADOPTED BY: Resolution No. DATED: January 9, 2014 AMENDED BY: support in the issuance of Special District debt. Selection of Outside Professionals When identifying members of the Financing Team, the selection of underwriters and financial consultants providing professional services shall be based upon qualifications, experience, and cost; typically through a formal Request for Proposal (RFP) Process. Procurement of other services related to the issuance of debt shall be through a competitive bidding process whenever reasonable. Depending on circumstances it may be advantageous for the City to participate in a pooled debt issuance with a number of local agencies where issue costs are shared and the underwriters and/or financial consultants are pre-selected by the managing organization. Due to the overall cost savings involved, programs such as the California Statewide Communities Development Authority's "Tax and Revenue Anticipation Note"program are options for the City to consider. Use of Debt The City will consider the use of debt financing primarily for capital improvement projects (CIP) 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. Some exceptions to this CIP driven focus are the issuance of debt such as Pension Obligation Bonds, where the financial benefits are significantly greater than the costs and where the benefits are determined to be a financially prudent option; and short-term instruments such as tax and revenue anticipation notes, which are to be used for prudent cash management purposes. Bonded debt should not be issued for projects with minimal public benefit or support, or to finance normal operating expenses. If a department has any project which is expected to use debt financing, the department director is responsible for expeditiously providing the Finance Department with reasonable cost estimates, including specific revenue accounts that will provide payment for the debt service. This will allow the Finance Department to do an analysis of the project's potential impact on the City's debt capacity and limitations. TYPES OF DEBT INSTRUMENTS In order to maximize the financial options available to benefit the public, it is the policy of the City of Chula Vista to allow for the consideration of issuing all generally accepted types of debt, including, but not exclusive to the following: • General Obligation (GO) Bonds: General Obligation Bonds are suitable for use in the construction or acquisition of improvements to real property that benefit the public at large. Examples of projects include libraries, parks, and public safety facilities. All GO bonds require a 2/3 vote in order to pass. • Revenue Bonds: Revenue Bonds are limited-liability obligations tied to a specific enterprise revenue stream where the projects financed clearly benefit or relate to the ente rise. An 2014-05-20 Agenda Packet Page 111 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 3 of 8 ADOPTED BY: Resolution No. TDATED: January 9,2014 AMENDED BY: example of projects that would be financed by a Revenue Bond would be improvements to the sewer system, which would be paid back with money raised from the property owner's sewer bills. Generally, no voter approval is required to issue this type of obligation but must comply with proposition 218 regarding rate adjustments. • Lease-Backed Debt/Certificates of Participation (COP): Issuance of COP debt is a commonly used form of debt that allows a City to finance projects where the debt service is secured via a lease or installment agreement and where the payments are budgeted in the annual budget appropriation by the City from the general fund. Lease-Backed debt does not constitute indebtedness under the state or the City's constitutional debt limit and does not require voter approval. • Special Assessment/Special District Debt: 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 City Council, which may include minimum value-to-lien ratios and maximum tax burdens. Examples of this type of debt are Assessment Districts (AD) and Community Facilities Districts (CFD) or more commonly known as Mello-Roos Districts. In order to protect bondholders as well as the City's credit rating, all Rate and Method of Apportionment (RMA) documents must include the provision that the maximum projected annual special tax revenues must equal I10% of the projected annual gross debt service on any bonds of the community facilities district. The City will also comply with all State guidelines regarding the issuance of special district or special assessment debt. For further information, refer to the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facility Districts. • Industrial Development Bonds — Industrial Development Bonds (IDBs) are tax-exempt securities which can fund manufacturing businesses or energy development projects which provides a public benefit. While the authorization to issue IDBs is provided by a state statute, the tax-exempt status of these bonds is derived from federal law (IRS Code Section 103(b) (2). • Tax Allocation Bonds .— Tax Allocation Bonds are special obligations that are secured by the allocation of tax increment revenues that were generated by increased property taxes in the designated redevelopment area. Tax Allocation Bonds are not debt of the City. Due to changes in the law affecting California Redevelopment agencies with the passage of ABX1 26 as codified in the California Health and Safety Code, the City of Chula Vista Redevelopment Agency (RDA) was dissolved as of February 1, 2012, and its operations substantially eliminated but for the continuation of certain enforceable RDA obligations to be administered by the City of Chula Vista Successor Agency. The terms of ABX 1 26 requires successor agencies perform all obligations with respect to enforceable debt obligations, which include Tax Allocation Bonds. • Multi-Family Mortgage Revenue Bonds — The City Housing Authority is authorized to issue mortgage revenue bonds to finance the development, acquisition and rehabilitation of multi- family rental projects. The interest on the bonds can be exempt from Federal and State 2014-05-20 Agenda Packet Page 112 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 4of8 ADOPTED BY: Resolution No. DATED: January 9, 2014 AMENDED BY: taxation. As a result, bonds provide below market financing for qualified rental projects. In addition, the bonds issued can qualify projects for allocations of Federal low-income housing tax credits, which can provide a significant portion of the funding necessary to develop affordable housing. For further information, refer to the Chula Vista Housing Authority — Multi-Family Administrative Bond Policies. • HUD Section 108 Loan Guarantee Program — The U.S. Department of Housing and Urban Development (HUD) Section 108 Loan Guarantee Program allows cities to use their annual Community Development Block Grant (CDBG) entitlement grants to obtain federally guaranteed funds large enough to stimulate or pay for major community development and economic development projects. The program does not require a pledge of the City's General Fund, only of future CDBG entitlements. By pledging future CDBG entitlement grants as security, the City can borrow at favorable interest rates because of HUD's guarantee of repayment to investors. DEBT AFFORDABILITY AND LIMITATIONS Debt capacity and affordability will be determined by conducting various analyses prior to the issuance of bonds. The analysis of debt capacity should cover a broad range of factors including but limited to the following: • Statutory or constitutional limitations affecting the amount that can be issued, such as legally authorized debt limits and tax or expenditure ceilings • Other legal limitations, such as coverage requirements or additional bonds tests imposed by bond covenants • Evaluation of trends relating to the government's financial performance, such as revenues and expenditures, net revenues available after meeting operating requirements, reliability of revenues expected to pay debt service and unreserved fund balance levels • Debt service as a percentage of total General Fund Revenues The City will attempt to limit the total amount of annual debt service payments payable by the General Fund to no more than 10% of estimated total General Fund revenues. Under State Law, general obligation bonds shall not exceed 15% of total assessed valuation within the City. An analysis using current market rates and conservative projections showing compliance with the debt affordability limitations included in this Debt Policy shall be conducted before the issuance of any debt with a maturity longer than two years from date of issue. Data showing direct and overlapping debt levels for the City of Chula Vista and surrounding agencies that affect the residents of the City shall be compiled for inclusion in the Comprehensive Annual Financial Report(CAFR) of the City. 2014-05-20 Agenda Packet Page 113 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 5of8 ADOPTED BY: Resolution No. TDATED: January 9,2014 AMENDED BY: DEBT STRUCTURING In order to maximize financial flexibility in a constantly-changing debt market, the City shall be allowed to structure its debt issuances using generally accepted methods. The guiding principal shall be to structure debt issuances so that the City's overall costs are minimized while still maintaining or increasing the City's credit rating. Allowable structures include, but are not limited to the issuance of: • Serial and/or Term Bonds: Serial Bonds are those in an issue that mature in consecutive years, whereas Term Bonds comprise a large part or all of a particular issue that come due in a single maturity but are prepared in part each year. • Fixed and Variable Rate Debt: Fixed rate debt is when an interest rate on a security does not change for the remaining life of the security, where Variable rate debt or "floating rate" changes at intervals according to market conditions or a predetermined index or formula. • Zero Coupon: Zero Coupon is an original issue discount bond on which no periodic interest payments are made but is issued at a deep discount from par, accreting (amortized) to its full value at maturity. • Capital Appreciation: Capital Appreciation occurs when the investment return on an initial principal amount is reinvested at a stated compounded rate until bond maturity. The investor receives a single payment (maturity value), representing both the initial principal amount and the total investment return. • Bonds with Capitalized Interest: Bonds with capitalized interest have a portion of the proceeds of an issue set aside to pay interest on securities for a specified period of time. • Senior and Junior Lien Structures: Senior Lien bonds have a priority claim against pledged revenues, while Junior Lien bonds have a subordinate claim against pledged revenues or other security. Debt service should be structured so that annual combined principal and interest payments do not dramatically vary year over year. This provides greater budget stability. Limited exceptions from level debt service will be allowed for individual debt issues when level debt service is unsuitable; for instance in the case of some refunding of debt. Redemption provisions should generally be included in most issuances, providing they are structured in a reasonable and cost-efficient manner as determined by the Financing Team. Redemption options include but are not limited to: • Optional Redemption: a call or prepayment provision option that is giving to the issuer, often only on or after a specified date. • Mandatory Redemption: to require the issuer to redeem or call the bond "in-whole redemption" which is all at once, or "partial redemption" which is only a portion on a scheduled basis. 2014-05-20 Agenda Packet Page 114 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 6of8 ADOPTED BY: Resolution No. DATED: January 9, 2014 AMENDED BY: Credit enhancement, such as letters of credit or insurance, may be purchased when the cost of enhancement is more than recovered by the debt service savings created. Entering into a financing utilizing letters of credit or insurance must be planned for and determined to be feasible by the Director of Finance/Treasurer. Maximum Maturity Debt obligations shall have a maximum maturity of the earlier of- the reasonably estimated useful life of the Capital Improvements being financed; or, • thirty years; or, • in the event they are being issued to refinance outstanding debt obligations the final maturity of the debt obligations being refinanced, unless a longer term is recommended by the Finance Team. • Such other terms which meet the financing goals of the debt issuance. DEBT ISSUANCE The City will strive to minimize borrowing costs by: • Seeking the highest credit rating possible; • Maintaining transparency and excellent communications with credit rating agencies regarding the City's fiscal condition; • Purchasing bond insurance or taking action to upgrade the City's current credit rating It shall be the policy of the City to allow the issuance of debt through public sale or private placement, and via competitive or negotiated sales underwriting methods. Consistent with the goal of minimizing costs, competitive sale shall be the primary method of sale considered unless the Financing Team decides that a negotiated sale is warranted. Factors that may impact this decision include: • Issuer/Issue Recognition: competitive sales are easier for an issuer that investors and underwriters are familiar with. If extensive marketing is needed to educate the market about the issuer, a negotiated sale maybe more appropriate. Similarly, even if the issuer is well- known, if the issue itself has a"story" that needs to be told, a negotiated sale may be needed to enhance the marketing and acceptance of the debt. • Issue Size: very large or very small deals may benefit from a negotiated sale over a competitive sale. • Debt Type: GO bonds and other well-known and accepted debt structures are suitable for competitive sales. Others such as CFDs, variable rate, or innovative structures may benefit from a negotiated sale. • Credit Ratings: issuers with high credit ratings and insured bonds lend themselves to competitive sales. Uninsured or lower rated issues are often more suitable for negotiated sales. 2014-05-20 Agenda Packet Page 115 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 7of8 ADOPTED BY: Resolution No. TDATED: January 9,2014 AMENDED BY: • Sale Timing: during times of market uncertainty when conditions are volatile, the flexibility of a negotiated sale may allow an issuer to adjust the sale date and capture additional interest rate savings. The City will seek to issue refunding bonds with the minimum goal of 5% net present value savings of the par value of the proposed bonds. Anything less than an anticipated 5% savings will require additional analysis discussing the benefits of the refunding due to the cost associated with refunding debt. Consideration shall be given to the benefit of delaying a refunding in a declining interest rate environment to capture maximum savings at the least cost. DEBT MANAGEMENT PRACTICES Disclosure The City will comply with Rule 15(c) 2-12 of the Securities Exchange Commission (SEC) and provide timely disclosure of relevant information on an annual basis as well as any material event notices as required. The City recognizes the importance of accuracy in disclosure documents and will strive to provide full and complete disclosure. To ensure accuracy of stated facts, directors of any department that originally provided or produced any data appearing in a disclosure document will provide a written statement certifying the accuracy of their department's data along with a statement denying knowledge of any misstatements or material omissions in the remainder of the disclosure document. The City will fulfill its obligations as covenanted in all the Continuing Disclosure Agreements associated with any active issuance. Documents are distributed through Electronic Municipal Market Access (EMMA)which can be viewed at any time by the public. The City will determine on a case-by-case basis whether or not to retain the services of an independent disclosure counsel. For additional information regarding disclosure procedures, please refer to Administrative Disclosure Procedures. Arbitrage In the past, agencies took advantage of their ability to borrow at tax-exempt rates and invest the proceeds at higher rates, thus earning positive arbitrage. Since 1986, the federal tax code requires issuers of long-term, tax-exempt debt to rebate positive arbitrage to the federal government. The City will diligently monitor its compliance with all federal arbitrage regulations. Due to the complex nature of arbitrage calculations, the City may elect to hire an outside expert consultant to perform this function. 2014-05-20 Agenda Packet Page 116 ATTACHMENT 3 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: City Debt Policy POLICY EFFECTIVE NUMBER DATE PAGE 8of8 ADOPTED BY: Resolution No. DATED: January 9, 2014 AMENDED BY: Compliance with Tax Law Provisions The City will diligently monitor its compliance with all bond legal covenants, as well as Federal and State requirements, with the assistance of its Finance Team and consultants. Furthermore, recognizing that the smallest of mistakes can lead to the appearance of conflicts of interest or wrongdoing, which in turn may lead to severe consequences, including criminal charges, the City will make every effort to ensure its debt financing conduct is above reproach. Investment of Bond Proceeds The City shall comply with Federal and State regulations governing the investment of bond proceeds. Each issue shall detail allowable investments within the Trust Agreements, which the City will adhere to. Where not specifically spelled out, the City will apply the City investment policy guiding principal commonly referred to as"SLY'; Safety, Liquidity, and Yield, in that order of priority. Records Retention The City will retain records sufficient to demonstrate compliance with the requirements of federal and California law necessary to preserve the tax advantage of such City Bonds for the period required by law, presently understood to be the life of the debt obligations or any succeeding refunding obligations plus 3 years. Other Provisions Bond proceeds, reserve, and repayment funds, should have separate accounting from operating or other funds, at a level distinct enough to facilitate arbitrage compliance calculations and ease debt service and expenditure tracking. If any part of this Debt Policy conflict with Federal or State laws, or the City of Chula Vista Municipal Code, or Charter, the regulations will take precedence over this Debt Policy. 2014-05-20 Agenda Packet Page 117 ATTACH ME NT 4 -_ -W77 TA Cipp DEBT_ � ,.. __ � '• mac ''���f��' ,. .- 's' PORTFOLIO CITY OF CHULA VISTA C H U L A VISTA , CALIFORNIA �i i• �► � f I =-.Mow r __ ATTACHMENT 4 2014-05-20 Agenda Packet Page 119 Al jAt_MjVjtjj I 2t City of Chula Vista Debt Portfolio Table of Contents Introduction 1 City of Chula Vista Bonded Indebtedness — Outstanding Issuances 3 RDA/Successor Agency Bonded Indebtedness — Outstanding Issuances 17 City of Chula Vista Other Bonded Indebtedness HUD Section 108 Loan 29 Special Tax Districts 33 Resources 41 2014 05 20 Agenda Paeket Page 120 ATTACHMENT 4 2014-05-20 Agenda Packet �� Page 121 ATTACHMENT 4 �111� 4444 CITY OF CHULA VISTA Debt Portfolio INTRODUCTION This debt portfolio is a summary of the City's outstanding bonded indebtedness by issuance. The purpose of this report is to provide Chula Vista citizens, investors and the general public, information on the City's bonded indebtedness. Also included within this report are Redevelopment Agency/Successor Agency obligations, and other City debt such as Special Tax District liabilities and HUD Section 108 Loan repayments. Each section summarizes the original issuance, the remaining debt of each bond, and describes the improvements funded by the bond proceeds. The projects that the bonds have funded retain a longer useful life than the term of the bonds. The term of each of these bond issuances that have been entered into does vary, but most have a term of 30 years. City of Chula Vista Bonded Indebtedness- Outstanding Bond Issuances Each of the remaining outstanding issuances that the City is responsible for is described within this section. The City of Chula Vista has entered into bonded indebtedness to finance various public facilities throughout the City. Some of these improvements include the Civic Center Complex, Police Facility, Corporation Yard, Western Chula Vista Infrastructure, and improvements to the Nature Center (named changed to Living Coast Discovery Center). The debt service payments (principal and interest payments) for these bonds are paid from the following revenue sources: • General Fund: the City's General Fund is the City's main operating fund. The General Fund revenues consist of mainly discretionary revenue such as Sales & Use Tax, Property Tax, Franchise Fees and Transient Occupancy Tax. • Public Facilities Development Impact Fees (PFDIF): these fees are charged to new development to mitigate the impacts on the City's existing public facilities. More information on the PFDIF can be found in the Chula Vista Municipal Code Chapter 3.50. • Residential Construction Tax (RCT) Fund: this fund contains fees that are charged to new residential units, including hotels and motels, which generate householders who impose a burden upon public facilities and infrastructure of the City. More information on the RCT can be found in the Chula Vista Municipal Code Chapter 3.32. Redevelopment Agency/Successor Agency Bonded Indebtedness- Outstanding Bond Issuances This section of the report describes outstanding issuances by the Redevelopment Agency/Successor Agency. The Redevelopment Agency originally issued debts, or more specifically Tax Allocation Bonds (TABs) for the purpose of eliminating blight within the City of Chula Vista. Funding for the debt payments is paid by tax increment revenues. The bonds are not backed by the City's General Fund. City of Chula Vista Other Bonded Indebtedness-HUD Section 708 Loan The Department of Housing and Urban Development (HUD) awarded the City a Section 108 Loan specifically for the Castle Park Infrastructure Improvement Project. The Section 108 Loan is an "advance" 2014-05-20 Agenda Packet Page 122 1 ATTACHMENT 4 of future Community Development Block Grant (CDBG) entitlement funds, therefore debt service payments are made with a portion of the City's annual CDBG entitlement revenue for a 20 year period. The anticipated payoff date is 2028. City of Chula Vista Other Bonded Indebtedness—Special Tax Districts Special Tax Districts are created for the purpose of financing public improvements. To pay the debt service on these bonds, parcels within the district are charged a special tax that is included within their property tax bill. This section of the report includes a summary of the special tax districts bonds, as well as descriptions of each of the special tax districts and the public improvements that they financed. The City has two different types of special tax district indebtedness: • Assessment Districts (AD): these types of bonded ADs were formed under the Municipal Improvement Act of 1913. Under this type of special district financing, the cost of the improvements is spread proportionally over every parcel of land within the district that receives a direct and special benefit from the improvements. • Community Facilities Districts (CFD): the City's bonded CFDs were created under the Community Facilities District Act, or the Mello-Roos Act, signed into law in 1982. A CFD needs only find a public benefit to the community at large, in contrast to an AD where a direct/special benefit must be found. Similar to an AD, the CFD debt service payments are paid by the property owners of parcels within the specific district. The City, more specifically the Finance Department, is responsible for administering and managing each debt issuance. In addition to the requirement of the City to make the above bonds debt service payments using their stated funding sources, the City is also required to file continuing disclosures on an annual basis to informational repositories that can be accessed by the general marketplace. Continuing disclosures are annual reports that contain current financial information of the issuer which is the City of Chula Vista, City of Chula Vista Redevelopment Agency/Successor Agency, Chula Vista Public Financing Authority or Chula Vista Municipal Financing Authority. To view copies of the City's disclosure reports, please visit the City's Disclosure Consultant's website at: http://disclosure.nbsaov.com/default.asox or the Electronic Municipal Market Access (EMMA) website at: http://emma.msrb.org/ For more information about the City's financial status, please visit the City of Chula Vista's Finance Department website at: http://www.chulavistaca.gov/City_Services/Administrative_Services/Finance/DefauIt.asp Data Disclaimer: Every effort has been made to assure the accuracy of the maps and data provided; however, some information may not be accurate or current. The City of Chula Vista assumes no responsibility arising from use of this information. 2014-05-20 Agenda Packet Page 123 2 Al lgt_MlVltll I 2t CITY OF CHULA VISTA BONDED INDEBTEDNESS OUTSTANDING ISSUANCES UPDATED DECEMBER 2013 ary of CHULAVISTA ATTACHMENT 4 2014-05-20 Agenda Packet Page 125 4 ATTACHMENT 4 CITY OF CHULA VISTA Total Annual Debt Service Payments(Principal and Interest) Fiscal Year 2002 COP 2004 COP 2006 COP 2010 COP Total Principal Total Interest Total FY 2003 $ 3,119,664.44 $ $ $ $ 3,119,664 $ 3,119,664.44 FY 2004 $ 2,800,696.26 $ $ $ $ 2,800,696 $ 2,800,696.26 FY 2005 $ 3,925,696.26 $ 741,425.21 $ $ $ 1,125,000.00 3,542,121 $ 4,667,121.47 FY 2006 $ 3,926,946.26 $ 1,617,655.00 $ $ $ 1,160,000.00 4,384,601 $ 5,544,601.26 FY 2007 $ 3,932,146.26 $ 2,392,655.00 $ 804,727.52 $ $ 1,975,000.00 $ 5,154,528.78 $ 7,129,528.78 FY 2008 $ 3,936,146.26 $ 2,392,155.00 $ 1,272,288.75 $ $ 2,465,000.00 $ 5,135,590.01 $ 7,600,590.01 FY 2009 $ 3,936,546.26 $ 2,393,392.50 $ 1,272,498.75 $ $ 2,550,000.00 $ 5,052,437.51 $ 7,602,437.51 FY 2010 $ 3,934,946.26 $ 2,391,117.50 $ 1,272,198.75 $ $ 2,635,000.00 $ 4,963,262.51 $ 7,598,262.51 FY 2011 $ 3,941,346.26 $ 2,391,217.50 $ 1,271,388.75 $ 1,505,929.71 $ 2,735,000.00 $ 6,374,882.22 $ 9,109,882.22 FY 2012 $ 3,945,346.26 $ 2,392,361.26 $ 1,270,068.75 $ 1,477,206.26 $ 2,840,000.00 $ 6,244,982.53 $ 9,084,982.53 FY 2013 $ 3,946,946.26 $ 2,391,386.26 $ 1,268,238.75 $ 1,477,206.26 $ 2,945,000.00 $ 6,138,777.53 $ 9,083,777.53 FY 2014 $ 3,951,146.26 $ 2,392,073.76 $ 1,270,388.75 $ 2,492,206.26 $ 4,080,000.00 $ 6,025,815.03 $ 10,105,815.03 FY 2015 $ 3,958,783.76 $ 2,391,448.76 $ 1,271,308.75 $ 2,491,606.26 $ 4,250,000.00 $ 5,863,147.53 $ 10,113,147.53 FY 2016 $ 3,960,743.76 $ 2,394,511.26 $ 1,270,958.75 $ 2,487,318.76 $ 4,415,000.00 $ 5,698,532.53 $ 10,113,532.53 FY 2017 $ 3,962,668.76 $ 2,393,511.26 $ 1,269,583.75 $ 2,494,343.76 $ 4,600,000.00 $ 5,520,107.53 $ 10,120,107.53 FY 2018 $ 3,970,993.76 $ 2,395,911.26 $ 1,272,458.75 $ 2,489,143.76 $ 4,800,000.00 $ 5,328,507.53 $ 10,128,507.53 FY 2019 $ 3,972,887.50 $ 2,395,123.76 $ 1,268,627.50 $ 2,492,718.76 $ 5,020,000.00 $ 5,109,357.52 $ 10,129,357.52 FY 2020 $ 3,983,125.00 $ 2,391,613.76 $ 1,268,227.50 $ 2,492,881.26 $ 5,260,000.00 $ 4,875,847.52 $ 10,135,847.52 FY 2021 $ 3,985,750.00 $ 2,395,613.76 $ 1,271,827.50 $ 2,494,631.26 $ 5,520,000.00 $ 4,627,822.52 $ 10,147,822.52 FY 2022 $ 3,990,500.00 $ 2,390,707.50 $ 1,268,365.00 $ 2,487,981.26 $ 5,765,000.00 $ 4,372,553.76 $ 10,137,553.76 FY 2023 $ 3,999,500.00 $ 2,393,287.50 $ 1,268,871.25 $ 2,490,293.76 $ 6,050,000.00 $ 4,101,952.51 $ 10,151,952.51 FY 2024 $ 4,002,250.00 $ 2,391,862.50 $ 1,272,581.25 $ 2,490,543.76 $ 6,345,000.00 $ 3,812,237.51 $ 10,157,237.51 FY 2025 $ 4,008,750.00 $ 2,392,737.50 $ 1,269,431.25 $ 2,490,081.26 $ 6,655,000.00 $ 3,506,000.01 $ 10,161,000.01 FY 2026 $ 4,018,500.00 $ 2,393,825.00 $ 1,270,006.25 $ 2,490,518.76 $ 6,990,000.00 $ 3,182,850.01 $ 10,172,850.01 FY 2027 $ 4,026,000.00 $ 2,391,675.00 $ 1,104,093.75 $ 2,491,600.00 $ 7,170,000.00 $ 2,843,368.75 $ 10,013,368.75 FY 2028 $ 4,031,000.00 $ 2,394,250.00 $ 1,102,812.50 $ 2,491,225.00 $ 7,535,000.00 $ 2,484,287.50 $ 10,019,287.50 FY 2029 $ 4,038,250.00 $ 2,393,025.00 $ 1,105,218.75 $ 2,490,350.00 $ 7,920,000.00 $ 2,106,843.75 $ 10,026,843.75 FY 2030 $ 4,047,250.00 $ 2,393,000.00 $ 1,106,093.75 $ 2,488,700.00 $ 8,325,000.00 $ 1,710,043.75 $ 10,035,043.75 FY 2031 $ 4,057,500.00 $ 2,394,250.00 $ 1,105,437.50 $ 2,486,000.00 $ 8,755,000.00 $ 1,288,187.50 $ 10,043,187.50 FY 2032 $ 4,063,500.00 $ 2,390,750.00 $ 1,103,250.00 $ 1,051,975.00 $ 7,765,000.00 $ 844,475.00 $ 8,609,475.00 FY 2033 $ $ 2,392,500.00 $ 1,103,425.00 $ 1,055,000.00 $ 4,095,000.00 $ 455,925.00 $ 4,550,925.00 FY 2034 $ $ 2,394,000.00 $ 1,106,800.00 $ $ 3,250,000.00 $ 250,800.00 $ 3,500,800.00 FY 2035 $ $ $ 1,103,150.00 $ $ 1,010,000.00 $ 93,150.00 $ 1,103,150.00 FY 2036 $ $ $ 1,107,700.00 $ $ 1,060,000.00 $ 47,700.00 $ 1,107,700.00 69,359,042.81 JOL 35,992,027.52 9,461.11 $ 147,065,000.0 ,126,057.281 Note:The above total annual debt service payments include payments made from the General Fund,Public Facilities Development Impact Fee(PFDIF),and Residential Construction Tax(RCT)combined. 2002 Certificates of Participation funded the Police Facility Project 2004 Certificates of Participation funded the Civic Center Phase I Project and Western Chula Vista Infrastructure 2006 Certificates of Participation funded the Civic Center Phase I I Project and Nature Center Improvements 2010 Certificates of Participation funded the Civic Center Phase III Project and refunded the 2000 COP which funded the Corporation Facility 2014-05-20 Agenda Packet Page 126 5 ATTACHMENT 4 N on n. y o 0 c 0 d ro co co f •�+ t -1- � Lo T r N -1- co co C 7 co co co co cn Ly 15 O O O O N N N N = E 9EO1 A] o acIIi acIIi acIIi acIIi °- sEOZ Ai F o 0 0 0 cl) cl) co c 4EOZ A� N -t `° O U- O O O N O A EEOZ Ai -° 0000 = � cDcDcDc V o 0 0 0 a) zEOZ Ai ° Vol Ai DEOZ Ai y E o Rol Aj ° cL U d = _ _ = o Bzoz Ai s RozA] zzzz y O O O O N O O O O p o� O O O O p U o o n Lo o =p c� °' co rn N a� o szoz Ai ° co ° co M a y fC Lo co ELJ c'3 N tzoz Aj 000 `° U EZO1Aj 0 0000 p o Zzoz Ai E o u) o O cn co N _ N cl) cl) p U a) Izol Ai ' ° m ° N a LL d OZO1 Aj EL co ° N o 610Z AJ m z O O O OIOZAJ 7 N N :5 U) Q y co 6) co N o O O O O y Zr- .2-) IIDZAO d o . o LL ° a sz 9I OZ Ai : M o o 9 s1o1Ai c,D EL co co o N = U6 U6 = o p _ M tiID1AO ° C E U ca N N EIOZA� y .o 'o ct a EL o o ° t!J o ' � o ,U U y o : ZIOZAi _ m _ _ - d = o AL L _ LL OOM ¢ d IIOZAJ o U U o o U U o Ur a.d U U UQ U U U U m OIOZAJ N p m 6001 Ai M� _ Z Q �m �° N � ¢ '= looz Ai < a loot A] Q) LLJ z = 9001 AO c') Q; Z5 ° a a a a U U s00Z Aj c o c `o e v v v c o � `o .+ < 0 z �' f0 .2 d v - - a m U U U �p .o d v fuC �, d 4001 Ai — — _ N _ •� 5 1 0� ° m m m _ o�'�' ¢ Eoo1 A] o fC L L L a - a o L L L O a a EL EL E - p a a EL a_ a_ _ _ = = y °o °o o °e °o °0 7 = y i o 0 o m 7 = 'n m a) 0 0 V p ni c m Lei v r �' LL. U U U m m � - - LL. „d, U U U C LL � w w N' aN iA � V U `y EL CU CU CU - R o o o y EL CU CU U Ln C C N co o - N v C N co O _ lYOIIIIw y y a� O O o .� -- y y a� o 0 o a, U ¢ V O O o o z° o` o e n U 0 0 0 0 O N 6 .4y�l 1 ATTACHMENT 4 CITY OF CHUTAVISTA Name of Debt Issued: 2002 Certificates of Participation— Police Facility Project f PAR Amount: $60,145,000 True Interest Cost: 4.93% p. p00CE i Purpose of Debt(Project): Construction of Police Headquarters J Sources of Funds: Uses of Funds: PAR Amount: $60,145,000.00 Project Fund: $49,065,746.74 OID (Discount): ($650,956.15) Capitalized Interest: $5,281,559.19 OIP(Premium): $0.00 Cost of Issuance: $1,083,237.92 Debt Service Reserve Fund: $4,063,500.00 TOTAL SOURCES: $59,494,043.85 TOTAL USES: $59,494,043.85 Prepayment Periods(Call Dates): Disclosure Due Dates: August 1, 2012 through July 31, 2013: 101.00% February 1 —Financial Statements and Tables 1-4, 6, 7, 9& 11 August 1, 2013 through July 31, 2014: 100.50% in Official Statement(page G-2) August 1, 2014 and thereafter 100.00% Financing Team: • Finance Director: Robert Powell • City Attorney: John Kaheny • Financial Advisor: Suzanne Harrell, Harrell&Company Advisors, LLC • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Bond Insurer: MBIA Insurance Corporation • Competitive Bid Purchaser: Banc of America Securities, LLC • Investment Providers: MBIA(Reserve Fund) • Dissemination Agent: US Bank, N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: US Bank, N.A. • Disclosure Administrator: NBS 2042 COP Debt Share by Funding Source usa uN Wo j Uw � sr se s+a il.f0 fIM use s _ ` •G.r�laM •KnK •(yMIV111MMit 2014-05-20 Agenda Packet Page 128 7 ATTACHMENT 4 N 00000000000 00 (o (Orr) 0000000000000 -:I, � (� N N N N N N N N N N N O f� N N CO N l!7 O O O O O O O O O O O O CO 6. . . . . . . . . . . . . . . . . . . . . . . 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Lf) (:: r-- V V (l Lf) — cr V r— V N O r-- (l O O 0o V a0 U- o Lf) V Lf) 00 O O V r-_ O O O N N N LO V 00 r— 00 (l) O 00 O M O r— O O LO O GO rN� N 0 N 0 00 00 00 00 00 00 00 00 O O O O O O O O O O CO O LL. d Lei N N N N N N N N N N N N N N N N N N N N N N N N N N N N r A c Ln to N 76 i () V l!7 CO f- 00 O O N (2 V l!7 CO f� 00 O O N (l) V LO O r— 00 O O N (l) J y y0 0 0 0 0 0 0 N N N N N N N N N N (o (o (o co � 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 a o ii O cm LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL LL 0 c� vcoco (0 f.0QDQD QD (o (o (o (0 (0 (0 (0 (000000000000000 -:I' a V N N N N N N N N N N N rl- rl- rl- rl- LO O O O O O O O O O O O O O OO V O O O O O O O O O O O M M 00 M r— LO O O O O O O O O O O O O LA O O O V V V V V V V V V 00 V O O 00 N LO O O LO LO O O O LO LO N 0 O O O O LfO M O r� r� O O 00 � r� LfLfN r� LfN N LO LO LA H O O LO O N O O V l!7 O 00 O N O N M LO O O N 00 00 (.0 00 r— r— (l) LA (D N N (l) (l) (l) (l) a) V V Lf) LO O O r— f� 00 00 O O O O N 2 (� V LO O n rC 00 O O O O O O O O O O O O O O O O O O O O O O O O O O O O M O O Q T E EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA a4 m U L. v (o fo fo (o co co c ococo (o (o (0 (0 (0 (000000000000000 O � V N N N N N N N N N N N f� f� f� f� l!7 O O O O O O O O O O O O O OR �N V O O O O O O O O O O O co co 00 co r-_ Lo O O O O O O O O O O O O LA O O O O V V V V V V V V V 00 V O O 00 N LO O O LO LO O O O LO LO O O N (2 ►+ O O O O Lf) O M M O -- O O 00 — r- l!7 Lf) N r-- Lf) O O N N Lf) Lf) Lr cn O O O O N O O V Lo O O 0o Lo r-- Lo r-- (o O O V N co 0o O O 0o N r-- (o O Q a i � 0 0 0 M O V O V 00 N O O N V O rl_ 00 00 rl_ LO (� O O N rl- LO rl- O M W 00 00 r— r— O O LO LO - V M N N O O 00 r— O LO V M — (D 00 LO cl) N (6 N N N N N N N N N N N N N N N � O m � N QEA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA 64 N O ,V O O O O O O O O O O O O O O O O O O O O O O O O O O O O O -p �+ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O o U O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Q O O O O O O O O O O O O O O O O O O O O O O O O O O O O O a > 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 `m o CL L() 0 0 0 0 0 0 0 0 L() O L() L() L() L() O L() O L() O L() 0 0 L() O L() 0 0 LA} O N O O V O V O O N 00 O M O O O O N V f� O LO O LO N O 00 r— � N N � — N N N M - V LO LO O r— 00 O O — N M V LO r— 00 O — M V O 00 to CL O 7 w U ) in R to a� i � ER EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA b4 N � � t o _ _ 0 '>= M V LO O rl_ 00 O O_ �_ N_ (2 V LP (O f� 00 O O N M V Lf) (O r— 00 O O N � O Q N 4 0 0 0 0 0 0 0 N N N N N N N N N N co (� co 0 U d O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O Ln N Cn N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N d' H O N 8 ATTACHMENT 4 Civic Center Total (All Phases)' Debt Share by Funding Source Fiscal Year General Fund PFDIF Annual Total FY2005 $ - $ - $ - FY2006 $ 14,630.06 $ 115,995.44 $ 130,625.50 FY2007 $ 192,077.43 $ 1,522,899.61 $ 1,714,977.04 FY2008 $ 399,016.16 $ 2,107,316.95 $ 2,506,333.11 - FY2009 $ 432,781.38 $ 2,389,069.27 $ 2,821,850.65 FY2010 $ 432,224.93 $ 2,385,585.08 $ 2,817,810.01 FY2011 $ 475,588.01 $ 2,731,871.90 $ 3,207,459.92 FY2012 $ 474,949.00 $ 2,726,308.83 $ 3,201,257.83 FY2013 $ 474,265.72 $ 2,721,153.33 $ 3,195,419.05 FY2014 $ 549,993.84 $ 3,325,521.58 $ 3,875,515.42 FY2015 $ 549,726.85 $ 3,323,660.59 $ 3,873,387.44 FY2016 $ 550,100.73 $ 3,325,366.81 $ 3,875,467.54 FY2017 $ 550,259.88 $ 3,327,003.39 $ 3,877,263.27 FY2018 $ 550,455.08 $ 3,327,528.44 $ 3,877,983.52 FY2019 $ 549,949.69 $ 3,323,681.87 $ 3,873,631.56 FY2020 $ 549,877.51 $ 3,324,913.20 $ 3,874,790.71 FY2021 $ 550,562.18 $ 3,328,458.10 $ 3,879,020.28 FY2022 $ 549,616.51 $ 3,323,262.12 $ 3,872,878.63 FY2023 $ 549,866.44 $ 3,323,892.71 $ 3,873,759.15 FY2024 $ 549,663.15 $ 3,322,914.61 $ 3,872,577.76 FY2025 $ 549,896.53 $ 3,324,502.16 $ 3,874,398.69 FY2026 $ 549,873.04 $ 3,323,686.37 $ 3,873,559.41 t FY2027 $ 549,644.85 $ 3,322,898.50 $ 3,872,543.35 f FY2028 $ 549,860.42 $ 3,323,372.36 $ 3,873,232.78 FY2029 $ 549,725.43 $ 3,322,960.56 $ 3,872,685.99 FY2030 $ 549,896.29 $ 3,324,371.78 $ 3,874,268.07 FY2031 $ 549,795.74 $ 3,322,962.04 $ 3,872,757.78 FY2032 $ 549,188.28 $ 3,319,648.31 $ 3,868,836.59 FY2033 $ 549,773.70 $ 3,323,517.24 $ 3,873,290.94 FY2034 $ 432,909.84 $ 2,389,831.25 $ 2,822,741.09 FY2035 $ 117,816.42 $ 985,333.58 $ 1,103,150.00 FY2036 $ 118,302.36 $ 989,397.64 $ 1,107,700.00 � ; 31' J.► TOTAL $ 14,562,287.49 $ 87,548,885.59 $ 102,111,173.08 Includes 2004 COP,2006 COP,and 2010 COP Civic Center payments. i ,- Note:Amounts shown above include principal and interest payments. Civic Center Total(All Phases) Debt Share by Funding Source $430 S4-00 53.50 $3.00 ! E Sz.50 52.00 — — SrsO - $t.o0 50.50 5- -- M- - ■Genernl Fund ■PFOIF 2014-05-20 Agenda Packet Page 130 9 ATTACHMENT 4 Page Intentionally Left Blank 2014-05-20 Agenda Packet Page 131 10 .4y�l 1 ATTACHMENT 4 CITY OF CHULA VISTA Name of Debt Issued: 2004 COP Civic Center Phase I and Western Chula Vista Infrastructure PAR Amount: $37,240,000 $26.7m-CC Phase I and$10.5m-Western CV Infrastructure True Interest Cost: 4.65% Purpose of Debt(Project): Construction & Improvements to Civic Center Complex and Western Chula Vista Infrastructure Project Sources of Funds: Uses of Funds: PAR Amount: $37,240,000.00 Project Fund: $31,776,000.00 OID (Discount): $0.00 Capitalized Interest: $2,176,837.68 OIP(Premium): $35,253.70 Cost of Issuance: $926,504.76 Debt Service Reserve Fund: $2,395,911.26 TOTAL SOURCES: $37,275,253.70 TOTAL USES: $37,275,253.70 Prepayment Periods(Call Dates): Disclosure Due Dates: March 1,2014 through February 28, 2015: 101.00% March 1 —Financial Statements and Tables 1-4, 6, 7, 9 & 11 in March 1,2015 through February 28, 2016: 100.50% Official Statement(page G-2) March 1, 2016 and thereafter 100.00% Financing Team: • Finance Director: Maria Kachadoorian • City Attorney:Ann Moore • Financial Advisor: Suzanne Harrell, Harrell&Company Advisors, LLC • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Bond Insurer: MBIA Insurance Corporation • Competitive Bid Purchaser: UBS Financial Services Inc. • Investment Providers: FSA Capital Management Services LLC(Reserve Fund) • Dissemination Agent: BNY Western Trust Company, N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: BNY Western Trust Company, N.A. • Disclosure Administrator: NBS 2004 COP Odd Shore by Funding S.- Hk au Sf k SI N Slk HS{ Il •Fr„r 1•k •IILi •IftiM •fT�'n•ffa.0 2014-05-20 Agenda Packet Page 132 11 ATTACHMENT 4 M O O O O O O co co co co co co (O CO CO CO 0 0 0 0 o 0 0 0 0 0 0 0 0 � N O O O LC) LC) LC) N N I- r- N N N I- r- r- LC) LC) LC) LC) 0 0 0 0 0 0 0 0 0 OO O LC) LC) LC) LC) N I-- CO M W cO C 2 C 2 I- r- N r- LC) LC) O LC) O O O O O N ++ N LC) LC) L(") M CO 00 r- V Lo N O W CO M N r- LC) N O LC) LC) O O O V CO CO M N co M O V L(") L(") (T CO CO I-- N W r- W CO N O O N I- LC) O O r-7 N N c' N - N - V c- LC) LC) - LC) O c- - N C`') - V c` c` V O N V 6) r V m m m m m m m CT CT CT CT CT CT CT CT CT m m m m m m m m m m m m LO O I- CO M M M M M M M M M M M M M M M M M M M M M M M M M M M M M _ N N N N N N N N N N N N N N N N N N N N N N N N N N N N to C Q EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA b4 r I- OO N V CO Ni i i i i i i i i i i i i i i i i i i i i i i i i i i i M OO ~ N LC) CO 76 V r- O = N fO - U C�l C�l C�l C�l C�l C�l C�l lb�lb�lb�C�l C�l C�l C�l C�l 16�16�16�16�16�16�lu�lu�lu�lu� a� d M CO LC) LC) m N I- N V N N m V O LC) W r O co LC) O N CO W N CO L() O O CT M W V 00 r-- CO M M � V N N O M CO LC) CO C`') � I- r- CO r V O CT L() V r- CO CO N O V W M CO M O O I-- M LC) CO I-- M m O m N LC) m W V W N � M W V I- m M O N O I- W N LC) LC) O O O N 00 r'-- N C 2 cO LC) 6) C (O CO LC) oc N N LC) M L(") M N cr (O M M L(") oc V o V I� � CO O N O r- r- r- [,- � � � � � OO I- W OO I- OO I- r- r- r- W r- OO r--- r--- OO r--- r--- OO OO CO CO CO (O CO CO CO CO CO CO CO (O CO CO CO CO CO CO CO (O CO CO CO CO CO CO CO CO O c U U C�l C�l C�l C�l C�l C�l C�l C�l C�l C�l C�l lb��������16�16�16�16�16�16�16�16�16�16�41�- ' V CT M CO N M V N V N W V O LC) LC) CO M V (O V N W N N M M (m V CO LC) CT M W CO CO O Nr- V N W O M V M LC) o CO W W W N LC) V CD LC) M I- o M M r- O V CO (O LC) O N O O CO W LC) CO CO CO N M LC) CT I� N m m L(") W LC) O I- O V M LC) LC) a) V W N W CT M I- W CO LC) W M LC) M � cr oc W LC) CO N I- � LC) CT M oc O M oc cr V oc M CO CO M M M N M O L(") N O O M M O M O M O N M N M O M O M O O M O D O N O O m m O CT O a) O O o 0 CT O m O m O O m O O O O CT O O LO O � U � fn y C�l C�l C�l C�l lb�lb�lb�lb�C�l C�l C�l C�l C�l C�l C�l C�l C�l C�l C�l�������tA�l tA�l C�l C�l co O y CO M CO V W N W N O LC) V N M W M M m CO CO M V CO I- O yL+ V p O V O I� (O W CO M N W CO M W M T r-- T CO L) CT V V V CO M V CO n H = O � M V I- W O O W O m V m LC) O m N I- o r- CO LC) N CO CO CO M V = co I- CO N N co W CO LC) CO I- M LC) L(") W r-- O N co W CY) co I- r- co r- O O _ ') a CO O V CO M co V co V co CO (T W M CT N CO V LC) (O M I- LC) LC) I� N L(") I- V N V V V V V V V V V V V V V V V V V V V V V V V V V V V LL. 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LL. `o N 0 � M � � N 0 0 0 0 0 0 CO CO CO CO (O (O (O (O (O (O 0 0 0 0 0 0 0 0 0 0 0 0 0 m N 0 0 0 LC) LC) LC) N N I- r- N N N r- r- r- LC) LC) LC) LC) O O O O O O O o o p = LC) LC) LC) LC) N I-- r- CO M W - M M M I-- I-- N I-- L(") O O O O O N LC) LC) LC) M CO M T V N o W (D M N I- LC) N O LC) LC) O O N O V CO CO - CO N CO CO O V LC) LC) (T (O (O I- N W r- W (O N O O N I-- LC) o a O N N M N N V C'') LC) LC) LC) o c' N M V co C'') V o N V CY) CY) CT CY) CT CT CT CT CT CY) CY) CY) CY) CY) CY) CY) CY) CY) CY) CY) CT CT CT CT CT 0) (T (T I� CO co co co co co co co co co M M M M M M M co co co co co co co co co co M Mi _ N N N N N N N N N N N N N N N N N N N N N N N N N N N N o U C d Q E 0 C E � o 0 0 0 o O co co co co (O (O (O (O (O CO O O O O O O O O O O O O O U N o 0 0 LC) LC) LC) N N I- r- N N N r- r- r- LC) LC) LC) LC) O O O o 0 0 0 0 0 E (, LC) LC) LC) LC) N I- r- CO co W - - co co co I- r- N r- LC) LC) O LC) o 0 0 0 o N m N LC) LC) L(") m CO Wr- V N o oO (O M N I- LC) N o LC) LC) o o W Q y V (O CO C`') N C`') C`') O V L(") L(") (T (O (O I' N oc [' oc (O N O O N r- LC) o Q N U d N CO CO I- CO N CO (T CO L(") O O L(") W (O N M V M W V LC) N V V O W (O co O r- V O (O N Oo V (T V W N (O o CO (O W o N N N � _ = I- (O CO CO X X X V V V �cl��cl� �cl�� O O CT CT W (O (O L(") V M N _ > O � � Q- EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA � o �-+ O O O O O O O O O O O O O O O O O O O O O O O O O O O O .V O O O o O O O O O O O O O O O O O O O o O O O O O O O O a L O O O O O O O O O O O O O O O O O O O o O O O O O O O O - O O O O O O O O O O O O O O O O O O O o O O O O O O O O o CO O O O o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 a� O O «O O O O «O «O «O O «O «) «) O «) O «) «) «) «) O O O O O «O O LC) O O r o d N V I- m M LC) W LC) W N CO «) O «) O CO N CT O M CT I- CO I� W yr C I- W co W W CT M M O O N N M M V V LC) CO I- W CT O N -o fC yr Q - - - - - - - - - - - - a m Z! d U U z, C � EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA N � b�D a� - O n � � N a> o _ _ LC) CO I- W m O N M V LC) CO I� W CT O N M V LC) (O I- W m O N M - o � L7 C U `y o O O O O N N N N N N N N N N CO M CO co co O N N a o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C14 R r 0 N 12 If/ ATTACHMENT 4 CITY OF CHUTAVISTA Name of Debt Issued: 2006 COP Civic Center Phase II and Nature Center PAR Amount: $20,325,000 $18.1 m—CC Phase II and$2.2m-Nature Center Net Interest Cost: 4.32% Purpose of Debt(Project): Construction & Improvements to Civic Center Complex and Nature Center Sources of Funds: Uses of Funds: PAR Amount: $20,325,000.00 Project Fund: $17,183,964.00 OID (Discount): ($77,820.40) Capitalized Interest: $1,159,250.10 OIP(Premium): $0.00 Cost of Issuance: $405,884.21 Underwriter's Discount: $225,622.54 Debt Service Reserve Fund: $1,272,458.75 TOTAL SOURCES: $20,247,179.60 TOTAL USES: $20,247,179.60 Prepayment Periods(Call Dates): Disclosure Due Dates: March 1, 2016 and thereafter: 100.00% March 1 —Financial Statements and Tables 8, 9, 11, 14, 16, 17 & 18 in Official Statement(pages C-2 and C-3) Financing Team: • Finance Director: Maria Kachadoorian • City Attorney:Ann Moore • Financial Advisor: Suzanne Harrell, Harrell&Company Advisors, LLC • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Bond Insurer:AMBAC • Competitive Bid Purchaser: Morgan Stanley • Investment Providers: FSA Capital Management Services LLC(Reserve Fund) • Dissemination Agent: BNY Western Trust Company, N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: BNY Western Trust Company, N.A. • Disclosure Administrator: NBS 2045 COP Debt Share by Funding Souris Sia 5110 Nk Nlo- HAP w v N td 1 sk—F., .deli •GNWI.[ .(WW_6Wwa w.[vml 2014-05-20 Agenda Packet Page 134 13 ATTACHMENT 4 M N LC) LC) LC) LC) LC) LC) LC) LC) LC) LC) LC) O O O O LC) LC) LC) LC) LC) O LC) LC) O O O O O O N LC) I-- � � r-- I- r- r- r- r- r- r- LC) LC) LC) O N N N N I-- LC) I-- r-- LC) O O O O O L() 0 I- oO oO oO oO W oO oO oO oO M oO r- i- r- L(") CO co N W M O L(") O O O 1� 0m, ++ N 00 O O 00 (O co 00 O LC) 00 LC) N N N CO I� Cb ZW O m co � m co LC) N O LC) O N o I� N V M O N M M m LC) V CO N oO co W L(") V O O co N O V N V oO - C I O V N N N - (= C>D C:5 - O cr N C>D W - C>D W N m O V N LC) CO LC) M M CO M r- N O I- r- r- r- r-- CO I-. r-. r-. 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LL- LL LL LL LL LL LL LL LL- LL- LL- `o z 7 � (Q M � N 'a N LC) LC) LC) LC) LC) LC) LC) LC) LC) LC) LC) O O O O LC) LC) LC) LC) LC) O LC) LC) O O O O O O m = LC) I- r- r- r- I- r- r- r- r- r- r-- LC) LC) LC) O N N N N I- LC) I- r- LC) O O O O O p I- W W W W W W oO oO oO co oO r- r- r- LC) CO M N W M r- O LC) O O O +O+ N W m CT W (D M W O LC) W LC) N N N CO I� W M O m m M LC) N O LC) O N O I- N V CO O N CO CO CT) LC) V CO N 00 CO W LC) V O O W N O V N V 00 - I- a O ~ V N N N O C>D O O cr N C>D W 06 00 N CT O V N LC) CO LC) M M CO M r- - C j O I- r- r- � r-- CO I- r- r- CO I- CO (O I- CO O - O - 00 N N N N N N N N N N N N N N N N N N 0 0 0 0 0 0 0 0 0 0 N � C d Q E C E � O N LC) LC) LC) LC) LC) LC) LC) LC) LC) LC) LC) O O O O LC) LC) LC) LC) LC) O LC) LC) O O O O O O cn U L(") I- L(") L(") L(") O N N N N I- L(") I- L(") O O O O O Ew W W W W W W W W M W r- r- r- Lo CO M N W M r- O LC) O O O N N W m CT W (O M W O LC) W LC) N N N CO I- W M O m m M LC) N O LC) O n N � N V C') (:: N C') C') cr LC) V CO N oc M oc LC) V O O W N O V N V oc --L r-- Q N d V I- Nrl-- LC) oO O O m I- M W co co N CT LC) CT I- LC) LC) W 00 CO M r- w V O M N O CT I- LC) V N O r- LC) M O Cb LC) N CT LC) N 00 LC) N CT LC) I� M (T V _ = 00 00 00 00 1- r- r r- CO CO CO (O L(") LC) LC) V V V M M M N N N O o- cfj u Q- EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA � o �-+ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O .V O O O O O O O O O O O O O O O O O O O O O O O O O O O O O o a L O O O O O O O O O O O O O O O O O O O O O O O O O O O O O - O O O O O O O O O O O O O O O O O O O O O O O O O O O O O o CO O O O O O O O O O O O O O O O O O O O O O O O O O O O O O w O O LC) O LC) O LC) O O O O O LC) LC) O O LC) LC) O O LC) LC) LC) O LC) O LC) LC) O O O r o 41 N V M LC) CO W m M LC) I- m M (D m V W V V W LC) W N CO cu �+ C V V V V V L(") LC) LC) LC) LC) CO CO (O CO I� r- r W 00 r- r- ;; 00 00 CT a) w u � EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA EA N � b�D a� - O n � � N a> o _ _ I- W CT O N M V L(") CO I� W CT O N CO V L(") CO I- W CT O N co V L11 CO o �� Vi O O O N N N N N N N N N N M M M M M M M � O N N a 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C14 R r 0 N 14 If/ ATTACHMENT 4 CITY OF CHUTAVISTA Name of Debt Issued: 2010 COP Civic Center Phase III and Corporation Yard Refunding (2000 COP) PAR Amount: $29,355,000 $12.8m—CC Phase III and$16.5m-Corp Yard Refunding Net Interest Cost: 5.57% Purpose of Debt(Project): Construction & Improvements to Civic Center Complex and refunding of COP Corporation Yard Construction & Improvements i _- Sources of Funds: Uses of Funds: PAR Amount: $29,355,000.00 Project Fund: $9,347,515.00 OID (Discount): ($709,819.05) Capitalized Interest: $1,867,819.82 OIP(Premium): $0.00 Cost of Issuance: $434,247.73 Debt Service Reserve Fund: $1,889,067.91 Escrow Fund: $16,390,035.05 Debt Service Reserve Fund: $2,494,631.26 TOTAL SOURCES: $30,534,248.86 TOTAL USES: $30,534,248.86 Prepayment Periods(Call Dates): Disclosure Due Dates: March 1,2020 and thereafter: 100.00% April 1 —Financial Statements and Tables 1, 2, 4, 9, 10 & 11 in Official Statement(page D-2) Financing Team: • Finance Director: Maria Kachadoorian • City Attorney: Bart Miesfeld • Financial Advisor: Julio Morales, Public Financial Management • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Negotiated Issuance: E.J. De La Rosa &Co., Inc. • Dissemination Agent: U.S. Bank Trust N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: U.S. Bank Trust N.A. • Disclosure Administrator: NBS 2010 COP Debt Share by Funding Source Uq 5750 clso 5-90 wso s •4wa F.y NOW •4W100 lnx.,t •G,wM F..1 •Prorc -SOprWNl.lp.q [fr1 Tm41 IfrlT.l! 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O V y N N N N N N N N N N ('7 ('7 ('7 ('7 C,4 N 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 a c N 16 Al lgt_MlVltll I 2t REDEVELOPMENT AGENCY/ SUCCESSOR AGENCY BONDED INDEBTEDNESS OUTSTANDING ISSUANCES UPDATED DECEMBER 2013 ciry of CHULAVISTA ATTACHMENT 4 2014-05-20 Agenda Packet Page 139 18 ATTACHMENT 4 REDEVELOPMENT AGENCY/SUCCESSOR AGENCY Total Annual Debt Service Payments (Principal and Interest) Fiscal Year 2006 Series A TABS 2006 Series B TABS 2008 TABS 2005 ERAF 2006 ERAF Total FY 2008 $ 1,023,689.33 $ 1,000,327.14 $ - $ 99,438.00 $ 123,872.98 $ 2,247,327.45 FY 2009 $ 1,025,545.00 $ 1,004,365.00 $ 104,393.93 $ 101,752.00 $ 128,158.50 $ 2,364,214.43 FY 2010 $ 1,027,145.00 $ 1,002,965.00 $ 963,636.26 $ 98,704.00 $ 123,886.50 $ 3,216,336.76 FY 2011 $ 1,027,945.00 $ 1,000,433.76 $ 963,636.26 $ 100,570.00 $ 124,558.50 $ 3,217,143.52 FY 2012 $ 1,027,945.00 $ 1,001,733.76 $ 963,636.26 $ 102,118.00 $ 124,934.50 $ 3,220,367.52 FY 2013 $ 1,027,145.00 $ 1,001,033.76 $ 963,636.26 $ 98,354.00 $ 125,002.50 $ 3,215,171.52 FY 2014 $ 1,027,845.00 $ 999,433.76 $ 963,636.26 $ 99,526.00 $ 124,749.00 $ 3,215,190.02 FY 2015 $ 1,027,420.00 $ 1,001,433.76 $ 1,538,636.26 $ 100,356.00 $ 124,169.00 $ 3,792,015.02 FY 2016 $ 1,025,870.00 $ 1,001,758.76 $ 1,540,636.26 $ 100,880.00 $ 128,278.50 $ 3,797,423.52 FY 2017 $ 1,026,270.00 $ 1,000,358.76 $ 1,536,636.26 $ - $ 126,804.00 $ 3,690,069.02 FY 2018 $ 1,025,030.00 $ 1,001,608.76 $ 1,536,836.26 $ $ - $ 3,563,475.02 FY 2019 $ 1,027,598.76 $ 1,001,358.76 $ 1,536,036.26 $ $ $ 3,564,993.78 FY 2020 $ 1,023,061.26 $ 999,608.76 $ 1,539,236.26 $ $ $ 3,561,906.28 FY 2021 $ 1,027,461.26 $ 1,000,693.76 $ 1,536,236.26 $ $ $ 3,564,391.28 FY 2022 $ 1,024,430.00 $ 999,993.76 $ 1,537,236.26 $ $ $ 3,561,660.02 FY 2023 $ 1,024,890.00 $ 1,002,325.00 $ 1,536,092.50 $ $ $ 3,563,307.50 FY 2024 $ 1,022,990.00 $ 1,001,637.50 $ 1,538,122.50 $ $ $ 3,562,750.00 FY 2025 $ 1,024,515.00 $ 1,003,850.00 $ 1,537,862.50 $ $ $ 3,566,227.50 FY 2026 $ 1,024,240.00 $ 1,003,700.00 $ 1,540,456.26 $ $ $ 3,568,396.26 FY 2027 $ 536,230.00 $ 526,187.50 $ 1,536,076.26 $ $ $ 2,598,493.76 FY 2028 $ 538,690.00 $ 526,250.00 $ 1,539,226.26 $ $ $ 2,604,166.26 FY 2029 $ - $ - $ 1,540,351.26 $ $ $ 1,540,351.26 FY 2030 $ $ $ 1,538,431.26 $ $ $ 1,538,431.26 FY 2031 $ $ $ 1,539,175.00 $ $ $ 1,539,175.00 FY 2032 $ $ $ 1,537,606.26 $ $ $ 1,537,606.26 FY 2033 $ $ $ 1,538,725.00 $ $ $ 1,538,725.00 FY 2034 $ $ $ 1,540,775.00 $ $ $ 1,540,775.00 FY 2035 $ $ $ 1,539,975.00 $ $ $ 1,539,975.00 FY 2036 $ $ $ 1,536,325.00 $ $ $ 1,536,325.00 FY 2037 $ $ $ 1,539,825.00 $ $ $ 1,539,825.00 Total $ 20,565,955.61 $ 20,081,057.26 $ 40,303,090.37 $ 1,002,474.00 $ 1,254,413.98 $ 83,206,991.22 TABS=Tax Allocation Bonds. These bonds are issued in conjunction with a redevelopment project. Please see"Definition of Terms"for more information. 2014-05-20 Agenda Packet Page 140 19 ATTACHMENT 4 on n. J (A C C O N 0 0 0 Cu E CD W co N r O d7 — N W � � x CC � N o Il N N N <C J J O M cEOZ Al E E E > o O O X U 9EBl AA M M N N m O N N cf _0 C o ,7EDl A� Y O O O ON O O O bEOZ A� C, o 0 0 o a s u M M EEBa Ai ¢ 0 M M p >, d N N N M M 0 O i O i O i X ZEN Ai o O 2 2 2 U O U .N C C C a z z z cl) o cl) E ° m IEOl AO ° � ° 0 CD c o 0 o g m m E m OEOZ AO a U � °O N o I o O C O M . 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O o o z o o O O O O N 20 ATTACHMENT 4 CITY OF CHUTAVI5TA Name of Debt Issued: 2006 Senior TAB Refunding Bonds Series A PAR Amount: $13,435,000 True Interest Cost: 4.96% Purpose of Debt(Project): Refinance 1994 A Bonds(The Bayfront/Town ►� Centre Project Area) Sources of Funds: Uses of Funds: Bond Proceeds Refunding Escrow Deposits PAR Amount: $13,435,000.00 Cash Deposits: $1,072.25 OID(Discount) ($96,585.40) Open Market Purchases: $13,191,671.50 Other Sources of Funds Other Fund Deposits Existing Debt Service: $1,306,246.01 Debt Service Reserve Fund: $1,027,945.00 Delivery Date Expenses Cost of Issuance: $158,470.25 Underwriter's Discount: $120,915.00 Bond Insurance: $271,470.61 TOTAL SOURCES: $14,771,544.61 TOTAL USES: $14,771,544.61 Prepayment Periods(Call Dates): Disclosure Due Dates: September 1, 2012 through August 31, 2013: 102.00% February 15—Financial Statements and Tables 1-6 in Official September 1, 2013 through August 31, 2014: 101.00% Statement(pages D-2 and D-3) September 1, 2014 and thereafter: 100.00% Financing Team: • Finance Director: Maria Kachadoorian • City Attorney:Ann Moore • Financial Advisor: Suzanne Harrell, Harrell &Company Advisors, LLC • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Bond Insurer:AMBAC Assurance Corporation • Negotiated Issuance: E.J. De La Rosa &Co., Inc. • Investment Providers: Rabo Bank International • Dissemination Agent: U.S. Bank, N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: U.S. Bank,N.A. • Disclosure Administrator: NBS 2014-05-20 Agenda Packet Page 142 21 ATTACHMENT 4 2006 Senior TAB Refunding Bonds Series A Scheduled Debt Service Period' Principal Interest Annual Total Period Principal Interest 2007 $ 395,000.00 $ 628,689.33 $ 1,023,689.33 2008 $ 460,000.00 $ 565,545.00 $ 1,025,545.00 2009 $ 480,000.00 $ 547,145.00 $ 1,027,145.00 2010 $ 500,000.00 $ 527,945.00 $ 1,027,945.00 2011 $ 520,000.00 $ 507,945.00 $ 1,027,945.00 2012 $ 540,000.00 $ 487,145.00 $ 1,027,145.00 2013 $ 565,000.00 $ 462,845.00 $ 1,027,845.00 2014 $ 590,000.00 $ 437,420.00 $ 1,027,420.00 2015 $ 615,000.00 $ 410,870.00 $ 1,025,870.00 2016 $ 640,000.00 $ 386,270.00 $ 1,026,270.00 2017 $ 665,000.00 $ 360,030.00 $ 1,025,030.00 2018 $ 695,000.00 $ 332,598.76 $ 1,027,598.76 2019 $ 720,000.00 $ 303,061.26 $ 1,023,061.26 2020 $ 755,000.00 $ 272,461.26 $ 1,027,461.26 2021 $ 785,000.00 $ 239,430.00 $ 1,024,430.00 2022 $ 820,000.00 $ 204,890.00 $ 1,024,890.00 2023 $ 855,000.00 $ 167,990.00 $ 1,022,990.00 2024 $ 895,000.00 $ 129,515.00 $ 1,024,515.00 2025 $ 935,000.00 $ 89,240.00 $ 1,024,240.00 2026 $ 490,000.00 $ 46,230.00 $ 536,230.00 2027 $ 515,000.00 $ 23,690.00 $ 538,690.00 TOTAL $ 13,435,000.00 $ 7,130,955.61 $ 20,565,955.61 'Period represents period ending September 1. 2006 Senior TAB{Series A}Scheduled Debt Service 51.20 SI.00 = S0.60 50.60 $0.40 $0.20 - 50.00 - – - - -- — -- x Fnncipul Interest 2014-05-20 Agenda Packet Page 143 22 ATTACHMENT 4 CITY OF CHUTAVI5TA Name of Debt Issued: 2006 Subordinate TAB Refunding Bonds Series B PAR Amount: $12,325,000 _ True Interest Cost: 5.30% Purpose of Debt(Project): Refinance 1994 C &D Bonds The - - ` Bayfront/Town Centre Project Area) Sources of Funds: Uses of Funds: Bond Proceeds Refunding Escrow Deposits PAR Amount: $12,325,000.00 Cash Deposits: $796.22 OID(Discount) ($97,346.35) SLG/Purchases/Cash: $7,115,825.00 Other Sources of Funds Open Market Purchases: $5,254,157.89 Existing Debt Service: $833,151.36 Other Fund Deposits Debt Service Fund: $609,724.93 Debt Service Reserve Fund: $1,002,165.00 Delivery Date Expenses Cost of Issuance: $106,548.33 Underwriter's Discount: $191,037.50 TOTAL SOURCES: $13,670,529.94 TOTAL USES: $13,670,529.94 Prepayment Periods(Call Dates): Disclosure Due Dates: October 1, 2012 through September 30, 2013: 102.00% February 15-Financial Statements and Tables 1-6 in Official October 1, 2013 through September 30, 2014: 101.00% Statement(pages D-2 and D-3) October 1, 2014 and thereafter: 100.00% Financing Team: • Finance Director: Maria Kachadoorian • City Attorney:Ann Moore • Financial Advisor: Suzanne Harrell, Harrell &Company Advisors, LLC • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Bond Insurer: None • Negotiated Issuance: E.J. De La Rosa &Co., Inc. • Investment Providers: Citigroup Financial Products • Dissemination Agent: U.S. Bank, N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: U.S. Bank, N.A. • Disclosure Administrator: NBS 2014-05-20 Agenda Packet Page 144 23 ATTACHMENT 4 2006 Subordinate TAB Refunding Bonds Series B Scheduled Debt Service Period' Principal Interest Annual Total 2007 $ 290,000.00 $ 710,327.14 $ 1,000,327.14 2008 $ 410,000.00 $ 594,365.00 $ 1,004,365.00 2009 $ 425,000.00 $ 577,965.00 $ 1,002,965.00 2010 $ 440,000.00 $ 560,433.76 $ 1,000,433.76 2011 $ 460,000.00 $ 541,733.76 $ 1,001,733.76 2012 $ 480,000.00 $ 521,033.76 $ 1,001,033.76 2013 $ 500,000.00 $ 499,433.76 $ 999,433.76 2014 $ 525,000.00 $ 476,433.76 $ 1,001,433.76 2015 $ 550,000.00 $ 451,758.76 $ 1,001,758.76 2016 $ 575,000.00 $ 425,358.76 $ 1,000,358.76 2017 $ 605,000.00 $ 396,608.76 $ 1,001,608.76 2018 $ 635,000.00 $ 366,358.76 $ 1,001,358.76 2019 $ 665,000.00 $ 334,608.76 $ 999,608.76 2020 $ 700,000.00 $ 300,693.76 $ 1,000,693.76 2021 $ 735,000.00 $ 264,993.76 $ 999,993.76 2022 $ 775,000.00 $ 227,325.00 $ 1,002,325.00 2023 $ 815,000.00 $ 186,637.50 $ 1,001,637.50 2024 $ 860,000.00 $ 143,850.00 $ 1,003,850.00 2025 $ 905,000.00 $ 98,700.00 $ 1,003,700.00 2026 $ 475,000.00 $ 51,187.50 $ 526,187.50 2027 $ 500,000.00 $ 26,250.00 $ 526,250.00 TOTAL $ 12,325,000.00 $ 7,756,057.26 $ 20,081,057.26 'Period represents period ending October 1. 2006 Subordinate TAB(Series B) Scheduled Debt Service SI.Yo st.00 Soso So.6o so.ao Selo 9z M ■Principal z Interest 2014-05-20 Agenda Packet Page 145 24 ATTACHMENT 4 CITY OF CHUTAVI5TA Name of Debt Issued: 2008 TAB Refunding Bonds PAR Amount: $21,625,000 r l ot Hr True Interest Cost: 4.93% Purpose of Debt(Project): Refinance 2000 TABS and to provide funds for redevelopment activities. Sources of Funds: Uses of Funds: Bond Proceeds Refunding Escrow Deposits PAR Amount: $21,625,000.00 Cash Deposits: $0.64 OID(Discount) ($401,835.80) Open Market Purchases: $15,835,267.00 Other Sources of Funds Other Fund Deposits 2000 Bonds on Deposit: $3,239,043.76 Debt Service Reserve Fund: $1,540,775.00 2000 DSRF+Accrued Interest: $1,233,914.23 Delivery Date Expenses 2000 Debt Service Fund: $481,088.23 Cost of Issuance: $216,010.20 Underwriter's Discount: $177,325.00 Bond Insurance: $636,788.83 Other Uses of Funds Street Improvements: $800,000.00 Repay City Loan: $3,732,000.00 2000 Bonds Redevelopment: $3,239,043.75 TOTAL SOURCES: $26,177,210.42 TOTAL USES: $26,177,210.42 Prepayment Periods(Call Dates): Disclosure Due Dates: September 1, 2019: 100.00% March 31 —Financial Statements and Tables 1-7 in Official Statement(page E-2) Financing Team: • Finance Director: Maria Kachadoorian • City Attorney: Bart Meisfeld • Financial Advisor: Suzanne Harrell, Harrell &Company Advisors, LLC • Bond Counsel: Bob Whalen, Stradling,Yocca Carlson & Rauth • Bond Insurer: FSA • Negotiated Issuance: E.J. De La Rosa &Co., Inc. • Investment Providers: None • Dissemination Agent: U.S. Bank, N.A. • Disclosure Counsel: Stradling Yocca Carlson & Rauth • Trustee: U.S. Bank, N.A. • Disclosure Administrator: NBS 2014-05-20 Agenda Packet Page 146 25 ATTACHMENT 4 2008 TAB Refunding Bonds Scheduled Debt Service Period' Principal Interest Annual Total 2008 $ $ 104,393.93 $ 104,393.93 2009 $ $ 963,636.26 $ 963,636.26 2010 $ $ 963,636.26 $ 963,636.26 2011 $ $ 963,636.26 $ 963,636.26 2012 $ $ 963,636.26 $ 963,636.26 2013 $ $ 963,636.26 $ 963,636.26 2014 $ 575,000.00 $ 963,636.26 $ 1,538,636.26 2015 $ 600,000.00 $ 940,636.26 $ 1,540,636.26 2016 $ 620,000.00 $ 916,636.26 $ 1,536,636.26 2017 $ 645,000.00 $ 891,836.26 $ 1,536,836.26 2018 $ 670,000.00 $ 866,036.26 $ 1,536,036.26 2019 $ 700,000.00 $ 839,236.26 $ 1,539,236.26 2020 $ 725,000.00 $ 811,236.26 $ 1,536,236.26 2021 $ 755,000.00 $ 782,236.26 $ 1,537,236.26 2022 $ 785,000.00 $ 751,092.50 $ 1,536,092.50 2023 $ 820,000.00 $ 718,122.50 $ 1,538,122.50 2024 $ 855,000.00 $ 682,862.50 $ 1,537,862.50 2025 $ 895,000.00 $ 645,456.26 $ 1,540,456.26 2026 $ 930,000.00 $ 606,076.26 $ 1,536,076.26 2027 $ 975,000.00 $ 564,226.26 $ 1,539,226.26 2028 $ 1,020,000.00 $ 520,351.26 $ 1,540,351.26 2029 $ 1,065,000.00 $ 473,431.26 $ 1,538,431.26 2030 $ 1,115,000.00 $ 424,175.00 $ 1,539,175.00 2031 $ 1,165,000.00 $ 372,606.26 $ 1,537,606.26 2032 $ 1,220,000.00 $ 318,725.00 $ 1,538,725.00 2033 $ 1,280,000.00 $ 260,775.00 $ 1,540,775.00 2034 $ 1,340,000.00 $ 199,975.00 $ 1,539,975.00 2035 $ 1,400,000.00 $ 136,325.00 $ 1,536,325.00 2036 $ 1,470,000.00 $ 69,825.00 $ 1,539,825.00 TOTAL $ 21,625,000.00 $ 18,678,090.37 $ 40,303,090.37 'Period represents period ending September 1. 2008 TAB Scheduled Debt Service 51.80 51.60 51.40 a S1.20 S1.00 50.80 — so.6o 50.40 50.20 50.00 ■Principal 4 Interest 2014-05-20 Agenda Packet Page 147 26 ATTACHMENT 4 CRA/ERAF Loan Program (All Project Areas) 10 Year Non-Callable As part of the effort to balance the budget of the State of California, redevelopment agencies across the state were obligated to make payments totaling $250 million to the Educational Revenue Augmentation Fund (ERAF). Individual ERAF payments were determined based on the Agency's tax increment as a proportion of the total tax increment of all agencies throughout the State. As part of the legislation that mandated the payment, the California Redevelopment Association (CRA) created the CRA/ERAF Loan Program,which allowed agencies to spread the payment over 10 years. 04-05 CRA/ERAF 05-06 CRA/ERAF Par$765,000 Par:$930,000 Total Annual Debt Date NIC:4.88% TIC:5.87% Service August 1,2006 $ 100,776.00 $ - $ 100,776.00 August 1,2007 $ 99,438.00 $ 123,872.98 $ 223,310.98 August 1,2008 $ 101,752.00 $ 128,158.50 $ 229,910.50 August 1,2009 $ 98,704.00 $ 123,886.50 $ 222,590.50 August 1,2010 $ 100,570.00 $ 124,558.50 $ 225,128.50 August 1,2011 $ 102,118.00 $ 124,934.50 $ 227,052.50 August 1,2012 $ 98,354.00 $ 125,002.50 $ 223,356.50 August 1,2013 $ 99,526.00 $ 124,749.00 $ 224,275.00 August 1,2014 $ 100,356.00 $ 124,169.00 $ 224,525.00 August 1,2015 $ 100,880.00 $ 128,278.50 $ 229,158.50 August 1,2016 $ - $ 126,804.00 $ 126,804.00 Total $ 1,002,474.00 $ 1,254,413.98 $ 2,256,887.98 CRA/ERAF Loan Program Scheduled Debt Service $0.25 so.zo A! 50.15 — 5o 10 60.05 so.00 ZZ ■04-05 CRAIERAF +05-06 CRAjfRAF 2014-05-20 Agenda Packet Page 148 27 ATTACHMENT 4 Page Intentionally Left Blank 2014-05-20 Agenda Packet Page 149 28 Al lgt_MlVltll I 2t CITY OF CHULA VISTA OTHER BONDED INDEBTEDNESS HUD SECTION 108 LOAN UPDATED DECEMBER 2013 ary of CHULAVISTA ATTACHMENT 4 2014-05-20 Agenda Packet Page 151 30 ATTACHMENT 4 Department of Housing and Development(HUD) Section 108 Loan In 2006, the City of Chula Vista applied for and was awarded a Section 108 Loan for the Castle Park Infrastructure Improvement Project by the Department of Housing and Urban Development(HUD). The Section 108 Loan is an"advance" of future Community Development Block Grant (CDBG) entitlement funds and, as such, debt service payments for the Section 108 Loan will be made with a portion of the City's annual CDBG entitlement for a period of 20 years. HUD 108 Consolidated Scheduled Debt Service Glenhaven Way Improvements Period' Principal Interest Annual Total 2009 $ 287,000.00 $ 512,647.98 $ 799,647.98 2010 $ 302,000.00 $ 443,711.10 $ 745,711.10 2011 $ 317,000.00 $ 434,318.90 $ 751,318.90 2012 $ 332,000.00 $ 423,414.10 $ 755,414.10 2013 $ 349,000.00 $ 410,731.70 $ 759,731.70 2014 $ 367,000.00 $ 396,771.70 $ 763,771.70 2015 $ 385,000.00 $ 381,577.90 $ 766,577.90 ::ago 2016 $ 404,000.00 $ 364,907.40 $ 768,907.40 Oxford Street Improvements 2017 $ 425,000.00 $ 346,808.20 $ 771,808.20 t 2018 $ 446,000.00 $ 327,428.20 $ 773,428.20 2019 $ 468,000.00 $ 306,823.00 $ 774,823.00 2020 $ 492,000.00 $ 284,031.40 $ 776,031.40 2021 $ 516,000.00 $ 259,628.20 $ 775,628.20 2022 $ 542,000.00 $ 233,570.20 $ 775,570.20 _ 2023 $ 569,000.00 $ 205,765.60 $ 774,765.60 T 2024 $ 597,000.00 $ 176,234.50 $ 773,234.50 r 2025 $ 627,000.00 $ 144,892.00 $ 771,892.00 Second Avenue Improvements 2026 $ 659,000.00 $ 111,661.00 $ 770,661.00 2027 $ 692,000.00 $ 76,470.40 $ 768,470.40 2028 $ 724,000.00 $ 39,240.80 $ 763,240.80 TOTAL $ 9,500,000.00 $ 5,880,634.28 $ 15,380,634.28 t 'Period represents period ending August 1. HUD Section 108 Scheduled Debt Service 5690 50.80 50.70 SO.60 $0.50 $0.40 SON SON 50.10 ■Prinripol Interest 2014-05-20 Agenda Packet Page 152 31 ATTACHMENT 4 Page Intentionally Left Blank 2014-05-20 Agenda Packet Page 153 32 Al lgt_MlVltll I 2t CITY OF CHULA VISTA OTHER BONDED INDEBTEDNESS SPECIAL TAX DISTRICTS UPDATED DECEMBER 2013 ciry of CHULAVISTA ATTACHMENT 4 2014-05-20 Agenda Packet Page 155 34 ATTACHMENT 4 N on 0 0 0 0 0 0 0 0 ( y O O O O (n LU m ('7 (O N N O d) O LO N V ('7 1- C � T <6 �= O � ((0 ((O0 ((0 ((O0 "T = O O O 0 0 0 0 0 0 0 co LZ m N N N N N N N N N Za to to co cu cu cu cu cu y A A A A A A A A A H N (O (O N O CO (0) O (0) O CNJ O O (0 (0 N Y O C) C) C O CD O O O O 0 0 0 0 0 0 0 (6 O O 0 0 0 0 0 0 0 U y + U U C � m CU m "a ocn CL 3 aii a'i ai a'i a'i a'i ai a'i � a 0 0 0 0 0 0 0 0 -0 3 3 a) a) a) a) a) a) a) a) aw) O O O O O O O O O p O O O O O O O O O p O O O O O O O O O O p y (n uS c c o uS uS uS o c V co(00 � N (6 N O — I- m V N OW o� N co mot» 6G r-, <»isli»t» r-, O m 6R v 0 O O O O O O O e ~ r- 0 O O O O O O o n v 0 O O O O O O O e ¢ o �a> -uS uS o uS o 0 0 o ai V (O a0 (O ('7 (O ('7 N LO O p _ = V a0 N O) (n N ( O) p m 3 N N N CO (O � GG GO ER GO E»GO CG m O N E o m O O O O O O O m O U O O) O 0 0 0 0 0 0 0 O N N N N N Q Q N v d R P- V V N (O 1- O _ 0 (D 0 O_ N � N N LL N O O O O N 0 0 O U N Q 0 s - U U) 03 3 m U U Q N m C C a) a) m Q o aa)i ° m a p c o m 0 > aai e v E s in n m W 0) m m° �'? o " a o o rn a) a) E y � t Clam a a � � � � � � 5 5 a) y o c4 n cu LL a) a3 d Q —cu _ _ a) _ U _ 0 o (� .�O _ E - in O O N U c o g W cu CD 04 CD 04 d' (n O O ON U ~ m p m Q Q E cn O y ~ Q U V p c �°04 O c m O N m a) o. a m O 0 a m ¢ c V E a) o m 0 O O m N O vl C c s K x N Q Q m a C a a O m .3 c m - _N a) mxx E mxx CxxO o a U C 0 0 a) a) N a) N (6 61 (n U) H O s s x O n� n Q N y [O [O (n O (n U) a) _ fd Q N a) O O a O O a a a _ N Q E C C 0 0 0 - _ X x J w Q — �O C'j H O N O ('h O X m 3 3 3 3 LL O o 2 2 O C Z Z Z Z N a a aGO p N N m c (O n ZF) LL LL LL LL Q 0 p y m m m m o N N Q W- of w U U U U U) z° ° ° U c N 35 ATTACHMENT 4 Special Tax District Descriptions District Name District/Improvement Description This district covers the Eastlake Greens and Trails developments. Facilities financed include street Assessment District 94-1 improvements and utilities along portions of South Greensview Drive, Hunte Parkway, and Olympic Parkway. Revenue Refunding Bonds Series A Bonds(refinanced as of Fiscal Year 2007-2002) This district covers the Salt Creek I development. Facilities financed include street improvements for Assessment District 90-1 a portion of East H Street and utilities serving the development along East H Street, Proctor Valley Road, and Mt. Miguel Road. This district covers the Eastlake Greens, Trails, and Vistas developments. Facilities financed include Assessment District 90-3 street improvements and utilities along North Greensview Drive, Masters Ridge Road, Clubhouse Drive, Greens ate Drive, Eastlake Parkway, and Hunte Parkway. Assessment District 91-1 This district covers a portion of the Eastlake Greens development and finances the widening of approximately 8,500 feet of Telegraph Canyon Road to a six-lane arterial street. Revenue Refunding Bonds Series B Bonds(refinanced as of Fiscal Year 2007-2002) This district covers the Eastlake Business Center Phase I and Eastlake Village Center. Assessment District 88-1 Improvements consist of the construction/expansion of Otay Lakes Road between Rutgers Avenue and Lane Avenue as a six-lane arterial street. This district covers the Otay Rio Business Park, Coors Amphitheater, and Knott's Soak City. Assessment District 90-2 Facilities financed include the widening of Main Street(Otay Valley Road)to a six-lane arterial street between 1-805 and Nirvana Avenue and includes landscaping, sidewalks, drainage, and some utilities. Assessment District 92-2 This district covers the Chula Vista Auto Park. Improvements include the construction of Auto Park Way, the extension of Brandywine Avenue south of Main Street, and utilities. Special Tax Revenue Refundin Bonds, Series 2073 This district (Improvement Area A) covers the Eastlake Woods and Vistas developments. Proceeds CFD No. 06-1 of the bonded indebtedness of will be used to finance backbone streets and associated 2002 Improvement Area A improvements (i.e. grading, sewer, streets, landscaping, utilities, etc.), Public Facilities DIF Eastlake—Woods,Vistas improvements, and traffic enhancement facilities. General description of the proposed facilities include: East Olympic Parkway, West Olympic Parkway, Otay Lakes Road, Eastlake Parkway, Hunte Parkway, Proctor Valley Road, Telegraph Canyon Road, and traffic signals. This district covers the McMillin Otay Ranch Village Six development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, sewer, streets, landscaping, utilities, etc.), Public Facilities DIF improvements, and interim CFD No. 2001-2 transportation facilities. General description of the proposed facilities include: Olympic Parkway, La Media Road South La Media Road Onsite, La Media Road Offsite, Birch Parkway Offsite, La Media 2003 Special Tax Bonds Bridge, East Olympic Parkway Bridge, and a neighborhood park. This CFD's bonding capacity may McMillin Otay Ranch Village 6 be used for the "Traffic Enhancement Program" within the greater eastern territories of Chula Vista. These transportation facilities will be traffic capacity adding improvements and could include the following projects: Telegraph Canyon Road (east of 1-805), Telegraph Canyon Road/1-805 on ramp improvements, Heritage Road (Olympic Parkway to Main Street), and East H Street Road widening. This district covers the Otay Ranch Village Six development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, sewer, streets, CFD No. 08-1 landscaping, utilities, etc.), Public Facilities DIF Improvements, and traffic enhancement facilities. 2003 Special Tax Bonds General description of the proposed facilities include: La Media Road, Olympic Parkway, Otay Lakes Otay Ranch Village Six Road, Birch Road, East Palomar Street, View Park Way, Magdalena Avenue, Santa Elisabeth Avenue, Sutter Buttes Street, and "Traffic Enhancement Program" facilities, and facilities to be financed by Development Impact Program Fees. 2014-05-20 Agenda Packet Page 157 36 ATTACHMENT 4 District Name District/improvement Description Special Tax Revenue Refundin Bonds, Series 2073(continued) This district covers the Otay Ranch Village Eleven development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, CFD No. 07-1 sewer, streets, landscaping, utilities, etc.), Public Facilities DIF improvements, and traffic 2004 Special Tax Bonds enhancement facilities. General description of the proposed facilities include: Hunte Parkway, Otay Ranch Village Eleven Eastlake Parkway, Kestral Falls Road, Hidden Path Drive, Windingwalk Street, Discovery Falls Drive, Birch Road, Exploration Falls Drive, Crossroads Street, Evening Star Street, "Traffic Enhancement Program"facilities, and other facilities to be financed by Development Impact Program Fees. This district (Improvement Area B) covers the Eastlake Land Swap development. Proceeds of the CFD No. 06-1 bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. 2004 Improvement Area B grading, sewer, streets, landscaping, utilities, etc.), Public Facilities DIF Improvements, and traffic Eastlake—Land Swap enhancement facilities. General description of the proposed facilities include: East Olympic Parkway, West Olympic Parkway, Otay Lakes Road, Eastlake Parkway, Hunte Parkway, Proctor Valley Road, Telegraph Canyon Road, and traffic signals. Series 2005A Revenue Refundin Bonds This covers the Rancho del Rey development. Improvements financed include the construction of RAID 2005-1 East H Street, as well as water, sewer, and storm drain facilities in this area. It also financed the (AD 87-1 and AD 88-2) widening of approximately 6,600 feet of Otay Lakes Road to a four-lane arterial with associated storm drains,sidewalks, and landscaping. RAID 2005-2 This district covers the Otay Ranch Village One development. Facilities financed include street (AD 97-2) improvements and utilities along portions of Paseo Ranchero, Telegraph Canyon Road, East Palomar Street,and Monarche Drive. CFD No. 97-3 This district covers the Otay Ranch McMillin SPA One development. Improvements include the Otay Ranch McMillin SPA One construction and/or improvements of La Media Road, East Palomar Street, Santa Cora Avenue, Olympic Parkway, as well as a master utilities loop and pedestrian bridge. This district covers the Otay Ranch SPA One development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, sewer, streets, CFD No. 99-1 landscaping, utilities, etc.), Public Facilities DIF Improvements, and pedestrian bridges. General Otay Ranch SPA One description of the proposed facilities include: Olympic Parkway Phases 1 and 2, Paseo Ranchero Phase 2, East Palomar, those facilities to be financed from proceeds of Public Facilities Development Impact Fees, those facilities to be financed from the proceeds of Pedestrian Bridges Development Impact Fees, slope landscaping, and environmental mitigation costs for Olympic Parkway. This district covers the Sunbow 11 (Villages 5 through 10) development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, CFD No. 2000-1 sewer, streets, landscaping, utilities, etc.), and Public Facilities DIF Improvements. General Sunbow II (Villages 5—10) description of the proposed facilities include: Telegraph Canyon Road, Medical Center Road/Brandywine Avenue, East Palomar, Offsite sewer improvements, Olympic Parkway, Paseo Ladera, Medical Center Court, and those facilities to be financed from proceeds of Public Facilities Development Impact Fees. This district covers the San Miguel Ranch development. Proceeds of the bonded indebtedness will CFD No. 2001-1 be used to finance backbone streets and associated improvements (i.e. grading, sewer, streets, Improvement Area A landscaping, utilities, etc.), and Public Facilities DIF Improvements, and interim transportation San Miguel Ranch facilities. General description of the proposed facilities include: Mt. Miguel Road East, Proctor Valley Road East, Calle La Marina, Paseo Vera Cruz, Calle La Quinta, and those facilities to be financed from the proceeds of Public Facilities Development Impact Fees. This district covers McMillin Otay Ranch Village Seven development. Proceeds of the bonded CFD No. 12-1 indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, 2005 Special Tax Bonds sewer, streets, landscaping, utilities, etc.), and Public Facilities DIF Improvements. General McMillin Otay Ranch Village description of the proposed facilities include: Magdalena Avenue, Wolf Canyon Loop, Bob Pletcher Seven Way, Santa Luna Way, Birch Road, and Rock Mountain Road. This CFD's bonding capacity may be used for offsite facilities to be financed by Transportation Development Impact Fees, Public Facilities Development Impact Fees, and Poggi Canyon and Salt Creek Sewer Fees. 2014-05-20 Agenda Packet Page 158 37 ATTACHMENT 4 District Name District/improvement Description This district covers the San Miguel Ranch development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, sewer, streets, CFD No. 2001-1 landscaping, utilities, etc.), Public Facilities DIF improvements, and interim transportation facilities. 2005 Improvement Area B General description of the proposed facilities include: Mt. Miguel Road West, Proctor Valley Road San Miguel Ranch West, and those facilities to be financed from the proceeds of Public Facilities Development Impact Fees. This CFD's bonding capacity may be used for certain SR-125 interim transportation facilities within the greater eastern territories of Chula Vista, which may include interim SR-125 and 1-805/East H Street additional on-ramp lane to 1-805. This district covers the Otay Ranch Village Seven development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, CFD No. 13-1 sewer, streets, landscaping, utilities, etc.), public facilities, and Development Impact Fee 2006 Special Tax Bonds Improvements. General description of the proposed facilities include: La Media Road, Magdalena Otay Ranch Village Seven Avenue, backbone sewer and paving, Fleishbein Street, Kincaid Avenue, trail system/storm drain system, Santa Luna Street, and slope landscaping. This CFD's bonding capacity may be used for offsite facilities to be financed by Transportation Development Impact Fees and Public Facilities Development Impact Fees. This district covers the Otay Ranch Village Eleven development. Proceeds of the bonded indebtedness will be used to finance backbone streets and associated improvements (i.e. grading, CFD No. 07-1 sewer, streets, landscaping, utilities, etc.), Public Facilities DIF improvements, and traffic 2006 Special Tax Bonds enhancement facilities. General description of the proposed facilities include: Hunte Parkway, Otay Ranch Village Eleven Eastlake Parkway, Kestral Falls Road, Hidden Path Drive, Windingwalk Street, Discovery Falls Drive, Birch Road, Exploration Falls Drive, Crossroads Street, Evening Star Street, "Traffic Enhancement Program"facilities,and other facilities to be financed by other Development Impact Program Fees. 2014-05-20 Agenda Packet Page 159 38 0 AT. ENO E r' o s Y- 1 t � � t o ILI LLI0 o k � s � ra W oo 0 � ¢ �• 0 [ Q n O1 �7 rJ cJ oo a C a t:1 •d' tb� N O O O N J .- F< 000 0 _ 000 a S N ry U oo G 0 000 IL 81 •��`A o69p6a ol w 0747 y tm t` ` NV I l {I11lllr �s = s� R o4" o c U �? z W s N }arn s @o Q V- ao O N 39 HMENT 4 TE Lla LU z� o � o LL V o� o �3 Q U LL. C1 l AL Aft a ,a l II O o •� V O N lL o o m LL. O V O o rn rn }b v V o p CU CU CU CU rN rN 0000 o co N M O Q 4 ^ U- U- U- U- � V V 0000 a 1 . r z o i 0 It V o 0 LL LL r 3 V U U w N 00 8 O 0 i moo o -- - ua pa " N 40 Al lgt_MlVltll I 2t RESOURCES UPDATED DECEMBER 2013 j4z��� CITY OF CHULAVISTA 41 ATTACHMENT 4 2014-05-20 Agenda Packet Page 163 42 ATTACHMENT 4 � • 1 1 • AMORTIZATION: the planned reduction of a debt obligation according to a stated maturity or redemption schedule. ASSESSMENT DISTRICT (AD): is a community which is charged a special assessment against the parcels within it for certain public improvement projects. The special assessment may only be levied against parcels that have been identified as having received a direct and unique benefit from the public project. BOND: a security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments. BOND COUNSEL: an attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel's opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation. BOND INSURANCE: bond insurance is a type of credit enhancement whereby a monoline insurance company indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay principal an interest in-full and on- time, investors may call upon the insurance company to do so. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued. CALL OPTION: the right to redeem a bond prior to its stated maturity, either on a given date or continuously. The call option is also referred to as the optional redemption provision. Often a "call premium" is added to the call option as compensation to the holders of the earliest bonds called. Generally, the earliest callable bonds called carry a 102% premium, the next earliest is a 101% premium, and the balance of the bonds are called at par value. CAPITALIZED INTEREST: bond proceeds which are reserved to pay interest on an issue for a period of time early in the term of the issue. CERTIFICATE OF PARTICIPATION (COP): a type of financing where an investor purchases a share of the lease revenues of a program or particular project. COMMUNITY FACILITIES DISTRICT (CFD): more commonly known as Mello-Roos districts. These districts are created under the Mello-Roos Act, which gave local government agencies means of obtaining community funding. Funding obtained is usually used to finance public improvements and services. The tax is imposed on the property owners within the specific district benefiting from the public improvements and services. COMPETITIVE SALE: a method of sale where underwriters submit proposals for the purchase of a new issue of municipal securities and the securities are awarded to the underwriter presenting the best bid. The underwriting of securities in this manner is also referred to as a "public sale" or"competitive bid" CONTINUING DISCLOSURE: the requirement by the Securities and Exchange Commission (SEC) for most issuers of municipal debt to provide current financial information to the informational repositories for access by the general marketplace. COST OF ISSUANCE: the costs incurred by the bond issuer during the planning and sale of securities. These costs include but are not limited to financial advisory and bond counsel fees, printing and advertising costs, rating agencies fees, and other expenses incurred in the marketing of an issue. DEBT SERVICE: the amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years. 2014-05-20 Agenda Packet Page 164 43 ATTACHMENT 4 DEBT SERVICE RESERVE FUND: the fund into which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds, or it may only be partly funded at the time of the issuance and allowed to reach its full funding requirement over time, due to the accumulation of pledged revenues. DEFAULT: the failure to pay principal or interest in full or on time. FINANCIAL ADVISOR: a consultant who advises an issuer on matters pertinent to a debt issue, such as structure, sizing, timing, marketing, pricing, terms, and bond ratings. FITCH INVESTORS SERVICE: a financial services company founded in 1913, which provides investors with an independent assessment of credit worthiness of debt obligations. INTEREST: the amount paid by a borrower as compensation for the use of borrowed money. This amount is generally calculated as an annual percentage of the principal amount. ISSUER: the legal entity that is borrowing money by issuing bonds. MOODY'S INVESTORS SERVICE, INC.: a financial service company, which has provided ratings for municipal securities and other financial information to investors. NEGOTIATED SALE: the sale of a new issue of municipal securities by an issuer directly to an underwriter selected by the issuer. Among the primary points of negotiation of an issuer are the interest rate, call features and purchase price of the issue. The sale of a new issue of securities in this manner is also known as a negotiated underwriting. NET INTEREST COST (NIC): the overall rate of interest to be paid by the issuer over the life of the bonds. The method used to computing the interest expense to the issuer of bonds, which may serve as the basis of award in a competitive sale. NIC takes into account any premium or discount applicable to the issue, as well as the dollar amount of coupon interest payable over the life of the issue. OFFICIAL STATEMENT (FOS): a document published by the issuer which generally discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities. ORIGINAL ISSUE DISCOUNT (OID Discount): the amount by which the public offering price of a security at the time of its original issuance is at a price lower than its PAR amount, or face value. ORIGINAL ISSUE PREMIUM (OID Premium): the amount by which the public offering price of the security at the time of its original issuance exceeded its PAR amount, or face value. PAR AMOUNT: the stated or face value of a security. The PAR amount can also be viewed as the original debt of the bond offering. PLEDGED ASSETS: assets that are guaranteed by the issuer as security for the bonds PREPAYMENT PERIOD (CALL DATES): the date on which the security can be redeemed before maturity. If there is a benefit to refinancing the issue, the bond may be redeemed on the call date at the PAR or at a small premium to PAR. PRINCIPAL: the face amount or par value of a security payable on the maturity date. 2014-05-20 Agenda Packet Page 165 44 ATTACHMENT 4 PROJECT FUND: a fund, sometimes referred to as a "construction fund", under the bond contract in which bond proceeds and other available moneys are deposited pending disbursement to pay costs of the financed project. REFUNDING: a procedure whereby an issuer refinances an outstanding bond issue by issuing new bonds. STANDARD & POOR'S CORPORATION (S&P): a financial service company that provides ratings for municipal securities and other financial information to investors. TAX ALLOCATION BONDS (TAB): bonds issued in conjunction with a redevelopment project. The taxes pledged to their repayment come from the increase of assessed value over and above a pre-established base. The redevelopment creates this added value, known as the tax increment. TRUE INTEREST COST (TIC): a measure of the interest cost of an issue that accounts for the time value of money. Under this method of computing the interest expense to the issuer of bonds, true interest cost is defined as the rate, compounded semi-annually, necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of bonds. TERM: with respect to a single bond, the period of time until the maturity date of the bond. With the respect to an issue, the period until the maturity date of the last bond of the issue to mature. UNDERWRITER: purchaser of the bonds from the issuer with the intent to resell the bonds to investors. 2014-05-20 Agenda Packet Page 166 45 2014-05-20 Agenda Packet Page 167 ATTACHMENT 5 Chula Vista Business Cluster Analysis .•I., ..� -_ _ ice. Leveraging Unique to Compete Globally Executive Summary%�Ww-4 0%; qw:zft CITY OF CHULAV[STA August 2013 SDGE connected "This study was partially supported by the Chula Vista Local Government Partnership, AWWW which is funded by California utility ratepayers and administered by San Diego Gas & A Sernpra.Energy utiuty' Electric, under the auspices of the California Public Utilities Commission." 5-20 Agenda Packet Page ATTACHMENT 5 Acknowledgements Tom Adler Charlie Adolphe Leo Alarcon City of Chula Vista Adolphe Commercial Real Estate South County Career Center Jason Anderson Sean Barr Dr. Ron Baza CleanTECH San Diego San Diego Regional EDC Southwestern College Wolf Bielas Andy Berg Paul Borden RSID Technologies National Electrical Contractors Assoc. Otay Land Company Kenneth Brown Efrem Bycer Daniel Canavan Leviton San Diego Regional EDC Nypro Victor Castillo James Clark Tracy Clark Southwestern College San Diego Reg'I Chamber of Commerce Voit Commercial Michael Derr Michele Dingle Scott Finn DNP United Technologies Southwestern College Bob Friar,Sr. Todd Galarneau John Giaquinta Chula Vista Electric Company The Corky McMillan Companies Data Center&Colocation Cindy Gompper-Graves Linda Greenberg Gary Halbert South County EDC Colliers International City of Chula Vista Thomas Harwell Mary Ladiana Martin Lodge Raytheon City of Chula Vista United Technologies Christina Anne Luhn Leo Matthieu Evan McLaughlin San Diego Regional EDC Southcoast Welding &Mfg. San Diego Labor Council Derek McMahon Michael Meacham Christine Moore McMahon Steele City of Chula Vista AT&T Karen Prescott James D.Sandoval Todd Roberts National Electrical Contractors Assoc. City of Chula Vista Marine Group Boat Works Flavio Oliveri Brendan Reed Duane Roth Tijuana EDC City of Chula Vista CONNECT Craig Ruiz Lauree Saba Chris Schodowski City of Chula Vista San Diego Regional EDC Leviton Mink Stavenga Seth Stein Anne Steinberger Southwestern College Green Talent Staffing City of Chula Vista Debbie Trujillo Mike Vogt Jerry Rindone Chula Vista SBDC IRE Development Chamber of Commerce Chula Vista Business Cluster Analysis — Executive Summary 2014-05-20 Agenda Packet Page 169 ATTACHMENT 5 Table of Contents Acknowledgments ExecutiveSummary ........................................................................................................ 1 Chula Vista Business Cluster Analysis............................................................................ 1 Leveraging Unique Assets to Compete Globally............................................................. 1 1 — Competitive Location Assessment ............................................................................. 3 II — Best Fit Industry Clusters for Chula Vista.................................................................. 6 III — Go-to-Market Strategy.............................................................................................. 8 Project Recommendations ............................................................................................ 10 Recommendation 1.0: Project Development, Policies & Practices............................ 10 Recommendation 2.0: Real Estate Preparedness..................................................... 12 Recommendation 3.0: Positioning ............................................................................. 14 Recommendation 4.0: Packaging.............................................................................. 16 Recommendation 5.0 Marketing, Communications and Prospecting......................... 17 Conclusions................................................................................................................... 19 Chula Vista Business Cluster Analysis — Executive Summary 2014-05-20 Agenda Packet Page 170 ATTACHMENT 5 Executive Summary Chula Vista Business Cluster Analysis Leveraging Unique Assets to Compete Globally The City of Chula Vista has made exceptional advancement in preparing the City for the future. Leadership has pursued significant economic development initiatives designed to create new mixed-use districts, investment, and jobs in both the newer East Side and historic West Side communities, including unique visionary developments of the Bayfront Master Plan, Millenia and the University Park and Innovation District (UPID). The purpose of the Chula Vista Business Cluster Analysis was to assess the City's readiness for recruitment of new businesses to attract and expand quality jobs, identify specific business clusters and provide recommendations for positioning, marketing, and business recruitment. The project involved three distinct tasks: I: Competitive Location Assessment II: Best Fit Industry Clusters for Chula Vista III: Go-to-Market Strategy What is distinctly unique that ✓�,T�p 8i-National Location A competitive advantage—an asset that is differentiates Chula Vista is the valuable,rare and hard to duplicate. proximity to Tijuana, the , '.�t `t rn5� connectivity to San Diego's upPYrv°' YS*^No,r Chula Vista resources and educational LowerOr�; R.mm our impend �—. institutions as well as a NavdRaceo W r _ ImP@fidl L }den Diego multinational residence base. ImpenalBeacnNAi1 7 SAN cau �—.�� DIEGO CO,�, •� B Chula Vista offers a quality �, na \' AJACALIF rt�� '^ ' vau location for headquarters, sales, " research and development, and high tech testing with the cross- border manufacturing opportunity. Chula Vista Business Cluster Analysis — Executive Summary 1 1 P a g e 2014-05-20 Agenda Packet Page 171 ATTACHMENT 5 The Executive Summary provides overview findings of each task as well as prioritizes recommendations for policies, practices, and infrastructure needed to address the weaknesses and investment for attracting new businesses, jobs and investment. The next key steps for Chula Vista to achieve a robust and successful economic development plan include: 1. Real estate readiness for target industries as well as protecting and preserving business park and industrial land use designations; 2. Ensure a permitting process, fee structure and incentive policy that is competitive in the region; 3. Become a key player in Cali-Baja Mega-Region Initiative and with CONNECT; 4. Strengthen Chula Vista's unique bi-national position by building cross-border partnerships; 5. Package Chula Vista's value proposition to specific target clusters; and 6. Implement focused recruitment around industry clusters and opportunity sites. These steps will require investment in marketing, business recruitment, and staff support. 1 Need to promote the fast-tracked permitting process,fee structure and incentive policy but also document that the process and fees are competitive- prove the point. Chula Vista Business Cluster Analysis — Executive Summary 2 1 P a g e 2014-05-20 Agenda Packet Page 172 ATTACHMENT 5 Competitive Location The objective of the Competitive Location Assessment Report was to document Chula Vista's assets and limitations for industry cluster development that leads to significant growth in quality jobs. Over 48 stakeholders were involved during the Competitive Location Assessment, which included a Land Supply & Building Inventory, a Corporate Location Exercise (CLE),3 and Business Climate interviews. Using a Location Decision Factor matrix, 12 key location factors were the basis for ranking Chula Vista to determine competitiveness and readiness. The 12 factors are ranked as a Strengths, Neutral (meaning neither an advantage nor disadvantage in the region), and Weaknesses. These are the same factors that major employers and their site acquisition consultants use to judge the competitive value of your City as a location. Specific details for each factor are included in Appendix Competitive Location Assessment. • • • - • • - - • • - • rIccess . Strength Real Estate Current Weakness (shovel-ready4) / potential Strength Utilities Neutral Transportation Strength / Neutral (potential west/cross town congestion) Workforce Strength /Weakness (Lack of documentation) Business Climate Neutral ........................................................................................................................................................................................................................................................................................... Sustainable Practices Strength Risk Management Strength Business Costs Neutral (impact fee concern) Incentives Neutral (loss of Enterprise Zones) Quality of Life Strength ............................................... .................................................................................................. ................................................................................................................................................................................................................................................................................. Readiness Weakness Overall Ranking Neutral 2 Appendix-Corporate Location Assessment 3 Corporate Location Exercise conducted by Austin Consulting,International Site Selectors 4 Definition of "shovel-ready" generally refers to commercial/industrial sites that have had all of the planning, zoning, surveys, title work, environmental studies,soils analysis,and public infrastructure engineering completed. Chula Vista Business Cluster Analysis — Executive Summary 3 1 P a g e 2014-05-20 Agenda Packet Page 173 ATTACHMENT 5 Competitive Location Exercise Ranking The overall ranking for Chula Vista was Neutral. The basis for evaluating Chula Vista as a potential site location for a corporate business was similar to a typical client project for a site consultant. Information was reviewed on local websites, a sample proposal was provided to the site consultant from the City, a site/City tour was conducted, meetings were requested with key departments and organizations, and interviews with local businesses and stakeholders. The Corporate Location Exercise conducted by Austin Consulting, an international site location firm, would have eliminated Chula Vista from the search process for this project. Several factors contribute to that decision but mainly the lack of: "shovel-ready" land, portfolio of ready-to-go-quality buildings, and protection/preservation of land uses (such as, City allowing non-compatible uses in Eastlake, a designated business park). Lack of information as well as expedited delivery of information from outside agencies also left the evaluation as a "short-list" contender open to question. Challenges and Constraint Findings The following challenges and constraints were identified by the Project Team that will affect marketing, business recruitment, and business locations: Inability to deliver major industrial sites for new users within 6-12 months. The City's plans designate extensive employment land, but much of it is raw land, lacking entitlements, infrastructure, and graded pads —shovel-ready sites. Dispersal of industrial uses throughout various sectors of the City, without clear district identities, consistent public improvements, concentrations of synergistic employment uses, and availability of supporting amenities. Non-conforming uses locating in zoned business-park or industrial areas. Use of conditional use permits (CUPs) allows commercial and non-compatible uses, which diminishes park / district as a viable location for a light industrial operation, i.e., Eastlake. Difficulty in competing for employment uses with huge inventory / development potential and low values / rental rates in Otay Mesa. Lack of reinvestment in older industrial areas, i.e., Interstate 5 corridor (Bay Boulevard / L Street) and western portion of Main Street. Lack of good documentation, expedited delivery of information and central location of data for community evaluation, i.e., sites, transportation, utilities, labor force, skills available, wage and salary survey, et al. Chula Vista Business Cluster Analysis — Executive Summary 4 1 P a g e 2014-05-20 Agenda Packet Page 174 ATTACHMENT 5 Lack of quality marketing collateral to support Chula Vista's value proposition to expanding and new businesses specifically in the target industry clusters. Impact and connection fees are high compared to the rest of the San Diego / Imperial region and are a disincentive for new locations5 (by region are we talking San Diego County? What is the source of this finding — the 07-08 BIA fee study?) Border crossing delays, important infrastructure to the growth in industry clusters with dual locations. Perceptions, not always reality, but red flags to address in marketing and promotion to change perceptions particularly within the region: Perception of extensive time for permitting (noted from interviews and survey). Perception of the South Bay as a tertiary market for employment uses within San Diego County. Perception of lack of employers / jobs in the South Suburban Metropolitan Statistical Area (MSA) in the important traded industry clusters of Biotechnology and Pharmaceuticals, and Information and Communications Technology (ICT). Chula Vista has employment strength in other key clusters. Perception of limited supply of executive housing and associated lifestyle amenities. Utility rates are comparable to the region. However, they are high compared to other southwestern locations, which for an energy-intensive company may be a disincentive (not within the control of the City). Another constraint not within the City's control is location in California, i.e. higher costs and higher taxes. With this in-depth evaluation from a Corporate Location perspective, Chula Vista has the ability to move from "good to great" to become a very competitive location. The goal is to move neutral and weakness factors to strengths. Recommended Competitive Positioning: The City will need to address policies, practices, real estate readiness, business costs, and preparation and positioning for expanding and attracting new high quality employment in the City of Chula Vista (see Recommendations for details). 5 Using City impact and connection fees and methodology,fees for test project Galaxy were calculated higher than other areas which was also supported by BIA Report. Chula Vista Business Cluster Analysis — Executive Summary 5 1 P a g e 2014-05-20 Agenda Packet Page 175 ATTACHMENT 5 Best' • for Chula Vista 6 In preparation for more aggressive economic development efforts, identification of key industry clusters and specific business targets is important to moving forward. The target industry cluster task focused on opportunities for Chula Vista based on the targets identified by SANDAG as well as unique opportunities related to the large manufacturing base in Chula Vista and cross-border as well as the City's focus on energy efficiency and renewable energy. The target industry _ screening process was mutli-phased. PF Six primary industry F Advanced Manufacturing clusters were identified as "best fits" based on Chula Vista's strengths and assets. Chula Vista There is a convergence of Target Industry strengths and assets Clusters around several of the clusters, i.e. Health, Wellness and Sports Medicine. , , • , Recommended Targeting: Focus on Advanced Manufacturing opportunities linked to Education & Innovation Centers while leveraging the Mexico /Tijuana connection to create a world class advanced manufacturing hub and International Gateway. Join and actively participate in the Cali-Baja Mega-Region Initiative, position as an International Gateway and CONNECT aligning with their focus and research on Advanced Manufacturing and Sports Innovation (see Recommendations for details). 6 Separate Report Chula Vista Business Cluster Analysis — Executive Summary 6 1 P a g e 2014-05-20 Agenda Packet Page 176 ATTACHMENT 5 Recommended Target Industry Clusters Advanced Manufacturing Advanced Manufacturing, both in Precision Manufacturing and the Aerospace, Including Precision Navigation & Maritime Technologies is Chula Vista's strongest niche in the Region. Manufacturing,Aerospace, This niche is also closely tied to the sectors in Tijuana. Navigation&Maritime Opportunities in this cluster include existing base expansions, new research and Technologies development in the field, component suppliers, and potential technical training. This cluster also provides a unique opportunity to work with Mexico / Tijuana in building an economic gateway to international global markets. The federal / state discussions around advanced manufacturing and the growing trend for"reshoring" and"near-shoring" bring special opportunities to this sector. CleanTech Chula Vista's clean tech reputation can help drive this industry cluster development. This is an emerging field that crosses over industry sectors. Environmental instrument manufacturing and industrial design services could be unique opportunities. Industrial design services may bring an element of innovation to this cluster. Within manufacturing, niche opportunities for small-medium sized companies in instrument manufacturing to support energy monitoring and efficiency. Education & Innovation Education & Innovation Centers are closely tied to Chula Vista's Advanced Centers Manufacturing niche and bi-national location. In addition to attracting a 4-year university Chula Vista could create technology and innovation centers specific to advanced manufacturing—automotive, aerospace, and electronics industries, as well as becoming a provider of technical education for skilled manufacturing employees in these sectors. Information & This cluster could leverage the manufacturing industries by developing better Communications information tracking systems to help manage manufacturing processes. Technologies Health &Wellness Given the strong industry presence in other areas of the region, Chula Vista is not Services (Sports Medicine) generally competitive for the bio-tech component of health services. However, there A convergence of sectors may be demand for additional health service providers in the City and opportunity for with asset opportunities. "health-wellness tourism", people traveling from Mexico and other areas for service and recuperation not just medical side of the equation as health services is typically population-driven. A unique niche and a growing niche in San Diego is the Sports Innovation Cluster (defined by CONNECT). Tying Chula Vista's Olympic Training Center to a "Sports Innovation" or "Sports Medicine" field could mean a convergence of tourism, health, wellness,fitness, and manufacturing industries supporting sports and athletes. Other opportunities for Chula Vista will emerge as the economy returns, new innovation happens and growth in the market occurs, such as diverse manufacturing. The sectors in this analysis are Chula Vista's best opportunity for success. Preparing for the target sectors will also prepare you for a better and more rapid response to inquiries outside the target areas. Chula Vista Business Cluster Analysis — Executive Summary 7 1 P a g e 2014-05-20 Agenda Packet Page 177 ATTACHMENT 5 • • Strategy The final task of the project addresses Business Retention, Expansion, and Attraction — a Go-to-Market Strategy. The Go-to-Market Strategy assumes that the City will take appropriate action to address competitiveness and change weaknesses to strengths. The purpose of the Go-to-Market Strategy is to: 1. Recommend Business Retention & Expansion actions focused on Chula Vista's key industries; 2. Recommend packaging, marketing, promotion and recruitment tactics for the targeted Industry Clusters; and 3. Provide an initial screened list of Target Industry businesses (domestic and international) in each cluster to launch prospecting efforts. The Go-to-Market Strategy is focused on the Industry Clusters identified in Task II Business Cluster Analysis and would be supplemental to the City's Economic and Marketing and Communications Plans. It is not intended to be an overall City branding, marketing or communications plan. All information and recommendations are focused on business retention, expansion, business attraction marketing, and prospecting tactics. From a marketing standpoint, there are unique assets and strengths that offer two key messages supported by proof points: Message: Our Location, Your Success Proof Points • Chula Vista's proximity to Mexico and their growing industry clusters; a bi- national location and international gateway; • Availability of affordable land and buildings in combination with lifestyle amenities; • Heavily traveled goods movement along Interstate 5 Corridor; • Central proximity to major educational and regional advanced training centers provides access to graduates from UCSD, SDSU, USD, Point Loma Nazarene and Baja Schools; Presence of a multinational residence base. Chula Vista Business Cluster Analysis — Executive Summary 8 1 P a g e 2014-05-20 Agenda Packet Page 178 ATTACHMENT 5 Message: Quality Location, Unique Development Opportunities Proof Points: • Vision-oriented and sophisticated Leadership with the ability to navigate state and federal regulatory agencies (Coastal Commission) to achieve change and results; • United Technologies Aerospace Systems, a leading aerospace company and foundation for advanced manufacturing cluster; • Largest planned University Park & Innovation District in the region; • The Olympic Training Center (only one of three in the nation) provides anchor to the convergence of health, wellness, tourism, recreation and sports cluster; Continued creation and enhancement of "24/7" environments for "live / work / play". Recommended Go-to-Market Strategies are focused on business retention and expansion outreach, packaging and promotion, and business attraction prospecting tactics (see Recommendations for details). Chula Vista Business Cluster Analysis — Executive Summary 9 1 P a g e 2014-05-20 Agenda Packet Page 179 ATTACHMENT 5 Project • • • Recommendations are based on the project findings and focused on moving Chula Vista from "good to great" as it relates to being competitive for business locations. The City is currently constrained with limited "shovel-ready" sites in quality business- park environments. This is a readiness priority and plans should be put in place to have sites ready within the foreseeable future, which will require collaboration with developers/owners. Competitiveness recommendations include: • Project Development, Policies & Practices • Real Estate Readiness • Positioning From a business attraction / recruitment perspective, now is the time to be marketing and calling on prospective businesses. Location decisions from the time of first contact to decision will typically range from 18-36 months, which is well within the range of Chula Vista having "shovel-ready" properties. Go-to-Market recommendations for business retention, expansion and attraction include: • Packaging • Marketing, Communications and Prospecting Recommendation 1.0: Project Development, Policies & Practices The City has done an exceptional job in planning and visioning for the future. As the economy begins to return, the Project Team recommends the City stay focused on the Vision, General Plan and the transformational goals it has put in place as well as addressing policies that will strengthen the long-term competitiveness for significant development and expansion of new, high quality employment uses in Chula Vista: 1.1 Implementation, e.g., groundbreaking of one or more major new mixed-use developments on the East Side — the City does not control the project but should focus on early wins. 1.2 Agreement with a university for development of at least an initial phase campus within the UPID. The City and HomeFed partnership is leading the planning and recruitment effort, with assistance from planners Ayers Saint Gross and U3 Ventures. The City and HomeFed should also consider, in addition to a four-year university, alternative education institutions, such as professional or research schools, institutes, research centers, etc. 1.3 Feasibility study, financing plan, and timeline for completion of Main Street / Rock Mountain / Hunte Parkway. Completion of this corridor from 1-805 to SR 125 is an essential link both for accessibility and marketing sites in the southern portion of Otay Ranch. Chula Vista Business Cluster Analysis — Executive Summary 10 1 P a g e 2014-05-20 Agenda Packet Page 180 ATTACHMENT 5 1.4 Continue progress on implementation of the Bayfront Master Plan. 1.5 Protect and preserve business park and industrial zoning. There has been a trend to allow, through Conditional Use Permits, family/consumer focused commercial uses in light industrial and industrial zoned areas. As noted in the evaluation by Site Consultant Frank Spano, "Eastlake was a quality location for small industrial/ assembly type operations until non-conforming uses located within the vacant space. This was one of the few (only) locations where a company could construct a building on a Greenfield site. BUT due to non-conforming uses throughout the park this location would be downgraded by most consultants / companies as a viable location for a light industrial operation." 1.6 A "red flag" item is the length of time for permitting and should be addressed in the short term. The City does have an "expedited" process for permitting priority business opportunities; however, there still remains a perception that the permitting process is difficult and lengthy. This, whether reality or perception, must be documented in sales packages with case studies where projects have been fast-tracked — with a goal of demonstrating that permitting can be completed within six months (ready-to-go property). This should also be a routine item of discussion with brokers. 1.7 Permitting and up-front connections fees appear to be high and even higher compared to other areas in the region. This could be a disincentive for those businesses looking to locate and trying to reduce their upfront costs. Fees should be in line with other areas in the region, documented as such when showing to a prospect. Based on the location test case used for the assessment the fees were higher. This was also a comment voiced often in interviews with business. Whether a perception or reality, documenting and comparing processing time and fee structure to other areas in the region will dispel the perception. 1.8 The key incentive for companies seeking location is the Enterprise Zone Tax Credit (sales and employee credits) that reduces a company's state liability tax. There are other incentives such as Foreign Trade Zone and Recycling Market Development Zone but those will be used on a case by case basis. A draft Local Business and Jobs Investment Policy prepared in July 2012 is an excellent start on a local package. Incentive packages should focus on reducing any fees, or deferral of fees that could become a disincentive to any investment. Most companies with large investments will be looking for incentive opportunities to reduce upfront costs. 1.9 Work with City-owned as well as privately-controlled utility / infrastructure departments to coordinate a "Team Approach" in securing and presenting information to site selectors and companies interested in Chula Vista. Prior to launching any recruitment plan, review with all parties 1) industry targets, 2) high Chula Vista Business Cluster Analysis — Executive Summary 11 1 P a g e 2014-05-20 Agenda Packet Page 181 ATTACHMENT 5 level information needed for sales packages and proposals, and 3) the marketing / recruitment plan and schedule so they can be prepared to answer questions for prospects contacted by the City. When Chula Vista Economic Development requests information from energy or telecommunications, there should be an agreement that the company will get the information back in a timely manner. Recommendation 2.0: Real Estate Preparedness The Corporate Location Assessment identified lack of "shovel-ready"7 land as one of Chula Vista's major weaknesses. The following are recommended as key near-term (five years) actions steps from a land use / real estate perspective in support of the City's goal of attracting high quality employment: 2.1 Complete land use and zoning designations for the remaining Otay Ranch villages. These planning processes are currently underway at the same time that the City and HomeFed Corporation are working on planning and recruitment for the proposed university at UPID. As the City and its development partners complete each successive planning process and initiate new developments, there is an opportunity to publicize and market the City's changing land use pattern. 2.2 Define site constraints and development potential for the 85-acre portion of the University Park and Innovation District, so that marketing efforts can commence now, rather than waiting for the university. 2.3 Bring online within the next 18-36 months, several "shovel-ready" sites demonstrating positioned for that planning, zoning, surveys, title work p- operations that n--d to be environmental studies, soils analysis, utility located within the San "•• metro area, but readiness, and public infrastructure could be competitive for larger 11 111 - be competing with surrounding communities and engineering has been completed. If feasible, to make the shovel-ready site the only - to effectively • p- - is to have more competitive bring public infrastructure "shovel and pad ready" to the site — all utilities including high-speed Frank Spano, Managing Director broadband access. The City has the The Austin Consulting opportunity to utilize its existing infrastructure (Site Selection Consultants) to provide the latest telecom infrastructure to meet the needs of "data-telecom" driven businesses more cost effectively than other areas. 2.4 As noted in Recommendation 1.5, put in place systems to protect and preserve the zoning for high quality employment uses. Definition of "shovel-ready' generally refers to commercial/industrial sites that have had all of the planning, zoning, surveys, title work, environmental studies,soils analysis,and public infrastructure engineering completed priorto puttingthesite upforsale.Often referred to as "pad-ready' and is location ready within six to eight months. Many communities across the US have third parties "certify" sites as "shovel-ready or'certified-ready. Chula Vista Business Cluster Analysis — Executive Summary 12 1 P a g e 2014-05-20 Agenda Packet Page 182 ATTACHMENT 5 2.5 Identify a site for an Advanced Manufacturing facility of 100,000 sq. ft. or more. 2.6 Identify City-supported financing strategies and mechanisms available to land developers and builders to assist with site preparation and infrastructure needed for new industrial uses. Many older industrial uses on the West Side are in need of rehabilitation or teardown / new construction. In the absence of redevelopment funding, the City needs to work with property owners and businesses to identify optimal financing approaches to support reinvestment in these areas. 2.7 Assist property owners in branding industrial / employment sub-areas on both the West Side and East Side. 2.8 The City should work with property owners and other district representatives to create stronger district identities, including geographic boundaries, building profiles, tenant mix, and principal strengths and weaknesses. These identities can be used to prioritize public improvements, marketing programs and tenant recruitment efforts. 2.9 Identify opportunities for incubator or "accelerator" space with developers, building owners, and / or current businesses with surplus space. 2.10 The ambitious plans for the City's Bayfront and East Side are difficult to grasp in the abstract. As plans are approved, and new developments initiated, the City and its partners should pro-actively market its readiness for new development, identifying both the opportunities for developers and the City's requirements. This would likely take the form of a continued concerted outreach effort through channels such as NAIOP, BOMA, ULI, BIA, UCSD CONNECT, Regional EDC, Clean Tech, broker caravans, etc. 2.11 "Place making" will continue to be important. Major employers are increasingly concerned about quality of life issues for their employees, as well as economic and environmental sustainability. The creation and enhancement of "24/7" mixed- use environments that accommodate "live / work / play" is an essential economic development tool. The City is aggressively pursuing new mixed-used developments with place making amenities, such as Millenia, University Park and Innovation District, University Village on the East Side and the Bayfront Master Plan and should continue to do so. Chula Vista Business Cluster Analysis — Executive Summary 13 1 P a g e 2014-05-20 Agenda Packet Page 183 ATTACHMENT 5 Recommendation 3.0: Positioning Chula Vista's bi-national location is an under-utilized, unique and rare asset. Locating companies in California is a challenge at best given the state's reputation, regulatory climate, and tax structure and puts Chula Vista in direct competition with other southwestern states which, on a comparative basis, have a lower cost structure. Bi-National Location A competitive advantage—an asset that is valuable, rare and hard to duplicate. r nysK 1 Louvr Chu r I• J UPpu-L7u„ ' Resenc is etf a Sea pogo �.1CAL1 BAJA CALIF Sly. ana van Following are recommendations to strengthen this unique bi-national position and opportunity to collaborate with Mexico / Tijuana on creating a dynamic International Gateway and utilizing the advanced manufacturing strength to position for additional recognition in this field: 3.1 Join and be a key player in the Cali-Baja Mega-Region Initiative. Chula Vista needs to be at the table. 3.2 Join and participate with CONNECT, particularly as it relates to Advanced Manufacturing initiatives and Sports Innovation Clusters. Chula Vista Business Cluster Analysis — Executive Summary 14 1 P a g e 2014-05-20 Agenda Packet Page 184 ATTACHMENT 5 3.3 Chula Vista is well positioned to be an Advanced Manufacturing Hub linked to education and training (University Park and Innovation District). There is much discussion about potential federal / state funding for an Advanced Manufacturing Center in the US and California. Participate with San Diego State, CONNECT and other organizations in the discussion and plans for competing for a federally designated Advanced Manufacturing Center. This is a short-term opportunity, for the long-term continue to build the Advanced Manufacturing Hub. 3.4 Chula Vista should begin meetings and develop a stronger working relationship with Tijuana EDC. Chula Vista and Tijuana can benefit from a collaborative economic development approach, particularly in attracting Foreign Direct Investment (FDI). Beneficial synergies include: 1) Agreement to assist with location packages for Mexican companies seeking to have a US presence but needing to remain close to the border; 2) Chula Vista and Tijuana share industry clusters, particularly in the advanced manufacturing fields. This synergistic relationship creates a unique selling proposition as well as positions both cities as a world-class advanced manufacturing hub; 3) Collaborate and leverage recruitment activities to attract manufacturing to Mexico from China or India (near-shoring) who also desire to have a regional headquarters nearby, but in the United States, a benefit to both and a stronger marketing package to the prospective company; 4) Working together identify assets that each partner can bring to the marketing package to make a stronger value proposition for businesses, such as, proximity to educational and research institutions; 5) Collaborate with Tijuana in a manner that transforms the Chula Vista / Tijuana Region into a North American gateway to the Global Economy that benefits both economies. Chula Vista Business Cluster Analysis — Executive Summary 15 P a g e 2014-05-20 Agenda Packet Page 185 ATTACHMENT 5 Recommendation 4.0: Packaging The Competitive Location Assessment identified quality location decision information and marketing collateral as a weakness. Existing available data sources are highly fractured and disjointed, generating confusion and lack of awareness among potential users and clients. Resources, beyond staff time, will be needed to complete packaging recommendations: 4.1 Compile a single inventory database and user-friendly map identifying all existing and planned industrial areas within the City, applicable zoning, major property owners / broker contacts, and probable timing of delivery. TO SAN DIEGO INTERNATIONAL AIRPORT l 12 MILES(18 MINUTES) _F Eastlake J l Central , '_ Bayfront (Master Plan) ! or © OTC Bay Blvd/ Landfill Industrial Blvd Buffer 54 Acres __— */ r �N©F "-J Millenia UPRC Main Street Auto Parkway KEY Existing Planned TO TIJUANA,MEXICO Other Opportunity 12 MILES(15 MINUTES) Chula Vista Business Cluster Analysis — Executive Summary 16 1 P a g e 2014-05-20 Agenda Packet Page 186 ATTACHMENT 5 4.2 Collateral materials to support marketing and business attraction should include: 1) Map booklet / brochure; 2) Citywide street map; 3) PowerPoint presentation; 4) Update Website focusing on Chula Vista's value proposition as a premier location for business and industry; 5) Sales package (aka business cases) for each target industry that presents a value proposition of why that industry is a fit for a Chula Vista location. 4.3 Prepare Data Set files (12) that provide detailed information on Chula Vista, including market access, business overview, labor, real estate, utilities, permitting, transportation, government services, incentives, and quality of life. 4.4 Labor, workforce and commuter data is weak and is a key location factor. Chula Vista has unique proximity to the UC-State education systems, which is one component of the workforce, typically engineering. There needs to be a stronger workforce training alliance / coalition with Southwestern College and others to meet the other needs (vocational) of manufacturers, particularly advanced manufacturers. There also needs to be better documentation of the existing labor base, which may require a labor force study / analysis be completed if the data cannot be gathered by local agencies to meet the needs of business. Recommendation 5.0 Marketing, Communications and Prospecting The Go-to-Market Strategy$ focused on those activities to market Chula Vista to the target industry clusters, both existing and new, generating leads, and prospective business expansion and location opportunities. To implement effective marketing and prospecting, this effort will need dedicated resources. The Project Team estimates a budget range of $214,000-$371,000 for implementing and maintaining an effective Marketing Strategy. Specific marketing and business attraction recommendations and tactics, along with budget detail are included in the Go-to-Market Strategy report. Below is an overview of the recommended tactics, which focus on direct marketing / prospecting to business targets: s Separate Report Chula Vista Business Cluster Analysis — Executive Summary 17 1 P a g e 2014-05-20 Agenda Packet Page 187 ATTACHMENT 5 5.1 As a retention program, hold CEO Roundtables with all major manufacturers in Chula Vista and headquarter / regional offices of companies with manufacturing facilities in Tijuana / Baja (3 times per year). The purpose is to listen to their needs, respond and ask in return that they be part of the City's economic development efforts in providing advice, comment, leads and talking with prospective businesses. 5.2 Existing anchor businesses, representing the target industry clusters, should be the focus of economic development staff. Collaborate with other departments and South County EDC to ensure outreach to all industry cluster businesses. 5.3 Schedule trips, as needed, to call on the Headquarters of existing companies located in Chula Vista. 5.4 Use the unique bi-national / international gateway position in all marketing and communications. 5.5 Business attraction marketing and tactics include: 1) Direct Marketing — using a qualified list of target businesses, direct calls and presentations; 2) Bi-National Marketing Collaborative — with Tijuana EDC promote / sell the bi- national location, leverage the assets of both Chula Vista and Tijuana, particularly as a Foreign Direct Investment marketing coalition; 3) Leveraged Marketing — face-to-face connections with decision makers through TeamCalifornia venues; 4) Relationship Marketing — communications and venues with site selctors and brokers; 5) Linkedln Group Marketing — communications with target industry groups. 5.6 Increase earned media with placements of news, articles, announcements, and stories in key industry trade publications. Chula Vista Business Cluster Analysis — Executive Summary 18 1 P a g e 2014-05-20 Agenda Packet Page 188 ATTACHMENT 5 Chula Vista has built a vision and pathway to unique opportunities to create economic prosperity for the City and its residents. Attracting traded sector businesses, as identified in this report, will provide quality employment to residents as well as generate a higher economic multiplier effect on the local economy...creating more jobs and demand for local services from existing businesses. Now the goal is to remove or mitigate any reason for a company to eliminate Chula Vista from the search process. From a business attraction perspective the City should implement strategic actions to be successful in moving forward on a results-oriented business recruitment initiative: • Focus on improving competitive advantages, providing "shovel-ready" sites and protecting the land use and zoning for high quality employment uses; • Leverage opportunities with Cali-Baja Mega Region, CONNECT and Mexico / Tijuana for an International Gateway that attracts domestic and foreign companies; • Build upon the advanced manufacturing hub opportunities; and • Invest in packaging and direct marketing to prospective businesses. With these actions Chula Vista can market and leverage their unique assets to compete globally. Chula Vista Business Cluster Analysis — Executive Summary 19 1 P a g e 2014-05-20 Agenda Packet Page 189 Libraries - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please update the table below. LIBRARIES Total Gross Square Gross Square Feet of Library Population Footage of Library Facilities Per 1000 Facilities Population Threshold X X 500 Sq. Ft. 5-Year Projection 284,366 97,412 343 2018 12-Month Projection 258,664 97,412*** 377 12/31/14 FY 2012-13 251613 95412 379 FY 2011-12 249,382 92,000/95,412** 369/383** FY 2010-11 246,496 102,000/92,000* 414/387* FY 2009-10 233,692 102,000 436 FY 2008-09 233,108 102,000 437 FY 2007-08 231,305 102,000 441 FY 2006-07 227,723 102,000 448 FY 2005-06 223,423 102,000 457 FY 2004-05 220,000 102,000 464 FY 2003-04 211,800 102,000 482 FY 2002-03 203,000 102,000 502 FY 2001-02 195,000 102,000 523 FY 2000-01 187,444 102,000 544 *After closure of Eastlake library in 2011 **After opening of Otay Ranch Town Center Branch Library in April 2012 ***After possible addition of 2000 sf at Otay Ranch Library in July 2014. 1 Libraries 2014 2014-05-20 Agenda Packet Page 190 Please provide brief responses to the following: 1 . Are current facilities and staff able to serve forecasted growth for the next 12 to 18 months? If not, please explain. Yes No X Current facilities and staff are significantly inadequate compared to what is needed to serve current population as well as forecasted growth. As shown above, the current square footage per capita is 24% lower than GMOC standards, and is projected to fall to 31% below GMOC standards in five years. The existing facilities of Civic Center Branch and South Chula Vista Branch are showing the effects of prolonged deferred maintenance just as many other city facilities are. Civic Center Branch is now the oldest "main library" of any city in San Diego County without a major renovation completed or planned. The staffing picture also shows inadequate resources. According to the most recent statistical data available (California Library Statistics 2012, published by the CA State Library)Chula Vista's library staffing ratio per capita is in the bottom 15%of public libraries in California. The state wide staffing average is 3,429 persons served by each library FTE. In Chula Vista the ratio is 6,562 persons served by each library FTE. The material budget also shows significant deficiencies. The statewide average annual materials expenditure for books, digital resources, magazines, etc. is$2.68 per person. In Chula Vista, the baseline budget provided by the general fund equals 10 cents per capita. Thanks to hard work on the part of the Friends of the Library and additional grants and donations, we managed to pull that up to about 45 cents per capita in FY 13. 2. Are current facilities and staff able to serve forecasted growth for the next five years? If not, please explain. Yes No X With increased population and no expectation of increased budget, current facilities and staff are expected to be less able to meet forecasted growth than they are able to meet current growth. 3. Will new facilities and staff be required to accommodate the forecasted growth? Yes X No 2 Libraries 2014 2014-05-20 Agenda Packet Page 191 4. Please complete the table below: LIBRARY USAGE TRENDS Annual Attendance Annual Circulation Guest Satisfaction FY 12/13 832,975 992,005 FY 11/12 726,310 969,168 FY 10/11 614,841 952,847 90%** FY 09/10 605,979 985,157 90%** FY 08/09 820,213 1 ,160,139 FY 07/08 1 ,296,245 1 ,265,720 89% FY 06/07 1 ,148,024 1 ,344,1 15 88% FY 05/06 1 ,170,168 1 ,467,799 85% FY04/05 1 ,121 ,1 19 1 ,414,295 91% FY03/04 1 1 ,076,967 1 1 ,308,918 1 88% *The Library Department eliminated its mystery shopper program in 08-09 for budget reasons,so no customer satisfaction survey was undertaken.The"mystery shopper" program sends field representatives to the library as ordinary library users to observe and rate staff,service,collection,facilities,etc., both in person and on the phone. **An in-house survey using intern labor was performed in May-August 2010. Rating factors are not identical to previous years. 5. What is the status of completing the Library Strategic Plan and updating the Library Facilities Master Plan? The draft of the Library Facilities Master Plan was completed and agendized for City Council review on July 12, 2011 , but was pulled. Subsequently, the Council requested that the Library Strategic Plan be updated to replace the existing one that expired in 2006, before a Facilities Master Plan is brought forward. An all-day Library Strategic Vision Workshop was held on September 12, 2013, with 50 community members participating. A subsequent meeting a the Community Advisory Council (CAC) is being held on October 16 to provide a sounding board for the draft recommendations. The CAC will meet again in December to finalize public input. At the same time, the draft Library Facilities Master Plan is being updated. The strategic vision component will be added to the Library Facilities Master Plan and presented to City Council in January or February 2014. The draft version of the Library Facilities Master Plan validates the 500 sq ft of library space per 1000 population threshold specified in the current version of the Library Facilities Master Plan. The draft plan estimates that 60,000 square foot of library space is needed to bring library facilities into compliance with threshold standards. 6. What is the status of constructing the Rancho del Rey library? Plans for the Rancho Del Rey Library have been tabled to permit the DIF to reach sufficient level to begin construction. City Finance Department estimates the timeline to be 10 years. 3 Libraries 2014 2014-05-20 Agenda Packet Page 192 7. What is the status of constructing the EUC library? Millenia (EUC) groundbreaking took place in September 2013. Plans for a 30,000 square foot library are part of the ultimate project build-out. Land for a future library has been set aside. DIF funds need to accumulate in order for library to be built. 8. Please provide an update on the storefront library facility at Otay Ranch Town Center and any other potential options for providing library services. The Otay Ranch Branch Library completed its first full year of operation in April 2013. From April 2012 through September 2013, it had 182,972 visitors, and circulated 217,960 items. General Growth Properties has offered the library an additional 2000 square feet in a vacant next door retail space. Negotiations are proceeding between GPP and the city to occupy the space. 9. On a separate page, please provide Chula Vista Public Library Usage Measurements for 2012/2013, and include any available data for the County's Bonita-Sunnyside Branch. 19,206 customers with Chula Vista zip codes are registered at the Bonita Library (7% of Chula Vista population) 10. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. 11. What are the current and projected hours of operation for the city's libraries? Mondays were added at the Otay Branch in September 2013. Sunday Monday Tuesday Wednesday Thursday Friday Saturday Civic Center 1 - 5 10-8 10-8 10-8 10-8 10-5 10-5 South 1 - 5 10-8 10-8 10-8 10-8 10-5 10-5 Otay closed 11-7 11-7 11-7 11-7 12-6 12-6 PREPARED BY: Name: Betty Waznis Title: Library Director Date: 10/9/2013 THRESHOLD STANDARD In the area east of 1-805,the City shall construct,by buildout(approximately year 2030)60,000 GSF of library space beyond the city-wide June 30,2000 GSF total.The construction of said facilities shall be phased such that the City will not fall below the city-wide ratio of 500 GSF per 1,000 population. Library facilities are to be adequately equipped and staffed. 4 Libraries 2014 2014-05-20 Agenda Packet Page 193 Performance Measures Library FY 2012-2103 Current Year Previous %change Hours Open CC 2,852 2,829 1% Hours Open EL 0 7 Hours Open SO 2,804 2,840 -1% Hours Open Otay 1,815 450 75% Internet Sessions CC 83,369 95,857 -15% Internet Sessions Otay 7,619 2,139 72% Internet Sessions SO 71,761 76,522 -7% Items Circulated CC 394,788 442,876 -12% Items Circulated EL 0 0 Items Circulated SO 306,913 352,445 -15% Items Circulated Otay 138,825 38,285 72% Ebooks circulated 14,895 7,760 48% Items Circulated Remotely 136,584 141,331 -3% Program Attendees CC 6,513 8,622 -32% Program Attendees EL 0 32 Program Attendees Off 5,425 1,367 75% Program Attendees SO 3,318 5,815 -75% Program Attendees Otay 6,066 4,772 21% Visitors CC 471,516 433,143 8% Visitors EL 0 600 Visitors SO 248,450 251,232 -1% Visitors Otay 1 113,009 1 36,816 67% �tea:■ mow, New Cards CC 8,867 9,470 -7% New Cards EL 0 0 New Cards SO 6,560 7,127 -9% New Cards Otay 3,447 2,418 30% i r� Card Holders 110,216 2014-05-20 Agenda Packet Page 194 Ota y Water District - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1, 2012- June 30, 2013 to Present Time and 5-Year Forecast 1. Please complete the tables below. WATER DEMAND AND CAPACITY MGD (Million Gallons Per Day) Potable Water Non-Potable Water Supply Storage Supply Storage Timeframe Demand Capacity Capacity Demand Capacity Capacity Local Imported Treated Raw 5-Year Projection 38.3 0.0 143.5 218.6 0.0 4.4 7.2 43.7 (Ending 6/30/18) 12-18 Month Projection 31.3 0.0 143.5 218.6 0.0 4.0 7.2 43.7 (Ending 6/30/15) WATER DEMAND AND CAPACITY MGD (Million Gallons Per Day) Potable Water Non-Potable Water FY 2012/13 28.5 0.0 143.5 218.6 0.0 3.9 7.2 43.7 (Ending 6/30/13) FY 2011/12 27.3 0.0 143.5 218.6 0.0 3.4 7.2 43.7 (Ending 6/30/12) FY 2010/11 26.7 0.0 143.5 218.6 0.0 3.59 7.2 43.7 (Ending 6/30/11) FY 2009/10 27.8 0.0 137.5 219.6 0.0 3.48 7.2 43.7 (Ending 6/30/10) FY 2008/09 31.2 0.0 137.5 215.4 0.0 4.02 7.2 43.7 (Ending 6/30/09) Sources of Water- FY 2012/13 (MG- Millions of Gallons) Water Source Capacity(MGD) Percentage of Total Actual Use (MGD) Capacity San Diego County Water Authority 121.5 80.6% 19.5 Helix Water District 12.0 8.0% 9.0 City of San Diego 10.0 6.6% 0.0 RWCWRF (Otay Water District) 1.2 0.8% 1.0 SBWRP(San Diego) 6.0 4.0% 2.9 TOTAL 150.7 100% 32.4 Otay Water District-2014 Page 1 2014-05-20 Agenda Packet Page 195 2. Do current facilities have the ability to serve forecasted growth for the next 12 to 18 months? If not, please list any additional facilities needed to serve the projected forecast, and when and where they would be constructed. Yes X No 3. Do current facilities have the ability to serve forecasted growth for the next five years? If not, please list any additional facilities needed to serve the projected forecast, and when and where they would be constructed. Yes No X The existing potable and recycled water systems with inclusion of the following near term list of Otay Water District capital improvement program (CIP) project facilities are anticipated to be needed to serve forecasted growth within the City of Chula Vista over the next five year time frame. The listed CIP projects are in various stages of development from planning through construction completion including some with pending developer reimbursement expenditure release. The CIP project details such as total project budget, project description,justification, funding source, projected expenditures by year, project mapping, etc. are provided within the current Otay Water District Fiscal Year 2014 through 2019 CIP documents. CIP CIP Project Title Project No. P2037 Res—980—3 Reservoir 5 MG P2104 PL - 12-Inch, 711 Zone, La Media Road - Birch/Rock Mountain P2106 PL— 12-Inch, 711 Zone, La Media Road— Rock Mtn/Otay Valle P2107 PL - 12-Inch, 711 Zone, Rock Mountain Road - La Media/SR 125 P2135 PL—20-Inch, 980 Zone, Otay Lakes Road—Wueste/Loop P2325 PL - 10"to 12" Oversize, 1296 Zone, PB Road - Rolling Hills Hydro PS/PB Bnd P2366 APCD Engine Replacements and Retrofits P2399 PL -30-Inch, 980 Zone, 980 Reservoirs to Hunte Parkway P2402 PL - 12-Inch, 624 Zone, La Media Road -Village 7/Otay Valle P2403 PL - 12-Inch, 624 Zone, Heritage Road -Olympic/Otay Valle P2431 Res -980-4 Reservoir 5 MG P2511 Otay Interconnect Pipeline P2528 30-Inch Potable Water Pipeline Manifold at 624 Reservoirs P2541 624 Pressure Zone PRSs R2028 RecPL- 8-Inch, 680 Zone, Heritage Road -Santa Victoria/Otay Valle R2042 RecPL -8-Inch, 944 Zone, Rock Mountain Road -SR-125/EastLake R2047 RecPL - 12-Inch, 680 Zone, La Media Road - Birch/Rock Mountain R2082 RecPL -24-Inch, 680 Zone, Olympic Parkway-Village 2/Heritage R2083 RecPL -20-Inch, 680 Zone, Heritage Road -Village 2/Olympic R2084 RecPL -20-Inch, 680 Zone, Village 2 - Heritage/La Media R2085 RecPL -20-Inch, 680 Zone, La Media -State/Olympic R2087 RecPl —24-Inch, 927 Zone, Wueste Road —Olympic/Otay WTP Otay Water District-2014 Page 2 2014-05-20 Agenda Packet Page 196 4. Are there any new major maintenance/upgrade projects to be undertaken pursuant to the current year and 6-year capital improvement program projects that are needed to serve the City of Chula Vista? If yes, please explain. Yes X No The following is a list of the maintenance, replacement, and/or upgrade projects within the FY 2014 six-year Otay Water District capital improvement program (CIP)that are planned and anticipated to be needed to serve the City of Chula Vista. The CIP project details such as total project budget, project description,justification, funding source, projected expenditures by year, project mapping, etc. are provided within the current Otay WD Fiscal Year 2014 through 2019 CIP documents. CIP CIP Project Title Project No. P2366 APCD Engine Replacements and Retrofits P2382 Safety and Security Improvements P2469 Information Technology Network and Hardware P2484 Large Water Meter Replacement Program P2485 SCADA Communication System and Software Replacement P2493 624-2 Reservoir Interior Coating and Upgrades P2496 Otay Lakes Road Utility Relocations P2507 East Palomar Street Utility Relocation P2513 East Orange Avenue Bridge Crossing P2520 Motorola Mobile Radio Upgrade P2521 Large Meter Vault Upgrade Program P2529 711-2 Reservoir Interior& Exterior Coating P2530 711-1 Reservoir Interior& Exterior Coating P2535 458-2 Reservoir Interior Coating P2539 South Bay Rapid Transit BRT Utility Relocations R2091 RecPS -927-1 Pump Station Upgrade 10,000 GPM and System Enhancements R2099 Recycled System Air and Vacuum Valve Retrofit R2108 927-1 Reservoir Cover Replacement 5. Are rebates available for single-family residences using gray water? No, rebates are not currently available for this. 6. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. The Otay Water District has effectively anticipated growth, managed the addition of new facilities, and documented water supply needs. Service reliability levels have been enhanced with the addition of major facilities that provide access to existing storage reservoirs and increase supply capacity from the Helix Water District Levy Water Treatment Plant, the City of San Diego South Bay Water Reclamation Plant, and the City of San Diego Otay Water Treatment Plant. This is due to the extensive planning Otay Water District has done over the years, including the Water Resources Master Plan and the annual process to have the capital improvement program projects funded and constructed in a timely manner corresponding with development construction activities and water demand growth that require new or upgraded facilities. The process of planning followed by the Otay Water District is to use Water Resource Otay Water District-2014 Page 3 2014-05-20 Agenda Packet Page 197 Master Plan (WRMP) as a guide and to reevaluate each year the best alternatives for providing reliable water system facilities. Growth projection data provided by SANDAG,the City of Chula Vista, and the development community was used to develop the WRMP. The Otay Water District need for a ten-day water supply during a SDCWA shutdown is actively being implemented and has been fully addressed in the WRMP and the Integrated Water Resources Plan (IRP). The IRP incorporate the concepts of water storage and supply from neighboring water agencies to meet emergency and alternative water supply needs. The Otay Water District works closely with City of Chula Vista staff to insure that the necessary planning information remains current considering changes in development activities and land use planning revisions within Chula Vista such as the Otay Ranch. The Otay Water District WRMP defines and describes the new water facilities that are required to accommodate the forecasted growth within the entire Otay Water District. These facilities are incorporated into the annual Otay Water District six-year CIP for implementation when required to support development activities. As major development plans are formulated and proceed through the City of Chula Vista approval processes, the Otay Water District typically requires the developer to prepare a Sub-Area Master Plan (SAMP) for the specific development project consistent with the WRMP. This SAMP document defines and describes all the water and recycled water system facilities to be constructed to provide an acceptable and adequate level of service to the proposed land uses. The SAMP also defines the financial responsibility of the facilities required for service. The Otay Water District through collection of water meter capacity fees,water rates, and other sources of revenue funds those facilities identified as regional projects. These funds were established to pay for the CIP project facilities. The developer funds all other required water system facilities to provide water service to their project. The SAMP identifies the major water transmission main and distribution pipeline facilities which are typically located within the roadway alignments. The Otay Water District plans, designs, and constructs water system facilities to meet projected ultimate demands to be placed upon the potable and recycled water systems. Also, the Otay Water District forecasts needs and plans for water supply requirements to meet projected demands at ultimate build out. The water facilities are constructed when development activities require them for adequate cost effective water service. The Otay Water District assures that facilities are in place to receive and deliver the water supply for all existing and future customers. The Otay Water District, in concert with the City of Chula Vista, continues to expand the use of recycled water. The Otay Water District continues to actively require the development of recycled water facilities and related demand generation within new development projects within the City of Chula Vista. The City of Chula Vista and Otay Water District recently completed a feasibility study to provide the City with projected needed sewer disposal capacity and production of recycled water. With the San Vicente Dam raise project completed and the approval of the San Diego County Water Authority's Carlsbad Desalination Project, the near term water supply outlook has improved while the City of Chula Vista's long-term growth should be assured of a reliable water supply. Water supply agencies throughout California continue to face climatological, environmental, legal, and other challenges that impact water source supply conditions, such as the court ruling regarding the Sacramento-San Joaquin Delta issues. Challenges such as these Otay Water District-2014 Page 4 2014-05-20 Agenda Packet Page 198 essentially always will be present. The regional water supply agencies, the SDCWA and MWD, along with Otay Water District nevertheless fully intend to have sufficient, reliable supplies to serve demands. Additional water supply sources are continually under investigation by Otay Water District, with the most significant potential source being the Rosarito, Mexico desalination facility. Projected to ultimately produce 100 MGD of potable water, there is the potential for up to 50 MGD to be purchased by Otay Water District. Significant regulatory and permitting issues need to be resolved before this project can be deemed viable, but the current outlook is promising.The Presidential Permit process is underway as well as discussions with the State of California regarding treatment requirements. The continued close coordination efforts with the City of Chula Vista and other agencies have brought forth significant enhancements for the effective utilization of the region's water supply to the benefit of all citizens. PREPARED BY: Name: Robert Kennedy, P.E. Title: Engineering Manager Date: January 16, 2014 THRESHOLD STANDARDS 1. Developer will request and deliver to the city a service availability letter from the Otay Water District or Sweetwater Authority for each project. 2. The city shall annually provide the San Diego County Water Authority,the Sweetwater Authority,and the Otay Water District with a 12-to 18-month development forecast and request an evaluation of their ability to accommodate the forecast and continuing growth. The replies should address the following: a. Water availability to the city and planning area,considering both short and long term perspectives. b. Amount of current capacity,including storage capacity, now used or committed. C. Ability of affected facilities to absorb forecasted growth. d. Evaluation of funding and site availability for projected new facilities. e. Other relevant information the agencies desire to communicate to the city and GMOC. Otay Water District-2014 Page 5 2014-05-20 Agenda Packet Page 199 Parks & Recreation - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please update the table, below: CITY-OWNED PARK ACREAGE Threshold, Forecast,and Comparisons Forecasts Prior Year Comparisons Threshold Area of City Current Standard (6/30/13) 18-Month 5-Year June June 2011 June 2012 (12/31/14) (2018) 2010 3 acres per East 1-805 1,000 AC/1,000 persons 3.05 2.94 2.59 3.02 3.16 3.1 population West 1-805 1.20 1.19 1.19 East of 1-805 AC/1,000 persons 1.21 1.21 1.2 Citywide 2.21 2.15 2.01 AC/1,000 persons 1 11 2.17 2.25 2.2 Acres of East 1-805, 418.44 418.44 427.96* 390.44 418.01 418.01 parkland West 1-805 138.76 138.76 142.66+ 138.76 138.76 138.76 Citywide 557.20 557.20 570.62 529.20 556.77 556.77 Population East 1-805 137,313 142,395 164,853** 129,307 132,357 135,205 West 1-805 115,330 116,325 119,513 114,936 115,077 115,130 Citywide 252,643 258,720 284,366 244,243 247,434 250,335 Acre shortfall East 1-805 6.50 (8.75) 66.59*** 2.52 20.94 12.4 or excess West 1-805 (207.23) (210.22) (215.88) (206.05) (206.47) (206.6) Citywide (200.73) (218.96) (282.48) (203.53) (185.53) (194.24) East 1-805,-%credit on existing HOA maintained,publically accessible Alcala Park added to Park inventory(0.43 acres). *Assumes completion of Otay Ranch Village 2 Neighborhood Park P-3(7.55 acres),Millenia Park P-1(1.97 acres). +Assumes completion of Orange Park(3.9 acres) **Population forecast generated by multiplying the developer provided unit projection by State Department of Finance coefficient. ***This figure compares population projection with anticipated completed parks. However the anticipated complete parks do not include those parks obligated by the developments that have yet to be approved and entitled. There will be conditions of approval that obligate these parks to be constructed prior to specific building permit thresholds. The effect will be to offset the type of park shortfall shown in these figures from actually occurring. Also making progress on the parks in Village 2 and a part of Village 4 will substantially improves the amount of acreage delivered. See response to question 3. Parks and Recreation - 2014 2014-05-20 Agenda Packet Page 1 Page 200 Please provide brief responses to the following: 1. Pursuant to the Parks Development Ordinance (PDO) and Parks and Recreation threshold, did the eastern Chula Vista parks system have the required parkland acreage(3 acres/1,000 persons)during the period under review? If no, what actions are being taken, or need to be taken, to correct any parkland shortages? Yes X No 2. Are there adequate parks and facilities to accommodate citywide growth forecasted for the next 12- to 18- months? The park/population ratio will be 2.94 acres per thousand, very nearly the required acreage but slightly under. Rounding up there are 3.00 acres/thousand. Yes No X (minimal shortfall,rounded up figure is 3 acres/thousand) If not: a. How many acres of parks and facilities are needed? 8.75 acres. b. Are there sites available for the needed parks and facilities? Yes. Offers of dedication for parkland (IODs) exist in Village 2. c. Is funding available for the needed parks and facilities? There are sufficient fees to proceed with the construction of Park P-3,the 7.55-acre park in Village 2. Grant monies are available for the construction of Orange Park. In the past year the design build contractor has been appointed and the plans are in design development and about to commence construction documentation.The first Millenia Park is a turnkey park to be provided by the developer.The master plan for this park has been approved by Parks and Recreation Commission and will be going to City Council in January 2014. At the 18 month point these parks will be either at construction document production stage or under construction. 3. Are there adequate parks and facilities to accommodate citywide growth forecasted for the next 5 years? Yes No X If not: a. How many acres of parks and facilities are needed? 66.59 acres are needed in eastern Chula Vista for 5 Year Forecast. See footnote *** to Priority 1 Table . b. Are there sites available for the needed parks and facilities? Yes, once park planning operations for future villages are finalized and once grading and waterline issues are resolved. The new villages; Village 3, Village 8 east, Village 8 west, Village 9 and Village 10 will all include irrevocable offers of dedication for parkland as part of their approval. Parks and Recreation - 2014 2014-05-20 Agenda Packet Page 2 Page 201 c. Is funding available for the needed parks and facilities? There are sufficient fees to proceed with the construction of Park P-3,the 7.55-acre park in Village 2. Grant monies are available for the construction of Orange Park and the first Millenia Park is a turnkey park to be provided by the developer. The new villages,Village 3, Village 8 east, Village 8 west, Village 9 and 10 will all be required to either pay park development fees or deliver completed parks in order to meet their park obligations,as part of their approval. As stated above, staff anticipates that the new Otay Ranch Villages; 3, 8 east 8 west 9 and 10 will provide parks to meet population thresholds obligated in their entitlements. Per the population forecast, the amount of parks that would be in master planning or construction in these villages would be: Village 3 P-1 Neighborhood Park 6.7 acres Village 8 West Neighborhood Park 7.5 acres Village 8 West Town Squares 3.0 acres Village 9 Pedestrian Parks 3.4 acres Village 8 East 6.3 acres Subtotal 26.9 acres To further address the projected park deficit effectively, an emphasis on the remaining Village 2 parks would increase the future inventory of developed park acreage, in particular Park P-2 (7.1 acres) and an initial phase of the Community Park (33 acres). Efforts to resolve planning issues related to these sites would enable staff to commence master planning work on those parks. The amount of parks that this effort could produce would be: Village 2 P-2 Neighborhood Park 7.1 acres Village 2 and a part Village 4 Otay Ranch Community Park 33 acres (first Phase) Subtotal 40.1 acres Grand Total 67.0 acres If all the above park development can be achieved the park threshold on Eastern Chula Vista and Citywide is substantially improved. Threshold Standard Acres of parkland Population Acres shortfall or excess East West Citywide East West Citywide East West Citywide East West Citywide 1-805 1-805 1-805 1-805 Park 1-805 1-805 Pop. 1-805 1-805 Park Park Acres Pop. Pop. Acres Acres Acres Acres Needed Need 3.00 1.19 2.20 494.96** 142.66 637.62** 164,853 119,513 284,366 0 (215.88) 215.88) **Acreage available will be as stated in Priority 1 table+67 acres=494.96 acres Parks and Recreation - 2014 2014-05-20 Agenda Packet Page 3 Page 202 Up until recently staff had been anticipating completion of Village 2, Park P-3 to be in 2016. In an effort to bring the park into use earlier (2015) negotiations with the developer have been held to explore ways to achieve that.The current proposal is to draw up an agreement with the developer to deliver the park as a turnkey park meaning that the developer is responsible for the design and installation of the park. During the last six months staff has already developed a draft master plan for P-3 which they plan to take to Parks and Recreation Commission and City Council in the early 2014. 4. Please provide a map showing existing and proposed parks. Commissioners are advised to see the interactive Parks and Recreation map currently on the home page of the City of Chula website showing the location of all existing parks and Recreation facilities. An additional map is attached showing the location of the future parks projected in the time span of this report. For information regarding the park provision at build out see the draft Citywide Parks& Recreation Master Plan. 5. Are there other growth-related issues you see affecting the ability to maintain the threshold standard as Chula Vista's population increases? If yes, please explain. Yes No X 6. Please provide square footage of the city's recreation facilities. According to the draft City wide Parks and Recreation Master Plan there are 133,820 square feet in the City's Community Center and Recreation Complexes. Information regarding location and facilities available at the City's recreation centers can be found on the interactive Parks and Recreation map currently on the home page of the City's website. 7. Regarding recreation facilities, how do current hours of service compare to previous years, and what is projected in the future? Recreation facilities are open to the public an average of six days per week in the current Fiscal Year 2013-2014, a continuation of the operational status of the previous Fiscal Year 2012-2013, when operations increased from three to six days per week as a result of$200,000 in added funding provided by the City Council.This additional funding was for the provision of structured and drop-in activities and programs, provision of meeting space for community groups and organizations and oversight of adjoining outdoor amenities and fitness centers at several locations.This additional funding followed two Fiscal Years, 2010-2011 and 2011-2012, during which, due to severe budgetary reductions, there had been a 66% reduction in operating hours at all recreation centers, elimination of recreational swimming periods, a 50% reduction in adult lap swimming periods and a 60% reduction in available fitness center hours. At this point, it is projected that the current level of operational service hours will continue for the next Fiscal Year, 2014-2015.The Recreation Department continues to restore the level of programs and services to, or in some cases exceed, pre-Fiscal Year 2010-2011 levels as well as to seek opportunities for grant funding to operate services to help offset the General Fund, especially in areas of the City's aquatic facilities for swim lessons and pool program operations. Parks and Recreation - 2014 2014-05-20 Agenda Packet Page 4 Page 203 8. Are parks and recreation facilities, such as gazebos, being leased to the maximum? The decline in rental reported last year has ceased, in fact there has been an increase in the reservations for gazebo's and picnic shelter in the past year. There are still times during the year when they are not rented to capacity. 9. What is the status of City Council approving the updated Parks & Recreation Master Plan? Completion of the Citywide Parks&Recreation Master Plan is subjectto future park planning efforts within the future University Villages.The University Villages located within the Otay Ranch area are currently being processed for entitlement approvals. Staff continues to work with project applicants in the development of the overall land use plans, including future park sites,for the villages.These Villages anticipate new park acreages and park locations beyond that envisioned in the former Draft Parks and Recreation Master Plan (PRMP) December 2010. Once the conceptual park plans for each of the Villages has solidified,final edits of the PRMP can occur.Thus far only one of the five villages, Village 8 west,has been approved by City Council at SPA level.The Draft PRMP will be updated when a more complete picture of future park locations and sizes is available. Staff anticipates completion of the updated draft in 2014. 10. Please provide any other relevant information,recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. GMOC should be aware of the park development potential of various Public Agency Lands (as identified in draft PRMP) that could substantially increase the inventory of park acreage in Chula Vista if developed. For example: Lower Sweetwater/KOA site 15 acres Undeveloped areas within the SDG&E corridor e.g.: Palomar Gateway 5 acres Rios Avenue site—Otay Valley 10 acres Unified Port of San Diego Bayfront- Bayfront Harbor District 11.38 acres net gain after development It should be noted that the GMOC threshold standard only includes developed parks with appropriate facilities to the east of I-805. These acreages cannot be entered into the park inventory until they are developed. The potential for the development of these sites exists and is described in more detail in the draft Citywide Parks& Recreation Master Plan. PREPARED BY: Name: Mary Radley, Landscape Architect, Development Services Title: Landscape Architect, Development Services Date: 1-7-14 THRESHOLD STANDARD Population Ratio: three(3)acres of neighborhood and community parkland with appropriate facilities shall be provided per 1,000 residents east of I-805. Parks and Recreation - 2014 2014-05-20 Agenda Packet Page 5 Page 204 N O N bD f� l a F- y _ = � a E2 LU W 7B c 50 .:�ti t•� r i N W N = F Al L',�T� ik � �• 4 \ v� F- a ' I - } WN ID -- jI�•'1-, t:_ �_- tt w I '� I�,o L LPL � �. � t �. r�• ' L�j 4J O }r 1 N k ppp- eo 4 w ro o N N O d' H O N Police - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please provide brief responses to the following: 1 . Please update the table below. Priority 1 - Emergency Response Calls for Service Call Volume % of Call Responses Average Within 7 Minutes Response Time Threshold Standard 81.0% 5:30 FY 2012-2013 738 of 65,741 81.5% 4:57 FY 2011-2012 726 of 64,386 78.4% 5:01 FY 2010-11 657 of 64,695 85.7% 4:40 FY 2009-10 673 of 68,145 85.1% 4:28 FY 2008-09 788 of 70,051 84.6% 4:26 FY 2007-08 1,006 of 74,192 87.9% 4:19 FY 2006-07 976 of 74,277 84.5% 4:59 FY 2005-06 1,068 of 73,075 82.3% 4:51 FY 2004-05 1,289 of 74,106 80.0% 5:11 FY 2003-04 1,322 of 71,000 82.1% 4:52 FY 2002-03 1,424 of 71,268 80.8% 4:55 FY 2001-02' 1,539 of 71,859 80.0% 5:07 FY 2000-01 1,734 of 73,977 79.7% 5:13 FY 1999-00 1,750 of 76,738 75.9% 5:21 Cy 19992 1,890 of 74,405 70.9% 5:50 FY 1997-98 1,512 of 69,196 74.8% 5:47 FY 1996-97 1 ,968 of 69,904 83.8% 4:52 All figures after FY 2000-2001 (as well as Priority 2 figures on the next page)reflect a change in citizen-initiated call reporting criteria. Prior to FY 01-02,citizen-initiated calls were determined according to call type;they are now determined according to received source. 2 The FY98-99 GMOC report used calendar 1999 data due to the implementation of the new CAD system in mid-1998. Page 1 Police - 2014 2014-05-20 Agenda Packet Page 206 2. During the period under review, were 81% of Priority 1 emergency calls citywide responded to within the threshold standard of seven minutes(maintaining an average of 5.5 minutes)? If not, please explain and describe what is necessary to meet the threshold standard for Priority 1 emergency calls citywide. Yes X No 3. Please update the table, below. Priority 2-Urgent Response Calls for Service Call Volume % of Call Responses Average Within 7 Minutes Response Time Threshold Standard 57.0% 7:30 FY 2012-2013 18,505 of 65,741 42.7% 11:37 FY 2011-2012 22,121 of 64,386 41.9% 11:54 FY 2010-11 21,500 of 64,695 49.8% 10:06 FY 2009-10 22,240 of 68,145 49.8% 9:55 FY 2008-09 22,686 of 70,051 53.5% 9:16 FY 2007-08 23,955 of 74,192 53.1% 9:18 FY 2006-07 24,407 of 74,277 43.3% 11:18 FY 2005-06 24,876 of 73,075 40.0% 12:33 FY 2004-05 24,923 of 74,106 40.5% 11:40 FY 2003-04 24,741 of 71,000 48.4% 9:50 FY 2002-03 22,871 of 71,268 50.2% 9:24 FY 2001-02 22,199 of 71,859 45.6% 10:04 FY 2000-01 25,234 of 73,977 47.9% 9:38 FY 1999-00 23,898 of 76,738 46.4% 9:37 CY 1999 20,405 of 74,405 45.8% 9:35 FY 1997-98 22,342 of 69,196 52.9% 8:13 FY 1996-97 22,140 of 69,904 62.2% 6:50 FY 1995-96 21,743 of 71,197 64.5% 6:38 Note: Beginning in FY 2002-03,these figures do not include responses to false alarms. 4. During the period under review, were 57%of the Priority 2 urgent response calls citywide responded to within seven minutes (maintaining an average of 7.5 minutes)? If not, please explain and describe what is necessary to meet the threshold standard for Priority 2 urgent response calls citywide. Yes No _X_ Staffing must be significantly increased in the Community Patrol Division in order to meet the priority two response time goals. Without adding additional staff improvements to the response time will most likely be limited. Page 2 Police - 2014 2014-05-20 Agenda Packet Page 207 5. Was the Police Department properly equipped to deliver services at the level necessary to maintain Priority 1 and Priority 2 threshold standard compliance during the period under review? Yes No X If not, please explain. The Department is in need of replacing computers, purchasing new less-lethal equipment, implementing body cameras, upgrading radios and making significant improvements to its information technology infrastructure. With the reduction in grant funds over the last several years, and the elimination of computer replacement and vehicle replacement funds from the normal budget, the department has had to delay purchases of these types of equipment and technology. 6. Was the Police Department properly staffed to deliver services at the level necessary to maintain Priority 1 and Priority 2 threshold standard compliance during the period under review? Yes No X If not, please explain. Although the Department was able to meet Priority 1 response standards this reporting year, the Department's staffing levels are still a serious concern. The Department hired Matrix Consulting Group to conduct a comprehensive patrol staffing study(Matrix Study). The Matrix Study found that the Department is critically low on proactive policing time in the Patrol Division. The goal for the proactive policing time in the Patrol Division is 40%and currently the Patrol Division is at approximately 22%. 7. The Police Department has adopted a goal for proactive time to be 40% of an officer's available time while on duty, and has been tracking proactive time as one measure to determine proper staffing. Please provide any data collected from tracking proactive time. The Department has contracted with the Matrix Consulting Group to conduct a study to review the results are of the changes made in the Patrol Division as a result of the original Matrix Study. The Department expects results of this study in December. 8. How has the proactive time goal of 40% affected response times? Trying to achieve a proactive time goal of 40% should not negatively affect the department's response times to priority 1 and 2 calls for service. With the operational changes that are being made to increase the amount of proactive time, it seems to reason that as officers are freed up from low priority calls for service the response times to higher priority calls for service should improve. The Department has not finalized all of the recommendations from the original Matrix Study, so a full accounting of affects to Page 3 Police - 2014 2014-05-20 Agenda Packet Page 208 proactive time and response times is not available at this time. The Department will certainly monitor the situation and make necessary adjustments as needed. 9. How has the hybrid work schedule implemented earlier this year affected response times? It is unknown what the overall effect of the hybrid work schedule has on response times at this point. The hybrid schedule went into effect approximately 6 months ago, and the Department is currently working with Matrix Consulting Group to study the effects of this change, as well as the other operational changes made during this time period. 10. Has growth during the last year negatively affected the Department's ability to maintain service levels consistent with the threshold standard? Yes No X If yes, please explain and describe what factors contributed to not meeting the threshold standard. 11 . Are current facilities, equipment and staff able to accommodate citywide growth forecasted, and meet the threshold standard, for the next 12 to 18 months? Yes No _X_ If not, please explain. Although the Department has achieved compliance with Priority 1 response times, there are still significant concerns with staffing. The Department is experiencing significant turn- over due to retirements, and as of the writing of this report, has approximately 22 sworn vacancies at the Peace Officer level. This puts a significant strain on the Department to maintain staffing levels in the Patrol Division. Any significant growth in the next 18 months will place additional strain on the Patrol Division to comply with GMOC threshold standards. 12. Are current facilities, equipment and staff able to accommodate citywide growth forecasted, and meet the threshold standard, for the next five years? Yes X No _X_ If not, please explain. The Police Department building was designed to meet the growth forecasts through build- out. Staffing and equipment, however, continue to be an issue as the City continues to deal with fiscal issues.Although the City has improved upon its fiscal stability, there are still significant concerns with healthcare and retirement costs in the upcoming year. Therefore, the Department has been unable to include computer replacement and vehicle replacement funds in the normal operating budget. Page 4 Police - 2014 2014-05-20 Agenda Packet Page 209 13. Please update the table below: NUMBER OF FALSE ALARMS PER YEAR FY 2006-07 FY 2007- FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 08 8,257 7,861 5,924 6,694 6,424 6,234 6,116 14. Please provide an update on the Police Department's efforts to improve the Priority 2 threshold standard. On November 19th, the Department received approval from the City Council for implementation of the updated Security Alarm Ordinance. This updated ordinance seeks to significantly reduce the number of responses to false alarms by at least 50%to 80%. The new Security Alarm Ordinance will go into effect on January 1 st, 2014. Also, the Department will also be adding two additional Community Service Officer's(CSO's) in Patrol(for a total of five CSO's), which will help officers by handling lower priority calls for service. The Department is also currently updating the fleet of mobile data computers (MDC's) in the Patrol fleet as well as getting ready to implement an Automated Vehicle Locating (AVL)system for the Computer Aided Dispatch(CAD)system.AVL and the new MDC's should aid dispatchers in dispatching the nearest available unit to a call. Even with these improvements, a significant change in Priority 2 response times is unlikely.As mentioned earlier in this report, there would need to be significant increases to Patrol staffing to meet the Priority 2 threshold. 15.What is the status of School Resources Officers? The Department currently has contracts with both the Sweetwater Union High School District and the Chula Vista Elementary School District which fully fund the SRO program. Currently those contracts fund 8 School Resource Officers. This is down from a high of 22 SRO's. Until the fiscal situation in the City improves significantly, and the Department is able to achieve the goal of 40% proactive policing time in Patrol, the SRO unit will not be expanded. 16. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the city council. As was mentioned in our previous meetings with the GMOC, we look forward to implementing the new GMOC threshold standards which are included in the"Top to Bottom" review being completed by the GMOC. PREPARED BY: Name: Ed Chew/Melanie Culuko Title: Administrative Services Manager/Public Safety Analyst Date: 11/20/2013 Page 5 Police - 2014 2014-05-20 Agenda Packet Page 210 THRESHOLD STANDARDS Emergency Response: Properly equipped and staffed police units shall respond to 81%of the Priority 1 emergency calls throughout the City within seven(7)minutes and shall maintain an average response time to all Priority I calls of five minutes and thirty seconds(5.5 minutes)or less(measured annually). Urgent Response: Properly equipped and staffed police units shall respond to 57% of the Priority 2 urgent calls throughout the City within seven(7)minutes and shall maintain an average response time to all Priority 11 calls of seven minutes and thirty seconds(7.5 minutes)or less(measured annually). Page 6 Police - 2014 2014-05-20 Agenda Packet Page 211 Sewer - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 -June 30, 2013 to Present Time and 5-Year Forecast Please update the table below. SEWAGE - Flow and Treatment Capacity Million Gallons per 10/11 11/12 12/13 18-month 5-year 'Buildout" Day MGD Fiscal Year Fiscal Year Fiscal Year Projection Projection Projection* Average Flow 16.272 15.935 15.734 16.870** 18.583** 26.20* Capacity 20.864 20.864 20.864 20.864 20.864 20.864 *Buildout Projection based on 2005 Wastewater Master Plan **Growth rate per the"Residential Growth Forecast Years 2013 through 2018" Please provide brief responses to the following: 1 . Have sewage flows or volumes exceeded City Engineering Standards (75% of design capacity) at any time during the period under review? If yes, please indicate where, when and why this occurred, and what has been, or will be done, to correct the situation. Yes No X 2. Are current facilities adequate to accommodate the 12- to 18-month forecasted growth? If not, what facilities need to be added, and is there adequate funding for future facilities, including site availability? Yes_X No 3. Are current facilities adequate to accommodate the 5-year forecasted growth? If not, what facilities need to be added, and is there adequate funding for future facilities, including site availability? Yes X No 4. Is adequate funding secured and/or identified for maintenance of existing facilities? If not, please explain. Yes X No Sewer - 2014 10/31/2013 1 2014-05-20 Agenda Packet Page 212 5. Please make any necessary changes to the table below. Average Daily Flow Trend 0) m m ° 4 C C C 28.00 ° ° ° 350,000 LO co M M C M 26.00 ' co N ,� ryo 300,000 1 c4 24.00 250,000 22.00 °' m METRO Capacity(2C,664 rigd co 20.00 200,000 � O � o 1b• 18.00 150,000 a F-- Oh S 16.00 ,. m� 100,000 e r°v 14.00 }o�_ LL: 50.000 12.00 mff - d 1 0.00 0 ti ti ti ry ti ti 'L `L `L `L � Year Average Daily Flow(MGD) —Treatment Capacity —a—Population Staff is now working on an update to the 2005 master plan in order to verify the build out treatment capacity needs of the City. The capacity needs are determined by the sewer generation rate(the amount of sewage generated per person per day). The master plan update will establish a revised generation rate. Staff expects that the sewer generation rate for the City will be lower. Volume based billing, increase in water prices and continued conservation efforts have helped in the decrease of flow experienced by the City. This means that the build out treatment capacity required could be less than what the 2005 master plan estimated. The option of building a treatment plant in Chula Vista becomes less feasible as the required treatment capacity diminishes. The City will update the analysis of the option to buy additional treatment capacity versus the option to build a treatment plant once the master plan has been completed. The master plan update is scheduled to be adopted in late-2013. At current growth projections, the City has enough capacity for the next 10 years(see graph above).The graph shows the City's average daily flow will reach the City's purchased treatment capacity rights sometime during the 2020 to 2030 decade. Staff will continue to monitor flow rates in order to secure treatment capacity before it's needed. PREPARED BY: Name: Roberto Yano Title: Sr. Civil Engineer Date: October 2013 Sewer - 2014 10/31/2013 2 2014-05-20 Agenda Packet Page 213 THRESHOLD STANDARDS 1. Sewage flows and volumes shall not exceed City Engineering Standards(75%of design capacity). 2. The city shall annually provide the San Diego Metropolitan Sewer Authority with a 12-to 18-month development forecast and request confirmation that the projection is within the city's purchased capacity rights and an evaluation of their ability to accommodate the forecast and continuing growth, or the City Public Works Services Department staff shall gather the necessary data. The information provided to the GMOC shall include the following: a. Amount of current capacity now used or committed. b. Ability of affected facilities to absorb forecasted growth. C. Evaluation of funding and site availability for projected new facilities. d. Other relevant information. The growth forecast and Authority response letters shall be provided to the GMOC for inclusion in its review. Sewer - 2014 10/31/2013 3 2014-05-20 Agenda Packet Page 214 To be reviewed by Board of Trustees at meeting on February 18, 2014 Sweetwater Union High School District (SUHSD) 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1, 2012- June 30, 2013 to Present Time and 5-Year Forecast 1. Please complete the table below, indicating the current enrollment and capacity conditions. EXISTING CONDITIONS - JANUARY 2014 Current Building Capacity Adjusted Physical Within Overflow %Residing Schools Enrollment Permanent/Portables Building Education Capacity Within 1/14 Capacity* Capacity In Out Boundaries NORTHWEST Chula Vista Middle 1,007 906 211 1,117 255 Y 75% Hilltop Middle 1,138 1,114 105 1,219 204 Y 65% Chula Vista High 2,494 1,823 770 2,593 204 Y 70% Hilltop High 2,082 1,878 365 2,242 204 Y 65% SOUTHWEST Castle Park Middle 843 1,298 53 1,351 204 Y 95% Castle Park High 1,504 1,388 535 1,923 204 Y 90% Palomar High 365 287 237 524 0 Y 100% Chula Vista Adult 2,457 n/a n/a SOUTHEAST Eastlake High 2,913 1,378 922 2,300 255 Note 1 71% Eastlake Middle 1,745 1,488 0 1,488 102 Note 1 84% Otay Ranch High 2,585 2,019 315 2,334 204 Note 1 72% Olympian High (#13) 2,171 1,913 0 1,913 204 Note 1 65% NORTHEAST Bonita Vista High 2,259 1,576 658 2,234 204 Y 79% Bonita Vista Middle 1,101 929 328 1,257 204 Y 78% Rancho Del Rey 1,706 1,522 0 1,522 153 Note 1 Middle **TOTAL 23,913 19,519 4,499 24,018 2,601 Y *Adjusted Building Capacity is based on 85%of the full capacity of the school site.85%loading allows teachers to remain in their classroom for their prep period.It is recalculated annually based on approved student/teacher ratios and room utilization.Total Capacityfor each school is the adjusted building capacity plus physical education capacity. It excludes students and capacity assigned to learning centers. 2014-05-20 Agenda Packet Page 215 **Total for Current Enrollment does not include Chula Vista Adult. Note 1:These schools are within the 100%capacity of the site.This enrollment is accommodated on-site through master scheduling and travelling teachers which allow classrooms to be used an extra period each day. 2. Please complete the tables below (insert new schools into the tables, as appropriate) to indicate the projected conditions for (a) December 2014 and (b) December 2018, based on the city's 2013 Residential Growth Forecast. 2.a SHORT-TERM FORECASTED CONDITIONS -- DECEMBER 2014 Projected Building Capacity Adjusted Physical Within Overflow %Residing Enrollment Permanent/Portables Building Education Capacity Within Schools 12/31/14 Capacity* Capacity In Out Boundaries NORTHWEST Chula Vista Middle 959 906 211 1,117 255 Y Hilltop Middle 1,154 1,114 105 1,219 204 Y Chula Vista High 2,584 1,823 770 2,593 204 Y Hilltop High 1 2,102 1,878 365 2,242 204 Y SOUTHWEST Castle Park Middle 881 1,298 53 1,351 204 Y Castle Park High 1,481 1,388 535 1,923 204 Y Palomar High 367 287 237 524 0 Y Chula Vista Adult 1 2,457 n/a SOUTHEAST Eastlake High 3,034 1,378 922 2,300 255 Note 1 Eastlake Middle 1,804 1,488 0 1,488 102 Note 1 Otay Ranch High 2,545 2,019 315 2,334 204 Note 1 Olympian High 1 2,511 1,913 0 1,913 204 Note 1 NORTHEAST Bonita Vista High 2,218 1,576 658 2,234 204 Y Bonita Vista 1,228 929 328 1,257 204 Y Middle Rancho del Rey 1,696 1,522 0 1,522 153 Note 1 Middle **TOTAL 24,564 19,519 4,499 24,018 2,601 Y *See note under previous table. **See note under previous table. Note 1:See note under previous table. SUHSD - 2014 Page 2 2014-05-20 Agenda Packet Page 216 2.b FIVE-YEAR FORECASTED CONDITIONS -- DECEMBER 2018 Projected Building Capacity Adjusted Physical Within Overflow %Residing Enrollment Permanent/Portables Building Education Capacity Within Schools 12/31/18 Capacity* Capacity Boundaries NORTHWEST Chula Vista Middle 1,000 906 211 1,117 255 y Hilltop Middle 1,400 1,114 105 1,219 204 y Chula Vista High 2,500 1,823 770 2,593 204 y Hilltop High 2,300 1,878 365 2,242 204 y SOUTHWEST Castle Park Middle 1,000 1,298 53 1,351 204 y Castle Park High 1,600 1,388 535 1,923 204 y Palomar High 350 287 237 524 0 y Chula Vista Adult 2,450 n/a SOUTHEAST Eastlake High 2,800 1,378 922 2,300 255 Note 1 Eastlake Middle 1,800 1,488 0 1,488 102 Note 1 Otay Ranch High 2,500 2,019 315 2,334 204 Note 1 Olympian (HS#13) 2,500 1,913 0 1,913 204 Note 1 MS#12 900 y HS#14 1,800 y NORTHEAST Bonita Vista High 2,400 1,576 658 2,234 204 y Bonita Vista 1,300 929 328 1,257 204 y Middle Rancho del Rey 1,700 1,522 0 1,522 153 Note 1 Middle **TOTAL 27,850 19,519 4,499 24,018 2,601 Note 1 *See note under Table 1. **See note under Table 1. Note 1: District staff currently projects the need for Middle School No. 12 and High School No. 14 no earlier than 2016-17.At this time, projected enrollment increases will be mostly offset by increased charter school enrollment. The schools will relieve Eastlake and Rancho Del Rey Middle Schools and Bonita Vista,Eastlake,Otay Ranch and Olympian High Schools. Because attendance boundaries have not been established,enrollment projections cannot be made nor can we project exactly how the affected schools'enrollment will be reduced. SUHSD - 2014 Page 3 2014-05-20 Agenda Packet Page 217 3. Please complete the table below to indicate enrollment history. ENROLLMENT HISTORY Schools 2012-13 2011-12 2010-2011 2009-10 2008-09 NORTHWEST SCHOOLS Total Enrollment 6,721 6,798 6,823 7,067 7,242 %of Change Over the -1.1% -0.4% -3.5% -z.4% ° -z.7/° Previous Year %of Enrollment from Chula 87% 87% 88% 88% 88/°° Vista SOUTHWEST SCHOOLS Total Enrollment 2,712 2,792 3,068 2,977 3,064 %of Change Over the -2.9% -9.0% 3.1% -2.8% ° Previous Year %of Enrollment from Chula 91% 91% 92% 94% 94% Vista SOUTHEAST SCHOOLS Total Enrollment 9,414 9,007 8,550 8,446 8,242 %of Change Over the 4.5% 5.4% 1.2% z.5% ° Previous Year 4.9/° %of Enrollment from Chula 92% 93% 94% 95% 94/°° Vista (Note 1) NORTHEAST SCHOOLS Total Enrollment 5,066 5,071 4,854 4,938 5,088 %of Change Over the -0.1% 4.5% -1.7% -1.4% -z.4/° Previous Year %of Enrollment from Chula 89% 91% 72% 72% 71% Vista DISTRICT-WIDE Total Enrollment 45,972 40,507 40,740 41,580 42,420 %of Change Over the 13.49% -0.57% -2.02% -1.98% -0.98% Previous Year %of Enrollment from Chula 59% 55% 55% 49% 48% Vista 4. Are existing facilities/schools able to accommodate forecasted growth through the next 12 to 18 months? If not, please explain. Yes X No SUHSD - 2014 Page 4 2014-05-20 Agenda Packet Page 218 5. Are existing facilities/schools able to accommodate forecasted growth fort he next five years?If not, please explain. Yes X No X This is a transition year because we expect to see growth next year. However, if charter schools continue to siphon students, it is likely that the District will have capacity for five years of residential growth.The District may need to construct Middle School No. 12 and High School No. 14 within the next 5 years if there is a significant increase in development and re-occupation of foreclosed homes. 6. Please complete the table below. NEW SCHOOLS STATUS Architectural School Review/Funding Beginning of Service by Time Name/ Site ID for Land and Site Utilities and Beginning of Needed Number Selection Construction Preparation Road Construction By MS #12 Complete Complete Complete Complete Est. 2015 Est. 2017 HS #14 Complete Complete Complete Complete Est. 2015 Est. 2017 7. Is adequate funding secured and/or identified for maintenance of new and existing facilities/schools? If not, please explain. Yes No X 8. Are any schools slated to close? 9. What is the status of various after-school programs, adult education, etc.? 10. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the city council. The unstable economy, high foreclosure rate, and the expansion of charter schools into the 7-12 arena make the 5- year projections for east Chula Vista very tentative. The timing of Middle School 12 and High School 14 may change significantly as the economy recovers. PREPARED BY: Name: Paul Woods Title: Director of Planning and Construction Date: February 11, 2014 "SCHOOLS"THRESHOLD STANDARD The city shall annually provide the two local school districts with a 12-to 18-month forecast and request an evaluation of their abilities to accommodate the forecast and continuing growth. The districts replies should address the following: 1. Amount of current capacity now used or committed; SUHSD - 2014 Page 5 2014-05-20 Agenda Packet Page 219 2. Ability to absorb forecasted growth in affected facilities; 3. Evaluation of funding and site availability for projected new facilities;and 4. Other relevant information the districts desire to communicate to the city and GMOC. SUHSD - 2014 Page 6 2014-05-20 Agenda Packet Page 220 Sweetwater Authorit y - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1 , 2012 —June 30, 2013 to Present Time and 5-Year Forecast 1. Please complete the table below. WATER DEMAND AND CAPACITY MGD (Million Gallons Per Day) Potable Water Non-Potable Water Supply Storage Supply Storage Timeframe Demand Capacity Capacity Demand Capacity Capacity Local Imported Treated Raw 5-Year Projection 20.0 39.5 30 44.55 17,421 n/a n/a n/a (Ending 6/30/18) 12-18 Month Projection 19.5 37 30 43.35 17,421 n/a n/a n/a (Ending 6/30/15) WATER DEMAND AND CAPACITY MGD (Million Gallons Per Day) Potable Water Non-Potable Water FY 2012/13 18.8 37 30 43.35 17,421 n/a n/a n/a (ending 6/30/13) FY 2011/12 18.3 37 30 43.35 17,421 n/a n/a n/a (ending 6/30/12) FY 2010/11 18.6 37 30 43.35 17,421 n/a n/a n/a (ending 6/30/11) FY 2009/10 18.6 37 30 43.35 17,421 n/a n/a n/a (ending 6/30/10) FY 2008/09 20.3 37 30 43.35 17,421 n/a n/a n/a (ending 6/30/09) Notes: a. The use of local vs. imported water sources is highly dependent on weather conditions and runoff within the Sweetwater River watershed and is, therefore, unpredictable. Based on a 20-year average, 48 percent of water demand has been supplied by imported water sources. b. Table values are for all of Sweetwater Authority, which only serves the western portion of Chula Vista.Sweetwater also serves the City of National City and the unincorporated community of Bonita. c. Production demand is taken from the Sweetwater Authority Water Use Reports that are submitted monthly to SDCWA. d. 12-18 month and 5-year potable water production demand projections are taken from Table 4-2 of Sweetwater Authority's 2010 Water Distribution System Master Plan. e. Local supply components include the Perdue Water Treatment Plant (30 mgd), Reynolds Desalination Facility(5 mgd), and National City Wells (2 mgd), for a total of 37 mgd or 13,500 MG Sweetwater Authority—2014 2014-05-20 Agenda Packet Page 221 per year.The Reynolds Desalination Facility production is scheduled to increase to 10 mgd in 2017, 7.5 mgd of which is allocated to Sweetwater Authority, bringing the local supply capacity to 39.5 mgd or 14,400 MG per year. f. Imported supply includes 30 mgd, or 10,950 MG per year of imported raw water treated at the Perdue Plant.Sweetwater Authority can substitute or supplement this with imported treated water through its 40 mgd treated water connection with SDCWA.Total supply capacity,however,is limited by conveyance capacity and imported water availability. g. Sweetwater Authority's 2010 Water Distribution System Master Plan lists existing and recommended treated water storage. The 1.2 MG Central-Wheeler tank is scheduled to be built next. h. Raw water storage capacity equals 28,079 acre-feet at Sweetwater Reservoir,and 25,387 acre-feet at Loveland Reservoir, for a total of 53,466 acre-feet, or 17,421 MG. 1. Do current facilities have the ability to accommodate forecasted growth for the next 12 to 18 months? If not, please list any additional facilities needed to serve the projected forecast, and when and where they would be constructed. Yes_X No 2. Do current facilities have the ability to accommodate forecasted growth for the next five years? If not,please list any additional facilities needed,and when and where they would be constructed. Yes_X No 3. Are there any new major maintenance/upgrade projects to be undertaken pursuant to the current year and 6-year capital improvement program projects that are needed to serve the City of Chula Vista? If yes, please explain. Yes_X_ No Sweetwater Authority has several maintenance and upgrade programs where pipelines, valves, and other facilities are being replaced.This allows Sweetwater Authority to continue to provide excellent service in the near and long term.The majority of the planned improvements, along with estimated costs, are listed in the 2010 Water Distribution System Master Plan.The final design of the Desalination Facility Expansion project is under way, with construction anticipated to start in early 2015. In addition, Sweetwater Authority plans to replace approximately 3 miles of 36-inch water transmission pipeline through Bonita Valley, which is critical for continued long term water supply to the City of Chula Vista. 4. Please provide any other relevant information,recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. Sweetwater Authority is monitoring development activities within the City of Chula Vista, including the Bay Front and the urban core, which will require major infrastructure coordination. Please continue to keep Sweetwater Authority informed and involved in all development and capital improvement projects to reduce the potential for unexpected water infrastructure requirements. Sweetwater Authority—2014 2 2014-05-20 Agenda Packet Page 222 PREPARED BY: Name: Ron R. Mosher Title: Director of Engineering Date: January 17, 2014 THRESHOLD STANDARDS 1. Developer will request and deliver to the city a service availability letter from the Water District for each project. 2. The city shall annually provide the San Diego County Water Authority,the Sweetwater Authority, and the Otay Municipal Water District with a 12-to 18-month development forecast and request an evaluation of their ability to accommodate the forecast and continuing growth. The district's replies should address the following: a. Water availability to the city and Planning Area, considering both short and long term perspectives. b. Amount of current capacity, including storage capacity, now used or committed. C. Ability of affected facilities to absorb forecast growth. d. Evaluation of funding and sited district's desire to communicate to the city and GMOC. e. Other relevant information the agencies desire to communicate to the city and GMOC. Sweetwater Authority—2014 3 2014-05-20 Agenda Packet Page 223 Traffic - 2014 GROWTH MANAGEMENT OVERSIGHT COMMISSION (GMOC) Threshold Standard Compliance Questionnaire July 1, 2012 —June 30, 2013 to Present Time and 5-Year Forecast With appropriate maps and tables, please provide brief responses to the following: 1. During the period under review, has the city maintained LOS "C" or better on all signalized arterial segments? If not, please list segments involved and explain. Yes No X During the period under review Heritage Road Northbound from Olympic Parkway to Telegraph Canyon Road did not meet the City's GMOC threshold standards. In the 2013 GMOC Report, Otay Lakes southbound from East`H' Street to Telegraph Canyon Road did not meet the threshold standards. Due to construction on Otay Lakes Road in front of Southwestern College, this segment was not analyzed for 2014. 2. During the period under review,were there arterial segments operating at LOS "D"for more than two hours during peak hours? If yes, please update the table below and explain how the situation is being addressed. Yes X No LOS 2012 LOS 2013 SEGMENT Limits DIR Hours Hours CHANGE Heritage Road NB D(5) E(1) D(5) E(1) None (Olympic Parkway to Telegraph Non-Compliant Non-Compliant Canyon Road) Citywide, Heritage Road in the northbound direction, from Olympic Parkway to Telegraph Canyon Road, the arterial segment exceeded the LOS "D" for more than two hours during the peak hours. Numerous signal/corridors have been analyzed for phasing and timing improvements based on traffic data collected by city staff. The data determines the need for re-timing analysis and improving the traffic flow characteristics for fewer vehicle stops and delays. On April of 2013, Heritage Road between Telegraph Canyon Road and Olympic Parkway was analyzed by our Signal Systems Engineer to determine the need for timing improvements. A new coordination timing plan was implemented between East J Street and Olympic Parkway to provide better progression through the Heritage Road corridor. Following an evaluation period from the public and floating car survey, it was determined the improvements were not enough to meet GMOC threshold standards. The new timing was therefore removed and developing a revised timing plan is underway. Traffic - 2014 1 2014-05-20 Agenda Packet Page 224 3. Are current facilities able to accommodate growth for the next 12 to 18 months without exceeding the threshold standards? If not, please list new roadways and/or improvements necessary to accommodate forecasted growth forthe 12-to 18-month timeframe. Yes No X The westbound Olympic Parkway Corridor is still experiencing varying degrees of delay. Regional traffic modeling confirms that when the roadway network is completed in accordance with the build-out plans the system will operate meeting GMOC Standards. An important link in this ultimate plan is the extension of Heritage Road as a 6-Lane arterial between Olympic Parkway and Main Street. Over the next several years, a number of improvement projects are needed in order to improve the levels of service along Olympic Parkway. These near term projects are as follows: o CI P TF-377 will lengthen the westbound Olympic Parkway left-turn pocket to southbound Brandywine Avenue. This project has been approved and will help alleviate the traffic congestion to the I-805 freeway in the near term. o Direct Access Ramps at I-805 and East Palomar Street Bridge. Construction has commenced with completion in late 2014. o The southerly extension of Heritage Road as a 2-lane interim facility from Olympic Parkway to Main Street (Phase 1), between Olympic Parkway and Santa Victoria is under construction, completion in early 2014. Phase 11, as a 2-lane interim facility between Santa Victoria and Main Street, to commence construction in FY14/15. For Otay Lakes Road improvements, generally along the frontage of Southwestern College (STM-355), construction has commenced. Improvements consist of additional through lanes in both directions, dual left-turn pockets into Southwestern College and raised medians from south of East H Street to Telegraph Canyon Road/La Media Road. This project is anticipated to be completed by early 2014 and will further reduce vehicular delays on this segment. a. How will these facilities be funded? The Heritage Road extension facility is funded by developers as land development project mitigation measures orwith development impact fees such as the TDIF,for east of 1-805,the WTDIF for west of 1-05 and/or a combination of other local, TransNet, state and federal funds. The 1-805 Direct Access Ramp project is funded by Regional, State and Federal funds. The Otay Lakes Road Widening Project is funded with TDIF and TransNet funds. b. Is there an appropriate/adequate mechanism in place to provide this funding? Yes, there are appropriate funding mechanisms in place to provide funding for needed roadway improvements. Traffic - 2014 2 2014-05-20 Agenda Packet Page 225 4. Are current facilities able to accommodate growth for the next five years without exceeding the threshold standards? If not, please list new roadways and/or improvements necessary to accommodate forecasted growth for the 5-year timeframe. Yes No X Olympic Parkway Olympic Parkway traffic levels will increase as development continues to the east. With continued traffic monitoring, the schedule for constructing the ultimate 6-lane southerly extension of Heritage Road will be determined. Construction of the first phase of the roadway between Olympic Parkway and Santa Victoria Road has commenced. Construction should be completed in early 2014. Further monitoring of the Olympic Parkway corridor and the number of building permits issued will trigger the ultimate 6-lane improvements of Heritage Road to the south to Main Street. Along the freeway medians, Caltrans is currently in construction of the carpool lanes portion of the 1-805 Managed Lanes project between East Palomar Street and E Street/Bonita Road. The 1-805 Managed Lanes will continue north to State Route 94 and terminate in Downtown San Diego. Pending regional approval, subsequent phases of the project are planned to be completed by 2020. This project will provide for a northbound on-ramp and a southbound off-ramp via carpool lane access points towards the center of the 1-805 freeway, not the typical on/off ramps where you merge from the right side of the freeway. The project includes a value-pricing program allowing toll-paying single occupant vehicles access onto and off the 1-805 at East Palomar Street. The East Palomar Street Bridge has been demolished and the new bridge with the Direct Access Ramps should be constructed in FY 14/15 as part of the East Palomar Street Direct Access Ramp (DAR) Project. As the construction progresses, staff will present updates to the Council and to the public. Once completed, it is expected that with the 1-805 DAR Project providing another access point to the freeway, that some traffic originating in the area bounded by parallel streets such as Olympic Parkway and Telegraph Canyon Road would divert to East Palomar Street. The DAR is considered a Managed Lane project in that it is available for carpool vehicles at no charge but single occupancy vehicles will have to pay a user fee, via an electronic transponder, similar to the Interstate-15 corridor. However, in the interim while construction is underway, Olympic Parkway, East Naples Street and Telegraph Canyon Road will see an increase in traffic volume until the East Palomar Street Bridge is reconstructed. Separately, city staff is working with SANDAG on the South Bay Bus Rapid Transit project which will have access from the 1-805 DAR then east towards the Otay Ranch shopping center generally utilizing the median area within the Sunbow 11 and Otay Ranch neighborhoods. The SBBRT project is in the design phase now and it is anticipated that construction will commence in FY14/15 with a completion date early 2016. By providing rapid bus service to/from downtown San Diego to the eastern territories of Chula Vista, this service will also reduce the number of vehicles traveling on the local arterial network. Since the time SANDAG has taken ownership of the SR-125 toll road in December 2011, ridership has increased approximately 30%. This is due to the reduction in the toll road fees SANDAG implemented in June 2012,which has made it more affordable to the residents of Chula Vista. The increase in ridership on SR-125 diverts the traffic volume from East H Traffic - 2014 3 2014-05-20 Agenda Packet Page 226 Street, Telegraph Canyon Road and Olympic Parkway. SR-125 traffic volumes which were historically in the 20,000 to 25,000 vehicles per day range are now well into the 30,000 to 35,000 vehicles per day range. Otay Lakes Road The construction of Phase 3 of the Otay Lakes Road widening project is under construction and should be completed in early 2014. This is the segment between a point south of East H Street near Elmhurst Avenue then south to the intersection of Telegraph Canyon Road/La Media Road. Southwestern College traffic significantly impacts this segment. The improvements will increase the capacity on Otay Lakes Road and improve the traffic within the area of Southwestern College. a. How will these facilities be funded; and b. Is there an appropriate/adequate mechanism(s) in place to provide this funding? Development is required to pay their fair share in mitigating any project impacts. The City of Chula Vista has transportation development impact fees that will collect sufficient funds for needed transportation improvements. The development impact fees pay only for the proportionate share of the project that is impacted by development. Existing deficiencies are the responsibility of the City to fund with other sources such as local TransNet, State and Federal funds. The transportation development impact fee program is periodically updated so that program identified project costs and scopes are updated as well as adding or deleting projects. The city does have in the current Capital Improvement Program a project identified to update both the TDIF and the WTDIF programs. Both the Caltrans and SANDAG projects have a combination of regional, state and federal funds for all of the phases of work such as preliminary engineering, planning, environmental, design and construction. As each of these projects completes a phase of work, the region approves funding for the subsequent phases. City of Chula Vista funds are being used for City staff time only. 5. Please provide an update on transit-oriented projects and statistics on current bus ridership and pedestrian access. The following data was provided by the Metropolitan Transit System: 2005 (the most complete sample year prior to Jan 1, 2006) H & 3rd—Westbound —54on/83off(Estimated Weekday Daily Riders) H & 3rd—Eastbound—64on/78off 2009 (the most complete sample year after Jan 1, 20081 H & 3rd—Westbound —188on/129off H & 3rd—Eastbound—102on/193off 6. Please identify public transportation projects and indicate how they will impact meeting threshold standards. Traffic - 2014 4 2014-05-20 Agenda Packet Page 227 In August of 2012, the city completed a combined technical study with the San Diego Association of Governments (SANDAG). This Project Study Report for"The Chula Vista Light Rail Corridor Improvements" can be found on the city website: (http://www.chulavistaca.gov/City Services/Development Services/Engineering/docume nts/PSRCVLRT-Final-August20l2.pdf) The Study documents the analysis of alternatives for grade separating the LRT tracks from the roadway crossings at E Street, H Street and Palomar Street. Alternatives being considered include elevating the tracks over the roadway; lowering the tracks under the roadway; and in the case of Palomar Street, lowering the roadway under the tracks. Currently the tracks in this area are also used by freight trains. Since the freight train will not be grade separated, each of the projects includes an at-grade bypass track for the freight trains to utilize. The Blue Line Light Rail Trolley (LRT), operated by the San Diego Metropolitan Transit System (MTS) runs north and south from the San Ysidro Transit Center near the U.S.- Mexico Border through Downtown San Diego to the Old Town Transit Center. This line experiences the highest ridership of any LRT line in the San Diego region with over 20 million riders in 2009 (State of the Commute, SANDAG 2010). Projections indicate that the ridership will continue to rise into the foreseeable future. This projected rise can be attributed to expected population growth and the development of the Bayfront area to the west. Within the Chula Vista city limits the LRT traverses east of and parallel to Interstate 5 (I-5). Vehicular traffic along Chula Vista's major east-west arterials heading to and from the I-5 is increasing due to area build-out in the City's western urban areas. Three at grade street crossing locations along the Blue Line LRT in Chula Vista have been identified as candidates for future grade separations. E Street, H Street and Palomar Street all are major arterial streets that convey traffic to and from I-5. The current at grade crossings require traffic to stop each time a train passes the crossings. Ridership of the Blue Line LRT is expected to increase, and as such plans are in place to increase the number of trolley trips per day. Consequently, headways between trains are expected to decrease. The combination of increased vehicular traffic and increased wait time behind the rail crossing arms will result in major traffic delays for vehicles at the at grade crossings of E Street, H Street and Palomar Street, and diminish the Level of Service. On December 14th,2012 the SANDAG Transportation Committee and then subsequently on December 21 st, the Board of Directors took action to approve Chula Vista and SANDAG's Memorandum of Understanding in commencing work on the environmental document for grade separating the Palomar Street LRT crossing. Palomar is the highest ranked location in Chula Vista with H Street and E Street following, respectively. This phase of work is expected to take about 24-months to complete. Design and construction funds have not yet been identified. 7. Please provide information on what methods of data collection were used to supply the responses in this questionnaire. Traffic Engineering uses several methods of data collection to measure traffic volumes and delays. Traffic hoses are often used to collect traffic volume data to calculate the Average Daily Traffic (ADT). This data is the basis for several types of studies: Engineering and Traffic - 2014 5 2014-05-20 Agenda Packet Page 228 Traffic Speed Survey, Traffic Signal, All Way Stop, Crosswalk and Left-Turn Warrant Studies. The Traffic Management Program (TMP)deploys a specially equipped vehicle into average weekly peak traffic to gather average speed, travel time and delay information for each roadway segment studied. This program determines which local streets and arterial roadways have the most delays. The Arterial Travel Time System is a wireless application for remotely managing deployed detection networks. The system measures and reports Real-Time travel times along East H Street, Telegraph Canyon Road and Olympic Parkway. The detection is from unique vehicle magnetic detection signatures, re-identifies vehicles to provide accurate travel times and vehicle density. The system helps in determining performance measures for vehicular counts and traffic delays. It provides data used for incident management and load balancing of the traveled segment. It has the capability of storing historical traffic volume data than can be used for future studies. In the eastern part of the City (east of I-805), developers have paid for 28 permanent traffic count stations. The count stations store traffic volume data and can remotely accessed through the internet. As with the other methods of data collection, they are all used in monitoring the City's traffic flow for the GMOC. 8. Please provide any other relevant information, recommendations or suggestions that you would like to relay to the GMOC and/or the City Council. The Coastal Commission approved the Bayfront Master Plan on August 9, 2012. The Master Plan will oversee the development of residential and multi-family units, office and commercial development. This proposed development west of the trolley station would increase pedestrian, bicycle and vehicular traffic volumes crossing the trolley tracks and west of I-5. The LRT improvements will be an integral part to the development of the Bayfront and provide alternative modes of transportation. The Bayfront Master Plan will also benefit from the Interstate 5 (I-5) South Multimodal Corridor Study, prepared by the San Diego Association of Governments (SANDAG, December 2010) and the City of Chula Vista, in collaboration with Caltrans District 11. The study analyzes a variety of conceptual alternatives for multimodal improvements along I-5 between State Route (SR) 54 and Main Street within the City of Chula Vista. This segment of I-5 lies within what is referred to as the I-5 South Corridor, which consists of various transportation facilities adjacent to, and including, I-5 between I-15 and the San Ysidro Port of Entry. The focus study area for the I-5 South Multimodal Corridor Study is I-5 and the adjacent transportation facilities located between Main Street and SR 54, including transit, freight rail, bicycle, and pedestrian modes. The Study also includes a conceptual strategy for implementation of future multimodal transportation improvements within the I-5 South Corridor. Additional major road improvement projects are being proposed within the next 4-6 years. In the southern part of the City, the design of the street improvements on Broadway, between Main Street and southern City limits is in its initial design phase. The projects will include road widening, curb, gutter and sidewalks and bike lanes. Construction is proposed for late 2014. Traffic - 2014 6 2014-05-20 Agenda Packet Page 229 The Willow Street Bridge project is in its final design phase and construction could start in late 2014. The existing bridge is outdated for seismic and is within the 100-year flood plain. It will be replaced with a wider bridge deck and include sidewalks and bike lanes. The Heritage Road Bridge, near the Sleep Train Amphitheatre will also be replaced. The existing temporary bridge is also within the 100-year flood plain. The new bridge will be constructed above the 100-yearflood level and built widerto accommodate future growth to the east and provide the amphitheater with improved ingress and egress to I-805. As the south eastern portion of the City continues to develop, the Main Street corridor will become another major access thoroughfare to I-805. The Main Street corridor will provide relief to the Olympic Parkway corridor once it is built and provide access from the Eastern Urban Core area to the SR-125 and I-805 freeways. (See Attachment 1) The Traffic Signal Systems Engineer is working on the Signal Optimization Program to implement and monitor new signal timing within the City's major arterial roadways. On May of 2013, the Broadway corridor was re-timed as part of the Protected Left-Turn conversion program. Due to the increased timing needed for protected left-turn phasing, the entire Broadway corridor from C Street to Palomar Street were retimed with new weekday and weekend timing plans. In mid-August, the re-timing of 13 intersections in the Broadway corridor was completed. Olympic Parkway, between Brandywine Avenue and Melrose Avenue, is also under review for signal optimization. Upon evaluation, it was determined that there is a need to fully synchronize all traffic lights along the aforementioned segment which includes Caltrans operated ramp signals. City staff is waiting on traffic volumes counts from Caltrans in order to create the new timing plans. After receiving the traffic volume data, City staff will collaborate with Caltrans to coordinate new timing plans before any field implementation is performed. Work is expected to be completed in December 2013 or early 2014. With the increasing development in the Olympic Parkway corridor, City staff will be evaluating this corridor in 2014. The wireless vehicle detection system installed in 2012 in the three major corridors, East H Street, Telegraph Canyon Road and Olympic Parkway will provide real-time 24-hours per day, 365 days-a-year level of service data. After Olympic Parkway is analyzed, the other 2 major corridors will be evaluated. PREPARED BY: Name: Ben Herrera Title: Associate Engineer Date: October 31, 2013 THRESHOLD STANDARDS 1. Citywide: Maintain LOS"C"or better as measured by observed average travel speed on all signalized arterial segments,except that during peak hours LOS"D"can occur for no more than two hours of the day. 2. West of Interstate 805: Those signalized arterial segments that do not meet the standard above may continue to operate at their current 1991 LOS, but shall not worsen. Traffic - 2014 7 2014-05-20 Agenda Packet Page 230 i �o iiiin � m E KIM LO WE 11 IF-W WM / � • - ���� -1111 � In NJ LO t • �`► �j r V yr �� �s�- IIII I ` oil City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0211, Item#: 1. REVIEW AND CONSIDERATION OF THE GROWTH MANAGEMENT OVERSIGHT COMMISSION'S (GMOC) 2014 ANNUAL REPORT A. RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CHULA VISTA ACCEPTING THE 2014 GMOC ANNUAL REPORT, AND RECOMMENDING ACCEPTANCE BY THE CITY COUNCIL B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING THE 2014 GMOC ANNUAL REPORT, AND DIRECTING THE CITY MANAGER TO UNDERTAKE ACTIONS NECESSARY TO IMPLEMENT REPORT RECOMMENDATIONS AS PRESENTED IN THE STAFF RESPONSES AND PROPOSED IMPLEMENTING ACTIONS SUMMARY RECOMMENDED ACTION Council conduct the public hearing, Planning Commission adopt Resolution A, and Council adopt Resolution B. SUMMARY Each year, the GMOC submits its Annual Report to the Planning Commission and City Council regarding compliance with threshold standards for the Growth Management Program's eleven quality -of-life indicators. The 2014 Annual Report covers the period from July 1 , 2012 through June 30, 2013; identifies current issues in the second half of 2013 and early 2014; and assesses threshold compliance concerns looking forward over the next five years. The report discusses each threshold in terms of current compliance, issues, and corresponding recommendations. A summary table of the GMOC's recommendations and staff's proposed implementing actions is included as Attachment 1 . ENVIRONMENTAL REVIEW The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that there is no possibility that the activity may have a significant effect on the environment because it involves only acceptance of the GMOC Annual Report and does not involve approvals of any specific projects; therefore, pursuant to Section 15061(b) (3) of the State CEQA Guidelines no environmental review is necessary. Although environmental review is not necessary at this time, specific projects defined in the future as a result of the recommendations in the 2014 GMOC Annual Report will be reviewed in accordance with CEQA, prior to the commencement of any project. BOARD/COMMISSION RECOMMENDATION The Planning Commission will provide comments and any recommendations at the workshop. City of Chula Vista Page 1 of 8 Printed on 5/6/2014 2014-05-20 Agenda Packet powered by Leg age 234 File#: 14-0211, Item#: 1. DISCUSSION The 2014 GMOC Annual Report addresses compliance with threshold standards for eleven quality-of -life indicators covered in the City's Growth Management Program. The rate, and therefore, the effects of growth in Chula Vista have slowed considerably since 2005 when nearly 3,300 units were issued building permits. The annual number of issued permits steadily declined until 2009, when 275 units were permitted. The number of annual permitted units has been on a gradual upward trend with 630 units being issued building permits in 2012. Presented below is a summary of findings and key issues in regards to threshold compliance. The GMOC Annual Report (Attachment 2) provides additional background information and more detailed explanations of findings and discussion/ recommendations. 1. Summary of Findings The following table summarizes the GMOC's threshold compliance findings for the 2014 GMOC Annual Review, including the current review period (July 1 , 2012 - June 30, 2013) and looking forward at any potential for non-compliance between 2014 and 2018. Current and Anticipated Threshold Compliance Not In Compliance In Compliance Potential Future Non- Compliance Libraries Air Quality Fire/EMS Police - Priority 2 Drainage Libraries Traffic Fiscal Parks and Recreation Fire/EMS Parks and Recreation Police - Priority 2 Police - Priority 1 Traffic Schools Sewer Water 2. Summary of Key Issues Below are threshold compliance summaries from the GMOC report, along with staff responses (as indicated in Attachment 1). Thresholds Not in Compliance or With Potential for Future Non-Compliance LIBRARIES 3.1.1 Non-Compliant Threshold Standard - The Libraries threshold standard states that library facilities shall not fall below the citywide ratio of 500 gross square feet (GSF) per 1 ,000 population; City of Chula Vista Page 2 of 8 Printed on 5/6/2014 2014-05-20 Agenda Packet powered by Leg age 235 File#: 14-0211, Item#: 1. however, for the tenth consecutive year the threshold standard has not been met. By the end of 2014, a deficit of 123 square feet per 1 ,000 population is projected (approximately 32,000 square feet total). Construction of additional library square footage is dependent upon funding from Public Facilities Development Impact Fees (PFDIF), which are expected to be insufficient for several more years. Therefore, the 2014 Annual Report makes the following two recommendations: • "That City Council direct the City Manager to work with the developers of Millenia to establish a phasing plan that accelerates delivery of the Millenia library using creative financing." Staff Response: The Library and City Manager will work with the developers of Millenia to explore opportunities for accelerating delivery of a new library. • "That City Council direct the City Manager to initiate grants, endowments, partnerships and other funding mechanisms to support library needs." Staff Response: The Library continues to aggressively pursue and compete for any suitable grant funding. Partnerships to leverage resources are a priority. POLICE 3.2.2 Non-Compliant Priority 2 Threshold Standard - The Police Priority 2 - Urgent Response Calls for Service times did not comply with the threshold standard of responding to 57 percent of calls within 7 minutes; 42.7 percent of Priority 2 calls were responded to within 7 minutes, 14.3 percent below the standard. (See table below) The average response time for Priority 2 was 11 minutes 37 seconds, which was 4 minutes 7 seconds above the 7 minutes 30 seconds threshold standard. Threshold Standard Percent Time Average Time Emergency Response (Priority 1) 81 .0% 7 minutes 5:30 min./sec. Urgent Response (Priority 2) 57.0% 7 minutes 7:30 min./sec Actual Percent Time Average Time Emergency Response (Priority 1) 81 .5% 7 minutes 4:57 min./sec. Urgent Response (Priority 2) 42.7% 7 minutes 11 :37 min./sec. However, during Top-to-Bottom review, the Police Department and city staff concluded that the existing threshold standard is not the correct indicator for reporting P2 response times and should be revised. This change will be part of an amended growth management ordinance staff anticipates bringing to Council by the end of 2014. In the meantime, the Police Department continues to make procedural, staff and equipment improvements wherever possible to improve efficiency and performance. The 2014 Annual Report makes the following recommendation: "That City Council direct the Police Chief to continue to monitor procedures and programs to improve response times and City of Chula Vista Page 3 of 8 Printed on 5/6/2014 2014-05-20 Agenda Packet powered by Leg age 236 File#: 14-0211, Item#: 1. achieve threshold compliance." Staff Response: The Police Department will continue to monitor and evaluate the impact of current programs on response times. In addition, the Department will continue to identify strategies to achieve threshold compliance. TRAFFIC 3.3.1 Non-Compliant Threshold Standard - One signalized arterial segment -- northbound Heritage Road from Olympic Parkway to Telegraph Canyon Road -- was non-compliant with the threshold standard. This segment has been non-compliant off and on over the past several years, and the city's traffic engineers are developing a new signal timing plan to improve service levels on this arterial segment. The 2014 Annual Report recommends: "That City Council continue to support City engineers in their efforts to implement improvements that will result in threshold compliance, including funding to monitor corridor timing on a continual basis." Staff Response: The Public Works Department concurs with the recommendation. City staff will continue to implement continual basis corridor monitoring, as long as funding is available. 3.3.2 Construction of Heritage Road to Main Street -Last year's GMOC report noted increasing traffic pressures on portions of Olympic Parkway and, along with supporting interim operational improvements near Brandywine Ave, emphasized completing the extension of Heritage Road between Olympic Parkway and Main Street. The GMOC was encouraged that two lanes between Olympic Parkway and Santa Victoria Road were recently completed, and that the City is working with the owners and developers of Otay Ranch Village 2 to complete the connection to Main St. The 2014 Annual Report recommends: "That City Council support city engineers in their efforts to ensure that a minimum of two lanes of Heritage Road be constructed from Santa Victoria Road to Main Street by the end of calendar year 2014." Staff Response: The Public Works Department concurs with the recommendation. City staff will continue to work with developers to expedite construction of Heritage Road from Santa Victoria Road to Main Street with a goal to finish construction as quickly as possible. Recent schedule discussions with the developers, however, have construction of two lanes of the remaining portion of Heritage Road starting in 2014 but not being completed until 2016. 3.3.3 Grade Separation of Palomar St./ LRT Crossing - Grade separation of this crossing has been identified as a top priority, according to an August 2012 Chula Vista/SANDAL combined technical study report; however, full funding has not been identified. Therefore, the 2014 Annual Report recommends: "That City Council and staff work with SANDAG on securing complete funding for the Palomar Street/Light Rail Trolley grade separation." Staff Response: The Public Works Department concurs with the recommendation. City staff will continue to work with SANDAG staff to secure construction funding for the Palomar Street/Light Rail City of Chula Vista Page 4 of 8 Printed on 5/6/2014 2014-05-20 Agenda Packet powered by Leg age 237 File#: 14-0211, Item#: 1. Trolley grade separation project. FIRE AND EMERGENCY MEDICAL SERVICES 3.4.1 Non-Compliant Threshold Standard - For the third consecutive year, the Fire/EMS threshold standard of responding to 80 percent of calls within 7 minutes has not been met; 75.7 percent of calls were responded to within 7 minutes, which is 4.3 percent below the standard and 0.7 percent below what was experienced in FY 2012. However, it should be noted that the call volume increased by 1 ,184 calls during the period under review, a 10.6 percent increase in the call volume of FY 2012. FIRE and EMS Response Times Review Period Call % of All Calls Average Average Trave Average Average Turn- Volume Responded to Response Timi Time Dispatch Time out Time Minutes for all Calls2 Threshold Standard: 80.0% FY 2013 12,316 75.7% 6:02 3:48 1:05 1:08 FY 2012 11,132 76.4% 5:59 3:43 FY 2011 9,916 78.1% 6:46 3:41 FY 2010 10,296 85.0% 5:09 3:40 FY 2009 9,363 84.0% 4:46 3:33 FY 2008 9,883 86.9% 6:31 3:17 FY 2007 10,020 88.1% 6:24 3:30 CY 2006 10,390 85.2% 6:43 3:36 In December 2013, the Fire Department implemented the 911 FirstWatch real time data and notification dashboard program to help address concerns related to dispatch and turnout. Since this occurred after the close of the current threshold reporting period (June 30, 2013), next year's report will have the benefit of approximately six months of data from FirstWatch. The 2014 Annual Report recommends: "That City Council continue to direct the Fire Department to implement effective measures that will ensure that the threshold standard will be met." Staff Response: The Fire Department is continuing to work on our response time thresholds. This process includes working to implement the FirstWatch program which will assist us in monitoring these thresholds with real-time data notifications. Thresholds Currently In Compliance Threshold Standards were found to be compliant for Police Priority 1, Parks and Recreation, Fiscal, Schools, Sewer, Drainage, Air Quality, and Water. However, the GMOC made recommendations for Parks and Recreation, Drainage, and schools, as outlined below: PARKS AND RECREATION 3.5.1 Parks and Recreation Facilities Master Plan - City staff had anticipated bringing the draft Parks and Recreation Master Plan (PRMP) update to City Council in 2013. However, park planning City of Chula Vista Page 5 of 8 Printed on 5/6/2014 istar 2014-05-20 Agenda Packet powered by Leg age 238 File#: 14-0211, Item#: 1. efforts tied in with processing entitlements for the future University Villages in Otay Ranch has necessitated postponement. The GMOC is concerned that additional delays may arise and postpone approval of the PRMP indefinitely. The 2014 Annual Report recommends: "That City Council approve the updated Parks and Recreation Master Plan by the end of 2014 and make additional updates as necessary." Staff Response: Completion of the Citywide Parks & Recreation Master Plan is subject to future park planning efforts within the future University Villages. The University Villages located within the Otay Ranch area are currently being processed for entitlement approvals. Staff continues to work with project applicants in the development of the overall land use plans, including future park sites, for the villages. These Villages anticipate new park acreages and park locations beyond that envisioned in the former Draft Parks and Recreation Master Plan (PRMP) December 2010. Once the conceptual park plans for each of the Villages has solidified, final edits of the PRMP will occur. Thus far only one of the five villages, Village 8 west, has been approved by City Council at SPA level. The Draft PRMP will be updated when a more complete picture of future park locations and sizes is available. Staff anticipates completion of the updated draft in 2014. Revenue Generating Capital Improvements - The GMOC is pleased that the City generates revenue by leasing gazebos in its parks and renting recreation facilities on Sundays. However, they would like the Recreation Department to continue exploring programs and/or capital improvements that would help generate additional recurring revenue. The 2014 Annual Report recommends: "That City Council direct the City Manager to seek opportunities for potential capital improvements that will provide new services and recreation to the community while generating revenue to offset recurring costs for new and existing parks." Staff Response: City Staff will work to review and update the Master Fee Schedule to maximize revenue from the City's Park Assets and will consider new revenue opportunities in the growing Parks System. In an effort to continually improve and enhance services and overall organizational effectiveness, the Recreation Department solicited competitive proposals from qualified firms to conduct a Cost Recovery, Resource Allocation and Revenue Enhancement Study. The comprehensive review and analysis will assist the Recreation Department in refining its service delivery and financial management philosophy to enhance and/or sustain services over both the short and long term. DRAINAGE 3.7.1 Maintenance of Existing Drainage Channels - The GMOC recognizes that maintaining existing channels in western Chula Vista is challenging because of shortages in resources, staffing levels and funding. The 2014 Annual Report makes the following two recommendations: A. "That City Council direct the City Manager to support engineering staff to closely monitor the status of the storm water conveyance system to ensure sufficient operation and continued threshold standard compliance." City of Chula Vista Page 6 of 8 Printed on 5/6/2014 istar 2014-05-20 Agenda Packet powered by Leg age 239 File#: 14-0211, Item#: 1. Staff Response: A. The Public Works Department concurs with the recommendation. City staff will continue to monitor the status of the storm water conveyance system to ensure sufficient operation and continued threshold standard compliance. B. "That City Council identify funding to 1) implement locally mandated storm water flow regulations designed to avoid potential flooding and/or health issues; and 2) comply with Regional Water Quality Control Board requirements." Staff Response: B.1) The Public Works Department concurs with the recommendation. City staff will continue to work with City Council to identify funding to implement locally mandated storm water flow regulations designed to avoid potential flooding and/or health issues B.2) The proposed FY 14-15 budget will provide sufficient funds for compliance with the Regional Water Quality Control Board requirements until the Water Quality Improvement Plan (WQIP) for the San Diego Bay Watershed is completed in June 2015. In FY 15-16, the City will start implementing activities identified in the WQIP. The implementation phase may require additional funding which cannot be estimated until the WQIP document is completed. SCHOOLS 3.8.1 School Districts Updates - Both the Chula Vista Elementary School District and the Sweetwater Union High School District indicated they will need new schools in eastern Chula Vista by 2016 or 2017. The Chula Vista Elementary School District is in the process of securing a site for an elementary school in Village 2 of Otay Ranch; the Sweetwater Union High School District has sites and funding for a new joint high school / middle school in Village 11 of Otay Ranch. The 2014 Annual Report recommends: "That City Council encourage the school districts to continue being proactive in identifying funding and school sites so that schools will be constructed before the need becomes more critical." Staff Response: CVESD has indicated that they will continue to act as proactively as possible to identify funding to construct schools before the need becomes critical. SUHSD will continue to identify funding sources and school sites as recommended. State funding is one source that currently does not have enough funding. SUHSD would appreciate support for a state-wide school bond and also recommends that the City Council not approve projects without a funding source in place (such as a Mello-Roos Community Facilities District). AIR QUALITY 3.10.1 Additional Air Monitoring Desired - The San Diego Air Pollution Control District (APCD) operates nine real-time, ambient air quality monitoring stations throughout the region, including one station in Chula Vista. However, the GMOC would like more monitoring stations in the Chula Vista area to obtain more data. The 2014 Annual Report makes the following recommendation: " That the City advocate for at least one more monitoring station in Chula Vista." City of Chula Vista Page 7 of 8 Printed on 5/6/2014 istar 2014-05-20 Agenda Packet powered by Leg age 240 File#: 14-0211, Item#: 1. Staff Response: The City can send a formal letter to the Air Pollution Control District requesting an additional air monitoring station within Chula Vista. It should be noted that the APCD only has 8 monitoring stations countywide (with 1 in Chula Vista), so the agency may be hesitant to add a redundant station in the City, when other parts of the region are unmonitored. 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 or Planning Commission 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 Growth Management Program's Fiscal threshold standard supports the Economic Vitality goal, "encouraging policies, planning, infrastructure, and services that are fundamental to an economically strong, vibrant city." The Air Quality, Libraries and Parks and Recreation threshold standards support the Healthy Communities goal, promoting "an environment that fosters health and wellness and providing parks, open spaces, outdoor experiences, libraries and recreational opportunities that residents can enjoy." And the Police, Fire and Emergency Services, Traffic, Sewer and Drainage threshold standards support the Strong and Secure Neighborhoods goal, ensuring "a sustainable and well- maintained infrastructure to provide safe and appealing communities to live, work and play" and maintaining "a responsive Emergency Management Program." CURRENT YEAR FISCAL IMPACT None of the staff responses and proposed implementing actions appears to require additional staff or other resources beyond those already included in the currently approved budget and/or in the fiscal year 2014/15 proposed budget. In such instance as any additional resources may be required, these requests will be returned to Council along with fiscal analysis as applicable. ONGOING FISCAL IMPACT As any follow-up implementing actions are brought forward to the City Council fiscal analysis of these actions will be provided, as applicable. ATTACHMENTS 1 - 2014 GMOC Staff Responses and Implementing Actions Summary 2 - 2014 GMOC Annual Report, including the Chair Cover Memo 3 - 2014 GMOC Annual Report Appendices A and B City of Chula Vista Page 8 of 8 Printed on 5/6/2014 2014-05-20 Agenda Packet powered by Leg age 241 RESOLUTION NO. 2013- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING THE 2014 GMOC ANNUAL REPORT, AND DIRECTING THE CITY MANAGER TO UNDERTAKE ACTIONS NECESSARY TO IMPLEMENT REPORT RECOMMENDATIONS AS PRESENTED IN THE STAFF RESPONSES AND PROPOSED IMPLEMENTING ACTIONS SUMMARY WHEREAS, the City's Growth Management Oversight Commission (GMOC) is responsible for monitoring threshold standards for eleven quality of life indicators associated with the City's Growth Management Program, and for submitting their annual report to the City Council; and WHEREAS, the Development Services Director has determined that there is no possibility that the activity may have a significant effect on the environment; therefore, pursuant to Section 15061(b)(3) of the State CEQA Guidelines, no environmental review is required; and WHEREAS, on April 3, 2014, the GMOC finalized its 2014 Annual Report; and WHEREAS, the report covers the period from July 1, 2012 through June 30, 2013, identifies current issues in the second half of 2013 and early 2014, and assesses threshold compliance concerns over the next five years; and WHEREAS, on May 1, 2014, the City Council held a duly noticed joint public meeting with the Planning Commission to consider the 2014 GMOC Annual Report; and WHEREAS, due to the lack of a Planning Commission quorum, formal recommending actions could not be made; and WHEREAS, the item was rescheduled to the May 14, 2014 Planning Commission meeting so that the Planning Commission could make its formal recommendation; and WHEREAS, the Planning Commission, upon considering the Report, recommended that the City Council accept the Report. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista accepts the 2014 GMOC Annual Report. BE IT FURTHER RESOLVED that the City Council directs the City Manager to undertake actions necessary to carry out the implementing actions as presented in the Staff Responses and Proposed Implementing Actions Summary (Exhibit A). 2014-05-20 Agenda Packet Page 242 Presented by: Approved as to form by: Kelly Broughton, FASLA Glen R. Googins Director of Development Services City Attorney PASSED, APPROVED and ADOPTED by the City Council of the City of Chula Vista, California this day of May 2014,by the following vote: AYES: NAYES: ABSENT: ABSTAIN: Cheryl Cox,Mayor ATTEST: Donna Norris, City Clerk STATE OF CALIFORNIA) COUNTY OF SAN DIEGO) CITY OF CHULA VISTA) I, Donna Norris, City Clerk of the City of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2013- was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the of May, 2014. 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RESOLUTION OF THE CHULA VISTA HOUSING AUTHORITY OF THE CITY OF CHULA VISTA AUTHORIZING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS IN ONE OR MORE SERIES IN A CUMULATIVE AND AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $8 MILLION FOR THE PURPOSE OF FINANCING THE ACQUISITION AND REHABILITATION OF THE KIKU GARDENS (GARDEN VILLAS) HOUSING PROJECT; APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF ANY AND ALL DOCUMENTS NECESSARY TO ISSUE THE BONDS, COMPLETE THE TRANSACTION AND IMPLEMENT THIS RESOLUTION, AND RATIFYING AND APPROVING ANY ACTION HERETOFORE TAKEN IN CONNECTION WITH THE BONDS RECOMMENDED ACTION Authority adopt the resolution. SUMMARY The City of Chula Vista received a request from C&C Development Group, dba RAHD Group ("Applicant") to consider the issuance of tax exempt obligations to finance the acquisition and rehabilitation of 100 existing affordable units at Kiku Gardens (Garden Villa) Apartments (the "Project"). The Project is located at 1260 Third Avenue in southwest Chula Vista. The rehabilitation will improve the property and extend the term of the affordable rents for 55 years. At this time, the Chula Vista Housing Authority is asked to approve the issuance, sale, and delivery of multi-family housing revenue bonds upon award of the bond allocation from the California Debt Limit Allocation Committee ("CDLAC"). 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 Project is categorically exempt pursuant to Section 15301(Class 1[a]) (Existing Facilities) of the State CEQA Guidelines because the project is only for the issuance bonds, the acquisition and rehabilitation of an existing apartment development. Thus, no further environmental review is necessary. BOARD/COMMISSION RECOMMENDATION On November 13, 2013, the Housing Advisory Commission voted to recommend the issuance of Tax Exempt Multi-Family Revenue Bonds to assist in the Project financing. DISCUSSION On December 10, 2013, the Chula Vista City Council conducted a public hearing and adopted Resolution No. 2013-258 approving the issuance, sale and delivery of multi-family housing revenue bonds for Kiku Gardens Apartments and the Chula Vista Housing Authority adopted Resolution No.2013-059 regarding its intention to issue tax exempt obligations for the Project (Attachment 1: Locator Map). The Applicant will receive approval from the California Debt Limit Allocation Committee (CDLAC), the State bonding authority on May 21, 2014. The Chula Vista Housing Authority will be the conduit bond City of Chula Vista Page 1 of 4 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 249 File#: 14-0274, Item#: 3. issuer for an aggregate amount not to exceed $8 million. The bond allocation and tax credit contributions will be used to substantially finance the Project. The Development Team C&C Development Group, LLC, dba RAHD Group, is currently under contract to purchase the property located at 1260 Third Avenue. DAL Development, LLC ("DAL") is a for-profit housing developer that will assist C&C Development Group, LLC, in the acquisition and development of the Project. C&C Development Group, LLC has successfully acquired and rehabilitated over 450 residential units in California, of which 355 are in San Diego, previously funded through the U.S. Department of Housing and Urban Development (HUD). Upon close of escrow, the Applicant and Hearthstone Housing Foundation (Hearthstone), a nonprofit service agency organized under section 501(c)(3) of the Internal Revenue Service Code, will create a new limited partnership, Kiku Gardens Housing Partners, LP, to own and operate the Project. The new partner, Hearthstone is a non-profit organization formed in 1991 and currently provides services to Hillside Apartments in San Diego and Spring Villa Apartments in Spring Valley. The Proposed Project The Project is an existing 100-unit affordable complex originally built and financed in 1983 through HUD. The affordability covenants are set to expire in ten years. To preserve the affordability of the project and to take advantage of tax credit financing, the existing owner, Kiku Gardens (Garden Villas), will sell the project to a new partnership formed by the Applicant, named Kiku Gardens Housing Partners, LP, a California limited partnership. Given the age and the desire to preserve the affordability, the Applicant is proposing the acquisition and rehabilitation of the property using bond financing and tax credits to ensure continued long term use and viability. The scope of the proposed renovation includes interior renovations to the units, new roof, upgrades to mechanical systems, electrical system, plumbing system, and other exterior finishes. Improvements will be made to common areas including the community room, library, central laundry, outside garden patio area, and computer lab for all residents. Income and Rent Restrictions For bond financing, Section 142 (d) of the Internal Revenue Services Code requires either a minimum of 20 percent of the rental units in the Project to be available for occupancy by persons or families whose income does not exceed 50 percent of the area median income (AMI) for the San Diego Primary Metropolitan Statistical Area, or alternatively, at least 40 percent of the rental units are required to be available for occupancy by persons or families whose income does not exceed 60 percent of the AMI. The units will be made available at affordable rents established by the applicable State law. The project will exceed the affordability requirements by setting aside 30 units for very low income householdsat 50 percent of AMI, and 69 units for low income householdsat 60 percent of AMI, with one unit reserved for the resident manager. The rents will also be set using these income levels (i.e. 30 units at 50% and 69 units at 60%). The Project proposes to maintain the income and rent restrictions for Kiku Gardens for a period not less than 55 years, exceeding the 30-year term of the bonds. These income and rent restrictions will be outlined within the bond regulatory agreement to be recorded against the property. The Project also has an existing Section 8 financing contract with HUD. This allows the tenants to pay only 30 percent of their income, with HUD paying the remaining portion of the rent. HUD will continue to City of Chula Vista Page 2 of 4 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 250 File#: 14-0274, Item#: 3. provide a Section 8 contract for the property for a 20 year period. Additionally,the applicant has applied for an increase in the Section 8 rent based on post rehabilitation market rent, which is $1,150 for a One Bedroom unit. The actual rent currently paid by the tenants will not increase due to the HUD assistance. Compliance with the income and rent restrictions will be subject annually to a regulatory audit and annual tax credit certification. Compliance with strict property management policies and procedures will ensure that income and rent restrictions will be maintained for the full 55-year compliance period. Proposed Financing of Project The Tax Exempt Multi-Family Revenue Bonds and Low Income Housing Tax Credit financing will support the majority of the estimated $16.63 million total development cost of the Project. The Housing Authority will serve as the issuer of $8 million in tax exempt bonds to be made available as a public offering for short term tax exempt bonds, with a long term taxable loan from Freddie Mac, as guarantor, and Citi Community Capital, as servicer. The Applicant will also apply for approximately $4.63 million in Low Income Housing Tax Credits. With the bond and tax credit financing, no additional City financing is needed for the Project. The Department of Housing and Urban Development's Section 8 contract for the Project will remain in place for 20-years. Bond Documents At this time, the Chula Vista Housing Authority is being asked to approve in substantial form all documents related to the bond issuance. Bond documents presented for the Housing Authority's consideration have been prepared by Stradling Yocca & Rauth, serving as bond counsel for the City of Chula Vista and its Housing Authority. These documents are listed below and are attached to this report. ■ The Bond Regulatory Agreement specifies the regulationsfor the use and operation of the Project (see Attachment 2). ■ The Trust Indenture for the Bonds specifies the terms and conditions for the issuance and selling of the Bonds and use of the bond proceeds (see Attachment 3). ■ The Loan Agreementfor the Bonds specific the terms and conditions of the Loan financing for the project (see Attachment 4). ■ The Bond Purchase Agreement describes the terms of the Bond Purchase between the Issuer and the Purchaser (see Attachment 5). ■ The Official Statement is the offering document by which the underwriter will market the bonds to the public (Attachment 6). Article 34 Article 34 of the California Constitution requires that voter approval be obtained before any "state public body" develops, constructs or acquires a "low rent housing project". The Project is existing and has a contract for financial assistance from the Federal Government for affordable units. Therefore, the project is exempt from the requirement. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the Housing 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 independentlyaware, and has not been informed by any Housing 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 3 of 4 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 251 File#: 14-0274, Item#: 3. The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The acquisition and rehabilitation of Kiku Gardens (Garden Villas) apartments to preserve the ongoing affordability supports the following strategic goals: Economic Vitality Provides an opportunity for investment in western Chula Vista and promotes an environment for residents to prosper; and, Connected Community Provides opportunities that enrich the community's quality of life. CURRENT YEAR FISCAL IMPACT Bond financing is a self-supporting program with the borrower responsiblefor the payment of all costs of issuance and other costs of the bonds. The Housing Authority will receive an origination fee for its services in issuing the bonds equivalent to 1/8 of 1% of the bond loan, approximately $10,400. Other costs related to the issuance of the bonds will be paid from bond proceeds. The bonds will be secured by the Project and will not constitute a liability to or an obligation of the City's General Fund. ONGOING FISCAL IMPACT Staff costs associated with monitoring compliance of the regulatory restrictions and administration of the outstanding bonds will be reimbursed from an annual administrative fee of approximately $10,400 (based upon 1/8 of 1% of the permanent bond loan) paid to the Housing Authority by the owner. ATTACHMENTS 1. Locator Map 2. Bond Regulatory Agreement 3. Trust Indenture 4. Loan Agreement 5. Bond Purchase Agreement 6. Official Statement City of Chula Vista Page 4 of 4 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 252 ��Slr MY OF CHULA VISTA Disclosure Statement*** Pursuant to City Council Policy 101-01, prior to any action on a matter that requires discretionary action by the City Council, Planning Commission or other official legislative body of the City, a statement of disclosure of certain ownerships, financial interests, payments, and campaign contributions must be filed. The following information must be disclosed: 1. List the names of all persons* having a financial interest in the project that is the subject of the application, project or contract (e.g., owner, applicant, contractor, subcontractor,material supplier). 2. If any person* i entified in section 1. is a corporation or partnership, list the names of all individuals with an investment of$2000 or more in the entity. L�,_ (t4J � 1 3. if any person* identified in section 1. is a non-profit organization or trust, list the names of any person who is the director of the non-profit organization or the names of the trustee,beneficiary and trustor of the trust. 4. Please identify every person,* including any agents, employees, consultants, or independent contractors, whom you have authorized to represent you before the City in this matter. ltn (�; �• ua-slue-Z.._ 276 Fourth Avenue Chula Vista I California l 91910 2014-05-20 Agenda Packet Page 253 CITY OF CHULA VISTA Disclosure Statement"* Disclosure Statement—Page 2 5. Has any person* identified in 1., 2., 3., or 4., above, or otherwise associated with this contract, project or application, had any financial dealings with an official** of the City of Chula Vista as it relates to this contract, project or application within the past 12 months? Yes No y If Yes, briefly describe the nature of the financial interest the official** may have in this contract. 6. Has any person* anyone identified in 1., 2., 3., or 4., above, or otherwise associated with this contract, project or application, made a campaign contribution of more than $250 within the past twelve (12) months to an official of t+{he City of Chula Vista? No Yes-7lf yes, which official? Gf 5 aS 7. Has any person* identified in 1., 2., 3., or 4., above, or otherwise associated with this contract, project or application, provided more than $440 (or an item of equivalent value) to an official" of the City of Chula Vista in the past twelve (12) months? (This includes any payment that confers a personal benefit on the recipient, a rebate or discount in the price of anything of value, money to retire a legal debt, gift, loan, etc.) Yes No If Yes, which official** and what was the nature of item provided? 7. Has any person* identified in 1., 2., 3., or 4., above, or otherwise associated with this contract, project or application, been a source of income of$500 or more to an official** of th City of Chula Vista in the past twelve (12) months? Yes No 276 Fourth Avenue Chula Vista California I 91910 2014-05-20 Agenda Packet Page 254 cm ox CHUM VISR Disclosure Statement"* If Yes, identify the official** and the nature of the income provided? Date: f Signature of Contractor/Applicant 4 � Print or type name of ContractorlApplicant * Person 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 any other group 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, and City employees or staff members. This Disclosure Statement must be completed at the time the project application, or contract, is submitted to City staff for processing, and updated within one week prior to consideration by the legislative body. 276 Fourth Avenue I Chula Vista California 1 91910 2014-05-20 Agenda Packet Page 255 RESOLUTION NO. RESOLUTION OF THE CHULA VISTA HOUSING AUTHORITY AUTHORIZING THE ISSUANCE OF ITS MULTIFAMILY HOUSING REVENUE BONDS IN ONE OR MORE SERIES IN A CUMULATIVE AND AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $8 MILLION FOR THE PURPOSE OF FINANCING THE ACQUISITION AND REHABILITATION OF THE KIKU GARDENS (GARDEN VILLAS) MULTIFAMILY RENTAL HOUSING PROJECT; APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF ANY AND ALL DOCUMENTS NECESSARY TO ISSUE THE BONDS, COMPLETE THE TRANSACTION AND IMPLEMENT THIS RESOLUTION, AND RATIFYING AND APPROVING ANY ACTION HERETOFORE TAKEN IN CONNECTION WITH THE BONDS WHEREAS, pursuant to the Housing Authorities Law, Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code ("Housing Authorities Law"), the Housing Authority of the City of Chula Vista, a public body corporate and politic organized, existing and operating pursuant to the Housing Authorities Law, ("Authority") is empowered to issue revenue bonds for the purpose of financing the acquisition, construction, rehabilitation, refinancing, development, and operation of multifamily rental housing, and to issue bonds for the purpose of refunding bonds previously issued by Authority; and WHEREAS, Kiku Gardens Housing Partners, L.P., a California limited partnership (the "Developer"), intends to acquire and rehabilitate a 100-unit project on that certain real property located at 1260 Third Avenue, in the City of Chula Vista, California(together, "Project"); and WHEREAS,the Developer has requested Authority to issue tax-exempt multifamily housing revenue bonds and loan the proceeds of the bonds to the Developer to finance the acquisition, rehabilitation and equipping through completion of the Project, and WHEREAS, Authority, by action of its Board of Commissioners (the "Board"), desires to assist the Developer and to increase the supply of affordable housing by making a portion of the units in the Project available for low and very low income persons or families, and in order to accomplish such purposes it is desirable for Authority to provide for the issuance of the bonds and financing of the Project; and WHEREAS,Authority will loan the proceeds of the bonds to the Developer; and WHEREAS, Government Code Section 8869.85 requires a local agency to file an application with the California Debt Limit Allocation Committee ("Committee")prior to the issuance of tax-exempt multifamily housing revenue bonds and the Authority has filed such an application; and WHEREAS, the Committee has allocated approximately $8 million of the State of California 2012 State ceiling for private activity bonds under Section 146 of the Internal Revenue Code of 1986 to the Project; and 2014-05-20 Agenda Packet Page 256 HA Resolution No. 2014- Page 2 WHEREAS, there have been prepared and presented to the Board for consideration at this meeting the forms of various documents for the Bonds, as more fully described herein; and WHEREAS, it appears that each of the documents and instruments described herein now before this meeting is in a substantially appropriate form and is an appropriate instrument to be executed and delivered for the purposes intended. NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA DOES HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS: 1. Authorization of Bonds. In accordance with the Housing Authorities Law and pursuant to the Indenture (hereinafter defined), Authority authorizes issuance of bonds designated as "City of Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A" in one or more series in a cumulative and aggregate principal amount not to exceed $8 million (collectively, the "Bonds"), with an interest rate or rates, a maturity date or dates and other terms as provided in the Indenture as finally executed for the Bonds. The Bonds shall be in substantially the form set forth in and otherwise in accordance with the Indenture, and shall be executed on behalf of Authority by the manual or facsimile signature of the Chair of the Board of Commissioners of the Authority (the "Chair") or the Executive Director of the Authority (the "Executive Director"), and the manual or facsimile seal of the Authority shall be impressed or reproduced thereon and the Bonds shall be attested by the manual or facsimile signature of the Secretary of the Board of Commissioners of the Authority ("Secretary"). 2. Approval of Indenture. The form of Trust Indenture pursuant to which the Bonds may be issued ("Indenture"), by and between the Authority and U.S. Bank National Association, as Trustee (the "Trustee"), in substantially the form on file with the Secretary, is hereby approved. The Chair, the Executive Director, and their authorized designee(s) (each, an "Authorized Officer") are authorized to execute, and the Secretary is authorized to attest, the Indenture in substantially said form, with such additions thereto and changes therein as the Authorized Officer may approve or recommend in accordance with Section 8 hereof. The date, maturity date or dates, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption, and other terms of the Bonds shall be as provided in the Indenture as finally executed. 3. Approval of Re uryAgreement. The form of that certain Regulatory Agreement and Declaration of Restrictive Covenants ("Regulatory Agreement"), among the Authority, the Developer and Trustee, in substantially the form on file with the Secretary, is hereby approved. Any Authorized Officer is authorized to execute, and the Secretary is authorized to attest, the Regulatory Agreement, in substantially said form, with such additions thereto and changes therein as such Authorized Officer may approve or recommend in accordance with Section 7 hereof. 4. Approval of Loan Agreement. The form of Loan Agreement relating to the Bonds ("Loan Agreement"), by and between Authority and the Developer, in substantially the form on file with the Secretary, is hereby approved. Any Authorized Officer is authorized to execute, and the Secretary is authorized to attest, the Loan Agreement, in substantially said form, with such additions thereto and changes therein as such Authorized Officer may approve or recommend in accordance with Section 7 hereof. 5. Approval of Loan Documents. The form of Construction Funding Agreement, by and among the Developer, Trustee and Citibank, N.A., as Bondholder Representative (the "Bondholder Representative") relating to the Bonds ("Construction Funding Agreement"), in 2014-05-20 Agenda Packet Page 257 HA Resolution No. 2014- Page 3 substantially the form on file with the Secretary, and solely to the extent it relates to the terms of the Bonds and as necessary to implement this Resolution, is hereby approved. Any Authorized Officer is authorized to execute and deliver, and the Secretary is authorized to attest, any and all certificates, agreements and other documents ancillary to the Loan Agreement, including, but not limited to, the Note, in the form approved by the City Attorney, as general counsel to Authority ("General Counsel") and by special counsel and bond counsel to the Authority and City on these matters, Stradling Yocca Carlson&Rauth (together, "Special Counsel")in accordance with Section 7 hereof. 6. Approval of Bond Purchase Agreement. The form of Bond Purchase Agreement, by and among the Authority, the Developer and the Bondholder Representative (the "Bond Purchase Agreement"), in substantially the form on file with the Secretary is hereby approved. Any Authorized Officer is authorized to execute, and the Secretary is authorized to attest, the Bond Purchase Agreement, in substantially said form, with such additions thereto and changes therein as such Authorized Officer may approve or recommend in accordance with Section 7 hereof. 7. Approval of Changes to Documents. Any Authorized Officer executing a document approved herein, in consultation with General Counsel and Special Counsel, is authorized to approve and make such modifications, changes or additions to the Indenture, the Regulatory Agreement, the Loan Agreement, the Bond Purchase Agreement or other documents as may be necessary or advisable, and the approval of any modification, change or addition to any of the aforementioned agreements shall be evidenced conclusively by the execution and delivery thereof by such Authorized Officer and approval as to form by General Counsel and Special Counsel. Further, any Authorized Officer, acting alone, is authorized to execute any assignment agreement related to any mortgage note, mortgage, deed of trust or other document related to the loan made to the Developer from the proceeds of the Bonds. 8. Actions Ratified and Authorized. All actions heretofore taken by the officers, employees and agents of Authority with respect to the issuance and sale of the Bonds are approved, confirmed and ratified, and the officers, employees and agents of Authority are authorized and directed, for and in the name and on behalf of Authority,to do any and all things and take any and all actions and execute and deliver any and all certificates, agreements and other documents, including, but not limited to, those documents described in the Indenture, Loan Agreement, Construction Funding Agreement,the Bond Purchase Agreement and the other documents herein approved,which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Bonds and to effectuate the purposes thereof and of the documents herein approved in accordance with this resolution and resolutions heretofore adopted by the Governing Board. In the event that the Secretary is unavailable to sign any document related to the Bonds, any Deputy Secretary of the Authority may sign on behalf of the Secretary. 9. Further Consents. Approvals and Other Actions. All consents, approvals, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution or otherwise appropriate in the administration of the Bonds and the lending program financed thereby, including without limitation any of the foregoing that may be necessary or desirable in connection with any amendment of such documents, any transfer of the Project, any substitution of security for the Bonds, or any redemption of the Bonds may be taken or given by the Chair or the Executive Director, and the Chair or the Executive Director are hereby authorized and directed to give any such consent, approval, notice, order or request and to take any such action which such officer may deem necessary or desirable to further the purposes of this Resolution. 10. Conflicting Resolutions Repealed. As to the Bonds, all prior resolutions or parts thereof, if any, in conflict herewith are,to the extent of such conflict,repealed. 2014-05-20 Agenda Packet Page 258 HA Resolution No. 2014- Page 4 11. Severabili1y. If any section, paragraph or provision of this Resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any remaining sections, paragraphs or provisions of this Resolution. 12. Effectiveness of Resolution and Date Thereof. This Resolution shall take effect upon its adoption. 13. Certification. The Secretary shall certify to the passage and adoption of this Resolution. Presented by Approved as to form by James D. Sandoval Glen R. Googins Housing Authority Director Housing Authority Legal Counsel 2014-05-20 Agenda Packet Page 259 O O p B P:l N G/ b0 W 6. V J El o El w z Y THIRD AV THIRD AV C/) ry u o Q O a' 0 � X O N O ca - W � � Q 0 = Co FOURTH AV T F-FF u 0. eS V O N N O Stradling Yocca Carlson & Rauth Draft Dated May 12, 2014 Recording Requested By and When Recorded Mail To: Stradling Yocca Carlson&Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attn: Bradley R.Neal, Esq. [Space above for recorder.] This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS By and Among CHULA VISTA HOUSING AUTHORITY, U.S. BANK NATIONAL ASSOCIATION, as Trustee And KIKU GARDENS HOUSING PARTNERS,LP, a California limited partnership Dated as of June 1,2014 Relating to CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (GARDEN VILLAS) SERIES 2014A 2014-05-20 Agenda Packet Page 261 Table of Contents Page Section 1. Definitions and Interpretation.......................................................................................2 Section 2. Acquisition, Rehabilitation, Equipping and Completion of the Project.......................6 Section 3. Residential Rental Property ------------------------------------------------------------------------------------------7 Section 4. Low Income and Very Low Income Units....................................................................8 Section 5. Tax Status of the Bonds---------------------------------------------------------------------------------------------- 12 Section 6. Modification of Special Tax Covenants...................................................................... 12 Section 7. Indemnification----------------------------------------------------------------------------------------------------------- 13 Section8. Consideration-------------------------------------------------------------------------------------------------------------- 15 Section9. Reliance----------------------------------------------------------------------------------------------------------------------- 15 Section 10. Sale or Transfer of the Project.................................................................................... 15 Section11. Foreclosure------------------------------------------------------------------------------------------------------------------ 16 Section12. Term---------------------------------------------------------------------------------------------------------------------------- 16 Section 13. Covenants to Run With the Land................................................................................ 17 Section 14. Burden and Benefit----------------------------------------------------------------------------------------------------- 17 Section 15. Uniformity; Common Plan ----------------------------------------------------------------------------------------- 18 Section16. Enforcement---------------------------------------------------------------------------------------------------------------- 18 Section 17. Recording and Filing--------------------------------------------------------------------------------------------------- 19 Section18. Payment of Fees---------------------------------------------------------------------------------------------------------- 19 Section19. Governing Law-----------------------------------------------------------------------------------------------------------20 Section20. Amendments---------------------------------------------------------------------------------------------------------------20 Section21. Notice--------------------------------------------------------------------------------------------------------------------------20 Section22. Severability-----------------------------------------------------------------------------------------------------------------21 Section 23. Multiple Counterparts-------------------------------------------------------------------------------------------------21 Section 24. Compliance by Borrower--------------------------------------------------------------------------------------------21 Section 25. Obligation of Borrower; Limitations on Recourse to Borrower.................................21 Section 26. CDLAC Requirements------------------------------------------------------------------------------------------------22 Section 27. Damage, Destruction or Condemnation of the Property.............................................22 EXHIBIT A LEGAL DESCRIPTION ------------------------------------------------------------------------------------------A-1 EXHIBIT B CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE.........................B-1 EXHIBIT C INCOME COMPUTATION AND CERTIFICATION............................................C-1 EXHIBIT D CDLAC RESOLUTION-------------------------------------------------------------------------------------------D-1 EXHIBIT E CDLAC COMPLIANCE CERTIFICATE................................................................E-1 i 2014-05-20 Agenda Packet Page 262 REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the "Regulatory Agreement"), dated as of June 1, 2014, by and among the Chula Vista Housing Authority, a public body corporate and politic duly organized and existing under the Constitution and the laws of the State of California (together with any successor to its rights, duties and obligations, the "Issuer"), Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower") and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America, duly authorized to accept and execute trusts of the type contemplated by the Indenture (as hereinafter defined), with a corporate trust office in Los Angeles, California, as Trustee (the"Trustee"). WI TNESSE TH WHEREAS, the Legislature of the State of California enacted Chapter 1 of Part 2 of Division 24 of the Health and Safety Code (the "Act")to authorize housing authorities to issue bonds to finance the acquisition, rehabilitation, equipping and development of multifamily rental housing for families and individuals of lower income; and WHEREAS, the Issuer is a political subdivision (within the meaning of that term in the Regulations of the Department of Treasury and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of 1986, as amended(the"Code")); and WHEREAS, on , 2014, the governing board of the Issuer adopted a resolution (the "Resolution") authorizing the issuance of revenue bonds in connection with financing the acquisition, rehabilitation and equipping of a 99-unit multifamily plus one manager's unit rental housing development, known generally as "Garden Villas" located at 1260 3rd Avenue in the City of Chula Vista, County of San Diego, California(the "Project"); and WHEREAS, in furtherance of the purposes of the Act and the Resolution and as a part of the Issuer's plan of financing residential rental housing, the Issuer has issued $ aggregate principal amount of its "$ Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A" (the "Bonds"), the proceeds of which will be loaned to the Borrower to finance the acquisition, rehabilitation and equipping of the Project for the public purpose of providing decent, safe and sanitary housing for families and individuals of low and very low income; and WHEREAS, the Issuer and the Borrower have entered into a loan agreement dated as of the date hereof(the "Loan Agreement"),providing the terms and conditions under which the Issuer,will make the Loan to the Borrower to finance the acquisition,rehabilitation and equipping of the Project; and WHEREAS, all things necessary to make the Bonds, when issued as provided in the Trust Indenture between the Issuer and the Trustee, dated as of June 1, 2014 (the "Indenture"), the valid, binding, and limited obligations of the Issuer according to the import thereof, and to constitute the 1 2014-05-20 Agenda Packet Page 263 Indenture a valid assignment of the amounts pledged to the payment of the principal of, and premium, if any, and interest on the Bonds have been done and performed, and the creation, execution, and delivery of the Indenture and the execution and issuance of the Bonds, subject to the terms thereof, in all respects have been duly authorized; and WHEREAS, the Issuer has obtained an allocation for the Project of a portion of the State of California's private activity bond volume cap, within the meaning of Section 146 of the Code, in accordance with the procedures established by the California Debt Limit Allocation Committee; and WHEREAS, the Code and the regulations and rulings promulgated with respect thereto and the Act prescribe that the use and operation of the Project be restricted in certain respects and in order to ensure that the Project will be owned and operated in accordance with the Code and the Act, the Issuer,the Trustee and the Borrower have determined to enter into this Regulatory Agreement in order to set forth certain terms and conditions relating to the acquisition, rehabilitation, equipping and operation of the Project; NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Issuer, the Trustee and the Borrower hereby acknowledge that the above recitals are true and correct and agree as follows: Section 1. Definitions and Interpretation. The following terms shall have the respective meanings assigned to them in this Section 1 or, if not defined herein, in the Indenture, unless the context in which they are used clearly requires otherwise: "Adjusted Income" — The adjusted income of a person who intends to reside in a residential unit (together with the adjusted income of all persons the age of 18 years or older who intend to reside with such person in one residential unit) as calculated in the manner prescribed in Regulation Section 1.103-8. "Affiliated Party" — (1)a Person whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code, (2) a Person who together with the Borrower are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that"more than 50 percent" shall be substituted for"at least 80 percent" each place it appears therein), (3) a partnership and each of its partners (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code or(4) an S Corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code. "Area"—The San Diego County, California, Primary Statistical Area. "Bonds" — The $ Chula Vista Housing Authority Multifamily Housing Revenue Bonds(Garden Villas) Series 2014A. "Borrower's Tax Certificate"—The certificate of the Borrower, dated as of the Closing Date, with respect to certain Project Costs delivered to the Issuer by the Borrower. "CDLAC"—The California Debt Limit Allocation Committee. 2 2014-05-20 Agenda Packet Page 264 "CDLAC Resolution" — Resolution No. adopted by CDLAC on , 2014, as amended. "Certificate of Continuing Program Compliance"—The certificate with respect to the Project to be filed by the Borrower with the Issuer,which shall be substantially in the form attached hereto as Exhibit B. "Closing Date"—June , 2014. "Costs of Issuance" — All costs incurred in connection with the issuance of the Bonds, generally those treated as Costs of Issuance under present Treasury Department regulations and rulings, and including all costs incurred in connection with the authorization, sale and issuance of the Bonds and the transactions contemplated herein, including, but not limited to (1) counsel fees (including bond counsel, purchaser's counsel, Issuer's counsel, Trustee's counsel, Borrower's counsel, as well as any other specialized counsel fees and expenses incurred in connection with the borrowing); (2) financial advisor fees and expenses incurred in connection with the borrowing; (3)rating agency fees, if any; (4) initial and prepaid Trustee's fees incurred in connection with the borrowing; (5) paying agent and certifying and authenticating agent fees related to issuance of the Bonds; (6) accountant fees related to issuance of the Bonds; (7) costs incurred in connection with the required public approval process (e.g., publication costs for public notices generally and costs of the public hearing or voter referendum); (8) costs of engineering and feasibility studies necessary to the issuance of the Bonds (as opposed to such studies related to acquisition or rehabilitation of the Project,but not to the borrowing); and(9)the Issuer fees. "Income Certification" — The Income Computation and Certification Form in substantially the form attached hereto as Exhibit C. "Indenture" — The Trust Indenture between the Issuer and the Trustee, dated as of June 1, 2014, as it may be amended from time to time. "Issuer Fee"—The administrative fee of the Issuer payable on the Closing Date in the amount of one-eighth of one percent (1/8%) of the aggregate original principal amount of the Bonds and (i)the ongoing administrative fee payable in advance every six (6) months commencing on the Closing Date in the amount of one-half(1/2) of one-eighth of one percent (1/8%) of the aggregate original principal amount of the Bonds. "Loan"— The Loan made by the Issuer to the Borrower pursuant to the Loan Agreement for the purpose of providing funds to the Borrower to finance the acquisition, rehabilitation and equipping of the Project. "Low Income Tenants" — Individuals or families with Adjusted Income which does not exceed 60 percent of the Median Income for the Area as adjusted in a manner consistent with the determination of lower income families under Section 8 of the United States Housing Act of 1937 and as adjusted for household size as set forth below. In no event, however, will the occupants of a residential unit be considered to be Low Income Tenants if all the occupants are students, as defined in Section 151(c)(4) of the Code, as such may be amended, no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4)defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and 3 2014-05-20 Agenda Packet Page 265 curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. Household Size Adjustment 1 70% 2 80% 3 90% 4 100% 5 108% 6 116% 7 124% 8 132% "Low Income Units" — The dwelling units in the Project designated for occupancy by Low Income Tenants pursuant to Section 4(a)(ii)of this Regulatory Agreement. "Median Income for the Area" — The median gross income for the Area as most recently determined by the Secretary of Treasury pursuant to Section 142(d)(2)(B)of the Code. "Project"—The Project Facilities and the Project Site. "Project Costs"—To the extent authorized by the Code,the Regulations and the Act, any and all costs incurred by the Borrower with respect to the acquisition, rehabilitation and equipping of the Project, whether paid or incurred prior to or after the sixtieth day preceding December 10, 2013, including, without limitation, costs for site preparation, the planning of housing and related facilities and improvements, the acquisition of property, the removal or demolition of existing structures, the rehabilitation and equipping of housing and related facilities and improvements, and all other work in connection therewith, and all costs of financing, including,without limitation,the costs of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, administrative and other expenses necessary or incident to the Project and the financing thereof(including reimbursement to any municipality, county or entity for expenditures made for the Project)and all other costs approved by Bond Counsel. "Project Facilities"—The buildings, structures and other improvements to be rehabilitated on the Project Site that are being financed with proceeds of the Bonds, and all fixtures and other property owned by the Borrower and located on, or used in connection with, such buildings, structures and other improvements. "Project Site"or"Property"—The parcel or parcels of real property described in Exhibit"A", which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. "Qualified Project Costs" — The Project Costs (excluding Costs of Issuance) incurred after the sixtieth day preceding December 10, 2013, which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts within the meaning of Regulation Section 1.103-8(a)(1)(i); 4 2014-05-20 Agenda Packet Page 266 provided,however,that only such portion of interest accrued during rehabilitation of the Project shall constitute a Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs bear to all Project Costs paid from Bond proceeds and interest earnings thereon; and provided further that interest accruing after the completion date shall not constitute a Qualified Project Cost; and provided still further that if any portion of the Project is being rehabilitated by an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Project Costs" shall include only the actual out-of-pocket costs incurred by such Affiliated Party in rehabilitating the Project (or any portion thereof) within the meaning of Section 147(d)(2) of the Code, as provided in the Tax Certificate. "Qualified Project Period"—The period beginning on the later of(i)the first day on which at least ten percent (10%) of the dwelling units in the Project are first occupied, and (ii) the Closing Date and ending on the later of(a)the date which is 55 years after the date on which fifty percent (50%) of the dwelling units are occupied, (b)the first day on which no tax exempt bonds with respect to the Project are Outstanding, or (c)the date on which any assistance provided with respect to the Project under Section 8 of the United States Housing Act of 1937 terminates; provided that the Qualified Project Period may be shortened with the written consent of the Issuer and CDLAC in their sole discretion, and upon receipt by the Issuer of an opinion of Bond Counsel that such action, in and of itself, will not cause interest on the Bonds to be includable in gross income for federal tax purposes. "Very Low Income Tenants"—Individuals or families with Adjusted Income which does not exceed 50 percent of the Median Income for the Area as adjusted in a manner consistent with determination of lower income families under Section 8 of the United States Housing Act of 1937 and as adjusted for household size as set forth below. In no event, however, will the occupants of a residential unit be considered to be Very Low Income Tenants if all the occupants are students, as defined in Section 151(c)(4)of the Code, as such,may be amended,no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. Household Size Adjustment 1 70% 2 80% 3 90% 4 100% 5 108% 6 116% 7 124% 8 132% "Very Low Income Units" — The dwelling units in the Project designated for occupancy by Very Low Income Tenants pursuant to Section 4(a)(i) of this Regulatory Agreement. Capitalized terms which are not defined herein shall have the meanings assigned to them in the Indenture. 5 2014-05-20 Agenda Packet Page 267 Unless the context clearly requires otherwise, as used in this Regulatory Agreement,words of the masculine, feminine or neuter gender shall be construed to include each other gender when appropriate and words of the singular number shall be construed to include the plural number, and vice versa, when appropriate. This Regulatory Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The defined terms used in the preamble and recitals of this Regulatory Agreement have been included for convenience of reference only, and the meaning, construction and interpretation of all defined terms shall be determined by reference to this Section 1 notwithstanding any contrary definition in the preamble or recitals hereof. The titles and headings of the sections of this Regulatory Agreement have been inserted for convenience of reference only, and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof or be considered or given any effect in construing this Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question of intent shall arise. Section 2. Acquisition, Rehabilitation, Equipping and Completion of the Project. The Borrower hereby represents, as of the date hereof, and covenants,warrants and agrees as follows: (a) The Borrower has incurred a substantial binding obligation to acquire, rehabilitate and equip the Project, pursuant to which the Borrower is obligated to expend at least ninety five percent of the net sale proceeds of the Bonds. (b) The Borrower's reasonable expectations respecting the total cost of the acquisition, rehabilitation and equipping of the Project and the disbursement of Bond proceeds are accurately set forth in the Borrower's Tax Certificate attached to the Tax Certificate which has been delivered to the Issuer. (c) The Borrower will proceed with due diligence to complete the acquisition, rehabilitation and equipping of the Project and expects to expend the full amount of the proceeds of the Loan for Project Costs prior to three years from the Closing Date. (d) The statements made in the various certificates delivered by the Borrower to the Issuer or the Trustee are true and correct. (e) Money on deposit in any fund or account in connection with the Bonds, whether or not such money was derived from other sources, shall not be used by or under the direction of the Borrower, in a manner which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and the Borrower specifically agrees that the investment of money in any such fund shall be restricted as may be necessary to prevent the Bonds from being "arbitrage bonds" under the Code. (f) The Borrower (and any person related to it within the meaning of Section 147(a)(2) of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture,the Loan Agreement or this Regulatory Agreement. (g) The Borrower shall comply with all applicable requirements of Section 65863.10 of the California Government Code, including the requirements for providing notices in Sections (b), (c), (d) and(e)thereof. 6 2014-05-20 Agenda Packet Page 268 Section 3. Residential Rental Property. The Borrower hereby acknowledges and agrees that the Project will be owned, managed and operated as a "qualified residential rental project" (within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Project Period. To that end, and for the term of this Regulatory Agreement, the Borrower hereby represents, as of the date hereof, and covenants,warrants and agrees as follows: (a) The Project is being acquired,rehabilitated and equipped for the purpose of providing multifamily residential rental property, and the Borrower shall own, manage and operate the Project as a project to provide multifamily residential rental property comprised of a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with applicable provisions of Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time. (b) All of the dwelling units in the Project will be similarly rehabilitated units, and,to the extent required by the Code and the Regulations, each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range, refrigerator and sink; provided that any tenant may, but shall not be obligated to,provide a refrigerator for the unit to be occupied. (c) None of the dwelling units in the Project will at any time be utilized on a transient basis, or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house,nursing home,hospital, sanitarium,rest home,retirement house or trailer court or park. (d) No part of the Project will at any time be owned or used as a condominium or by a cooperative housing corporation, nor shall the Borrower take any steps in connection with a conversion to such ownership or uses. The Borrower shall not take any steps in connection with a conversion of the Project to a condominium or cooperative ownership except with the prior written approving opinion of Bond Counsel that by reason of any such action the interest on the Bonds will not become includable in gross income for federal income tax purposes. (e) All of the dwelling units (except for one manager's unit described in (g) below) will be available for rental on a continuous basis to members of the general public and the Borrower will not give preference to any particular class or group in renting the dwelling units in the Project, except to the extent that dwelling units are required by this Regulatory Agreement or any other restriction to be imposed on the Project to be leased or rented to Low Income Tenants, Very Low Income Tenants and to holders of Section 8 certificates or vouchers or, in the case of any other restrictions imposed on the Project,to tenants meeting the income and affordability restrictions required thereby. (f) The Project Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Project Facilities will comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership,management, accounting and operation of the Project. (g) No dwelling unit in any building in the Project shall be occupied by the Borrower unless the building contains five or more dwelling units, in which case two units may be occupied by the Borrower or by persons related to or affiliated with the Borrower such as a resident manager or 7 2014-05-20 Agenda Packet Page 269 maintenance personnel. Subject to the foregoing limitation, one unit in the Project may be occupied by resident managers or maintenance personnel. (h) Should involuntary noncompliance with the provisions of Section 1.103-8(b) of the Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar event, the Borrower covenants that, within a "reasonable period" determined in accordance with the Regulations, it will either prepay the Loan and thereby cause the Bonds to be redeemed or apply any proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements of Section 142(d) of the Code and the Regulations. (i) The Borrower shall not discriminate on the basis of race,religion, creed, color, ethnic group identification, sex, sexual preference, age, source of income (e.g. AFDC, SSI), mental or physical disability, national origin or marital status in the rental, lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the operation and management of the Project. 0) Following the expiration or termination of the Qualified Project Period, Low Income Units and Very Low Income Units shall remain available to the Low Income Tenants and Very Low Income Tenants then occupying such units at the date of expiration or termination of the Qualified Project Period at a rent not greater than the rent determined pursuant to Section 4(a)(i) and(ii)below until the earliest of any of the following occurs: (i) The household's income exceeds 140 percent of the income at which such household would qualify as a Low Income Tenant or Very Low Income Tenant, applicable. (ii) The household voluntarily moves or is evicted for "good cause." For these purposes, "good cause" means the nonpayment of rent or allegation of facts necessary to prove major, or repeated minor, violations of material provisions of the lease agreement which detrimentally affect the health and safety of other persons or the structure, the fiscal integrity of the Project, or the purposes or special programs of the Project. (iii) Sixty (60)years after the commencement of the Qualified Project Period. (iv) The Borrower pays the relocation assistance and benefits to such Low Income Tenants or Very Low Income Tenants, as applicable, as provided in Section 7264(b) of the Government Code of the State of California. (k) The Issuer may but shall not be required to monitor the Borrower's compliance with the provisions of subparagraph 0) above. Section 4. Low Income and Very Low Income Units. (a) Pursuant to the requirements of Section 142(d) of the Code and applicable provisions of the Act, the Borrower hereby represents, as of the date hereof, and warrants, covenants and agrees as follows: (i) During the Qualified Project Period, not less than ten percent (10%) of the units in the Project shall be designated as Very Low Income Units and shall be continuously occupied by or held available for occupancy by Very Low Income Tenants at monthly rents paid by 8 2014-05-20 Agenda Packet Page 270 tenants which do not exceed one-twelfth of the amount obtained by multiplying 30% times 50% of the Median Income for the Area, as adjusted for household size utilizing the percentages set forth above under the definition of Very Low Income Tenant less a reasonable deduction for utilities paid by the tenant as determined by the Issuer and assuming (solely for purposes of the above-described limit on the amount of monthly rent, and not for purposes of determining whether individuals or families are Very Low Income Tenants for purposes of Section 142(d) of the Code), the following unit sizes and household sizes: Unit Size Household Size One Bedroom Two Persons Two Bedrooms Three Persons Three Bedrooms Four Persons Such Very Low Income Units shall be of comparable quality and offer a range of sizes and number of bedrooms comparable to those units which are available to other tenants and shall be distributed throughout the Project. A unit occupied by a Very Low Income Tenant who at the commencement of the occupancy is a Very Low Income Tenant shall be treated as occupied by a Very Low Income Tenant until a recertification of such tenant's income in accordance with Section 4(c)(i)below demonstrates that such tenant no longer qualifies as a Very Low Income Tenant and thereafter such unit shall be treated as any residential unit of comparable or smaller size in the Project occupied by a new resident other than a Very Low Income Tenant. Moreover, a unit previously occupied by a Very Low Income Tenant and then vacated shall be considered occupied by a Very Low Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (3 1) days. (ii) In addition to the Very Low Income Units set aside under paragraph (i) above, during the Qualified Project Period not less than another thirty percent (30%) of the units in the Project shall be designated as Low Income Units and shall be continuously occupied by or held available for occupancy by Low Income Tenants at monthly rents which do not exceed one-twelfth of the amount obtained by multiplying 30% times 60% of the Median Income for the Area, as adjusted for household size utilizing the percentages set forth above under the definition of Low Income Tenant less a reasonable deduction for utilities paid by the tenant as determined by the Issuer and assuming (solely for purposes of the above-described limit on the amount of monthly rent, and not for purposes of determining whether individuals or families are Low Income Tenants for purposes of Section 142(d) of the Code),the following unit sizes and household sizes: Unit Size Household Size One Bedrooms Two Persons Two Bedrooms Three Persons Three Bedrooms Four Persons Such Low Income Units shall be of comparable quality and offer a range of sizes and number of bedrooms comparable to those units which are available to other tenants and shall be distributed throughout the Project. A unit occupied by a Low Income Tenant who at the commencement of the occupancy is a Low Income Tenant shall be treated as occupied by a Low Income Tenant until a 9 2014-05-20 Agenda Packet Page 271 recertification of such tenant's income in accordance with Section 4(c)(ii) below demonstrates that such tenant no longer qualifies as a Low Income Tenant and thereafter such unit shall be treated as any residential unit of comparable or smaller size in the Project occupied by a new resident other than a Low Income Tenant. Moreover, a unit previously occupied by a Low Income Tenant and then vacated shall be considered occupied by a Low Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (3 1)days. (b) Immediately prior to a Very Low Income Tenant's occupancy of a Very Low Income Unit and a Low Income Tenant's occupancy of a Low Income Unit, the Borrower will obtain and maintain on file an Income Certification from each Very Low Income Tenant occupying a Very Low Income Unit and each Low Income Tenant occupying a Low Income Unit, dated immediately prior to the initial occupancy of such Very Low Income Tenant or Low Income Tenant, as applicable, in the Project. In addition,the Borrower will provide such further information as may be required in the future by the State of California, the Issuer,the Act, Section 142(d) of the Code and the Regulations, as the same may be amended from time to time, or in such other form and manner as may be required by applicable rules, rulings, policies, procedures or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations issued under Section 142(d) of the Code. The Borrower shall verify that the income provided by an applicant is accurate by taking one or more of the following steps as a part of the verification process: (1) obtain a federal income tax return for the most recent tax year, (2) obtain a written verification of income and employment from the applicant's current employer, (3)if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income satisfactory to the Issuer or (4)such other information as may be reasonably requested by the Issuer. Copies of the most recent Income Certifications for Low Income Tenants and Very Low Income Tenants shall be attached to the quarterly report to be filed with the Issuer as required in (d) below. (c) (i) Immediately prior to the first anniversary date of the occupancy of a Very Low Income Unit by one or more Very Low Income Tenants, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of each Very Low Income Unit by obtaining a completed Income Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds 140% of the income at which such household would qualify as Very Low Income Tenants, such household will no longer qualify as Very Low Income Tenants, and to the extent necessary to comply with the requirements of Section 4(a)(i)above,the Borrower will rent the next available unit of comparable or smaller size to one or more Very Low Income Tenants. No tenants shall be denied continued occupancy in the Project because, after occupancy, their income increases to make them no longer qualify as Very Low Income Tenants. (ii) Immediately prior to the first anniversary date of the occupancy of a Low Income Unit by one or more Low Income Tenants, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of each Low Income Unit by obtaining a completed Income Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds 140% of the income at which such household would qualify as Low Income Tenants, such household will no longer qualify as Low Income Tenants and to the extent necessary to comply with the requirements of 10 2014-05-20 Agenda Packet Page 272 Section 4(a)(ii) above, the Borrower will rent the next available unit of comparable size to one or more Low Income Tenants. (d) Upon commencement of the Qualified Project Period, and within ten days of the last day of each quarter thereafter during the term of this Regulatory Agreement, the Borrower shall advise the Issuer of the status of the occupancy of the Project by delivering to the Issuer a Certificate of Continuing Program Compliance. (e) The Borrower shall maintain complete and accurate records pertaining to the Low Income Units and Very Low Income Units, and shall permit any duly authorized representative of the Issuer, the Trustee, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the Project, including those records pertaining to the occupancy of the Low Income Units and Very Low Income Units. (f) The Borrower shall submit to the Secretary of the Treasury annually on the anniversary date of the start of the Qualified Project Period, or such other date as is required by the Secretary, a certification that the Project continues to meet the requirements of Section 142(d) of the Code, and shall provide a copy of such certification to the Issuer. (g) The Borrower shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants. The Borrower shall not collect any additional fees or payments from a Low Income Tenant or a Very Low Income Tenant except security deposits or other deposits required of all tenants. The Borrower shall not collect security deposits or other deposits from Section 8 certificate or voucher holders in excess of those allowed under the Section 8 Program. The Borrower shall not discriminate against applicants for Low Income Units or Very Low Income Units on the basis of source of income (i.e., AFDC or SSI), and the Borrower shall consider a prospective tenant's previous rent history of at least one year as evidence of the ability to pay the applicable rent (ability to pay shall be demonstrated if an applicant can show that the same percentage or more of the applicant's income has been paid for rent in the past as will be required to be paid to rent the Very Low Income Unit to be occupied). (h) Each lease pertaining to a Low Income Unit or Very Low Income Unit shall contain a provision to the effect that the Borrower has relied on the Income Certification and supporting information supplied by the applicant in determining qualification for occupancy of the Low Income Unit or Very Low Income Unit, as applicable, and that any material misstatement in such certification (whether or not intentional)will be cause for immediate termination of such lease. Each lease will also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to Section 4(c) above may, at the option of the Borrower, disqualify the unit as a Low Income Unit or Very Low Income Unit, as applicable, or provide grounds for termination of the lease. (i) Prior to the Closing Date, the Borrower agrees to provide to the Issuer a copy of the form of application and lease to be provided to prospective Low Income Tenants and Very Low Income Tenants. The term of the lease shall be not less than thirty (30)days. 11 2014-05-20 Agenda Packet Page 273 0) To the extent required by law, notwithstanding the termination of the Qualified Project Period, the rent of"in-place" Low Income Tenants and Very Low Income Tenants at the conclusion of the Qualified Project Period will continue to be governed by the applicable affordability restrictions in this Section 4, so long as those tenants continue to live in the Project. The foregoing shall not prevent the Borrower from terminating a tenant's occupancy in accordance with the terms of such tenant's lease or from declining to extend such tenant's lease. Section 5. Tax Status of the Bonds. The Borrower and the Issuer each hereby represents, as of the date hereof, and warrants, covenants and agrees that: (a) It will not knowingly take or permit, or omit to take or cause to be taken, as is appropriate, any action that would adversely affect the exclusion from gross income for federal income tax purposes or the exemption from California personal income taxation of the interest on the Bonds and, if it should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof, (b) It will take such action or actions as may be necessary, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, to comply fully with the Act and all applicable rules, rulings,policies,procedures, Regulations or other official statements promulgated,proposed or made by the Department of the Treasury or the Internal Revenue Service pertaining to obligations issued under Section 142(d) of the Code to the extent necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds; and (c) The Borrower, at the Borrower's expense,will file of record such documents and take such other steps as are necessary, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, in order to insure that the requirements and restrictions of this Regulatory Agreement will be binding upon all owners of the Project, including,but not limited to, the execution and recordation of this Regulatory Agreement in the real property records of the County of San Diego. The Borrower hereby covenants to notify any subsequent owner of the Project of the requirements and restrictions contained in this Regulatory Agreement in any documents transferring any interest in the Project to another person to the end that such transferee has notice of such restrictions, and to obtain the agreement from any transferee to abide by all requirements and restrictions of this Regulatory Agreement; provided that the covenants contained in this paragraph shall not apply to any transfer of the Project by foreclosure, deed in lieu of foreclosure or comparable conversion of the Freddie Mac Mortgage. Section 6. Modification of Special Tax Covenants. The Borrower, the Trustee and the Issuer hereby agree as follows: (a) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, impose requirements upon the ownership or operation of the Project more restrictive than those imposed by this Regulatory Agreement which must be complied with in order to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds, this Regulatory Agreement shall be deemed to be automatically amended to impose such additional or more restrictive requirements following delivery of written notice thereof to Borrower. 12 2014-05-20 Agenda Packet Page 274 (b) To the extent any amendments to the Act, the Regulations or the Code shall, in the written opinion of Bond Counsel filed with the Issuer and the Trustee, impose requirements upon the ownership or operation of the Project less restrictive than imposed by this Regulatory Agreement, this Regulatory Agreement may be amended to conform in whole or in part to such changed requirements should the Issuer, in its sole discretion, determine that such requirements should be made applicable to the Project. (c) The Borrower, the Issuer and, if applicable, the Trustee shall execute, deliver and, if applicable, file of record any and all documents and instruments, necessary to effectuate the intent of this Section 6, and each of the Borrower and the Issuer hereby appoints the Trustee as its true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of the Borrower or the Issuer, as is applicable, any such document or instrument(in such form as may be approved in writing by Bond Counsel) if either the Borrower or the Issuer defaults in the performance of its obligations under this subsection (c); provided, however, that the Trustee shall take no action under this subsection (c)without first notifying the Borrower or the Issuer, or both of them, as is applicable, unless directed in writing by the Issuer or the Borrower and without first providing the Borrower or the Issuer, or both, as is applicable, an opportunity to comply with the requirements of this Section 6. Section 7. Indemnification. The Borrower hereby releases the Issuer, the Trustee, their officers and employees from, and covenants and agrees to indemnify, hold harmless and defend the Issuer, the Trustee, their officers, members, directors, officials, agents and employees and each of them (collectively the "Indemnified Parties," and, individually an "Indemnified Party") from and against, any and all claims, losses, costs, damages, demands, expenses, taxes, suits, judgments, actions and liabilities of whatever nature, joint or several (including, without limitation, costs of investigation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments), made directly or indirectly (a)by or on behalf of any person arising from any cause whatsoever in connection with transactions contemplated hereby or otherwise in connection with the Project, the Bonds, or the execution or amendment of any document relating thereto; (b)arising from any cause whatsoever in connection with the approval of financing for the Project,the making of the Loan or otherwise; (c)arising from any act or omission of the Borrower or any of its agents, servants, employees or licensees, in connection with the Loan or the Project; (d) arising in connection with the issuance and sale, resale or reissuance of any Bonds or any certifications or representations made by any person (other than the Issuer or the party seeking indemnification in connection therewith) or the carrying out by the Borrower of any of the transactions contemplated by the Bonds, the Indenture, the Loan Agreement or this Regulatory Agreement; (e)arising in connection with the operation of the Project, or the conditions, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or rehabilitation of, the Project or any part thereof, and (f)arising out of or in connection with the Trustee's acceptance and administration of the trusts created by the Indenture and the exercise of its powers or duties thereunder or under the Loan Agreement, this Regulatory Agreement or any other agreements in connection therewith to which it is a party. This indemnification shall extend to and include, without limitation, all reasonable costs, counsel fees, expenses and liabilities incurred in connection with any such claim, or proceeding brought with respect to such claim, except (i) in the case of the foregoing indemnification of the Trustee or any of its Indemnified Parties, to the extent such damages are caused by the gross negligence or willful misconduct of such Person and (ii) in the case of the foregoing indemnification 13 2014-05-20 Agenda Packet Page 275 of the Issuer or any of its Indemnified Parties to the extent such damages are caused by the gross negligence or willful misconduct of such Person. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party and approved by the Borrower (which approval shall not be unreasonably withheld); and the Borrower shall assume the payment of all reasonable fees and expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Issuer shall have the right to review and approve or disapprove any such compromise or settlement. The Borrower specifically acknowledges and agrees that it has an immediate and independent obligation to defend each Indemnified Party from any claim which actually or potentially falls within this Section 7 even if such claim is or may be groundless, fraudulent or false,which obligation arises at the time such claim is tendered to the Borrower by any Indemnified Party and continues at all times thereafter. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that unless such separate counsel is employed with the approval of the Borrower, which approval shall not be unreasonably withheld, the Borrower shall not be required to pay the fees and expenses of such separate counsel unless the Indemnified Party reasonably determines that a conflict exists between the interests of the Borrower and such Indemnified Party, in which case the Borrower shall pay the reasonable fees and expenses of such separate counsel. The Borrower also shall pay and discharge and shall indemnify and hold harmless the Issuer and the Trustee from (i)any lien or charge upon payments by the Borrower to the Issuer and the Trustee hereunder arising out of Borrower's actions or inactions and (ii)any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim is asserted, or any such lien or charge upon payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed,the Trustee shall give prompt notice to the Borrower, and the Borrower shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion. Notwithstanding any transfer of the Project to another owner in accordance with the provisions of Section 10 of this Regulatory Agreement, the Borrower shall remain obligated to indemnify the Indemnified Parties pursuant to this Section 7, unless at the time of transfer the Issuer has consented to indemnification under this Section 7 from such subsequent owner. If the Issuer has consented to any transfer of the Project in accordance with the provisions of Section 10 of this Regulatory Agreement, the Borrower shall not be obligated to indemnify the Indemnified Parties pursuant to this Section 7 for actions or inactions of the transferee arising after such transfer, but shall remain obligated to provide indemnity for claims related to actions or inactions occurring prior to such transfer. In addition to the foregoing,the Borrower will pay upon demand all of the fees and expenses paid or incurred by the Trustee or the Issuer in enforcing the provisions hereof, unless such enforcement is related to an event occurring after a transfer that the Issuer has consented to in accordance with the provisions of Section 10 of this Regulatory Agreement. The provisions of this Section 7 shall survive the term of the Bonds and this Regulatory Agreement. 14 2014-05-20 Agenda Packet Page 276 The obligations of the Borrower under this Section are independent of any other contractual obligation of the Borrower to provide indemnity to the Indemnified Parties, and the obligation of the Borrower to provide indemnity hereunder shall not be interpreted, construed or limited in light of any other separate indemnification obligation of the Borrower. The Indemnified Parties shall be entitled simultaneously to seek indemnity under this Section and any other provision under which they are entitled to indemnity. Section 8. Consideration. The Issuer has issued the Bonds to make the Loan to finance the Project, all for the purpose, among others, of inducing the Borrower to acquire,rehabilitate, equip and operate the Project. In consideration of the issuance of the Bonds by the Issuer, the Borrower has entered into this Regulatory Agreement and has agreed to restrict the uses to which the Project can be put on the terms and conditions set forth herein. Section 9. Reliance. The Issuer and the Borrower hereby recognize and agree that the representations, warranties, covenants and agreements set forth herein may be relied upon by all persons interested in the legality and validity of the Bonds, and in the exclusion from gross income for federal income tax purposes of interest on the Bonds and the exemption from California personal income taxes of the interest on the Bonds. In performing their duties and obligations hereunder, the Issuer and the Trustee may rely upon statements and certificates of the Borrower, the Low Income Tenants, the Very Low Income Tenants, and upon audits of the books and records of the Borrower pertaining to the Project. In addition, the Issuer and the Trustee may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Trustee under this Regulatory Agreement in good faith and in conformity with such opinion, but only to the extent Issuer first obtains a letter from such counsel allowing Borrower to rely on such opinion (it further being understood that the Borrower shall bear all costs related to such opinion and letter); provided, however, if there are conflicting opinions among the counsel selected by such parties, the opinion of Bond Counsel shall govern the interpretation and enforcement of this Regulatory Agreement. In determining whether any default or lack of compliance by the Borrower exists under this Regulatory Agreement,the Trustee shall not be required to conduct any investigation into or review of the operations or records of the Borrower and may rely solely on any notice or certificate delivered to the Trustee by the Borrower or the Issuer with respect to the occurrence or absence of a default. Section 10. Sale or Transfer of the Project. The Borrower intends to hold the Project for its own account, has no current plans to sell, transfer or otherwise dispose of the Project, and hereby covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated hereunder), without obtaining the prior written consent of the Issuer (except as provided in the second to last paragraph of this Section 10), which consent shall not be unreasonably withheld, delayed or conditioned, and upon receipt by the Issuer (except as provided in the second to last paragraph of this Section 10) of(i) such certifications as deemed necessary by the Issuer to establish that the Borrower shall not be in default under this Regulatory Agreement or under the Loan Agreement or, if any such defaults exist, the purchaser or assignee undertakes to cure such defaults to the satisfaction of the Issuer; (ii)a written instrument by which the Borrower's purchaser or transferee has assumed in writing and in full the Borrower's duties and obligations under this Regulatory Agreement, (iii)an opinion of counsel for the transferee that the transferee has duly assumed the obligations of the Borrower under this Regulatory Agreement and that such obligations and this Regulatory Agreement are binding on the transferee, (iv)documentation from the transferee reflecting the transferee's experience or, should the transferee choose to have a property manager run the Project, a property manager's experience with owning 15 2014-05-20 Agenda Packet Page 277 and/or operating multifamily housing projects such as the Project and with use and occupancy restrictions similar to those contained in this Regulatory Agreement, and (v)an opinion of Bond Counsel addressed to the Issuer to the effect that such transfer will not cause interest on the Bonds,to become includable in the gross income of the recipients thereof for federal income tax purposes. The Borrower shall not allow any non-profit entity,which is not as of the date hereof a general partner of the Borrower, to become a general partner of the Borrower nor release any non-profit entity which is a general partner of the Borrower as of the date hereof from the limited partnership without the prior written consent of an Authorized Officer of the Issuer (which consent shall not be unreasonably withheld, delayed or conditioned). No transfer of the Project shall operate to release the Borrower from its obligations under this Regulatory Agreement with respect to any action or inaction taken prior to such transfer. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Project in violation of this Section 10 shall be null,void and without effect, shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under this Regulatory Agreement. Not less than 30 days prior to consummating any sale,transfer or disposition of any interest in the Project, the Borrower shall deliver to the Issuer and the Trustee a notice in writing explaining the nature of the proposed transfer. Notwithstanding the above, the following transfers will be permitted without consent of the Issuer: (a) a transfer of partnership interests in Borrower to or by the tax credit investor (the "Tax Credit Investor") under the limited partnership agreement of the Borrower (the "Partnership Agreement"), or its designee pursuant to the partnership agreement of the Borrower; (b) a transfer of the limited partner interests in the Borrower of the Tax Credit Investor to an affiliate of the Tax Credit Investor; (c) a transfer of the limited partner interests in the Borrower of the Tax Credit Investor to nonaffiliates of the Tax Credit Investor; (d) the removal and replacement of any general partner of the Borrower under the Partnership Agreement (the "General Partner") pursuant to the Partnership Agreement or pursuant to the assignment of general partnership interests of the Borrower to the Freddie Mac Lender, or the removal of the Special Limited Partner pursuant to the Partnership Agreement; (e) the transfer of ownership interests in the Investor Limited partner or the Special Limited Partner, (f) the transfer of the interests of the Investor Limited Partner in Borrower to Borrower's Special Limited partner or any of its affiliates, and (g) any amendment to the Partnership Agreement to memorialize the transfers or removal described above. Prior to removal of the General Partner permitted in (d) above,the Issuer shall receive an opinion of counsel acceptable to the Issuer to the effect that such transfer will not cause interest on the Bonds to become includable in the gross income of the recipients thereof for federal income tax purposes. Section 11. Foreclosure. Notwithstanding anything contained in Section 10 hereof to the contrary, neither the consent of the Issuer nor the delivery of items (i) through (v) of the first paragraph of Section 10 hereof(the "Transfer Conditions") shall be required in the case of a transfer by foreclosure or deed in lieu of foreclosure, whereby the Freddie Mac Lender becomes the owner of the Project, and nothing contained in this Section 11 shall otherwise affect the right of the Trustee to foreclose on the Project or accept a deed in lieu of foreclosure. The Transfer Conditions shall be applicable to any subsequent transfer by the Trustee. Section 12. Term. This Regulatory Agreement and all and several of the terms hereof shall become effective upon its execution and delivery and shall remain in full force and effect during the Qualified Project Period, or for such longer period as is provided in Sections 30) and 7 16 2014-05-20 Agenda Packet Page 278 above, and in the CDLAC Resolution referred to in Section 26 below, it being expressly agreed and understood that the provisions hereof are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement and the Loan. Notwithstanding any other provisions of this Regulatory Agreement to the contrary,this entire Regulatory Agreement, or any of the provisions or sections hereof, may be terminated prior to the expiration of the Qualified Project Period upon agreement by the Issuer, the Trustee (if Bonds are still outstanding) and the Borrower only if there shall have been received by the Issuer an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the exemption from State personal income taxes of the interest on the Bonds. The terms of this Regulatory Agreement to the contrary notwithstanding (except as to the provisions of Section 7 hereof), this Regulatory Agreement, and each and all of the terms hereof, shall terminate and be of no further force or effect in the event of an involuntary noncompliance by the Borrower with the provisions of this Regulatory Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer and the Trustee from enforcing the provisions of this Regulatory Agreement, foreclosure on the Project or delivery of a deed in lieu of foreclosure or condemnation or a similar event, but only if within a reasonable period thereafter the Bonds are (or have been) redeemed or retired or amounts received as a consequence of such event are used to provide a project that meets the requirements of the Code set forth in this Regulatory Agreement; provided,however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained herein shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure on the Project or the delivery of a deed in lieu of foreclosure or a similar event, the Borrower or any Affiliated Party obtains an ownership interest in the Project for federal income tax purposes. Upon the termination of the terms of this Regulatory Agreement, the parties hereto agree to execute, deliver and record appropriate instruments of release and discharge of the terms hereof, provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of this Regulatory Agreement in accordance with its terms. Section 13. Covenants to Run With the Land. The Borrower hereby subjects the Project (including the Project Site)to the covenants, reservations and restrictions set forth in this Regulatory Agreement. The Issuer and the Borrower hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the Borrower's successors in title to the Project; provided, however, that on the termination of this Regulatory Agreement said covenants, reservations and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instruments. Section 14. Burden and Benefit. The Issuer and the Borrower hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Borrower's legal interest in the Project is rendered less valuable thereby. The Issuer and the Borrower hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Low Income Tenants and Very Low Income Tenants and by furthering the public purposes for which the Bonds were issued. 17 2014-05-20 Agenda Packet Page 279 Section 15. Uniformity; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Project in order to establish and carry out a common plan for the use, development and improvement of the Project Site. Section 16. Enforcement. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in this Regulatory Agreement, and if such default remains uncured for a period of 60 days after written notice thereof shall have been given by the Issuer or the Trustee to the Borrower and the Investor Limited Partner (or such longer period if the Borrower provides the Issuer (if any Bonds are outstanding) with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds), then the Issuer may, or upon the direction of the Issuer, the Trustee may, subject to the provisions of Section 9 hereof, and to the extent indemnified pursuant to the provisions of the Indenture, and acting on its own behalf or on behalf of the Issuer, declare an "Event of Default"to have occurred hereunder, and, at its option,may take any one or more of the following steps: (i) by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants hereunder or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee hereunder; (ii) have access to and inspect, examine and make copies of all of the books and records of the Borrower pertaining to the Project; (iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower hereunder. The Borrower hereby agrees that specific enforcement of the Borrower's agreements contained herein is the only means by which the Issuer may fully obtain the benefits of such agreements made by the Borrower herein, and the Borrower therefore agrees to the imposition of the remedy of specific performance against it in the case of any Event of Default by the Borrower hereunder. Any cure of any Event of Default hereunder made or tendered by the Investor Limited Partner shall be deemed to be cured by the Borrower, and shall be accepted or rejected by the Issuer and the Trustee on the same basis as if made or tendered by the Borrower. The Trustee shall have the right, in accordance with this Section 16 and the provisions of the Indenture, upon notice to but without the consent or approval of the Issuer, but subject to the Unassigned Issuer's Rights of the Issuer, to exercise any or all of the rights or remedies of the Issuer hereunder. All fees, costs and expenses of the Trustee (including, without limitation, reasonable attorneys fees) incurred in taking any action pursuant to this Section 16 shall be the sole responsibility of the Borrower. After the Indenture has been discharged, or if the Trustee fails to act under this Section 16, the Issuer may act on its own behalf to declare an "Event of Default" to have occurred and to take any one or more of the steps specified hereinabove to the same extent and with the same effect as if taken by the Trustee. After the date on which no Bonds remain outstanding as provided in the Indenture, the Trustee shall no longer have any duties or obligations under this Regulatory Agreement, and all references to the Trustee herein shall be deemed references to the Issuer. 18 2014-05-20 Agenda Packet Page 280 Notwithstanding anything contained in this Regulatory Agreement or the Indenture to the contrary, the occurrence of an Event of Default under this Regulatory Agreement shall not (i) be deemed, under any circumstances whatsoever, to constitute a default under the Indenture, the Loan Agreement, or the Freddie Mac Loan Documents, except as may be otherwise specified in therein or (ii) impair, defeat or render invalid the lien of the Freddie Mac Loan. Under no circumstances shall the Issuer or the Trustee: (i) initiate or take any action which may have the effect, directly or indirectly, of impairing the ability of the Borrower to timely pay the principal of, interest on, or other amounts due and payable under,the Freddie Mac Loan; or (ii) interfere with or attempt to influence the exercise by Freddie Mac Lender of any of its rights with respect to the Freddie Mac Loan, including, without limitation, Freddie Mac Lender's remedial rights under the Freddie Mac Loan Documents upon the occurrence of an event of default by the Borrower under the Freddie Mac Loan Documents. The rights of the Trustee under this Section are in addition to all rights conferred upon the Trustee under the Indenture and in no way limit those rights. Section 17. Recording and Filing. The Borrower shall cause this Regulatory Agreement and all amendments and supplements hereto and thereto, to be recorded and filed in the real property records of the County of San Diego and in such other places as the Issuer or the Trustee may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording. Section 18. Payment of Fees. The Borrower hereby agrees to pay all reasonable costs and expenses of the Trustee and the Issuer in connection with the Bonds and the financing of the Project as such costs and expenses become due and payable upon the receipt of written invoices verifying such costs and expenses. On the Closing Date, the Issuer shall be paid an administrative fee by the Borrower in the amount of one-eighth of one percent (1/8%)of the aggregate original principal amount of the Bonds. Thereafter, the Issuer shall be paid an ongoing administrative fee payable in advance every six (6) months commencing on the Closing Date in the amount of one-half (1/2) of one-eighth of one percent(1/8%) of the aggregate original principal amount of the Bonds until the end of the Qualified Project Period. Notwithstanding any prepayment of the Loan and notwithstanding a discharge of the Indenture, throughout the term of this Regulatory Agreement, the Borrower shall continue to pay to the Issuer the Issuer Fee, and, in the event of default, shall also pay to the Issuer and to the Trustee reasonable compensation for any services rendered by either of them hereunder and reimbursement for all expenses reasonably incurred by either of them in connection therewith. The fee payable to the Issuer referenced in this section shall in no way limit amounts payable by the Borrower under Section 7 hereof, or arising after an Event of Default in connection with the Issuer's or the Trustee's enforcement of the provisions of this Regulatory Agreement. The fee payable to the Issuer referenced in this section includes any fee to be paid by the Issuer to any entity which administers the Proj ect. 19 2014-05-20 Agenda Packet Page 281 Section 19. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California. Section 20. Amendments. Except as provided in Section 6(a) hereof, this Regulatory Agreement shall be amended by a written instrument executed by the parties hereto or their successors in title, and duly recorded in the real property records of the County of San Diego. Any amendment to this Regulatory Agreement shall be accompanied by an opinion of Bond Counsel to the effect that such amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. Section 21. Notice. All notices, certificates or other communications shall be sufficiently given and shall be deemed given on the date personally delivered or on the second day following the date on which the same have been mailed by certified mail,return receipt requested,postage prepaid, addressed as follows: Issuer: Chula Vista Housing Authority 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director Telephone: (619)409-5948 Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services Telephone: (213) 615-6063 Borrower: Kiku Gardens Housing Partners, LP 5031 Birch Street, Suite F Newport Beach, CA 92660 Attention: Socorro Vasquez With a copy to: Kiku Gardens Development, LLC P.O. Box 33882 San Diego, CA 92163 And to: Katten Muchin Rosemann LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067-3012 Attention: David Cohen 20 2014-05-20 Agenda Packet Page 282 Investor Limited Partner: c/o City Real Estate Advisors, Inc. 30 S. Meridian Street Suite 400 Indianapolis, IN 46204 Attention: Brian K. McDonnell Telephone: (317) 808-7251 With a copy to: Holland&Knight LLP 10 St. James Avenue Boston,MA 02116 Attention: James E. McDermott Telephone: (617) 573-5848 Any of the foregoing parties may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, documents or other communications shall be sent. Copies of notices sent by any party hereto shall be sent concurrently to each of the parties listed above. Section 22. Severabilily. If any provision of this Regulatory Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions hereof shall not in any way be affected or impaired thereby. Section 23. Multiple Counterparts. This Regulatory Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original. Section 24. Compliance by Borrower. The Trustee shall not be responsible for monitoring or verifying compliance by the Borrower with its obligations under this Regulatory Agreement. Section 25. Obligation of Borrower: Limitations on Recourse to Borrower. Notwithstanding any provisions of this Regulatory Agreement to the contrary, all obligations of the Borrower under this Regulatory Agreement for the payment of money (including payment of the Issuer Fee and any other fees, costs and expenses of the Issuer) and all claims for damages against the Borrower occasioned by breach or alleged breach by the Borrower of its obligations under this Regulatory Agreement, including indemnification obligations, shall not be secured by or in any manner constitute a lien on the Project and no person shall have the right to enforce such obligations other than directly against the Borrower without recourse to the Project, and all such obligations shall be subordinate in priority, in right to payment and in all other respects to the obligations, liens, rights (including without limitation the right to payment) and interests arising or created under the Loan Documents. Except as otherwise provided in Section 7 of this Regulatory Agreement,no subsequent owner of the Project shall be liable or obligated for the breach or default of any obligation of any prior owner of the Project (including the Borrower) under this Regulatory Agreement. Such obligations shall be the Obligations of the Person who was the owner of the Project at the time the default or breach was alleged to have occurred, and such Person shall remain liable for any and all damages occasioned by the default or breach even after such Person ceases to be the owner of the Proj ect. 21 2014-05-20 Agenda Packet Page 283 The following obligations of the Borrower shall, subject to the limitations set forth in the preceding paragraph, and Section 16 of this Regulatory Agreement, be and remain the joint and several full recourse obligations of the Borrower and each general partner of the Borrower (other than any nonprofit general partner): (i) the Borrower's obligations to the Issuer and the Trustee and the Borrower's obligation to pay any and all rebate amounts that may be owed with respect to the Bonds as provided in Section 3.9 of the Loan Agreement; and (ii) the Borrower's obligations under Section 7 of this Regulatory Agreement. Section 26. CDLAC Requirements. The acquisition, rehabilitation, equipping and operation of the Project and the financing thereof are and shall be in compliance with the conditions set forth in Exhibit A to the CDLAC Resolution, a copy of which is attached hereto as Exhibit D, which conditions are incorporated herein by reference and are made a part hereof- The Issuer shall monitor and enforce the Borrower's compliance with the provisions of this Section 26. The Borrower shall prepare and submit to CDLAC on each anniversary of the Closing Date, and on such other date as is reasonably requested by CDLAC, a Certificate of Compliance in substantially the form attached hereto as Exhibit E, executed by an authorized representative of the Borrower. CDLAC shall be a third-party beneficiary of this Regulatory Agreement solely for purposes of enforcing the terms of the CDLAC Resolution. CDLAC shall have the right to enforce the terms of the CDLAC Resolution through an action for specific performance or any other available remedy; provided, however, that CDLAC shall not take any action or enforce any remedy that would be materially adverse to the interests of the Bondholders and any such action or enforcement shall otherwise be subject to the terms, conditions and limitations applicable to the enforcement of remedies under this Regulatory Agreement. Section 27. Damage. Destruction or Condemnation of the Property. In the event that the Property is damaged or destroyed or title to the property, or any part thereof, is taken through the exercise or the threat of the exercise of the power of eminent domain, the Borrower shall comply with all applicable requirements of the Freddie Mac Mortgage and the other Freddie Mac Loan Documents. [The rest of this page intentionally left blank] 22 2014-05-20 Agenda Packet Page 284 IN WITNESS WHEREOF, the Issuer, the Borrower and the Trustee have executed this Regulatory Agreement by duly authorized representatives, all as of the date first written hereinabove. CHULA VISTA HOUSING AUTHORITY By: Executive Director ATTEST: By: Secretary S-1 Regulatory Agreement Garden Villas 2014-05-20 Agenda Packet Page 285 "BORROWER" KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory S-2 Regulatory Agreement Garden Villas 2014-05-20 Agenda Packet Page 286 "TRUSTEE" U.S. BANK NATIONAL ASSOCIATION By: Name: Title: S-3 Regulatory Agreement Garden Villas 2014-05-20 Agenda Packet Page 287 ACKNOWLEDGMENT 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 name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by 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 (Seal) 2014-05-20 Agenda Packet Page 288 ACKNOWLEDGMENT STATE OF CALIFORNIA COUNTY OF SAN DIEGO On before me, ,Notary personally appeared ,who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by 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 (Seal) 2014-05-20 Agenda Packet Page 289 ACKNOWLEDGMENT STATE OF CALIFORNIA COUNTY OF On before me, ,Notary personally appeared ,who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by 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 (Seal) 2014-05-20 Agenda Packet Page 290 EXHIBIT A LEGAL DESCRIPTION All that certain real property situated in the County of San Diego, State of California, described as follows: [TO COME] A-1 2014-05-20 Agenda Packet Page 291 EXHIBIT B CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE The undersigned, , being duly authorized to execute this certificate on behalf of KIKU GARDENS HOUSING PARTNERS, LP, a California limited partnership (the `Borrower"),hereby represents and warrants that: 1. The undersigned has read and is thoroughly familiar with the provisions of the following documents associated with the Borrower's participation in the Chula Vista Housing Authority's (the "Issuer") issuance of the Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A, such documents including: (a) the Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") dated as of June 1, 2014, by and among the Borrower, the Issuer and U.S. Bank National Association; (b) the Note, dated June , 2014 from the Borrower to the Issuer representing the Borrower's obligation to repay the Loan. 2. As of the date of this certificate, the following percentages of residential units in the Project (i)are occupied by Low Income Tenants and Very Low Income Tenants (as such terms are defined in the Regulatory Agreement) or (ii)are currently vacant and being held available for such occupancy and have been so held continuously since the date a Low Income Tenant or Very Low Income Tenant, as applicable,vacated such unit; as indicated: Studio 1 Bedroom 2 Bedrooms 3 Bedrooms Total Occupied by Low Income Tenants: %Unit Nos.: Held vacant for occupancy continuously since last occupied by a Low Income Tenant: %Unit Nos.: Studio 1 Bedroom 2 Bedrooms 3 Bedrooms Total Occupied by Very %Unit Nos.: Low Income Tenants: Held vacant for occupancy %Unit Nos.: continuously since last occupied by a Very Low Income Tenant: 3. The Borrower hereby certifies that the Borrower is not in default under any of the terms of the above documents and no event has occurred which, with the passage of time, would constitute an Event of Default thereunder, with the exception of the following [state actions being taken to remedy default]. B-1 2014-05-20 Agenda Packet Page 292 KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory B-2 2014-05-20 Agenda Packet Page 293 EXHIBIT C INCOME COMPUTATION AND CERTIFICATION NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD")Regulations(24 CFR 5.609). You should make certain that this form is at all times up to date with the HUD Regulations. All capitalized terms used herein shall have the meaning set forth in the Regulatory Agreement. Re: Garden Villas, , Chula Vista, California I/We, the undersigned state that I/we have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the above apartment project. Listed below are the names of all persons who intend to reside in the unit: 1 2 3 4 5 Name of Members Relationship to of the Head of Social Security Place of Household Household Number Age Employment HEAD SPOUSE C-1 2014-05-20 Agenda Packet Page 294 Income Computation 6. The total anticipated income, calculated in accordance with this paragraph 6, of all persons (except children under 18 years)listed above for the 12-month period beginning the earlier of the date that I/we plan to move into a unit or sign a lease for a unit is$ Included in the total anticipated income listed above are: (a) The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees,tips and bonuses, and other compensation for personal services; (b) The net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family; (c) Interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as authorized in paragraph (6)(b) of this section. Any withdrawal of cash or assets from an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by the family. Where the family has net family assets in excess of$5000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rate, as determined by the Department of Housing and Urban Development; (d) The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a periodic amount except deferred periodic amounts from supplemental security income and social security benefits that are received in a lump sum amount or in prospective monthly amounts; (e) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay except lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses (excluding payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay); (f) Welfare assistance. If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the C-2 2014-05-20 Agenda Packet Page 295 welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of (1) The amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities; plus (2) The maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities. If the family's welfare assistance is ratably reduced form the standard of need by applying a percentage, the amount calculated under this paragraph shall be the amount resulting from one application of the percentage; (g) Periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing in the dwelling; (h) All regular pay, special pay and allowances of a member of the Armed Forces except the special pay to a family member serving in the Armed Forces who is exposed to hostile fire. Excluded from such anticipated income are: (a) Income from employment of children (including foster children) under the age of 18 years; (b) Payments received for the care of foster children or foster adults (usually persons with disabilities,unrelated to the tenant family,who are unable to live alone); (c) Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses except payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; (d) Amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family member; (e) Income of a live-in aide, as defined by 24 CFR §5.403; (f) The full amount of student financial assistance paid directly to the student or to the educational institution; (g) The special pay to a family member serving in the Armed Forces who is exposed to hostile fire; (h) (1) Amounts received under training programs funded by the Department of Housing and Urban Development; (2) Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and C-3 2014-05-20 Agenda Packet Page 296 benefits because they are set aside for use under a Plan to Attain Self- Sufficiency (PASS): (3) Amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program; (4) Amounts received under a resident service stipend. A resident service stipend is a modest amount(not to exceed$200 per month)received by a resident for performing a service for the Public Housing Authority or owner, on a part- time basis,that enhances the quality of life in the development. Such services may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, and resident initiatives coordination. No resident may receive more than one such stipend during the same period of time; (5) Incremental earnings and benefits resulting to any family member from participation in qualifying State or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives, and are excluded only for the period during which the family member participates in the employment training program; (i) Temporary,nonrecurring or sporadic income(including gifts); (j) Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era; (k) Earnings in excess of$480 for each full-time student 18 years old or older(excluding the head of household and spouse); (1) Adoption assistance payments in excess of$480 per adopted child; (m) Deferred periodic amounts from supplemental security income and social security benefits that are received in a lump sum amount or in prospective monthly amounts. (n) Amounts received by the family in the form of refunds or rebates under State or local law for property taxes paid on the dwelling unit; (o) Amounts paid by a State agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home; or (p) Amounts specifically excluded by any other Federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 CFR §5.609(c) apply. C-4 2014-05-20 Agenda Packet Page 297 7. Do the persons whose income or contributions are included in item 6 above (a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)? Yes No; or (b) have they disposed of any assets (other than at a foreclosure or bankruptcy sale) during the last two years at less than fair market value? Yes _ No (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? Yes No (d) If the answer to (c) above is yes, state: (1) the combined total value of all such assets: $ ; (2) the amount of income expected to be derived from such assets in the 12-month period beginning on the date of initial occupancy in the unit that you propose to rent: $ , and (3) the amount of such income, if any,that was included in item 6 above: 8. (a) Are all of the individuals who propose to reside in the unit full-time students*? Yes No *A full-time student is an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least 2 of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? Yes No 9. Neither myself nor any other occupant of the unit I/we propose to rent is the owner of the rental housing project in which the unit is located (hereinafter the `Borrower"), has any family relationship to the Borrower; or owns directly or indirectly any interest in the C-5 2014-05-20 Agenda Packet Page 298 Borrower. For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member, ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trust held by the individual or a family member; and ownership, direct or indirect, by a partner of the individual. 10. This certificate is made with the knowledge that it will be relied upon by the Borrower to determine maximum income for eligibility to occupy the unit; and I/we declare that all information set forth herein is true, correct and complete and based upon information I/we deem reliable and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. I/we will assist the Borrower in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s)or copies of federal tax returns for the immediately preceding calendar year. 12. I/we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Borrower to lease the unit and will entitle the Borrower to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. I/we declare under penalty of perjury that the foregoing is true and correct. Executed this day of in the County of San Diego, California. Applicant Applicant [Signature of all persons (except children under the age of 18 years)listed in number 2 above required] C-6 2014-05-20 Agenda Packet Page 299 FOR COMPLETION BY BORROWER ONLY: 1. Calculation of eligible income: a. Enter amount entered for entire household in 6 above: $ b. (1) If the answer to 7(c) above is yes, enter the total amount entered in 7(d)(2), subtract from that figure the amount entered in 7(d)(3) and enter the remaining balance ($ ) (2) Multiply the amount entered in 7(d)(1) times the current passbook savings rate as determined by HUD to determine what the total annual earnings on the amount in 7(d)(1) would be if invested in passbook savings ($ ), subtract from that figure the amount entered in 7(d)(3) and enter the remaining balance ($ ); (3) Enter at right the greater of the amount calculated under(1) or(2) above: $ C. TOTAL ELIGIBLE INCOME (Line La plus line I.b(3)): $ 2. The amount entered in line l.c: Qualifies the applicant(s) as a Low Income Tenant(s) Does not qualify the applicant(s) as a Low Income Tenant(s). Qualifies the applicant(s) as a Very Low Income Tenant(s) Does not qualify the applicant(s) as a Very Low Income Tenant(s). 3. Number of apartment unit assigned: Bedroom Size Rent: $ 4. This apartment unit [was/was not] last occupied for a period of 31 or more consecutive days by persons whose aggregate anticipated annual income as certified in the above manner upon their initial occupancy of the apartment unit qualified them as [Low Income Tenants/Very Low Income Tenants]. 5. Method used to verify applicant(s) income: Employer income verification. Copies of tax returns. Other( ) Manager C-7 2014-05-20 Agenda Packet Page 300 INCOME VERIFICATION (for employed persons) The undersigned employee has applied for a rental unit located in a project financed under the Chula Vista Housing Authority Multifamily Housing Revenue Bond Program for persons of lower income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime Bonuses Commissions Other Income Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under the Chula Vista Housing Authority Multifamily Housing Revenue Bond Program. Signature Date Please send to: C-8 2014-05-20 Agenda Packet Page 301 INCOME VERIFICATION (for self-employed persons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature Date C-9 2014-05-20 Agenda Packet Page 302 EXHIBIT D CDLAC RESOLUTION RESOLUTION NO. D-1 2014-05-20 Agenda Packet Page 303 EXHIBIT E CDLAC COMPLIANCE CERTIFICATE Project Name: Garden Villas Name of Bond Issuer: Chula Vista Housing Authority CDLAC Application No.: 14- Pursuant to Section 13 of Resolution No. 14- (the "Resolution"), adopted by the California Debt Limit Allocation Committee (the"Committee")on , 2014, 1, , an Officer of the Project Sponsor,hereby certify under penalty of perjury that, as of the date of this Certification,the above-mentioned Project is in compliance with all of the terms and conditions set forth in the Resolution. I further certify that I have read and understand the CDLAC Resolution,which specifies that once the Bonds are issued,the terms and conditions set forth in the Resolution shall be enforceable by the Committee through an action for specific performance or any other available remedy. Please check or write N/A to the items list below: The project is currently in the Construction or Rehabilitation phase. The project has incorporated minimum specifications into the project design for all new construction and rehabilitation projects as evidenced by the attached applicable third party certification (HERS Rater, Green Point Rater or US Green Building Council). For projects under construction or rehabilitation,the information is due following receipt of the verification but in no event shall the documentation be submitted more than two years after the issuance of bonds. For projects that received points for exceeding the minimum requirements please attach the appropriate California Energy Commission compliance form for the project which shows the necessary percentage improvement better than the appropriate standards. The compliance form must be signed by a California Association of Building Consultants, Certified Energy Plans Examiner or HERS Rater as applicable. Signature of Officer Date Printed Name of Officer Title of Officer E-1 2014-05-20 Agenda Packet Page 304 Stradling Yocca Carlson & Rauth Draft Dated May 12, 2014 TRUST INDENTURE between CHULA VISTA HOUSING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (GARDEN VILLAS), SERIES 2014A Dated as of June 1, 2014 2014-05-20 Agenda Packet Page 305 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section1.01. Definitions-----------------------------------------------------------------------------------------------------------------3 Section1.02. Interpretation----------------------------------------------------------------------------------------------------------- 13 Section 1.03. Captions and Headings------------------------------------------------------------------------------------------- 14 ARTICLE II AUTHORIZATION AND TERMS OF BONDS Section 2.01. Authorized Amount of Bonds................................................................................. 14 Section 2.02. Issuance of Bonds--------------------------------------------------------------------------------------------------- 14 Section 2.03. Authorization of Bonds; Sale and Delivery of the Bonds....................................... 14 Section 2.04. Special Obligations------------------------------------------------------------------------------------------------- 15 ARTICLE III TERMS OF BONDS GENERALLY Section3.01. Form of Bonds-------------------------------------------------------------------------------------------------------- 15 Section 3.02. Execution and Authentication of Bonds................................................................. 15 Section 3.03. Source of Payment of Bonds................................................................................... 16 Section 3.04. Payment and Ownership of Bonds.......................................................................... 16 Section 3.05. Registration, Transfer and Exchange of Bonds...................................................... 17 Section 3.06. Mutilated, Lost,Wrongfully Taken or Destroyed Bonds....................................... 17 Section 3.07. Cancellation of Bonds--------------------------------------------------------------------------------------------- 18 Section 3.08. Special Agreement with Holders............................................................................ 18 Section 3.09. Book-Entry Only System---------------------------------------------------------------------------------------- 19 ARTICLE IV REDEMPTION OF BONDS Section 4.01. No Redemption of Bonds Prior to Maturity............................................................20 ARTICLE V PROVISIONS AS TO FUNDS, PAYMENTS, PROJECT AND AGREEMENT Section 5.01. Creation of Funds;Allocation of Bond Proceeds...................................................20 Section 5.02. Application of Loan Payments................................................................................21 Section 5.03. Disbursements from the Project Fund.....................................................................21 Section5.04. Bond Fund---------------------------------------------------------------------------------------------------------------22 Section 5.05. Investment of Special Funds...................................................................................23 Section 5.06. Moneys to be Held in Trust....................................................................................24 Section 5.07. Nonpresentment of Bonds.......................................................................................24 Section 5.08. Repayment to the Borrower from the Bond Fund...................................................25 Section5.09. Rebate Fund------------------------------------------------------------------------------------------------------------25 i 2014-05-20 Agenda Packet Page 306 TABLE OF CONTENTS (Continued) Page Section5.10. Valuation-----------------------------------------------------------------------------------------------------------------25 Section 5.11. Completion of the Project.......................................................................................25 Section5.12. Collateral Fund--------------------------------------------------------------------------------------------------------25 Section 5.13. Costs of Issuance Fund...........................................................................................26 ARTICLE VI THE TRUSTEE, REGISTRAR, PAYING AGENTS AND AUTHENTICATING AGENTS Section 6.01. Trustee's Acceptance and Responsibilities.............................................................26 Section 6.02. Certain Rights and Obligations of the Trustee........................................................27 Section 6.03. Fees, Charges and Expenses of Trustee, Registrar, Paying Agents and AuthenticatingAgents--------------------------------------------------------------------------------------------30 Section 6.04. Intervention by Trustee...........................................................................................31 Section 6.05. Successor Trustee----------------------------------------------------------------------------------------------------31 Section 6.06. Appointment of Co-Trustee....................................................................................32 Section 6.07. Resignation by the Trustee......................................................................................32 Section 6.08. Removal of the Trustee...........................................................................................32 Section 6.09. Appointment of Successor Trustee.........................................................................33 Section 6.10. Adoption of Authentication....................................................................................34 Section6.11. Registrars----------------------------------------------------------------------------------------------------------------34 Section 6.12. Designation and Succession of Paying Agents.......................................................35 Section 6.13. Designation and Succession of Authenticating Agents..........................................36 Section 6.14. Dealing in Bonds-----------------------------------------------------------------------------------------------------36 Section 6.15. Representations,Agreement and Covenants of Trustee.........................................37 Section 6.16. Right of Trustee to Pay Taxes and Other Charges..................................................37 Section6.17. Interpleader-------------------------------------------------------------------------------------------------------------37 Section 6.18. Survival of Certain Provisions................................................................................37 ARTICLE VII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND HOLDERS Section 7.01. Defaults; Events of Default.....................................................................................38 Section 7.02. Notice of Default-----------------------------------------------------------------------------------------------------38 Section7.03. Acceleration------------------------------------------------------------------------------------------------------------39 Section 7.04. Other Remedies; Rights of Holders........................................................................39 Section 7.05. Right of Holders to Direct Proceedings..................................................................40 Section 7.06. Application of Moneys -------------------------------------------------------------------------------------------40 Section 7.07. Remedies Vested in Trustee....................................................................................41 Section 7.08. Rights and Remedies of Holders.............................................................................41 Section 7.09. Termination of Proceedings....................................................................................42 Section 7.10. Waivers of Events of Default..................................................................................42 ii 2014-05-20 Agenda Packet Page 307 TABLE OF CONTENTS (Continued) Page ARTICLE VIII SUPPLEMENTAL INDENTURES Section 8.01. Supplemental Indentures Generally........................................................................43 Section 8.02. Supplemental Indentures Not Requiring Consent of Holders.................................43 Section 8.03. Supplemental Indentures Requiring Consent of Holders........................................44 Section 8.04. Consent of Borrower-----------------------------------------------------------------------------------------------45 Section 8.05. Authorization to Trustee; Effect of Supplement.....................................................45 Section 8.06. Opinion of Counsel-------------------------------------------------------------------------------------------------46 Section 8.07. Modification by Unanimous Consent.....................................................................46 ARTICLE IX DEFEASANCE Section 9.01. Release of Indenture -----------------------------------------------------------------------------------------------46 Section 9.02. Payment and Discharge of Bonds...........................................................................47 Section 9.03. Survival of Certain Provisions................................................................................47 ARTICLE X COVENANTS AND AGREEMENTS OF THE ISSUER Section 10.01. Covenants and Agreements of the Issuer................................................................48 Section 10.02. Observance and Performance of Covenants,Agreements,Authority and Actions 48 Section 10.03. Trustee May Enforce Issuer's Rights......................................................................49 ARTICLE XI AMENDMENTS TO AGREEMENT, REGULATORY AGREEMENT AND NOTE Section 11.01. Amendments Not Requiring Consent of Holders...................................................49 Section 11.02. Amendments Requiring Consent of Holders..........................................................49 ARTICLE XII MEETINGS OF HOLDERS Section 12.01. Purposes of Meetings----------------------------------------------------------------------------------------------50 Section 12.02. Call of Meetings------------------------------------------------------------------------------------------------------50 Section12.03. Voting ---------------------------------------------------------------------------------------------------------------------50 Section12.04. Meetings------------------------------------------------------------------------------------------------------------------51 Section12.05. Miscellaneous---------------------------------------------------------------------------------------------------------51 iii 2014-05-20 Agenda Packet Page 308 TABLE OF CONTENTS (Continued) Page ARTICLE XIII MISCELLANEOUS Section 13.01. Limitation of Rights------------------------------------------------------------------------------------------------51 Section13.02. Severability-------------------------------------------------------------------------------------------------------------52 Section13.03. Notices--------------------------------------------------------------------------------------------------------------------52 Section 13.04. Suspension of Mail and Courier Service.................................................................53 Section 13.05. Payments Due on Saturdays, Sundays and Holidays..............................................53 Section 13.06. Instruments of Holders............................................................................................53 Section 13.07. Priority of this Indenture.........................................................................................54 Section 13.08. Extent of Covenants;No Personal Liability ...........................................................54 Section 13.09. Binding Effect---------------------------------------------------------------------------------------------------------54 Section13.10. Counterparts------------------------------------------------------------------------------------------------------------54 Section 13.11. Governing Law-------------------------------------------------------------------------------------------------------54 Section 13.12. Security Advice Waiver------------------------------------------------------------------------------------------54 Section13.13. Patriot Act---------------------------------------------------------------------------------------------------------------54 Section 13.14. Subordination to Freddie Mac Loan Documents....................................................55 Signatures------------------------------------------------------------------------------------------------------------------------------------------- S-1 ExhibitA - Bond Form----------------------------------------------------------------------------------------------------------------------A-1 Exhibit B—Description of Project-----------------------------------------------------------------------------------------------------B-1 iv 2014-05-20 Agenda Packet Page 309 TRUST INDENTURE THIS TRUST INDENTURE (this "Indenture") dated as of June 1, 2014, is made by and between the CHULA VISTA HOUSING AUTHORITY, a public body corporate and politic, organized and existing under the laws of the State of California (the "Issuer") and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as Trustee (the "Trustee") under the circumstances summarized in the following recitals (the capitalized terms not defined in the recitals and granting clauses being used therein as defined in Article I hereof): A. Pursuant to and in accordance with the laws of the State, including without limitation, the Act, the Issuer has determined to issue and sell the Bonds in the aggregate principal amount of $ and to loan the proceeds to be derived from the sale thereof to the Borrower (as defined below) to assist in the financing of the Project (as defined below) to be undertaken by the Borrower; B. The Bonds will be secured by this Indenture, and the Issuer is authorized to execute and deliver this Indenture and to do or cause to be done all acts provided or required herein to be performed on its part; C. Pursuant to its lawful authority under the Act, the Issuer and Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"), have executed a certain Loan Agreement, dated as of June 1, 2014 (the "Agreement" or the "Loan Agreement"), by the terms of which Loan Agreement the Issuer agrees to loan the proceeds of the Bonds to the Borrower (the "Loan") for the purpose of financing the acquisition, rehabilitation and equipping of a multifamily residential development known as"Garden Villas" (the "Project")located in Chula Vista, California, and more fully described in the Agreement, to be occupied to the extent required by federal tax law and state law,by persons or families of low,moderate or middle income. D. The Loan will be evidenced by a Promissory Note (the "Note") executed by the Borrower in the form attached as Exhibit A to the Loan Agreement and delivered to the Issuer, and assigned by the Issuer to the Trustee. E. All acts and conditions required to happen, exist and be performed precedent to and in the issuance of the Bonds and the execution and delivery of this Indenture have happened, exist and have been performed, or at the delivery of the Bonds will exist,will have happened and will have been performed(i)to make the Bonds,when issued, delivered and authenticated,valid obligations of the Issuer in accordance with the terms thereof and hereof and (ii)to make this Indenture a valid, binding and legal agreement for the security of the Bonds in accordance with its terms. F. The Trustee has accepted the trusts created by this Indenture, and in evidence thereof has joined in the execution hereof. NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the payment of Bond Debt Service Charges on the Bonds according to their true intent and meaning, to secure the performance and observance of all of the covenants, agreements, obligations and conditions contained therein and herein, and to declare the terms and conditions upon and subject to which the Bonds are and are intended to be issued, held, secured and enforced, and in consideration of the premises and the acceptance by the Trustee of the trusts created herein and of the purchase and acceptance of the Bonds by the Holders, and for other good and valuable consideration the receipt 2014-05-20 Agenda Packet Page 310 and sufficiency of which is hereby acknowledged, the Issuer has executed and delivered this Indenture and absolutely assigns hereby to the Trustee, and to its successors in trust, and its and their assigns, all right, title and interest of the Issuer in and to (i)the Issuer Revenues, including, without limitation, all Loan Payments and other amounts receivable by or on behalf of the Issuer under the Loan Agreement in respect of repayment of the Loan, (ii)the Special Funds, including all accounts in those funds and all moneys deposited therein and the investment earnings on such moneys, (iii) all right, title and interest of the Issuer in the proceeds derived from the sale of the Bonds, and any securities in which moneys in the Special Funds are invested, and (except for moneys in the Rebate Fund and otherwise required to be rebated to the United States of America under the Code) the proceeds derived therefrom, and any and all other real or personal property of every name and nature from time to time hereafter by delivery or by writing of any kind pledged, assigned or transferred, as and for additional security hereunder by the Issuer or by anyone in its behalf, or with its written consent,to the Trustee,which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms of this Indenture, and (iv)the Loan Agreement, except for the Unassigned Issuer's Rights (the foregoing collectively referred to as the "Trust Estate"), TO HAVE AND TO HOLD unto the Trustee and its successors in that trust and its and their assigns forever; BUT IN TRUST,NEVERTHELESS, and subject to the provisions hereof, (a) except as provided otherwise herein, for the equal and proportionate benefit, security and protection of all present and future Holders of the Bonds issued or to be issued under and secured by this Indenture, (b) for the enforcement of the payment of the principal of and interest on the Bonds, when payable, according to the true intent and meaning thereof and of this Indenture, and (c) to secure the performance and observance of and compliance with the covenants, agreements, obligations,terms and conditions of this Indenture, in each case, without preference,priority or distinction, as to lien or otherwise, of any one Bond over any other by reason of designation, number, date of the Bonds or of authorization, issuance, sale, execution, authentication, delivery or maturity thereof, or otherwise, so that each Bond and all Bonds shall have the same right, lien and privilege under this Indenture and shall be secured equally and ratably hereby;provided,however,that (i) if the principal of the Bonds and the interest due or to become due thereon shall be well and truly paid, at the times and in the manner to which reference is made in the Bonds, according to the true intent and meaning thereof, or the outstanding Bonds shall have been paid and discharged in accordance with Article IX hereof, and (ii) if all of the covenants, agreements, obligations, terms and conditions of the Issuer under this Indenture shall have been kept, performed and observed and there shall have been paid to the Trustee, the Registrar and the Paying Agents all 2 2014-05-20 Agenda Packet Page 311 sums of money due or to become due to them in accordance with the terms and provisions hereof, then this Indenture and the rights assigned hereby shall cease, determine and be void, except as provided in Section 9.03 hereof with respect to the survival of certain provisions hereof, otherwise,this Indenture shall be and remain in full force and effect. It is declared that all Bonds issued hereunder and secured hereby are to be issued, authenticated and delivered, and that all Issuer Revenues assigned hereby are to be dealt with and disposed of under, upon and subject to, the terms, conditions, stipulations, covenants, agreements, obligations, trusts, uses and purposes provided in this Indenture. The Issuer has agreed and covenanted, and agrees and covenants with the Trustee and with each and all Holders, as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. In addition to the words and terms defined elsewhere in this Indenture or by reference to the Loan Agreement, unless the context or use clearly indicates another meaning or intent: "Act" means Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, as amended. "Additional Payments" means the amounts required to be paid by the Borrower pursuant to the provisions of Section 4.2 of the Loan Agreement. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control"when used with respect to any specified Person means the power to direct the policies of such Person, directly or indirectly, whether through the power to appoint and remove its directors,the ownership of voting securities,by contract, or otherwise; and the terms"controlling" and"controlled"have meanings correlative to the foregoing. "Agreement'' means the Loan Agreement dated as of even date with this Indenture, between the Issuer and the Borrower and assigned by the Issuer, except for Unassigned Issuer's Rights, to the Trustee, as amended or supplemented from time to time. "Authorized Borrower Representative" means the person or persons designated to act on behalf of the Borrower by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by an officer of the manager of either of the general partners of the Borrower, which certificate may designate an alternate or alternates. "Authorized Denomination" means (a) so long as the Bonds are rated "A," without regard to a modifier (or the equivalent) or higher by a Rating Agency, $5,000 or any integral multiple of $5,000 in excess thereof, or (b) at any other time, $100,000, or any integral multiple of $0.01 in excess thereof, except that in each case one Bond of each series may be in a principal amount equal to the then Outstanding principal amount of the Bonds of such series. 3 2014-05-20 Agenda Packet Page 312 "Authorized Official" means the Chairperson or the Executive Director of the Issuer of the Issuer, and any other officer of the Issuer designated by certificate of any of the foregoing as authorized by the Issuer to perform a specified act, sign a specified document or otherwise take action with respect to the Bonds. The Trustee may conclusively presume that a person designated in a written certificate filed with it as an Authorized Official is an Authorized Official until such time as such provider files with it a written certificate identifying a different person or persons to act in such capacity. "Available Moneys" means, as of any date of determination, any of the following, as applicable: (a) the proceeds of the Bonds; (b) proceeds from advances on the Freddie Mac Loan deposited directly with the Trustee by the Freddie Mac Lender; (c) any other amounts, including the proceeds of refunding bonds, for which the Trustee has received an opinion of counsel to the effect that the use of such amounts to make payments on the Bonds would not violate Section 362(a)of the Bankruptcy Code (or that relief from the automatic stay provisions of such Section 362(a)would be available from the bankruptcy court)or be avoidable as preferential payments under Section 547 of the Bankruptcy Code should the Issuer or the Borrower become a debtor in proceedings commenced under the Bankruptcy Code; (d) the proceeds of any letter of credit; or (e) investment earnings derived from the investment of moneys described in (a), (b), (c), or(d). "Bankruptcy Code" means Title 11 of the United States Code entitled `Bankruptcy," as in effect now and in the future, or any successor statute. `Board'means the Board of the Issuer. "Bond Counsel" shall mean, collectively, Stradling Yocca Carlson & Rauth, a Professional Corporation or any other attorney or firm of attorneys designated by the Issuer and approved by a Majority of the Holders of the Bonds and who has a national reputation for skill in connection with the authorization and issuance of municipal obligations under Sections 103 and 141 through 150 (or any successor provisions) of the Code. "Bond Debt Service Charges" means, for any period or payable at any time, the principal of and interest on the Bonds for that period or payable at that time whether due at maturity or upon acceleration. "Bond Fund'means the Bond Fund created in Section 5.01 of this Indenture. "Bond Payment Date" means each Interest Payment Date and any other date Bond Debt Service Charges on the Bonds are due,whether at maturity,upon acceleration or otherwise. "Bond Resolution"means that certain Bond Resolution relating to the Project, adopted by the Board on May 20, 2014. 4 2014-05-20 Agenda Packet Page 313 "Bond Year" means each annual period of twelve months the first of which commences on the date of the original issuance and delivery of the Bonds and the last of which ends on the maturity of the Bonds, except that the first and last Bond Year may be less than twelve months. "Bonds" means the Multifamily Housing Revenue Bonds (Garden Villas), Series 2014A of the Issuer authorized in the Bond Resolution and Section 2.02 hereof in an amount of$ "Book Entry Form" or "Book Entry System" means, with respect to the Bonds, a form or system, as applicable, under which (i)physical Bond certificates in fully registered form are issued only to a Depository or its nominee,with the physical Bond certificates"immobilized" in the custody of the Depository and (ii)the ownership of book entry interests in Bonds and Bond Debt Service Charges thereon may be transferred only through a book entry made by Persons other than the Issuer or the Trustee. The records maintained by Persons other than the Issuer or the Trustee constitute the written record that identifies the owners, and records the transfer, of book entry interests in the Bonds and Bond Debt Service Charges thereon. "Borrower" means Kiku Gardens Housing Partners, LP, a California limited partnership, and its lawful successors and assigns to the extent permitted by the Loan Agreement. "Borrower Documents" has the meaning given to such term in Section 2.2(b) of the Loan Agreement. "Business Day" means a day of the week, other than a Saturday or a Sunday, on which commercial banks located in the city in which the principal corporate trust office of the Trustee are not required or authorized to remain closed. "Closing Date"means June , 2014. "Code"means the Internal Revenue Code of 1986, as amended, and all applicable regulations (whether proposed,temporary or final)under the Code and the statutory predecessor of the Code, and any official rulings and judicial determinations under the foregoing applicable to the Bonds. "Collateral Fund' means the Collateral Fund created pursuant to Section 5.01 of this Indenture. "Completion Date" means the date of substantial completion of the Project evidenced in accordance with the requirements of Section 3.7 of the Loan Agreement. "Construction Period' means the period between the beginning of the acquisition, rehabilitation,remodeling, improving and equipping of the Project and the Completion Date. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of June 1, 2014,between the Borrower and U.S. Bank National Association, as Dissemination Agent. "Contractual Obligation" means for any Person any obligation, covenant, or condition contained in any evidence of Indebtedness or any agreement or instrument under or pursuant to which any evidence of Indebtedness has been issued, or any other material agreement, instrument or guaranty, to which such Person is a party or by which such Person or any of its assets or properties are bound. 5 2014-05-20 Agenda Packet Page 314 "Costs of Issuance Fund'means the Costs of Issuance Fund created pursuant to Section 5.01 of this Indenture. "Depository"means, with respect to the Bonds, DTC,until a successor Depository shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, Depository shall mean the successor Depository. Any Depository shall be a securities depository that is a clearing agency under federal law operating and maintaining,with its participants or otherwise, a Book Entry System to record ownership of book entry interests in the Bonds or Bond Debt Service Charges thereon, and to effect transfers of book entry interests in the Bonds. "Disbursement Request"shall have the meaning set forth in Section 5.03(a)hereof. "DTC"means The Depository Trust Company (a limited purpose trust company),New York, New York, and its successors or assigns. "DTC Participant" means any participant contracting with DTC under its book entry system and includes securities brokers and dealers,banks and trust companies and clearing corporations. "Eligible Investments" means (i)non-AMT tax exempt obligations rated in the highest short term category by S&P; or (ii)money market mutual funds (including funds of the Trustee or affiliates) registered under the Investment Company Act of 1940, as amended, investing solely in investments described in (i)which are rated in the highest short term category by S&P, which in any case, shall mature or be subject to tender or redemption at par on or prior to the earlier of(A) 35 days from the date of investment or(B)the date such moneys are needed for the purposes thereof. "Event of Default" means any of the events described as an Event of Default in Section 7.01 hereof or Section 7.1 of the Loan Agreement. "Extraordinary Services" and "Extraordinary Expenses" mean all services rendered and all reasonable expenses properly incurred by the Trustee under this Indenture, other than Ordinary Services and Ordinary Expenses. Extraordinary Services and Extraordinary Expenses shall specifically include services rendered or expenses incurred by the Trustee in connection with, or in contemplation of, an Event of Default. "Fair Market Value"means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction(determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide, arm's length transaction (as referenced above) if(i)the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii)the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii)the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv)the investment is a commingled investment fund in which the Issuer and related parties do not own more than a 10% beneficial interest therein if the return paid by the fund is without regard to the source of the 6 2014-05-20 Agenda Packet Page 315 investment. To the extent required by applicable regulations under the Code, the term "investment" will include a"hedge." "Fiscal Year" means, with respect to a Person, that period beginning on January 1 of each year and ending on December 31 of that year or such other fiscal year as shall be designated by such Person as its annual accounting period. "Force Majeure" means any of the causes, circumstances or events described as constituting Force Majeure in Section 7.1 of the Loan Agreement. "Freddie Mac"means the Federal Home Loan Mortgage Corporation. "Freddie Mac Borrower Note" means the $ Multifamily Note dated , 2014 from Borrower to Freddie Mac Lender to evidence its indebtedness under the Freddie Mac Loan. "Freddie Mac Guide"means the Freddie Mac Multifamily Seller/Servicer Guide, as the same may be amended from time to time. "Freddie Mac Lender"means Citibank, N.A., a national banking association, its successors and assigns including Freddie Mac, if and when Freddie Mac acquires the Freddie Mac Loan. "Freddie Mac Loan" means the mortgage loan in the original principal amount of $ to be advanced by the Freddie Mac Lender to the Borrower. "Freddie Mac Loan Commitment" means, collectively, the commitments for the Freddie Mac Loan with respect to the Project, from the Freddie Mac Lender and from Freddie Mac. "Freddie Mac Loan Documents" means the documents related to the Freddie Mac Loan, including the Freddie Mac Loan Commitment, the Freddie Mac Borrower Note, the Freddie Mac Mortgage and any and all other documents, agreements, or instruments which evidence or secure the indebtedness evidenced by the Freddie Mac Borrower Note. "Freddie Mac Loan Funds" means, proceeds of the Freddie Mac Loan in the principal amount of $ plus the Initial Deposit, which proceeds have been assigned by the Borrower to the Trustee pursuant to Section 3.5 of the Loan Agreement. "Freddie Mac Mortgage" means the first-lien priority Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of , 2014 from Borrower for the benefit of the Freddie Mac Lender to secure the repayment of the Freddie Mac Borrower Note. "GAAP"means generally accepted accounting principles applied on a consistent basis. "Government" shall mean the government of the United States of America, the government of any other nation, any political subdivision of the United States of America or any other nation (including, without limitation, any state, territory, federal district, municipality or possession) and any department, agency or instrumentality thereof, and "Governmental" shall mean of, by, or pertaining to any Government. 7 2014-05-20 Agenda Packet Page 316 "HUD"means the United States Department of Housing and Urban Development. "Holder," "Holders," or "Holder of a Bona' means the Person in whose name a Bond is registered on the Register. "Indebtedness" shall mean for any Person (a) all indebtedness or other obligations of such Person for borrowed money or for the deferred purchase price of property or services, (b) all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services, the payment or collection of which such Person has guaranteed (except by reason of endorsement for deposit or collection in the ordinary course of business) or in respect of which such Person is liable, contingently or otherwise, including, without limitation, by way of agreement to purchase, to provide funds for payment, to supply funds to or otherwise to invest in such other Person, or otherwise to assure a creditor against loss, (c)all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise,to be secured by)any Lien,upon or in property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness or other obligations, (d) all direct or contingent obligations of such Person in respect of letters of credit, (e) all lease obligations which have been or should be, in accordance with GAAP, capitalized on the books of such Person as lessee, and (f)guaranties of any of the foregoing; provided that Indebtedness does not include accounts payable and accrued expenses incurred in the ordinary course of business. "Indenture" means this Trust Indenture, dated as of June 1, 2014, between the Issuer and the Trustee, as amended or supplemented from time to time in accordance with Article VIII hereof. "Independent" when used with respect to a specified Person means such Person has no specific financial interest direct or indirect in the Borrower or any Affiliate of the Borrower and in the case of an individual is not a director,trustee, officer,partner or employee of the Borrower or any Affiliate of the Borrower and in the case of an entity, does not have a partner, director, trustee, officer, partner or employee who is a director, trustee, officer or employee of any partner of the Borrower or any Affiliate of the Borrower. "Information Services" means in accordance with then-current guidelines of the Securities and Exchange Commission, the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(1) of the Securities Exchange Act of 1934, or any successor entity or entities designated by the Securities and Exchange Commission. "Initial Deposit"means the deposit of Available Moneys in the amount of$[Initial Deposit Amount] which the Borrower shall cause to be made from Available Moneys other than the proceeds of the Bonds to the Initial Deposit Account of the Bond Fund on the Closing Date. "Initial Deposit Account"means the Initial Deposit Account within the Bond Fund created in Section 5.01 hereof. "Interest Payment Date" means each June 1 and December 1, commencing December 1, 2014. "Interest Rate"means %per annum. 8 2014-05-20 Agenda Packet Page 317 "Interest Rate for Advances" means the rate of twelve percent per annum (12%) or the rate per annum which is two percent plus that interest rate announced by the Trustee in its lending capacity as a bank as its "Prime Rate" or its "Base Rate," whichever is greater and lawfully chargeable, in whole or in part. "Investor Limited Partner" means CREA Garden Villas, LLC, a Delaware limited liability company, its permitted successors and assigns. "Issuer" means the Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California. "Issuer Revenues" means (a)the Loan Payments, (b) all other moneys received or to be received by the Issuer or the Trustee in respect of repayment of the Loan, including without limitation, all moneys and investments in the Bond Fund, (c) any moneys and investments in the Project Fund and the Collateral Fund, and (d) all income and profit from the investment of the foregoing moneys. The term "Issuer Revenues" does not include any moneys or investments in the Rebate Fund and the Costs of Issuance Fund. "Lien" means any mortgage, deed of trust, lien, charge, security interest or encumbrance of any kind upon, or pledge of, any property, whether now owned or hereafter acquired, and includes the acquisition of, or agreement to acquire, any property subject to any conditional sale agreement or other title retention agreement, including a lease on terms tantamount thereto or on terms otherwise substantially equivalent to a purchase. "Loan"means the loan by the Issuer to the Borrower with the proceeds received from the sale of the Bonds. "Loan Payment Cure Period' means a period of four Business Days following any Loan Payment Date. "Loan Payment Date"means the fifth Business Day preceding each Bond Payment Date. "Loan Payments" means the amounts required to be paid by the Borrower in repayment of the Loan pursuant to the provisions of the Note and Section 4.1 of the Loan Agreement. "Majority of the Holders of the Bonds"means the Holders of more than fifty percent (50%) of the principal amount of the then Outstanding Bonds. "Maturity Date"means June 1, 2015. "Minimum Trustee Rating"means a long term rating of the Trustee's unsecured obligations with maturities in excess of one year of not less than "A" by S&P, or, if the Trustee does not have such a rating from S&P, it must have a minimum rating of its unsecured obligations with maturities of one year or less of"A-1"from S&P. "Note" means the Promissory Note, dated as of the Closing Date, in the form attached to the Loan Agreement as Exhibit A, in the original principal amount of $ evidencing the obligation of the Borrower to make Loan Payments. 9 2014-05-20 Agenda Packet Page 318 "Notice Address"means: To the Issuer: Chula Vista Housing Authority 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director To the Trustee: U.S. Bank National Association Global Corporate Trust Services 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Ismael Diaz Borrower: Kiku Gardens Housing Partners, LP 5031 Birch Street, Suite F Newport Beach, CA 92660 Attention: Socorro Vasquez With a copy to: Kiku Gardens Development, LLC P.O. Box 33882 San Diego, CA 92163 And to: Katten Muchin Rosemann LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067-3012 Attention: David Cohen To the Rating Agency: Standard&Poor's Rating Services 55 Water Street, 38th Floor New York,NY 10041 Attention: Public Finance Surveillance Group Email: pubfin_structured&standardandpoors.com If to Investor Limited Partner: City Real Estate Advisors, Inc. 30 S. Meridian Street, Suite 400 Indianapolis, IN 46204 Attention: Brian K. McDonnell With a copy to: Holland and Knight LLP 10 St. James Avenue Boston,MA 02116 Attention: James E. McDermott To Freddie Mac Lender: Citibank,N.A. c/o Berkadia Commercial Mortgage, LLC 118 Welsh Road Horsham, PA 19044 Attention: Loan Servicing Re: Deal ID No. 10 2014-05-20 Agenda Packet Page 319 With a copy to: Citibank,N.A. 325 East Hillcrest Drive, Suite 160 Thousand Oaks, California 91360 Attention: Asset Management Re: Deal ID No. Facsimile: (805) 557-0924 If and when Freddie Mac Acquires the Freddie Mac Loan, a copy to: Federal Home Loan Mortgage Corporation 8100 Jones Branch Drive McLean,Virginia 22102 Attention: Senior Director,MF Asset Management or such additional or different address,notice of which is given under Section 13.03 hereof. "Opinion of Bond Counsel"means an opinion of Bond Counsel. "Ordinary Services" and "Ordinary Expenses" mean those services normally rendered, and those expenses normally incurred, by a trustee under instruments similar to this Indenture. Without limiting the generality of this definition, Ordinary Services and Ordinary Expenses shall include, without limitation, services provided by the Trustee in connection with any meetings of Holders of the Bonds as provided in Article XII of this Indenture. "Outstanding Bonds,""Bonds outstanding' or"outstanding'as applied to Bonds mean, as of the applicable date, all Bonds which have been authenticated and delivered, or which are being delivered by the Trustee under this Indenture, except: (a) Bonds cancelled upon surrender, exchange or transfer, or cancelled because of payment on or prior to that date; (b) Bonds, or the portion thereof, for the payment or purchase for cancellation of which sufficient money has been deposited and credited with the Trustee or the Paying Agents on or prior to that date for that purpose (whether upon or prior to the maturity of those Bonds); (c) Bonds, or the portion thereof, which are deemed to have been paid and discharged or caused to have been paid and discharged pursuant to the provisions of this Indenture; and (d) Bonds in lieu of which others have been authenticated under Section 3.06 of this Indenture. "Paying Agent" means the Trustee acting as such, or any other bank or trust company designated as a Paying Agent by or in accordance with this Indenture. "Person" or words importing persons mean firms, associations, partnerships (including without limitation, general and limited partnerships), joint ventures, societies, estates, trusts, corporations, limited liability companies, public or governmental bodies, other legal entities and natural persons. 11 2014-05-20 Agenda Packet Page 320 "Plans and Specifications" means the plans and specifications describing the Project as now prepared and as they may be changed as herein provided from time to time. "Predecessor Bond' of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by the particular Bond. For the purposes of this definition, any Bond authenticated and delivered under Section 3.06 of this Indenture in lieu of a lost, stolen or destroyed Bond shall, except as otherwise provided in Section 3.06,be deemed to evidence the same debt as the lost, stolen or destroyed Bond. "Project" means the acquisition, rehabilitation and equipping of an existing 99-unit plus one manager's unit apartment complex known as "Garden Villas" (fka Kiku Gardens), and located at 1260 3rd Avenue in Chula Vista, California. "Project Costs" means the costs of the Project specified in Section 3.4 of the Loan Agreement. "Project Fund"means Project Fund created in Section 5.01 of this Indenture. "Project Purposes" means the operation of the Project in accordance with the Act, the Code and the Regulatory Agreement. "Rating Agency" means Standard & Poor's Ratings Services ("S&P"), Moody's Investors Service, Inc. ("Moody's") or any other nationally recognized municipal securities rating agency acceptable to the Holders. "Rebate Fund'means the Rebate Fund created in Section 5.01 of this Indenture. "Register"means the books kept and maintained by the Registrar for registration and transfer of Bonds pursuant to Section 3.05 hereof. "Registrar" means the Trustee, until a successor Registrar shall have become such pursuant to applicable provisions of this Indenture; each Registrar shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934. "Regular Record Date" means, the fifteenth day of the calendar month next preceding an Interest Payment Date applicable to that Bond. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants,by and among the Issuer,the Borrower and the Trustee, dated as of June 1, 2014. "Securities Act" means the United States Securities Act of 1933, as in effect on the Closing Date. ,,Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City,New York 11530, Fax (516) 227 4039 or 4191; 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, as the Issuer may designate in a request of the Issuer delivered to the Trustee,to no such depositories. "S&P"means Standard& Poor's Ratings Services. 12 2014-05-20 Agenda Packet Page 321 "Special Funds" means, collectively, the Bond Fund, the Collateral Fund and the Project Fund, and any accounts therein, all as created in this Indenture. "Special Limited Partner" means Kiku Gardens Development, LLC, a California limited liability company. "Special Record Date" means, with respect to any Bond, the date established by the Trustee in connection with the payment of overdue interest or principal on that Bond. "State"means the State of California. "Supplemental Indenture" means any indenture supplemental to this Indenture entered into between the Issuer and the Trustee in accordance with Article VIII hereof. "Surplus Cash" means, with respect to any period, any revenues of the Borrower remaining after paying, or setting aside funds for paying, (i) all sums due or currently required to be paid under the Freddie Mac Loan Documents that are due or currently payable, and (ii) all reasonable operating expenses of the Project, including but not limited to real estate taxes, insurance premiums, utilities, building maintenance,painting and repairs,management fees, payroll, administrative expenses, legal expenses and audit expenses (including any fees, deposits or escrows payable under the Borrower's organizational documents,but excluding any developer fees payable with respect to the Project). "Tax Certificate"means the Tax Certificate, dated the Closing Date executed by the Issuer. "Trustee" means U.S. Bank National Association, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, "Trustee" shall mean the successor Trustee. "Unassigned Issuer's Rights" means all of the rights of the Issuer to receive Additional Payments under Section 4.2 of the Loan Agreement, to be held harmless and indemnified under Section 5.3 of the Loan Agreement, to be reimbursed for attorney's fees and expenses under Section 7.4 of the Loan Agreement,to receive notices pursuant to Section 8.3 of the Loan Agreement and to give or withhold consent to amendments, changes, modifications, alterations and termination of the Loan Agreement under Section 8.6 of the Loan Agreement. "Underwriter" shall mean Citigroup Global Markets Inc. Section 1.02. Interpretation. Any reference herein to the Issuer, to the Board or to any member or officer of either includes entities or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or lawfully performing their functions. Any reference to a section or provision of the Constitution of the State or the Act, or to a section, provision or chapter of any statute of the State, or to any statute of the United States of America, includes that section, provision or chapter as amended, modified, revised, supplemented or superseded from time to time; provided, that no amendment, modification, revision, supplement or superseding section, provision or chapter shall be applicable solely by reason of this paragraph, if it constitutes in any way an impairment of the rights or obligations of the Issuer, the Holders, the Trustee, the Registrar, the Paying Agent, any Authenticating Agent or the Borrower under this Indenture, the Bond Resolution, the Bonds, the Loan Agreement, the Note, the Regulatory Agreement or any other instrument or document entered into in connection with any of the foregoing, 13 2014-05-20 Agenda Packet Page 322 including without limitation, any alteration of the obligation to pay Bond Debt Service Charges in the amount and manner, at the times, and from the sources provided in the Bond Resolution and this Indenture, except as permitted herein. Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa. The terms "hereof.. ..hereby," ..herein," ..hereto," ..hereunder," "hereinafter" and similar terms refer to this Indenture; and the term "hereafter" means after, and the term "heretofore" means before, the date of this Indenture. Words of any gender include the correlative words of the other genders,unless the sense indicates otherwise. Section 1.03. Captions and Headings. The captions and headings in this Indenture are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections,paragraphs, subparagraphs or clauses hereof. ARTICLE II AUTHORIZATION AND TERMS OF BONDS Section 2.01. Authorized Amount of Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article. The total authorized principal amount of Bonds which shall be issued under the provisions of this Indenture is $ Section 2.02. Issuance of Bonds. It is determined to be necessary to, and the Issuer shall, issue, sell and deliver$ principal amount of Bonds and shall loan the proceeds thereof to the Borrower to finance the Project. The Bonds shall be designated "Multifamily Housing Revenue Bonds (Garden Villas), Series 2014A" shall be issuable only in fully registered form, substantially as set forth in Exhibit A to this Indenture and shall be numbered in such manner as determined by the Trustee in order to distinguish each Bond from any other Bond; shall be in Authorized Denominations; shall be dated the Closing Date; and shall bear interest from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from their date of delivery. The Bonds shall mature on the Maturity Date and shall bear interest from their date on the principal amount outstanding at the Interest Rate, payable on each Interest Payment Date, calculated on the basis of a 360-day year consisting of twelve 30-day months. Section 2.03. Authorization of Bonds; Sale and Delivery of the Bonds. Upon the execution and delivery hereof,the Issuer shall execute the Bonds and deliver them to the Trustee, and the Trustee shall authenticate or cause the authentication of the Bonds and deliver them to such purchaser or purchasers as shall be directed by the Issuer, provided, that there shall be previous thereto or simultaneous therewith filed with the Trustee the following: (a) copies, certified by the Secretary of the Issuer, of all resolutions adopted and proceedings had by the Issuer authorizing the issuance and delivery of the Bonds, including the Bond Resolution; (b) written instructions of the Issuer directing the Trustee to authenticate and deliver the Bonds against receipt of the purchase price therefor, 14 2014-05-20 Agenda Packet Page 323 (c) original executed counterparts of this Indenture, the Loan Agreement, the Regulatory Agreement and the Note; (d) an approving opinion of Bond Counsel in form and content acceptable to the Issuer and the Underwriter; (e) an opinion of counsel for the Borrower in form and content acceptable to the Issuer, Bond Counsel and the Underwriter; (f) an executed Tax Agreement; (g) an executed Regulatory Agreement; (h) payment to the Trustee,for the account of the Issuer, of the purchase price for the Bonds; and (i) payment to the Trustee, for the account of the Issuer, of the Initial Deposit. Section 2.04. Special Obheations. The Bonds are special obligations of the Issuer payable solely from the Trust Estate and any other revenues, funds and assets pledged under this Indenture and not from any other revenues, funds or assets of the Issuer. The Bonds are not general obligations, debt or bonded indebtedness of the Issuer or of the State or any political subdivision thereof(other than of the Issuer to the limited extent set forth in this Indenture) and the Holders of the Bonds do not have the right to have any excises or taxes levied by the Issuer or by the State or any political subdivision thereof for the payment of the principal of and any premium and interest on the Bonds. The Issuer has no taxing power. Neither the Issuer nor the State nor any political subdivision of the State will be obligated to pay the principal of and the interest on the Bonds or other costs incident thereto except from the Issuer Revenues pledged under this Indenture. ARTICLE III TERMS OF BONDS GENERALLY Section 3.01. Form of Bonds. The Bonds,the certificate of authentication and the form of assignment shall be in the respective forms thereof set forth in Exhibit A to this Indenture. All Bonds, unless a Supplemental Indenture shall have been executed and delivered pursuant to Section 8.02 hereof, shall be in fully registered form, and, except as provided in Section 3.05 hereof, the Holder of a Bond shall be regarded as the absolute owner thereof for all purposes of this Indenture. The Bonds shall be negotiable instruments in accordance with the Act, and shall express the purpose for which they are issued and any other statements or legends which may be required by law. Each Bond shall be of a single maturity. Section 3.02. Execution and Authentication of Bonds. Unless otherwise provided in the applicable Bond Resolution or Supplemental Indenture, each Bond shall be signed by the Authorized Officer and the Authorized Attesting Official in their official capacities (provided that any or all of those signatures may be facsimiles). In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be that officer before the issuance of the Bond, his 15 2014-05-20 Agenda Packet Page 324 signature or the facsimile thereof nevertheless shall be valid and sufficient for all purposes,the same as if he had remained in office until that time. Any Bond may be executed on behalf of the Issuer by an officer who, on the date of execution is the proper officer, although on the date of the Bond that person was not the proper officer. No Bond shall be valid or become obligatory for any purpose or shall be entitled to any security or benefit under this Indenture unless and until a certificate of authentication, substantially in the form set forth in Exhibit A to this Indenture, has been signed by the Trustee. The authentication by the Trustee upon any Bond shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered hereunder and is entitled to the security and benefit of this Indenture. The certificate of the Trustee may be executed by any person authorized by the Trustee, but it shall not be necessary that the same authorized person sign the certificates of authentication on all of the Bonds. Section 3.03. Source of Payment of Bonds. To the extent provided in and except as otherwise permitted by this Indenture, (i)the Bonds shall be special limited obligations of the Issuer and the Bond Debt Service Charges thereon shall be payable equally and ratably solely from the Issuer Revenues, including but not limited to moneys and investments in the Special Funds, (ii)the payment of Bond Debt Service Charges on the Bonds shall be secured by the assignment of Issuer Revenues hereunder and by this Indenture, and(iii)payments due on the Bonds also shall be secured by the Note. Notwithstanding anything to the contrary in the Bond Resolution, the Bonds or this Indenture, the Bonds do not and shall not represent or constitute a debt or pledge of the faith and credit or the taxing power of the Issuer or of the State or of any political subdivision,municipality or other local agency thereof. Section 3.04. Payment and Ownership of Bonds. Bond Debt Service Charges shall be payable in lawful money of the United States of America without deduction for the services of the Trustee or the Paying Agent. Subject to the provisions of Section 3.09 hereof, (i)the principal of any Bond shall be payable when due to a Holder upon presentation and surrender of such Bond at the designated corporate trust office of the Trustee or at the office, designated by the Trustee, of the Paying Agent, and (ii)interest on any Bond shall be paid on each Interest Payment Date by check or draft which the Trustee shall cause to be mailed on that date to the Person in whose name the Bond is registered on the Register at the close of business on the Regular Record Date applicable to that Interest Payment Date, at such Holder's address appearing therein. If and to the extent, however, that the Issuer shall fail to make payment or provision for payment of interest on any Bond on any Interest Payment Date,that interest shall cease to be payable to the Person who was the Holder of that Bond as of the applicable Regular Record Date. In that event, except as provided below in this Section, when moneys become available for payment of the interest, (x)the Trustee shall, pursuant to Section 7.06(d), establish a Special Record Date for the payment of that interest which shall be not more than 15 nor fewer than 10 days prior to the date of the proposed payment, and (y)the Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first-class mail,postage prepaid,to each Holder at its address as it appears on the Register not fewer than 10 days prior to the Special Record Date and,thereafter,the interest shall be payable to the Persons who are the Holders of the Bonds at the close of business on the Special Record Date. 16 2014-05-20 Agenda Packet Page 325 Subject to the foregoing, each Bond delivered under this Indenture upon transfer thereof, or in exchange for or in replacement of any other Bond, shall carry the rights to interest accrued and unpaid, and to accrue on that Bond, or which were carried by that Bond. Except as provided in this Section and the first paragraph of Section 3.06 hereof, (i)the Holder of any Bond shall be deemed and regarded as the absolute owner thereof for all purposes of this Indenture, (ii)payment of or on account of the Bond Debt Service Charges on any Bond shall be made only to or upon the order of that Holder or its duly authorized attorney in the manner permitted by this Indenture, and(iii)none of the Issuer,the Trustee,the Registrar nor the Paying Agent shall,to the extent permitted by law, be affected by notice to the contrary. All of those payments shall be valid and effective to satisfy and discharge the liability upon that Bond, including without limitation, the interest thereon,to the extent of the amount or amounts so paid. Section 3.05. Registration, Transfer and Exchange of Bonds. The Trustee shall cause the Bond Register to be kept for the registration of Bonds and the registration of transfers of Bonds. The registration of any Bond may be transferred only upon an assignment duly executed by the registered holder or his duly authorized representative in such form as shall be satisfactory to the Trustee, and upon surrender of such Bond to the Trustee for cancellation. Whenever any Bond or Bonds shall be surrendered for registration of transfer, the Issuer shall execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of the same series and of Authorized Denomination or Denominations and for the amount of such Bond or Bonds so surrendered. Any Bond may be exchanged at the designated office of the Trustee, for a new Bond or Bonds of an Authorized Denomination and for the aggregate amount of, and of the same series as, such Bond then remaining Outstanding. In all cases in which the registration of Bonds shall be transferred or Bonds shall be exchanged hereunder, the Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange, and all such taxes, fees or charges shall be Ordinary Expenses payable as scheduled pursuant to Section 6.03 hereof. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and premium and interest on any such Bond shall be made only to or upon the order of the holder thereof, or its legal representative, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums to be paid. Section 3.06. Mutilated, Lost, Wronefully Taken or Destroyed Bonds. If any Bond is mutilated, lost, wrongfully taken or destroyed, in the absence of written notice to the Issuer or the Registrar that a lost,wrongfully taken or destroyed Bond has been acquired by a bona fide purchaser, the Issuer shall execute, and the Registrar shall authenticate and deliver, a new Bond of like date, maturity, series and denomination as the Bond mutilated, lost, wrongfully taken or destroyed; provided, that (a) in the case of any mutilated Bond, the mutilated Bond first shall be surrendered to the Registrar, and (b)in the case of any lost, wrongfully taken or destroyed Bond, there first shall be furnished to the Registrar evidence of the loss, wrongful taking or destruction satisfactory to the Registrar, together with indemnity satisfactory to the Registrar for the Trustee, the Registrar and the Issuer. 17 2014-05-20 Agenda Packet Page 326 If any lost, wrongfully taken or destroyed Bond shall have matured, instead of issuing a new Bond, the Trustee may pay that Bond without surrender thereof upon the furnishing of satisfactory evidence and indemnity as the Registrar may require, as in the case of issuance of a new Bond. The Issuer, the Registrar and the Trustee may charge the Holder of a mutilated, lost, wrongfully taken or destroyed Bond their reasonable fees and expenses in connection with their actions pursuant to this Section. Every new Bond issued pursuant to this Section by reason of any Bond being mutilated, lost, wrongfully taken or destroyed(i) shall constitute,to the extent of the outstanding principal amount of the Bond lost, mutilated, taken or destroyed, an additional contractual obligation of the Issuer, regardless of whether the mutilated, lost, wrongfully taken or destroyed Bond shall be enforceable at any time by anyone and (ii) shall be entitled to all of the benefits of this Indenture equally and proportionately with any and all other Bonds issued and outstanding hereunder. All Bonds shall be held and owned on the express condition that the foregoing provisions of this Section are exclusive with respect to the replacement or payment of mutilated, lost, wrongfully taken or destroyed Bonds and, to the extent permitted by law, shall preclude any and all other rights and remedies with respect to the replacement or payment of negotiable instruments or other investment securities without their surrender, notwithstanding any law or statute to the contrary now existing or enacted hereafter. Section 3.07. Cancellation of Bonds. Any Bond surrendered pursuant to this Article for the purpose of payment or retirement or for exchange, replacement or transfer shall be cancelled upon presentation and surrender thereof to the Registrar, the Trustee or the Paying Agent. Any Bond cancelled by the Trustee or the Paying Agent shall be transmitted promptly to the Registrar by the Trustee or Paying Agent. The Issuer, or the Borrower on behalf of the Issuer, may deliver at any time to the Registrar for cancellation any Bonds previously authenticated and delivered hereunder,which the Issuer or the Borrower may have acquired in any manner whatsoever. All Bonds so delivered shall be cancelled promptly by the Registrar. Certification of the surrender and cancellation shall be made to the Issuer and the Trustee by the Registrar upon written request to the Registrar. Unless otherwise directed by the Issuer, cancelled Bonds shall be retained and stored by the Registrar for a period of two years after their cancellation. Those cancelled Bonds shall be destroyed by the Registrar at that time or at any earlier time directed by the Issuer. The Registrar shall provide certificates describing the destruction of cancelled Bonds to the Issuer and the Trustee upon written request to the Registrar. The costs of such storage, cancellation and certification shall constitute Ordinary Expenses payable as scheduled pursuant to Section 6.03 hereof. Section 3.08. Special A-areement with Holders. Notwithstanding any provision of this Indenture or of any Bond to the contrary,with the written approval of the Borrower,the Trustee may enter into an agreement with any Holder providing for making all payments to that Holder of principal of and interest on that Bond or any part thereof(other than any payment of the entire unpaid principal amount thereof) at a place and in a manner other than as provided in this Indenture and in the Bond, without presentation or surrender of the Bond, upon any conditions which shall be satisfactory to the Trustee and the Borrower; provided, that payment in any event shall be made to the Person in whose name a Bond shall be registered on the Register, with respect to payment of principal, on the date such principal is due, and, with respect to the payment of interest, as of the applicable Regular Record Date or Special Record Date, as the case may be. 18 2014-05-20 Agenda Packet Page 327 The Trustee will furnish a copy of each of those agreements, certified to be correct by an officer of the Trustee, to the Registrar, the Issuer and the Borrower. Any payment of principal or interest pursuant to such an agreement shall constitute payment thereof pursuant to, and for all purposes of,this Indenture. Section 3.09. Book-Entry Only System. Notwithstanding any provision of this Indenture to the contrary, the Issuer may direct that all Bonds issued hereunder shall be initially issued in a Book Entry System, registered in the name of a Depository or its nominee as registered owner of the Bonds, and held in the custody of that Depository. Unless otherwise requested by a Depository, a single certificate will be issued and delivered to the Depository for each maturity of Bonds. Beneficial owners of Bonds in a Book Entry System will not receive physical delivery of Bond certificates except as provided hereinafter. For so long as a Depository shall continue to serve as securities depository for the Bonds as provided herein, all transfers of beneficial ownership interests will be made by book-entry only, and no investor or other party purchasing, selling or otherwise transferring beneficial ownership of Bonds is to receive, hold or deliver any Bond certificate; provided; that, if a Depository fails or refuses to act as securities depository for the Bonds,the Issuer shall take the actions necessary to provide for the issuance of Bond certificates to the Holders of such Bonds. With respect to Bonds registered in the name of a Depository, the Issuer, the Borrower and the Trustee shall have no responsibility or obligation to any participant therein or to any Person on whose behalf any participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, neither the Issuer, the Borrower nor the Trustee shall have any responsibility or obligation with respect to (i)the accuracy of the records of the Depository or any participant therein or any other Person, other than a registered owner of the Bonds, as shown on the registration books, or(ii) any notice with respect to the Bonds or(iii)the payment to any participant in the Depository or any other Person, other than a registered owner of the Bonds, as shown in the registration books, of any amount with respect to principal of or interest on or purchase price of the Bonds. Replacement Bonds may be issued directly to beneficial owners of Bonds other than a Depository, or its nominee,but only in the event that (i)the Depository determines not to continue to act as securities depository for the Bonds (which determination shall become effective no less than 90 days after written notice to such effect to the Issuer and the Trustee); or (ii)the Issuer has advised a Depository of its determination (which determination is conclusive as to the Depository and beneficial owners of the Bonds)that the Depository is incapable of discharging its duties as securities depository for the Bonds; or (iii)the Issuer has determined (which determination is conclusive as to the Depository and the beneficial owners of the Bonds) that the interests of the beneficial owners of the Bonds might be adversely affected if such book-entry only system of transfer is continued. Upon occurrence of any of the foregoing events, the Issuer and the Borrower shall use commercially reasonable efforts to attempt to locate another qualified securities depository. If the Issuer and the Borrower fail to locate another qualified securities depository to replace the Depository, the Issuer and the Borrower, at the Borrower's expense, shall cause to be authenticated and delivered replacement Bonds, in certificate form, to the beneficial owners of the Bonds. In the event that the Issuer makes the determination noted in (ii) or (iii) above (provided that the Issuer undertakes no obligation to make any investigation to determine the occurrence of any events that would permit the Issuer to make any such determination), and has made provisions to notify the beneficial owners of Bonds of such determination by mailing an appropriate notice to the Depository, it and the Borrower shall cause to be issued replacement Bonds in certificate form to beneficial owners of the Bonds as shown on the records of the Depository provided to the Issuer. 19 2014-05-20 Agenda Packet Page 328 Upon the written consent of one hundred percent (100%) of the beneficial owners of the Bonds, the Trustee shall withdraw the Bonds from any Depository and authenticate and deliver Bonds fully registered to the assignees of that Depository or its nominee. If the request for such withdrawal is not the result of any Issuer action or inaction, such withdrawal, authentication and delivery shall be at the cost and expense (including costs of printing, preparing and delivering such Bonds) of the persons requesting such withdrawal, authentication and delivery; otherwise such withdrawal, authentication and delivery shall be at the cost and expense of the Borrower. Whenever, during the term of the Bonds,the beneficial ownership thereof is determined by a book entry at a Depository, (i)the requirements in this Indenture of holding, delivering or transferring Bonds shall be deemed modified to require the appropriate Person or entity to meet the requirements of the Depository as to registering or transferring the book entry to produce the same effect and (ii)delivery of the Bonds will be in accordance with arrangements among the Issuer, the Trustee and the Depository notwithstanding any provision of this Indenture to the contrary. The Trustee and the Issuer shall enter into any letter of representation with a Depository to implement the Book Entry System of bond registration described above. ARTICLE IV REDEMPTION OF BONDS Section 4.01. No Redemption of Bonds Prior to Maturity. The Bonds are not subject to optional redemption prior to maturity. ARTICLE V PROVISIONS AS TO FUNDS, PAYMENTS,PROJECT AND AGREEMENT Section 5.01. Creation of Funds, Allocation of Bond Proceeds. (a) The funds and accounts described in this Section, designated as indicated are created by this Section 5.01. Each fund and account is to be maintained in the custody of the Trustee as a separate fund or account. The funds and accounts are: (1) the Bond Fund designated "Bond Fund," and the "Initial Deposit Account"therein; (2) the Project Fund designated"Project Fund"; (3) the Collateral Fund designated"Collateral Fund"; (4) the Costs of Issuance Fund designated"Costs of Issuance Fund"; and (5) the Rebate Fund designated"Rebate Fund." (b) The proceeds of the sale of the Bonds (including without limitation,premium, if any, and interest accrued thereon), shall be deposited by the Trustee on the Closing Date to the Project Fund. 20 2014-05-20 Agenda Packet Page 329 On the Closing Date, the Trustee shall deposit$ received by or on behalf of the Borrower, from money other than the proceeds of the Bonds, in the Costs of Issuance Fund. In addition, the Trustee shall cause the Initial Deposit to be deposited by the provider thereof to the Initial Deposit Account of the Bond Fund. Section 5.02. Application of Loan Payments. So long as there are any Outstanding Bonds, any payments made by the Borrower pursuant to the Note and the Loan Agreement shall be paid on each Loan Payment Date directly to the Trustee and deposited into the Bond Fund,to be used to pay the interest and principal (if any) on the Bonds on the next succeeding Interest Payment Date; provided that so long as there are amounts available therefor, for purposes of paying interest on the Loan when due the Trustee shall debit the Initial Deposit Account in the amount of interest due on the Bonds on each Interest Payment Date and transfer the same to the Bond Fund to pay interest due on the Bonds on each Interest Payment Date; and provided further that so long as there are amounts available therefor, for purposes of making principal payments on the Loan when due the Trustee shall debit the Collateral Fund and transfer the same to the Bond Fund to pay the principal of the Bonds on the date set for payment of the Bonds on the Maturity Date. Section 5.03. Disbursements from the Proiect Fund. (a) Requisitions. Subject to the provisions of this Section 5.03(a) and Section 5.03(b) below, the Trustee shall make disbursements from the Project Fund to pay Project Costs only upon the receipt of a written request of the Borrower signed by an Authorized Borrower Representative (which request shall be in the form attached as Exhibit B to the Loan Agreement) a "Disbursement Request." (b) Project Fund. When the Trustee receives a Disbursement Request from the Project Fund in accordance with the provisions of Section 5.03(a) above and Sections 3.4 and 3.5 of the Loan Agreement, subject to the following paragraph, the Trustee shall confirm that Available Moneys equal to or greater than the sum of(i)the amount set forth in the Disbursement Request and (ii)all prior disbursements made by the Trustee from the Project Fund, are on deposit in the Collateral Fund. Upon confirmation of the items above and subject to the provisions of Section 3.4 of the Loan Agreement, the Trustee shall thereafter disburse the funds from the Project Fund to pay Project Costs in the amount pursuant to the Disbursement Request directly to (1)the Freddie Mac Lender, or at the direction of the Freddie Mac Lender as provided in Section 3.5(f) of the Loan Agreement, to the extent the corresponding deposit of Available Moneys to the Collateral Fund was made by or at the direction of the Freddie Mac Lender(as confirmed in the Disbursement Request) or (2)the Borrower (or any other party designated in the Disbursement Request) to the extent the corresponding deposit of Available Moneys to the Collateral Fund was made by or at the direction of the Borrower or such other party. Any interest earnings on the Project Fund shall be credited to the Bond Fund. The Trustee is hereby authorized and directed to transfer, without the need to receive a signed Disbursement Request, funds from the Project Fund to the Bond Fund, as referenced in Section 5.04(3) below, for the purpose of covering any shortfall or delinquency in the Bond Fund as to payments of Bond Debt Service Charges. There shall be deposited from time to time in the Collateral Fund Available Moneys in such amounts and at such times as may be necessary to allow the Trustee to disburse funds from the Project Fund, pursuant to Section 5.03 hereof, upon the Trustee's receipt of a Disbursement Request from the Borrower to pay Project Costs. 21 2014-05-20 Agenda Packet Page 330 (c) Records. The Trustee shall cause to be kept and maintained adequate records pertaining to the Project Fund and all disbursements therefrom as herein provided. If requested by the Issuer or the Borrower, or the Investor Limited Partner, after the filing by the Borrower of the Completion Certificate with the Trustee as provided in Section 5.11 hereof, the Trustee shall file copies of the records pertaining to the Project Fund and disbursements therefrom with the Issuer and the Borrower and the Investor Limited Partner. The proceeds of the Bonds shall be used or deemed used exclusively to pay costs that (i)are capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations), and (ii) are made exclusively with respect to a "qualified residential rental project" within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to the building in the Project and the land on which it is located so that the building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided,however, the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its partners and neither the Trustee nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or Event of Default under this Indenture. Upon the occurrence and continuance of an Event of Default hereunder because of which the principal amount of the Bonds has been declared to be due and immediately payable pursuant to Section 7.03 hereof, any moneys remaining in the Project Fund shall be promptly transferred by the Trustee to the Bond Fund. Section 5.04. Bond Fund. There shall be deposited in the Bond Fund (1)the amounts set forth in Sections 5.01 and 5.02, (2) interest earnings on the Project Fund and the Collateral Fund and (3) amounts set forth under this Section 5.04. The Bond Fund (and the Initial Deposit Account therein) and the moneys and Eligible Investments therein shall be used solely and exclusively for the payment of Bond Debt Service Charges as they become due and at stated maturity, or upon acceleration, all as provided herein and in the Loan Agreement. The Trustee shall transmit to the Paying Agent, as appropriate, from moneys on deposit in the Bond Fund, amounts sufficient to make timely payments of Bond Debt Service Charges on the Bonds. To the extent that the amount needed by the Paying Agent is not sufficiently predictable, the Trustee may make any credit arrangements with the Paying Agent which will permit those payments to be made. The Issuer authorizes and directs the Trustee to cause withdrawal of moneys from the Bond Fund which are available for the purpose of paying, and are sufficient to pay, Bond Debt Service Charges on the Bonds as they become due and payable, for the purposes of paying or transferring moneys to the Paying Agent which are necessary to pay such Bond Debt Service Charges. Amounts credited to or on deposit in the Initial Deposit Account shall be transferred to the Bond Fund on each Loan Payment Date in order to provide for the payment of Bond Debt Service Charges on the next succeeding Bond Payment Date. 22 2014-05-20 Agenda Packet Page 331 In the event that amounts on deposit in the Bond Fund on any Loan Payment Date are insufficient to make the payment of Bond Debt Service Charges due on the next succeeding Bond Payment Date, the Trustee shall transfer funds in the following order to the Bond Fund and use such funds, together with amounts then on deposit in the Bond Fund, to pay the Bond Debt Service Charges due on the next succeeding Bond Payment Date: (1) first, from amounts on deposit in the Initial Deposit Account of the Bond Fund; (2) second, from amounts on deposit in the Collateral Fund; and (3) third, from amounts on deposit in the Project Fund. Section 5.05. Investment of Special Funds. (a) Any money held as part of the funds and accounts created under this Indenture shall be invested or reinvested by the Trustee solely in Eligible Investments pursuant to written direction from the Borrower consistent with the terms of this Indenture. All such Eligible Investments shall mature or be subject to withdrawal or redemption without discount or penalty prior to the next Interest Payment Date. In addition, following receipt of written notice of an Event of Default of the Borrower, the Trustee shall invest and reinvest the money it holds as part of the funds and accounts in Eligible Investments consistent with the terms of this Indenture. Except as described below, any investment made with money on deposit in a fund or account shall be held by or under control of the Trustee and shall be deemed at all times a part of the fund or account where such money was on deposit, and the interest and profits realized from such investment shall be credited to such fund or account and any loss resulting from such investment shall be charged to such fund or account. In the absence of the receipt of any investment instructions as provided herein, the Trustee is authorized to invest all money under its control in money market mutual funds described in clause (ii) of the definition of Eligible Investments. Further, in the absence of written directions from the Borrower and except for funds required to be invested at a restricted yield pursuant to Section 148 of the Code, the Trustee is expressly authorized to implement its automated cash investment system, to assure that cash on hand is invested, and to charge its normal cash investment fees, which may be deducted from income earned on investments; provided that such fees are separately stated and accounted for. (b) The Trustee may make any investment through its own bond department, investment department or other commercial banking department or Affiliate of the Trustee providing investment services. The Trustee, any such department or the Trustee's Affiliates may receive reasonable and customary compensation in connection with any investment made under this Indenture. (c) The Trustee shall have no liability or responsibility for any depreciation of the value of any investment made in accordance with the provisions of this Section or for any loss resulting from such investment or redemption, sale or maturity thereof. (d) Unless otherwise confirmed in writing, an account statement delivered by the Trustee to the Borrower shall be deemed written confirmation by said party that the investment transactions identified therein accurately reflect the investment directions given to the Trustee by said 23 2014-05-20 Agenda Packet Page 332 party, unless said party notifies the Trustee in writing to the contrary within 30 days of the date of receipt of such statement. (e) The Issuer (and the Borrower by its execution of the Loan Agreement) acknowledges that to the extent regulations of the Office of the Comptroller of the Currency or other applicable regulatory entity grant the Issuer or the Borrower the right to receive brokerage confirmations of security transactions as they occur, the Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish to the Issuer, the Borrower and the Investor Limited Partner periodic cash transaction statements that include detail for all investment transactions made by the Trustee hereunder. (f) Except as otherwise provided in subsection (g), the Issuer and the Borrower covenant that all investments of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. (g) The Issuer (and the Borrower by its execution of the Loan Agreement) covenants that investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in any reserve fund shall be valued at their present value (within the meaning of Section 148 of the Code). Section 5.06. Moneys to be Held in Trust. Except where moneys have been deposited with or paid to the Trustee pursuant to an instrument restricting their application to particular Bonds, all moneys required or permitted to be deposited with or paid to the Trustee or the Paying Agent under any provision of this Indenture or the Note, and any investments thereof, shall be held by the Trustee or the Paying Agent in trust. Except for moneys held by the Trustee pursuant to Section 5.09 hereof, all moneys described in the preceding sentence held by the Trustee or the Paying Agent shall be subject to the lien hereof while so held. Section 5.07. Nonpresentment of Bonds. In the event that any Bond shall not be presented for payment when the principal thereof becomes due, or a check or draft for interest is uncashed, if moneys sufficient to pay the principal then due of that Bond or of such check or draft shall have been made available to the Trustee for the benefit of its Holder, all liability of the Issuer to that Holder for such payment of the principal then due of the Bond or of such check or draft thereupon shall cease and be discharged completely. Thereupon, it shall be the duty of the Trustee to hold those moneys, without liability for interest thereon, in a separate account in the Bond Fund for the exclusive benefit of the Holder,who shall be restricted thereafter exclusively to those moneys for any claim of whatever nature on its part under this Indenture or on, or with respect to, the principal then due of that Bond or of such check or draft. The Trustee shall notify the Borrower in writing of any Bond that has not been presented for payment when the principal thereof becomes due. Any of those moneys which shall be so held by the Trustee, and which remain unclaimed by the Holder of a Bond not presented for payment or check or draft not cashed for a period of two years after the due date thereof, shall be paid to the Borrower free of any trust or lien,upon a request of the Borrower in writing executed by an Authorized Borrower Representative. Thereafter, the Holder of that Bond shall look only to the Borrower for payment and then only to the amounts so received by 24 2014-05-20 Agenda Packet Page 333 the Borrower without any interest thereon, and the Trustee shall not have any responsibility with respect to those moneys. Section 5.08. Repayment to the Borrower from the Bond Fund. Except as provided in Section 5.09 hereof, any amounts remaining in the Bond Fund (i)after all of the outstanding Bonds shall be deemed paid and discharged under the provisions of this Indenture, and (ii) after payment of all fees, charges and expenses of the Trustee, the Registrar, the Paying Agents and the Issuer, and of all other amounts required to be paid under this Indenture, the Loan Agreement, the Regulatory Agreement and the Note, shall be paid to the Borrower to the extent that those amounts are in excess of those necessary to effect the payment and discharge of the outstanding Bonds. Section 5.09. Rebate Fund. Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien hereunder. The Trustee shall furnish to the Borrower all information reasonably requested by the Borrower with respect to the Bonds and investments of the funds and accounts maintained by the Trustee hereunder. The Trustee shall make deposits to and disbursements from the Rebate Fund (including rebate payments to the United States required to be made by the Tax Certificate), as well as investments of the amounts therein, in accordance with the written directions received from the Borrower pursuant to the Tax Certificate. Anything in Article XI hereof to the contrary notwithstanding, the provisions of the Tax Certificate may be superseded or amended by an amendment or supplement to the Tax Certificate effected in accordance with the terms thereof. Section 5.10. Valuation. For the purpose of determining the amount on deposit to the credit of any fund or account, the value of obligations in which money in such fund or account shall have been invested shall be computed at the then market value thereof. The Eligible Investments shall be valued by the Trustee at any time requested by the Borrower on reasonable notice to the Trustee (which period of notice may be waived or reduced by the Trustee); provided, however, that the Trustee shall not be required to value the Eligible Investments more than once in any calendar month. Section 5.11. Completion of the Proiect. The completion of the Project and payment of all costs and expenses incident thereto shall be evidenced by the filing with the Trustee of the Completion Certificate required by Section 3.7 of the Loan Agreement. As soon as practicable after the filing with the Trustee of the Completion Certificate, any balance remaining in the Project Fund (other than the amounts retained by the Trustee as described in the Completion Certificate) shall be deposited or applied in accordance with the direction of the Borrower executed by an Authorized Borrower Representative pursuant to Section 3.4 of the Loan Agreement. Section 5.12. Collateral Fund. There shall be deposited from time to time in the Collateral Fund,Available Moneys in such amounts and at such times as may be necessary to allow the Trustee to disburse funds from the Project Fund,pursuant to Section 5.03 hereof and Section 3.4 of the Loan Agreement, upon the Trustee's receipt of a disbursement request from the Borrower. Moneys in the Collateral Fund shall be invested in Eligible Investments. The Collateral Fund shall only be used and applied for, and irrevocably committed to, the payment of (i)the Bond Debt Service Charges on the Bonds which are due and payable on any Interest Payment Date or Maturity Date and (ii)the Bond Debt Service Charges on the Bonds as and 25 2014-05-20 Agenda Packet Page 334 when due at any other Bond Payment Date. Any interest earnings on the Collateral Fund shall be credited to the Bond Fund. Section 5.13. Costs of Issuance Fund. The Trustee shall use money on deposit to the credit of the Costs of Issuance Fund if any, to pay the costs of issuance on the Closing Date or as soon as practicable thereafter in accordance with written instructions to be given to the Trustee by the Borrower, as set forth in a certificate of the Borrower delivered to the Trustee on the Closing Date or as otherwise directed by the Borrower, upon delivery to the Trustee of appropriate invoices for such expenses. Investment earnings on amounts on deposit in the Costs of Issuance Fund shall be retained in such fund. Amounts remaining on deposit in the Costs of Issuance Fund sixty (60) days after the Closing Date shall be remitted by the Trustee to the Borrower. Upon such final disbursement, the Trustee shall close the Costs of Issuance Fund. ARTICLE VI THE TRUSTEE,REGISTRAR, PAYING AGENTS AND AUTHENTICATING AGENTS Section 6.01. Trustee's Acceptance and Responsibilities. The Trustee accepts the trusts imposed upon it by this Indenture, and agrees to observe and perform those trusts,but only upon and subject to the terms and conditions set forth in this Article, to all of which the parties hereto and the Holders agree. (a) Prior to the occurrence of a default or an Event of Default (as defined in Section 7.01 hereof) of which the Trustee has been notified, as provided in paragraph (f) of Section 6.02 hereof, or of which by that paragraph the Trustee is deemed to have notice, and after the cure or waiver of all defaults or Events of Default which may have occurred, (i) the Trustee undertakes to perform only those duties and obligations which are set forth specifically in this Indenture, and no duties or obligations shall be implied to the Trustee; (ii) in the absence of bad faith on its part, the Trustee may rely conclusively, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are required specifically to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case a default or an Event of Default has occurred and is continuing hereunder (of which the Trustee has been notified, or is deemed to have notice), the Trustee shall exercise those rights and powers vested in it by this Indenture and shall use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that 26 2014-05-20 Agenda Packet Page 335 (i) this Subsection shall not be construed to affect the limitation of the Trustee's duties and obligations provided in subparagraph (a)(i) of this Section or the Trustee's right to rely on the truth of statements and the correctness of opinions as provided in subparagraph (a)(ii) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith, unless it shall be established that the Trustee was grossly negligent in ascertaining the pertinent facts; (iii) 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 Holders of not less than a majority in principal amount of the Bonds then outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee,under this Indenture; and (iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds in its sole discretion for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01. Section 6.02. Certain Ri6hts and Obligations of the Trustee. Except as otherwise provided in Section 6.01 hereof: (a) The Trustee (i)may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees (but shall be answerable therefor only in accordance with the standard specified above), (ii) shall be entitled to the advice of counsel concerning all matters of trusts hereof and duties hereunder, and (iii)may pay reasonable compensation in all cases to all of those attorneys, agents, receivers and employees reasonably employed by it in connection with the trusts hereof(at its own expense or, if such attorneys, agents and receivers are reasonably employed by the Trustee to perform Extraordinary Services, at the expense of the Borrower as provided in Section 6.03 hereof). The Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Issuer or the Borrower) approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in good faith in reliance upon that opinion or advice. (b) Except for its certificate of authentication on the Bonds, the Trustee shall not be responsible for: (i) any recital in this Indenture or in the Bonds, (ii) the validity, priority,recording, re-recording, filing or re-filing of this Indenture or any Supplemental Indenture or the Regulatory Agreement, 27 2014-05-20 Agenda Packet Page 336 (iii) any instrument or document of further assurance or collateral assignment, (iv) any financing statements, amendments thereto or continuation statements, (v) insurance of the Project or collection of insurance moneys, (vi) the validity of the execution by the Issuer of this Indenture, any Supplemental Indenture or instruments or documents of further assurance, (vii) the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, (viii) the value of or title to the Project, or (ix) the maintenance of the security hereof, except that, in the event that the Trustee enters into possession of a part or all of the Project pursuant to any provision of the Regulatory Agreement or any other instrument or document collateral thereto, the Trustee shall use due diligence in preserving that property. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, agreements or obligations on the part of the Issuer or the Borrower under the Loan Agreement except as set forth hereinafter; but the Trustee may require of the Issuer or the Borrower full information and advice as to the observance or performance of those covenants, agreements and obligations. Except as otherwise provided in Section 7.04 hereof,the Trustee shall have no obligation to observe or perform any of the duties of the Issuer under the Loan Agreement. (c) The Trustee shall not be accountable for the application by the Borrower or any other Person of the proceeds of any Bonds authenticated or delivered hereunder. (d) The Trustee shall be protected, in the absence of bad faith on its part, in acting upon any notice,request, consent, certificate, order, affidavit, letter,telegram or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons. Any action taken by the Trustee pursuant to this Indenture upon the request, authority or consent of any Person who is the Holder of any Bonds at the time of making the request or giving the authority or consent, shall be conclusive and binding upon all future Holders of the same Bond and of Bonds issued in exchange therefor or in place thereof. (e) As to the existence or nonexistence of any fact for which the Issuer or the Borrower may be responsible or as to the sufficiency or validity of any instrument, document,report, paper or proceeding,the Trustee, in the absence of bad faith on its part, shall be entitled to rely upon a certificate signed on behalf of the Issuer or Borrower, as appropriate, by an authorized officer or representative thereof as sufficient evidence of the facts recited therein. Prior to the occurrence of a default or Event of Default hereunder of which the Trustee has been notified, as provided in paragraph (f) of this Section, or of which by that paragraph the Trustee is deemed to have notice, the Trustee may accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient; provided, that the Trustee in its discretion may require and obtain any 28 2014-05-20 Agenda Packet Page 337 further evidence which it deems to be necessary or advisable; and, provided further, that the Trustee shall not be bound to secure any such further evidence. (f) The Trustee shall not be required to take notice, and shall not be deemed to have notice, of any default or Event of Default hereunder, except Events of Default described in paragraphs (a), (b) and (d) (but only with respect to paragraph (a) of Section 7.1 of the Loan Agreement) of Section 7.01 hereof, unless the Trustee shall be notified specifically of the default or Event of Default in a written instrument or document delivered to it by the Issuer or by the Holders of at least 10% of the aggregate principal amount of Bonds then outstanding. In the absence of delivery of a notice satisfying those requirements, the Trustee may assume conclusively that there is no default or Event of Default, except as noted above. (g) At any reasonable time, the Trustee and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, with no duty to do so, (i)may inspect and copy fully all books, papers and records of the Issuer pertaining to the Project and the Bonds, and (ii)may make any memoranda from and in regard thereto as the Trustee may desire. (h) The Trustee shall not be required to give any bond or surety with respect to the execution of these trusts and powers or otherwise in respect of the premises. (i) Notwithstanding anything contained elsewhere in this Indenture, the Trustee may demand any showings, certificates, reports, opinions, appraisals and other information, and any corporate action and evidence thereof, in addition to that required by the terms hereof, as a condition to the authentication of any Bonds or the taking of any action whatsoever within the purview of this Indenture, if the Trustee deems it to be desirable for the purpose of establishing the right of the Issuer to the authentication of any Bonds or the right of any Person to the taking of any other action by the Trustee;provided,that the Trustee shall not be required to make that demand. 0) Before taking action hereunder pursuant to Section 6.04 or Article VII hereof (with the exception of any action required to be taken under Section 7.02 hereof), the Trustee may require that a satisfactory indemnity bond be furnished to it for the reimbursement of all expenses which it may incur and to protect it against all liability by reason of any action so taken, except liability which is adjudicated to have resulted from its negligence or willful misconduct. The Trustee may take action without that indemnity, and in that case, the Borrower shall reimburse the Trustee for all of the Trustee's expenses pursuant to Section 6.03 hereof. (k) Unless otherwise provided herein, all moneys received by the Trustee under this Indenture shall be held in trust for the purposes for which those moneys were received, until those moneys are used, applied or invested as provided herein; provided,that those moneys need not be segregated from other moneys, except to the extent required by this Indenture or by law. Absent written direction provided to the Trustee pursuant to Section 5.05 hereof, the Trustee shall not be responsible or liable for keeping moneys held by it hereunder invested in any particular investment, and the Trustee shall not have any liability for interest on any moneys received hereunder, except to the extent expressly provided herein. (1) Any resolution by the Board, and any opinions, certificates and other instruments and documents for which provision is made in this Indenture, may be accepted by the Trustee, in the absence of bad faith on its part, as conclusive evidence of the facts and conclusions 29 2014-05-20 Agenda Packet Page 338 stated therein and shall be full warrant, protection and authority to the Trustee for its actions taken hereunder. (m) The Trustee shall be entitled to file proofs of claim in bankruptcy at the direction of the Holders of at least 25% in aggregate principal amount of Bonds outstanding. Trustee fees and expenses are intended to constitute administrative expenses in bankruptcy. (n) The duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture. No implied covenants or obligations shall be read into this Indenture against the Trustee. Notwithstanding any provision herein, the Trustee shall have no duty or obligation to the Borrower except as may be expressly set forth in this Indenture. (o) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising or caused, directly or indirectly by circumstances beyond its reasonable control including, without limitation, acts of God; earthquakes; fire; flood; hurricanes or other storms wars; terrorism; similar military disturbances; sabotage; epidemic; pandemic; riots; interruptions; loss or malfunctions of utilities, communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under any such circumstances. (p) Notwithstanding anything contained herein to the contrary, upon the occurrence and continuance of an Event of Default, before taking any action which may subject the Trustee to liability under any environmental law, statute,regulation or similar requirement relating to the environment, the Trustee may require that a satisfactory indemnity bond, indemnity or environmental impairment insurance be furnished for the payment or reimbursement of all costs and expenses to which it may be put (including reasonable attorney's fees, costs and expenses) and to protect it against all liability resulting from any claims,judgments, damages, losses, penalties, fines, liabilities (including strict liability) and costs and expenses which may result from such foreclosure or other action (including reasonable attorney's fees, costs and expenses). Section 6.03. Fees, Charges and Expenses of Trustee, Registrar, Paying Alzents and Authenticating Agents. The Trustee, Registrar, Paying Agents and Authenticating Agents shall be entitled to payment or reimbursement by the Borrower, as provided in the Loan Agreement, for customary fees for their respective Ordinary Services rendered hereunder and for all advances, counsel fees and other Ordinary Expenses reasonably and necessarily paid or incurred by them in connection with the provision of Ordinary Services. For purposes hereof, fees for Ordinary Services provided for by their respective standard fee schedule shall be considered customary. Notwithstanding anything in this Indenture or the other Loan Documents to the contrary, fees of the Trustee, Registrar, Paying Agents and Authenticating Agents for Ordinary Services (including any fees for services of the Dissemination Agent under the Continuing Disclosure Agreement) shall not exceed $ per annum in the aggregate and shall be paid directly by the Borrower to the Trustee as provided in Section 4.2(c) of the Loan Agreement. In the event that it should become necessary for any of them to perform Extraordinary Services, they shall be entitled to customary extra compensation therefor and to reimbursement for reasonable and necessary Extraordinary Expenses incurred in connection therewith. Unless and until such time as the Trustee resigns or is 30 2014-05-20 Agenda Packet Page 339 replaced, and a successor Trustee is appointed pursuant to Section 6.09 hereunder, the Trustee shall continue to perform its duties hereunder notwithstanding the Borrower's failure to timely pay such fees. Without creating a default or an Event of Default hereunder, however, the Borrower may contest in good faith the necessity for any Extraordinary Service and Extraordinary Expense and the amount of any fee, charge or expense except Ordinary Expenses. The Trustee, the Registrar, Paying Agents and Authenticating Agents shall not be entitled to compensation or reimbursement for Extraordinary Services or Extraordinary Expenses occasioned by their negligence or willful misconduct. The customary fees for their respective Ordinary Services and charges of the foregoing shall be entitled to payment and reimbursement only from (i)the Additional Payments made by the Borrower pursuant to the Loan Agreement, or (ii) from other moneys available therefor. Any amounts payable to the Trustee, the Registrar,the Paying Agents or Authenticating Agents pursuant to this Section 6.03 shall be payable upon receipt of a detailed invoice from the Trustee, Registrar, Paying Agents or Authenticating Agents, as applicable, and shall bear interest beginning thirty (30) days following the provision of the respective invoice to the Borrower at the Interest Rate for Advances. Section 6.04. Intervention by Trustee. The Trustee may intervene on behalf of the Holders, and shall intervene if requested to do so in writing by the Holders of at least 25% of the aggregate principal amount of Bonds then outstanding, in any judicial proceeding to which the Issuer or the Borrower is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Holders of the Bonds. The rights and obligations of the Trustee under this Section are subject to the approval of that intervention by a court of competent jurisdiction. The Trustee may require that a satisfactory indemnity bond be provided to it in accordance with Sections 6.01 and 6.02 hereof before it takes action hereunder. Section 6.05. Successor Trustee. Anything herein to the contrary notwithstanding, (a) any corporation or association (i)into which the Trustee may be converted or merged, (ii)with which the Trustee or any successor to it may be consolidated, or (iii)to which it may sell or transfer its corporate trust assets and corporate trust business as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Trustee hereunder and shall be vested with all of the title to the whole property or Trust Estate hereunder; and (b) that corporation or association shall be vested further, as was its predecessor, with each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by, vested in or conveyed to the Trustee, without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto. Any successor Trustee, however, (i) shall be a trust company or a bank having the powers of a trust company, (ii) shall be in good standing within the State, (iii) shall be duly authorized to exercise trust powers within the State, (iv) shall have a reported capital, surplus and retained earnings of not less than$100,000,000, and(v)shall have at least a Minimum Trustee Rating. 31 2014-05-20 Agenda Packet Page 340 Section 6.06. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including without limitation, the laws of the State) denying or restricting the right of banks or trust companies to transact business as trustees in that jurisdiction. It is recognized that, (a) if there is litigation under this Indenture or other instruments or documents relating to the Bonds and the Project, and in particular, in case of the enforcement hereof or thereof upon a default or an Event of Default, or (b)if the Trustee should deem that, by reason of any present or future law of any jurisdiction, it may not (i) exercise any of the powers, rights or remedies granted herein to the Trustee, (ii)hold title to the properties, in trust, as granted herein, or (iii)take any action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an individual or additional institution as a co- Trustee. The following provisions of this Section are adapted to these ends. In the event that the Trustee appoints an individual or additional institution as a co-Trustee, each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by,vested in or conveyed to the Trustee shall be exercisable by,vest in and be conveyed to that co-Trustee, but only to the extent necessary for it to be so vested and conveyed and to enable that co-Trustee to exercise it. Every covenant, agreement and obligation necessary to the exercise thereof by that co-Trustee shall run to and be enforceable by it. Should any instrument or document in writing from the Issuer reasonably be required by the co-Trustee so appointed by the Trustee for vesting and conveying more fully and certainly in and to that co-Trustee those trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens, that instrument or document shall be executed, acknowledged and delivered, but not prepared, by the Issuer. In case any co-Trustee or a successor to it shall die, become incapable of acting, resign or be removed, all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the co- Trustee shall be exercised by,vest in and be conveyed to the Trustee, to the extent permitted by law, until the appointment of a successor to the co-Trustee. The total compensation of the Trustee and any co-Trustee or separate trustee shall be as, and may not exceed the amounts,provided in Section 6.03 hereof. Section 6.07. Resienation by the Trustee. The Trustee may resign at any time from the trusts created hereby by giving written notice of the resignation to the Issuer, the Borrower, the Investor Limited Partner, the Registrar, the Paying Agents and Authenticating Agents, and by mailing written notice of the resignation to the Holders as their names and addresses appear on the Register at the close of business fifteen days prior to the mailing. Notwithstanding the foregoing, if the Trustee no longer has a Minimum Trustee Rating, it shall resign within sixty (60) calendar days of the withdrawal or suspension of a former Minimum Trustee Rating or other event giving rise to its failure to maintain a Minimum Trustee Rating. The resignation shall take effect upon the appointment of a successor Trustee as provided for in Section 6.09 of this Indenture or an order of a court of competent jurisdiction allowing the Trustee to resign. Section 6.08. Removal of the Trustee. The Trustee may be removed at any time by an instrument or document or concurrent instruments or documents in writing delivered to the Trustee, with copies thereof mailed to the Issuer,the Registrar, the Paying Agents and Authenticating Agents and the Borrower. 32 2014-05-20 Agenda Packet Page 341 The Trustee also may be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee by any court of competent jurisdiction upon the application of the Issuer or the Holders of not less than 51% in aggregate principal amount of the Bonds then outstanding under this Indenture. The removal of the Trustee under this Section 6.08 shall take effect upon the appointment of a successor Trustee as provided for in Section 6.09 of this Indenture. Section 6.09. Appointment of Successor Trustee. If(i)the Trustee shall resign, shall be removed, shall be dissolved, or shall become otherwise incapable of acting hereunder, (ii)the Trustee shall be taken under the control of any public officer or officers, or (iii) a receiver shall be appointed for the Trustee by a court,then a successor Trustee shall be appointed by the Issuer; provided,that if a successor Trustee is not so appointed within thirty days after (a) a notice of resignation or an instrument or document of removal is received by the Issuer, as provided in Sections 6.07 and 6.08 hereof, respectively, or (b)the Trustee is dissolved, taken under control, becomes otherwise incapable of acting or a receiver is appointed, in each case, as provided above,then, but only so long as the Issuer shall not have appointed a successor Trustee, the Holders of a majority in aggregate principal amount of Bonds then outstanding may designate a successor Trustee by an instrument or document or concurrent instruments or documents in writing signed by or on behalf of those Holders. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section, the Holder of any Bond outstanding hereunder or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee. Every successor Trustee appointed pursuant to this Section (i) shall be a trust company or a bank having the powers of a trust company (ii) shall be in good standing within the State, (iii) shall be duly authorized to exercise trust powers within the State, (iv) shall have a reported capital, surplus and retained earnings of not less than $100,000,000, (v) shall be willing to accept the trusteeship under the terms and conditions of this Indenture, and(vi) shall have a Minimum Trustee Rating. Every successor Trustee appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Issuer and the Borrower an instrument or document in writing accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of its predecessor. Upon the written request of its successor, the Issuer or the Borrower, and payment of all fees and expenses owed to it, the predecessor Trustee (i) shall execute and deliver an instrument or document transferring to its successor all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the predecessor Trustee hereunder, and (ii) shall take any other action necessary to duly assign, transfer and deliver to its successor all property (including without limitation, all securities and moneys)held by it as Trustee. Should any instrument or document in writing from the Issuer be requested by any successor Trustee for vesting and conveying more fully and certainly in and to that successor the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens vested or conveyed or intended to be vested or conveyed hereby in or to the predecessor Trustee,the Issuer shall execute, acknowledge and deliver that instrument or document. 33 2014-05-20 Agenda Packet Page 342 In the event of a change in the Trustee,the predecessor Trustee shall cease to be custodian of any moneys which it may hold pursuant to this Indenture and shall cease to be Registrar, Authenticating Agent and a Paying Agent for any of the Bonds,to the extent it served in any of those capacities. Section 6.10. Adoption of Authentication. In case any of the Bonds shall have been authenticated, but shall not have been delivered, any successor Trustee, Registrar or Authenticating Agent may adopt the certificate of authentication of any predecessor Trustee, Registrar or Authenticating Agent and may deliver those Bonds so authenticated as provided herein. In case any Bonds shall not have been authenticated, any successor Trustee, Registrar or Authenticating Agent may authenticate those Bonds in its own name as successor Trustee. In all cases, the certificate of authentication shall have the same force and effect as provided in the Bonds or in this Indenture with respect to the certificate of authentication of the predecessor Trustee, Registrar or Authenticating Agent. Section 6.11. Reeistrars. (a) Succession. Anything herein to the contrary notwithstanding, any corporation or association (i) into which a Registrar may be converted or merged, (ii)with which a Registrar or any successor to it may be consolidated, or (iii)to which it may sell or transfer its assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Registrar to that Registrar hereunder and shall be vested with each and every power, right, duty, obligation, discretion and privilege expressed or intended by this Indenture to be exercised by or vested in the predecessor Registrar,without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto. (b) Resignation. A Registrar may resign at any time by giving written notice of its resignation to the Issuer, the Borrower, the Trustee and to each Paying Agent and Authenticating Agent for the Bonds, at least 60 days before the resignation is to take effect. The resignation shall take effect immediately, however, upon the appointment of a successor Registrar, if the successor Registrar is appointed and accepts that appointment before the time stated in the notice. (c) Removal. The Registrar may be removed at any time by an instrument or document or concurrent instruments or documents in writing delivered to the Registrar, with copies thereof mailed to the Issuer,the Trustee and the Borrower, and signed by or on behalf of the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding. (d) Appointment of Successors. If(i)a Registrar shall resign, shall be removed, shall be dissolved, or shall become otherwise completely incapable of acting hereunder, (ii)a Registrar shall be taken under the control of any public officer or officers, (iii) a receiver shall be appointed for a Registrar by a court, or (iv)a Registrar shall have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws or commence a proceeding under any federal or state bankruptcy, insolvency,reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for ninety days, then a successor Registrar shall be appointed by the Trustee, with the written consent of the Borrower; provided, that if a successor Registrar is not so appointed within ten days after (a) a notice of resignation or an instrument or document of removal is received by the Trustee, as provided above, or(b)the Registrar 34 2014-05-20 Agenda Packet Page 343 is dissolved,taken under control,becomes otherwise incapable of acting or a receiver is appointed, in each case, as provided above, then, if the Trustee shall not have appointed a successor Registrar, the Trustee shall be and become the Registrar. Every successor Registrar appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Issuer, the Trustee and the Borrower, an instrument or document in writing accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, titles and interests of its predecessor. Upon the written request of its successor, the Issuer or the Borrower, a predecessor Registrar (i) shall execute and deliver an instrument or document transferring to its successor all of the properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, titles and interests of it as predecessor Registrar hereunder, and (ii) shall take any other action necessary to duly assign, transfer and deliver to its successor all property and records (including without limitation, the Register and any cancelled Bonds) held by it as Registrar. Should any instrument or document in writing from the Issuer be requested by any successor Registrar for vesting and conveying more fully and certainly in and to that successor the properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, titles and interests vested or conveyed or intended to be vested or conveyed hereby in or to a predecessor Registrar, the Issuer shall execute, acknowledge and deliver that instrument or document. The Trustee shall cause the Borrower to pay pursuant to Section 4.2 of the Loan Agreement, to any Registrar customary compensation for its services from time to time, as authorized,but subject to the limitations set forth, in Section 6.03 hereof. The provisions of Sections 3.05, 3.06, 3.07 and 6.02(d)hereof shall be applicable to the Registrar. Section 6.12. Desienation and Succession of Payine Agents. The Trustee shall be a Paying Agent for the Bonds, and, with the consent of the Issuer, the Trustee may appoint a Paying Agent or Agents with power to act on its behalf and subject to its direction in the payment of Bond Debt Service Charges on the Bonds. It is the responsibility of the Trustee to establish the duties and responsibilities of the Paying Agent for the purposes of this Indenture, to the extent not specified herein. Any corporation or association with or into which the Paying Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which the Paying Agent shall be a party, or any corporation or association succeeding to the trust business of the Paying Agent, shall be the successor of that Paying Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or the Paying Agent or that successor corporation or association. The Paying Agent may at any time resign by giving written notice of resignation to the Trustee, to the Registrar and to the Borrower. The Trustee may at any time terminate the agency of the Paying Agent by giving written notice of termination to such Paying Agent, to the Registrar and to the Borrower. Upon receiving such a notice of resignation or upon such a termination, or in case at any time the Paying Agent shall cease to be eligible under this Section,the Trustee may appoint a successor Paying Agent. The Trustee shall give written notice of appointment of a successor Paying Agent to the Borrower, the Issuer and the Registrar and shall mail, within ten days after that 35 2014-05-20 Agenda Packet Page 344 appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment. The Trustee shall cause the Borrower to pay pursuant to Section 4.2 of the Loan Agreement, to the Paying Agent from time to time customary compensation as authorized, but subject to the limitations set forth, in Section 6.03 hereof for its services. The provisions of Section 3.05, 3.07 and Subsection 6.02(d) shall be applicable to the Paying Agent. Section 6.13. Desienation and Succession of Authenticatin-a Agents. With the consent of the Issuer, the Trustee may appoint an authenticating agent or agents (each referred to herein as an "Authenticating Agent"), in addition to the Registrar, with power to act on its behalf and subject to its direction in the authentication and delivery of Bonds in connection with transfers and exchanges under Sections 3.06 and 4.02 hereof. For all purposes of this Indenture, the authentication and delivery of Bonds by an Authenticating Agent pursuant to this Section shall be deemed to be authentication and delivery of those Bonds"by the Trustee". Any corporation or association with or into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation or association succeeding to the trust business of any Authenticating Agent, shall be the successor of that Authenticating Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee, to the Registrar and to the Borrower. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent,to the Registrar and to the Borrower. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Authenticating Agent. The Trustee shall give written notice of appointment of a successor Authenticating Agent to the Borrower, the Issuer and the Registrar and shall mail, within ten days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment. The Trustee shall cause the Borrower to pay pursuant to Section 4.2 of the Loan Agreement, to any Authenticating Agent from time to time customary compensation for its services. The provisions of Section 3.05 and Subsections 6.02(b), (c), (d), (h) and (i) shall be applicable to any Authenticating Agent. Section 6.14. Dealine in Bonds. The Trustee, a Registrar, a Paying Agent and an Authenticating Agent, their Affiliates, and any directors, officers, employees or agents thereof, in good faith, may become the owners of Bonds secured hereby with the same rights which it or they would have hereunder if the Trustee, the Registrar, Paying Agents and Authenticating Agent did not serve in those capacities. 36 2014-05-20 Agenda Packet Page 345 Section 6.15. Representations, Agreement and Covenants of Trustee. The Trustee hereby represents that it is a national banking association duly organized and validly existing under the laws of the United States of America, in good standing and duly authorized to exercise corporate trust powers in the State, and that it has an unimpaired reported capital, surplus and retained earnings of not less than $100,000,000. The Trustee covenants that it will take such action, if any, as is necessary to remain in good standing and duly authorized to exercise corporate trust powers in the State, and that it will maintain an unimpaired reported capital, surplus and retained earnings of not less than $100,000,000. The Trustee accepts and agrees to observe and perform the duties and obligations of the Trustee to which reference is made in any other instrument or document providing security for any of the Bonds. Section 6.16. RiEht of Trustee to Pay Taxes and Other Charles. The Trustee is hereby authorized (i)to pay taxes, assessments and other governmental charges with respect to the Project, (ii)to make payments for the discharge of mechanics' and other liens relating to the Project, (iii)to obtain and maintain insurance for the Project and pay premiums therefor, and (iv) generally, to make payments and incur expenses, all in the event that the Borrower fails to do so as required by the Loan Agreement, but only to the extent that it has received funds necessary for the purpose of making any such payments, and in any event without prejudice to any rights of the Trustee or the Holders against the Borrower for failure of the Borrower to do so. Any amount so paid at any time, with interest thereon at the Interest Rate for Advances from the date of payment, (i) shall be an additional obligation secured by this Indenture, (ii) shall be given a preference in payment over any Bond Debt Service Charges, and (iii) shall be paid out of the Issuer Revenues, if not caused otherwise to be paid. The Trustee shall only make such payments if it shall have been requested to do so by the Holders of at least 25% of the aggregate principal amount of Bonds then outstanding and shall have been provided with adequate funds for the purpose of making such payment. Section 6.17. Interpleader. In the event of a dispute between any of the parties hereto with respect to the disposition of any funds held by the Trustee hereunder, or the Trustee receives conflicting demands made upon the Trustee with respect to the Trustee's duties hereunder or any other document related to the Bonds, the Trustee shall be entitled to file a suit in interpleader in a court of competent jurisdiction seeking to require the parties to interplead and litigate in such court their several claims and rights among themselves. Upon the filing of such a suit and the deposit of the applicable funds to such court, the Trustee will ipso facto be fully released and discharged from all obligations to further perform any and all duties imposed hereunder or any other document related to the Bonds regarding such matter and/or such funds that are the subject of such interpleader suit. In the event that the Trustee remains as Trustee under this Indenture and receives a court order, directive or other request regarding the interpleader suit, the Trustee shall be entitled to rely upon such instruction without incurring any obligation or liability and the parties hereto release, hold harmless and indemnify the Trustee for any obligation or liability for so relying on such court instruction. Section 6.18. Survival of Certain Provisions. The provisions of Sections 6.01 through 6.18 of this Indenture shall survive the release, discharge and satisfaction of this Indenture. ARTICLE VII 37 2014-05-20 Agenda Packet Page 346 DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND HOLDERS Section 7.01. Defaults; Events of Default. The occurrence of any of the following events is defined as and declared to be and to constitute an Event of Default hereunder: (a) Payment of any interest on any Bond shall not be made when and as that interest shall become due and payable; (b) Payment of the principal of any Bond shall not be made when and as that principal shall become due and payable,whether at stated maturity,upon acceleration or otherwise; (c) Failure by the Issuer to observe or perform any other covenant, agreement or obligation on its part to be observed or performed contained in this Indenture or in the Bonds, which failure shall have continued for a period of 30 days after written notice, by registered or certified mail, to the Issuer and the Borrower specifying the failure and requiring that it be remedied, which notice may be given by the Trustee in its discretion and shall be given by the Trustee at the written request of the Holders of not less than 25% in aggregate principal amount of Bonds then outstanding; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure shall not constitute an Event of Default so long as the Issuer or the Borrower institutes curative action within the applicable period and diligently pursues that action to completion,which must be resolved within one hundred eighty (180) days after the aforementioned notice; and (d) The occurrence and continuance of an Event of Default as defined in Section 7.1 of the Loan Agreement The term "default" or "failure" as used in this Article means (i)a default or failure by the Issuer in the observance or performance of any of the covenants, agreements or obligations on its part to be observed or performed contained in this Indenture or in the Bonds, or(ii)a default or failure by the Borrower under the Loan Agreement, exclusive of any period of grace or notice required to constitute an Event of Default, as provided above or in the Loan Agreement. Section 7.02. Notice of Default. If an Event of Default shall occur, the Trustee shall give written notice of the Event of Default, by registered or certified mail, to the Issuer, the Borrower,the Investor Limited Partner, the Registrar or the Paying Agent and Authenticating Agent, within five days after the Trustee has notice of the Event of Default pursuant to Section 6.02(f) of this Indenture. If an Event of Default occurs of which the Trustee has notice pursuant to this Indenture, the Trustee shall give written notice thereof, within thirty days after the Trustee's receipt of notice of its occurrence, to the Holders of all Bonds then outstanding as shown by the Register at the close of business fifteen days prior to the mailing of that notice. The Investor Limited Partner shall be entitled to cure any Event of Default hereunder within the time frame provided to the Borrower hereunder. Issuer and Trustee agree that cure of any default or Event of Default made or tendered by the Investor Limited Partner shall be deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or tendered by the Borrower. 38 2014-05-20 Agenda Packet Page 347 Section 7.03. Acceleration. Upon the occurrence of an Event of Default described in Section 7.01(a) and (b), the Trustee may declare, and upon the written request of the Holders of not less than 25% in aggregate principal amount of Bonds then outstanding the Trustee shall declare, by a notice in writing delivered to the Issuer and the Borrower, the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. Upon the occurrence of any Event of Default other than those described in Section 7.01(a) and (b), the Trustee, with the written consent of all Holders of Bonds then outstanding,may declare by a notice in writing delivered to the Issuer and Borrower, the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. Upon such declaration, the principal and interest on the Bonds shall become and be due and payable immediately. Interest on the Bonds shall accrue to the date determined by the Trustee for the tender of payment to the Holders pursuant to that declaration; provided,that interest on any unpaid principal of Bonds outstanding shall continue to accrue from the date determined by the Trustee for the tender of payment to the Holders of those Bonds. The provisions of the preceding paragraph are subject, however, to the condition that if, at any time after declaration of acceleration and prior to the entry of a judgment in a court for enforcement hereunder(after an opportunity for hearing by the Issuer and the Borrower), (a) all sums payable hereunder (except the principal of and interest on Bonds which have not reached their stated maturity dates but which are due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Bonds in respect of which the default shall have occurred, shall have been duly paid or provision shall have been duly made therefor by deposit with the Trustee or Paying Agents, and (b) all existing Events of Default shall have been cured, then and in every case, the Trustee shall waive the Event of Default and its consequences and shall rescind and annul that declaration. No waiver or rescission and annulment shall extend to or affect any subsequent Event of Default or shall impair any rights consequent thereon. Section 7.04. Other Remedies; Riehts of Holders. With or without taking action under Section 7.03 hereof, upon the occurrence and continuance of an Event of Default, the Trustee may pursue any available remedy, including without limitation actions at law or equity to enforce the payment of Bond Debt Service Charges or the observance and performance of any other covenant, agreement or obligation under this Indenture, the Loan Agreement, the Regulatory Agreement or the Note or any other instrument providing security, directly or indirectly, for the Bonds. If,upon the occurrence and continuance of an Event of Default,the Trustee is requested so to do by the Holders of at least 25% in aggregate principal amount of Bonds outstanding, the Trustee (subject to the provisions of Sections 6.01 and 6.02 and particularly subparagraph 6.01(c)(iv) and Subsection 6.02 0) of those Sections), shall exercise any rights and powers conferred by this Section and by Section 7.03 hereof. No remedy conferred upon or reserved to the Trustee (or to the Holders) by this Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or otherwise to the Trustee or to the Holders now or hereafter existing. 39 2014-05-20 Agenda Packet Page 348 No delay in exercising or omission to exercise any remedy,right or power accruing upon any default or Event of Default shall impair that remedy, right or power or shall be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy, right and power may be exercised from time to time and as often as may be deemed to be expedient. No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Holders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any remedy,right or power consequent thereon. As the assignee of all right, title and interest of the Issuer in and to the Loan Agreement (except for the Unassigned Issuer's Rights), the Trustee is empowered to enforce each remedy, right and power granted to the Issuer under the Loan Agreement. In exercising any remedy,right or power thereunder or hereunder, the Trustee shall take such action as may be directed by the requisite percentage of the Holders of the Bonds then outstanding, applying the standards described in Sections 6.01 and 6.02 hereof. Section 7.05. Rieht of Holders to Direct Proceedings. Anything to the contrary in this Indenture notwithstanding, the Holders of a majority in aggregate principal amount of Bonds then outstanding shall have the right at any time to direct, by an instrument or document in writing executed and delivered to the Trustee, the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture or any other proceedings hereunder; provided, that(i)any direction shall not be other than in accordance with the provisions of law and of this Indenture, and (ii)the Trustee shall be indemnified as provided in Sections 6.01 and 6.02. Section 7.06. Application of Moneys. After payment of any costs, expenses, liabilities and advances paid, incurred or made by the Trustee in the collection of moneys and to all fees of the Trustee for Ordinary and Extraordinary Expenses pursuant to any right given or action taken under the provisions of this Article or the provisions of the Loan Agreement, the Regulatory Agreement or the Note (including without limitation, reasonable attorneys' fees and expenses, except as limited by law or judicial order or decision entered in any action taken under this Article VII), all moneys received by the Trustee, shall be applied as follows, subject to Section 3.04 hereof: (a) Unless the principal of all of the Bonds shall have become, or shall have been declared to be, due and payable, all of those moneys shall be deposited in the Bond Fund and shall be applied: First -- To the payment to the Holders entitled thereto of all installments of interest then due on the Bonds, in the order of the dates of maturity of the installments of that interest, beginning with the earliest date of maturity and, if the amount available is not sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on that installment, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds; and Second -- To the payment to the Holders entitled thereto of the unpaid principal of any of the Bonds which shall have become due, in the order of their due dates, beginning with the earliest due date, with interest on those Bonds from the respective dates upon which they became due at the rates specified in those Bonds, and if the amount available is not 40 2014-05-20 Agenda Packet Page 349 sufficient to pay in full all Bonds due on any particular date, together with that interest, then to the payment thereof ratably, according to the amounts of principal due on that date, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds. (b) If the principal of all of the Bonds shall have become due or shall have been declared to be due and payable pursuant to this Article, all of those moneys shall be deposited into the Bond Fund and shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest, of interest over principal, of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds. (c) If the principal of all of the Bonds shall have been declared to be due and payable pursuant to this Article, and if that declaration thereafter shall have been rescinded and annulled under the provisions of Section 7.03 or 7.10 hereof, subject to the provisions of paragraph (b) of this Section in the event that the principal of all of the Bonds shall become due and payable later, the moneys shall be deposited in the Bond Fund and shall be applied in accordance with the provisions of Article III. (d) Whenever moneys are to be applied pursuant to the provisions of this Section, those moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of moneys available for application and the likelihood of additional moneys becoming available for application in the future. Whenever the Trustee shall direct the application of those moneys, it shall fix the date upon which the application is to be made, and upon that date, interest shall cease to accrue on the amounts of principal, if any, to be paid on that date, provided the moneys are available therefor. The Trustee shall give notice of the deposit with it of any moneys and of the fixing of that date, all consistent with the requirements of Section 3.04 hereof for the establishment of, and for giving notice with respect to, a Special Record Date for the payment of overdue interest. The Trustee shall not be required to make payment of principal of a Bond to the Holder thereof, until the Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if it is paid fully. Section 7.07. Remedies Vested in Trustee. All rights of action (including without limitation,the right to appear on behalf of the Issuer and the Holders of the Bonds in any bankruptcy or insolvency proceeding and to file proof of claims in any such proceeding)under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto. Any suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining any Holders as plaintiffs or defendants. Any recovery of judgment shall be for the benefit of the Holders of the Outstanding Bonds, subject to the provisions of this Indenture. Section 7.08. Riehts and Remedies of Holders. A Holder shall not have any right to institute any suit, action or proceeding for the enforcement of this Indenture, for the execution of any trust hereof, or for the exercise of any other remedy hereunder,unless: 41 2014-05-20 Agenda Packet Page 350 (a) there has occurred and is continuing an Event of Default of which the Trustee has been notified, as provided in paragraph (f) of Section 6.02 hereof, or of which it is deemed to have notice under that paragraph, (b) the Holders of at least 25% in aggregate principal amount of Bonds then outstanding shall have made written request to the Trustee and shall have afforded the Trustee reasonable opportunity to proceed to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name, and shall have offered indemnity to the Trustee as provided in Sections 6.01 and 6.02 hereof, and (c) the Trustee thereafter shall have failed or refused to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name. At the option of the Trustee, that notification (or notice), request, opportunity and offer of indemnity are conditions precedent in every case, to the institution of any suit, action or proceeding described above. No one or more Holders of the Bonds shall have any right to affect, disturb or prejudice in any manner whatsoever the security or benefit of this Indenture by its or their action, or to enforce, except in the manner provided herein, any remedy, right or power hereunder. Any suit, action or proceedings shall be instituted, had and maintained in the manner provided herein for the benefit of the Holders of all Bonds then outstanding. Nothing in this Indenture shall affect or impair,however, the right of any Holder to enforce the payment of the Bond Debt Service Charges on any Bond owned by that Holder at and after the maturity thereof, at the place, from the sources and in the manner expressed in that Bond. Section 7.09. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any remedy, right or power under this Indenture in any suit, action or proceedings, and the suit, action or proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, the Issuer,the Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Trustee shall continue as if no suit, action or proceedings had been taken. Section 7.10. Waivers of Events of Default. The Trustee shall waive any Event of Default hereunder and its consequences and may rescind and annul any declaration of maturity of principal of or interest on,the Bonds upon the written request of the Holders of (a) at least a majority in aggregate principal amount of all Bonds then outstanding in respect of which an Event of Default in the payment of Bond Debt Service Charges exists, or (b) at least 25% in aggregate principal amount of all Bonds then outstanding, in the case of any other Event of Default. There shall not be so waived,however, any Event of Default described in paragraph (a) or(b) of Section 7.01 hereof or any declaration of acceleration in connection therewith rescinded or annulled, unless at the time of that waiver or rescission and annulment payments of the amounts provided in Section 7.03 hereof for waiver and rescission and annulment in connection with acceleration of maturity have been made or provision has been made therefor. In the case of the 42 2014-05-20 Agenda Packet Page 351 waiver or rescission and annulment, or in case any suit, action or proceedings taken by the Trustee on account of any Event of Default shall have been discontinued, abandoned or determined adversely to it, the Issuer, the Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively. No waiver or rescission shall extend to any subsequent or other Event of Default or impair any right consequent thereon. ARTICLE VIII SUPPLEMENTAL INDENTURES Section 8.01. Supplemental Indentures Generally. The Issuer and the Trustee may enter into indentures supplemental to this Indenture, as provided in this Article and pursuant to the other provisions therefor in this Indenture. Trustee shall deliver copies of all Supplemental Indentures to Borrower and Investor Limited Partner. Section 8.02. Supplemental Indentures Not Reguirine Consent of Holders. Without the consent of, or notice to, any of the Holders, the Issuer and the Trustee may enter into indentures supplemental to this Indenture for any one or more of the following purposes: (a) To cure any ambiguity, inconsistency or formal defect or omission in this Indenture; (b) To grant to or confer upon the Trustee for the benefit of the Holders any additional rights,remedies,powers or authority that lawfully may be granted to or conferred upon the Holders or the Trustee; (c) To assign additional revenues under this Indenture; (d) To accept additional security and instruments and documents of further assurance with respect to the Project; (e) To add to the covenants, agreements and obligations of the Issuer under this Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders, or to surrender or limit any right, power or authority reserved to or conferred upon the Issuer in this Indenture; (f) To evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer under this Indenture, the Loan Agreement and the Bonds; (g) To permit the Trustee to comply with any obligations imposed upon it by law; (h) To specify further the duties and responsibilities of, and to define further the relationship among,the Trustee,the Registrar and any Authenticating Agents or Paying Agents; (i) To achieve compliance of this Indenture with any applicable federal securities or tax law; 0) To make amendments to the provisions hereof relating to arbitrage matters under Section 148 of the Code, if, in the Opinion of Bond Counsel, those amendments would not 43 2014-05-20 Agenda Packet Page 352 cause the interest on the Bonds outstanding to be included in gross income of the Holders for federal income tax purposes which amendments may, among other things, change the responsibility for making the relevant calculations, provided that in no event shall such amendment delegate to the Trustee, without its consent, in its sole discretion the obligation to make or perform the calculations required under Section 148 of the Code; and (k) To permit any other amendment which, is not materially adverse to the Trustee, in the judgment of the Trustee, or the Holders. The provisions of Subsections 8.02(h) and 0) shall not be deemed to constitute a waiver by the Trustee, the Registrar, the Issuer or any Holder of any right which it may have in the absence of those provisions to contest the application of any change in law to this Indenture or the Bonds. Section 8.03. Supplemental Indentures ReguirinE Consent of Holders. Exclusive of Supplemental Indentures to which reference is made in Section 8.02 hereof and subject to the terms, provisions and limitations contained in this Section, and not otherwise, with the consent of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time outstanding, evidenced as provided in this Indenture, and with the consent of the Borrower if required by Section 8.04 hereof, the Issuer and the Trustee may execute and deliver Supplemental Indentures adding any provisions to, changing in any manner or eliminating any of the provisions of this Indenture or any Supplemental Indenture or restricting in any manner the rights of the Holders. Nothing in this Section or Section 8.02 hereof shall permit,however, or be construed as permitting: (a) without the consent of the Holder of each Bond so affected, (i) an extension of the maturity of the principal of or the interest on any Bond or (ii) a reduction in the principal amount of any Bond or the rate of interest thereon, or (b) without the consent of the Holders of all Bonds then outstanding, (i)the creation of a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (ii) a reduction in the aggregate principal amount of the Bonds required for consent to a Supplemental Indenture. If the Issuer shall request that the Trustee execute and deliver any Supplemental Indenture for any of the purposes of this Section, upon (i)being satisfactorily indemnified with respect to its expenses in connection therewith, and (ii)if required by Section 8.04 hereof, receipt of the Borrower's consent to the proposed execution and delivery of the Supplemental Indenture, the Trustee shall cause notice of the proposed execution and delivery of the Supplemental Indenture to be mailed by first-class mail, postage prepaid, to all Holders of Bonds then outstanding at their addresses as they appear on the Register at the close of business on the fifteenth day preceding that mailing. The Trustee shall not be subject to any liability to any Holder by reason of the Trustee's failure to mail, or the failure of any Holder to receive, the notice required by this Section. Any failure of that nature shall not affect the validity of the Supplemental Indenture when there has been consent thereto as provided in this Section. The notice shall set forth briefly the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the designated corporate trust office of the Trustee for inspection by all Holders. 44 2014-05-20 Agenda Packet Page 353 If the Trustee shall receive, within a period prescribed by the Borrower, of not less than 60 days, but not exceeding one year, following the mailing of the notice, an instrument or document or instruments or documents, in form to which the Trustee does not reasonably object, purporting to be executed by the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding (which instrument or document or instruments or documents shall refer to the proposed Supplemental Indenture in the form described in the notice and specifically shall consent to the Supplemental Indenture in substantially that form),the Trustee shall, but shall not otherwise, execute and deliver the Supplemental Indenture in substantially the form to which reference is made in the notice as being on file with the Trustee,without liability or responsibility to any Holder,regardless of whether that Holder shall have consented thereto. Any consent shall be binding upon the Holder of the Bond giving the consent and, anything herein to the contrary notwithstanding, upon any subsequent Holder of that Bond and of any Bond issued in exchange therefor(regardless of whether the subsequent Holder has notice of the consent to the Supplemental Indenture). At any time after the Holders of the required percentage of Bonds shall have filed their consents to the Supplemental Indenture, the Trustee shall make and file with the Issuer a written statement that the Holders of the required percentage of Bonds have filed those consents. That written statement shall be conclusive evidence that the consents have been so filed. If the Holders of the required percentage in aggregate principal amount of Bonds outstanding shall have consented to the Supplemental Indenture, as provided in this Section,no Holder shall have any right (a)to object to (i)the execution or delivery of the Supplemental Indenture, (ii)any of the terms and provisions contained therein, or (iii)the operation thereof, (b)to question the propriety of the execution and delivery thereof, or (c)to enjoin or restrain the Trustee or the Issuer from that execution or delivery or from taking any action pursuant to the provisions thereof. Section 8.04. Consent of Borrower. Anything contained herein to the contrary notwithstanding, a Supplemental Indenture executed and delivered in accordance with this Article VIII which affects any rights or obligations of the Borrower shall not become effective unless and until the Borrower shall have consented in writing to the execution and delivery of that Supplemental Indenture. The Trustee shall cause notice of the proposed execution and delivery of any Supplemental Indenture and a copy of the proposed Supplemental Indenture to be mailed to the Borrower, as provided in Section 13.03 hereof, (i)at least 30 days (unless waived by the Borrower) before the date of the proposed execution and delivery in the case of a Supplemental Indenture to which reference is made in Section 8.02 hereof, and (ii)at least 30 days (unless waived by the Borrower) before the giving of the notice of the proposed execution and delivery in the case of a Supplemental Indenture for which provision is made in Section 8.03 hereof. Section 8.05. Authorization to Trustee; Effect of Supplement. The Trustee is authorized to join with the Issuer in the execution and delivery of any Supplemental Indenture in accordance with this Article and to make the further agreements and stipulations which may be contained therein. Thereafter, (a) that Supplemental Indenture shall form a part of this Indenture; (b) all terms and conditions contained in that Supplemental Indenture as to any provision authorized to be contained therein shall be deemed to be a part of the terms and conditions of this Indenture for any and all purposes; 45 2014-05-20 Agenda Packet Page 354 (c) this Indenture shall be deemed to be modified and amended in accordance with the Supplemental Indenture; and (d) the respective rights, duties and obligations under this Indenture of the Issuer, the Borrower, the Trustee, the Registrar, the Paying Agents, the Authenticating Agents and all Holders of Bonds then outstanding shall be determined, exercised and enforced hereunder in a manner which is subject in all respects to those modifications and amendments made by the Supplemental Indenture. Express reference to any executed and delivered Supplemental Indenture may be made in the text of any Bonds issued thereafter, if that reference is deemed necessary or desirable by the Trustee or the Issuer. A copy of any Supplemental Indenture for which provision is made in this Article, except a Supplemental Indenture described in clause (g) of Section 8.02 hereof, shall be mailed by the Trustee to the Registrar, each Authenticating Agent and Paying Agent. The Trustee shall not be required to execute any supplemental indenture containing provisions adverse to the Trustee. Section 8.06. Opinion of Counsel. The Trustee shall be entitled to receive, and shall be fully protected in relying upon,the opinion of any counsel approved by it as conclusive evidence that (i)any proposed Supplemental Indenture complies with the provisions of this Indenture, and (ii)it is proper for the Trustee to join in the execution of that Supplemental Indenture under the provisions of this Article. That counsel may be counsel for the Issuer or the Borrower. Section 8.07. Modification by Unanimous Consent. Notwithstanding anything contained elsewhere in this Indenture, the rights and obligations of the Issuer and of the Holders, and the terms and provisions of the Bonds and this Indenture or any Supplemental Indenture, may be modified or altered in any respect with the consent of (i)the Issuer, (ii)the Holders of all of the Bonds then outstanding, (iii)the Borrower; and(iv)if such modification or alteration contains provisions adverse to the Trustee,the Trustee. ARTICLE IX DEFEASANCE Section 9.01. Release of Indenture. If (i)the Issuer shall pay all of the Outstanding Bonds, or shall cause them to be paid and discharged, or if there otherwise shall be paid to the Holders of the Outstanding Bonds, all Bond Debt Service Charges due or to become due thereon, and (ii)provision also shall be made for the payment of all other sums payable hereunder or under the Loan Agreement, the Regulatory Agreement and the Note, then this Indenture shall cease, determine and become null and void (except for those provisions surviving by reason of Section 9.03 hereof in the event the Bonds are deemed paid and discharged pursuant to Section 9.02 hereof), and the covenants, agreements and obligations of the Issuer hereunder shall be released, discharged and satisfied. Thereupon, and subject to the provisions of Section 9.03 hereof if applicable, (a) the Trustee shall release this Indenture (except for those provisions surviving by reason of Section 9.03 hereof in the event the Bonds are deemed paid and discharged pursuant to Section 9.02 hereof), and shall execute and deliver to the Issuer any instruments or documents in 46 2014-05-20 Agenda Packet Page 355 writing as shall be requisite to evidence that release and discharge or as reasonably may be requested by the Issuer, and (b) the Trustee and any other Paying Agents shall assign and deliver to the Issuer any property subject at the time to the lien of this Indenture which then may be in their possession, except amounts in the Bond Fund required (a)to be paid to the Borrower under Section 5.08 hereof, or(b)to be held by the Trustee and the Paying Agents under Section 5.09 hereof or otherwise for the payment of Bond Debt Service Charges. Section 9.02. Payment and Discharge of Bonds. All or any part of the Bonds shall be deemed to have been paid and discharged within the meaning of this Indenture, including without limitation, Section 9.01 hereof, if- (a) the Trustee as paying agent and the Paying Agents shall have received, in trust for and irrevocably committed thereto, sufficient moneys, or (b) the Trustee shall have received, in trust for and irrevocably committed thereto, noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America which are certified by an Independent public accounting firm or such other firm experienced with such certifications of national reputation to be of such maturities or redemption dates and interest payment dates, and to bear such interest, as will be sufficient together with any moneys to which reference is made in subparagraph (a)above, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which earnings are to be held likewise in trust and so irrevocably committed, except as provided herein), for the payment of all Bond Debt Service Charges on those Bonds at their maturity. Any moneys held by the Trustee in accordance with the provisions of this Section may be invested by the Trustee only in noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America having maturity dates, or having redemption dates which, at the option of the Holder of those obligations, shall be not later than the date or dates at which moneys will be required for the purposes described above. To the extent that any income or interest earned by, or increment to, the investments held under this Section is determined from time to time by the Trustee to be in excess of the amount required to be held by the Trustee for the purposes of this Section, that income, interest or increment shall be transferred at the time of that determination in the manner provided in Section 5.08 hereof for transfers of amounts remaining in the Bond Fund. If any Bonds shall be deemed paid and discharged pursuant to this Section 9.02, then within 15 days after such Bonds are so deemed paid and discharged the Trustee shall cause a written notice to be given to each Holder as shown on the Register on the date on which such Bonds are deemed paid and discharged. Such notice shall state the numbers of the Bonds deemed paid and discharged or state that all Bonds are deemed paid and discharged and shall set forth a description of the obligations held pursuant to subparagraph (b) of the first paragraph of this Section 9.02. Section 9.03. Survival of Certain Provisions. Notwithstanding the foregoing, any provisions of the Bond Resolution and this Indenture which relate to the maturity of Bonds, interest payments and dates thereof, exchange, transfer and registration of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds,the safekeeping and cancellation of Bonds,the storage and shredding of cancelled Bonds,non-presentment of Bonds,the holding of moneys in trust, and repayments to the 47 2014-05-20 Agenda Packet Page 356 Borrower from the Bond Fund, the rebate of moneys to the United States in accordance with Section 5.09 hereof, and the rights and duties of the Trustee and the Registrar in connection with all of the foregoing, shall remain in effect and be binding upon the Trustee, the Registrar, the Authenticating Agents, Paying Agents and the Holders notwithstanding the release and discharge of this Indenture. The provisions of this Article shall survive the release, discharge and satisfaction of this Indenture. The obligations of the Borrower to pay the Trustee its fees and expenses hereunder shall survive the release, discharge and satisfaction of this Indenture. ARTICLE X COVENANTS AND AGREEMENTS OF THE ISSUER Section 10.01. Covenants and Aereements of the Issuer. In addition to any other covenants and agreements of the Issuer contained in the Loan Agreement,this Indenture or the Bond Resolution,the Issuer further covenants and agrees with the Holders and the Trustee as follows: (a) Payment of Bond Debt Service Charges. The Issuer will pay all Bond Debt Service Charges, or cause them to be paid, solely from the sources provided herein, on the dates, at the places and in the manner provided in this Indenture. (b) Issuer Revenues and Assignment of Issuer Revenues. The Issuer will not assign the Issuer Revenues or create or authorize to be created any debt, lien or charge thereon, other than the assignment thereof under this Indenture. (c) Issuer Not to Adversely Affect Exclusion From Gross Income of Interest on Bonds. The Issuer covenants that it(i)will take, or require to be taken, at the written direction of any Holder or the Trustee, and at the expense of the Borrower, all actions that may be required of the Issuer for the interest on the Bonds to be and remain excluded from gross income for federal income tax purposes, and (ii)will not take or authorize to be taken any actions that would, to its actual knowledge, adversely affect that exclusion under the provisions of the Code. (d) Patriot Act. The Issuer covenants and agrees to provide documentation as reasonably requested or required by the Trustee to enable the Trustee to satisfy the requirements of the USA Patriot Act as described in Section 13.13 of this Indenture. Section 10.02. Observance and Performance of Covenants, Agreements, Authority and Actions. The Issuer will observe and perform faithfully at all times all covenants, agreements, authority, actions, undertakings, stipulations and provisions to be observed or performed on its part under the Loan Agreement, this Indenture, the Bond Resolution, the Regulatory Agreement and the Bonds which are executed, authenticated and delivered under this Indenture, and under all proceedings of its Board pertaining thereto. The Issuer represents and warrants that (a) It is duly authorized by the Constitution and laws of the State, including particularly and without limitation the Act, to issue the Bonds, to execute and deliver this Indenture, the Loan Agreement and the Regulatory Agreement and to provide the security for payment of the Bond Debt Service Charges in the manner and to the extent set forth in this Indenture. 48 2014-05-20 Agenda Packet Page 357 (b) All actions required on its part to be performed for the issuance, sale and delivery of the Bonds and for the execution and delivery of this Indenture and the Loan Agreement have been taken duly and effectively. (c) The Bonds will be valid and enforceable special obligations of the Issuer according to their terms. Section 10.03. Trustee May Enforce Issuer's Rights. The Trustee may enforce, in its name or in the name of the Issuer, all rights of the Issuer for and on behalf of the Holders, except for Unassigned Issuer's Rights, and may enforce all covenants, agreements and obligations of the Borrower under and pursuant to the Loan Agreement,regardless of whether the Issuer is in default in the pursuit or enforcement of those rights, covenants, agreements or obligations. The Issuer, however, will do all things and take all actions on its part necessary to comply with covenants, agreements, obligations, duties and responsibilities on its part to be observed or performed under the Loan Agreement, and will take all actions within its authority to keep the Loan Agreement in effect in accordance with the terms thereof. ARTICLE XI AMENDMENTS TO AGREEMENT,REGULATORY AGREEMENT AND NOTE Section 11.01. Amendments Not Reguirine Consent of Holders. Without the consent of or notice to the Holders, the Issuer, the Borrower and the Trustee may consent to any amendment, change or modification of the Loan Agreement, the Regulatory Agreement or the Note as may be required (i)by the provisions of the Loan Agreement, the Regulatory Agreement or this Indenture, (ii) for the purpose of curing any ambiguity, inconsistency or formal defect or omission in the Loan Agreement, the Regulatory Agreement or the Note, (iii)in connection with an amendment or to effect any purpose for which there could be an amendment of this Indenture pursuant to Section 8.02 hereof, or (iv)in connection with any other change therein which is not materially adverse to the Trustee or the Holders of the Bonds, in the judgment of the Trustee, applying the standards described in Sections 6.01 and 6.02 hereof. Section 11.02. Amendments Reguirine Consent of Holders. Except for the amendments, changes or modifications contemplated in Section 11.01 hereof, neither the Issuer nor the Trustee shall consent to (a) any amendment, change or modification of the Loan Agreement or the Note which would change the amount or time as of which Loan Payments are required to be paid, without the giving of notice as provided in this Section of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of all of the then Outstanding Bonds affected by such amendment, change or modification, or (b) any other amendment, change or modification of the Loan Agreement, the Regulatory Agreement or the Note without the giving of notice as provided in this Section of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding affected by such amendment, change or modification. 49 2014-05-20 Agenda Packet Page 358 The consent of the Holders shall be obtained as provided in Section 8.03 hereof with respect to Supplemental Indentures. If the Issuer or the Authorized Borrower Representative shall request at any time the consent of the Trustee to any proposed amendment, change or modification of the Loan Agreement, the Regulatory Agreement or the Note contemplated in subparagraphs (a) or (b) of this Section, upon being indemnified satisfactorily with respect to expenses, the Trustee shall cause notice of the proposed amendment, change or modification to be provided in the manner which is required by Section 8.03 hereof with respect to notice of Supplemental Indentures. The notice shall set forth briefly the nature of the proposed amendment, change or modification and shall state that copies of the instrument or document embodying it are on file at the designated corporate trust office of the Trustee for inspection by all Holders. ARTICLE XII MEETINGS OF HOLDERS Section 12.01. Purposes of Meetings. A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article XII,to take any action (i) authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Bonds, (ii)under any provision of this Indenture or(iii)authorized or permitted by law. Section 12.02. Call of Meetings. The Trustee may (but shall not be obligated to) call at any time a meeting of Holders pursuant to Section 12.01 to be held at any reasonable time and place the Trustee shall determine. Notice of such meeting, setting forth the time, place and generally the subject thereof, shall be mailed by first-class mail, postage prepaid, not fewer than 15 nor more than 90 days prior to the date of the meeting to the Holders at their addresses as they appear on the Register on the fifteenth day preceding such mailing, which fifteenth day, preceding the mailing, shall be the record date for the meeting. At any time, the Issuer or the Borrower, or the Holders of at least 25% in aggregate principal amount of the Bonds then outstanding, shall have requested the Trustee to call a meeting of Holders, by written request setting forth the purpose of the meeting, and the Trustee shall not have mailed the notice of the meeting within 20 days after receipt of the request, then the Issuer, the Borrower, the Investor Limited Partner or the Holders of Bonds in the amount above specified may determine the time and the place of the meeting and may call the meeting to take any action authorized in Section 12.01,by mailing notice thereof as provided above. Any meetings of Holders shall be valid without notice, if the Holders of all Bonds then outstanding are present in person or by proxy, or if notice is waived before or after the meeting by the Holders of all Bonds outstanding who were not so present at the meeting, and if the Issuer, the Borrower and the Trustee are either present by duly authorized representatives or have waived notice, before or after the meeting. Section 12.03. Voting. To be entitled to vote at any meeting of Holders, a Person shall (a)be a Holder of one or more outstanding Bonds as of the record date for the meeting as determined above, or (b)be a person appointed by an instrument or document in writing as proxy by a Person who is a Holder as of the record date for the meeting, of one or more outstanding Bonds. Each 50 2014-05-20 Agenda Packet Page 359 Holder or proxy shall be entitled to one vote for each $100,000 principal amount of Bonds held or represented by it. The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders of Bonds or of their representatives by proxy and the identifying number or numbers of the Bonds held or represented by them. Section 12.04. Meetines. Notwithstanding any other provisions of this Indenture, the Trustee may make any reasonable regulations which it may deem to be advisable for meetings of Holders,with regard to (a) proof of the holding of Bonds and of the appointment of proxies, (b) the appointment and duties of inspectors of votes, (c) recordation of the proceedings of those meetings, (d) the execution, submission and examination of proxies and other evidence of the right to vote, and (e) any other matters concerning the conduct, adjournment or reconvening of meetings which it may think fit. The Trustee shall appoint a temporary chair of the meeting by an instrument or document in writing, unless the meeting shall have been called by the Issuer, the Borrower or by the Holders, as provided in Section 12.02, in which case the Issuer, the Borrower or the Holders calling the meeting, as the case may be, shall appoint a temporary chair in like manner. A permanent chair and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Bonds represented at the meeting and entitled to vote. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at the meeting and their counsel, any representatives of the Trustee or Registrar and their counsel, any representatives of the Issuer and its counsel and any representatives of the Borrower and its counsel. Section 12.05. Miscellaneous. Nothing contained in this Article XII shall be deemed or construed to authorize or permit any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Bonds by reason of any call of a meeting of Holders or any rights conferred expressly or impliedly hereunder to make a call. ARTICLE XIII MISCELLANEOUS Section 13.01. Limitation of Riehts. With the exception of rights conferred expressly in this Indenture, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any Person other than the parties hereto, the Registrar,the Authenticating Agents, the Paying Agents, the Borrower, the Investor Limited Partner and the Holders of the Bonds any legal or equitable right, remedy, power or claim under or with respect to 51 2014-05-20 Agenda Packet Page 360 this Indenture or any covenants, agreements, conditions and provisions contained herein. This Indenture and all of those covenants, agreements, conditions and provisions are intended to be, and are, for the sole and exclusive benefit of the parties hereto, the Registrar, the Paying Agents, the Authenticating Agents, the Borrower, the Investor Limited Partner and the Holders of the Bonds, as provided herein. Section 13.02. Severability. In case any section or provision of this Indenture, or any covenant, agreement, stipulation, obligation, act or action, or part thereof, made, assumed, entered into or taken under this Indenture, or any application thereof, is held to be illegal or invalid for any reason, or is inoperable at any time, that illegality, invalidity or inoperability shall not affect the remainder thereof or any other section or provision of this Indenture or any other covenant, agreement, stipulation, obligation, act or action, or part thereof,made, assumed, entered into or taken under this Indenture, all of which shall be construed and enforced at the time as if the illegal, invalid or inoperable portion were not contained therein. Any illegality, invalidity or inoperability shall not affect any legal, valid and operable section, provision, covenant, agreement, stipulation, obligation, act, action, part or application, all of which shall be deemed to be effective, operative,made, assumed, entered into or taken in the manner and to the full extent permitted by law from time to time. Section 13.03. Notices. It shall be sufficient service or giving of any notice, request, complaint, demand or other instrument or document, if mailed by registered or certified mail,postage prepaid, or forwarded by overnight courier service, delivery charges prepaid (receipt of which to be evidenced by a signed receipt from such overnight delivery service), or sent by facsimile which produces evidence of transmission, addressed to the appropriate party at its Notice Address. Such notice or other communication shall be deemed given on (i)the third (3rd) Business Day following deposit thereof in the mail when mailed by registered or certified mail, (ii)the Business Day immediately following deposit thereof with the overnight courier service when forwarded by an overnight courier service, and(iii)the Business Day immediately following the date specified in the written evidence of electronic transmission. The Issuer, Trustee, the Borrower, the Investor Limited Partner may,by notice given as provided in this paragraph, designate any further or different address to which subsequent notices or other communication shall be sent. Any notice given pursuant to Sections 6.09, 6.13, 7.02, 7.03, 8.02, 8.03, 9.02 and 11.02 shall be simultaneously given to the Rating Agency, if and so long as the Bonds are rated, and the Freddie Mac Lender. The foregoing parties may designate, by written notice given hereunder, any further or different addresses to which any subsequent notice, request, complaint, demand or other instrument or document shall be sent. The Trustee shall designate, by written notice to the Issuer,the Borrower and the Investor Limited Partner, the addresses to which notices or copies thereof shall be sent to the Registrar, the Authenticating Agents and the Paying Agents. In addition to the foregoing,the Trustee hereby agrees to send written notice to the Rating Agency, if and so long as the Bonds are rated, upon the occurrence of any of the following events: (1)any change in the Trustee; (2)any amendment to the documents; (3)a payment of all principal and interest on all of the Bonds; or (4)any defeasance or acceleration of the Bonds. In connection with any notice mailed pursuant to the provisions of this Indenture, a certificate of the Trustee, the Issuer, the Registrar, the Authenticating Agents, the Borrower, the Investor 52 2014-05-20 Agenda Packet Page 361 Limited Partner or the Holders of the Bonds,whichever or whoever mailed that notice,that the notice was so mailed shall be conclusive evidence of the proper mailing of the notice. Section 13.04. Suspension of Mail and Courier Service. If because of the suspension of delivery of registered or certified mail or delivery by overnight courier services, the Trustee shall be unable to mail by registered or certified mail or forward by overnight courier service any notice required to be given by the provisions of this Indenture, the Trustee shall use its best efforts to give such notice in such other manner as in the judgment of the Trustee shall most effectively approximate the required mailing or forwarding thereof, and the giving of that notice in that manner for all purposes of this Indenture shall be deemed to be in compliance with the requirements of Section 13.03 hereof. Except as otherwise provided herein, the mailing of any notice by first class mail, postage prepaid, shall be deemed given on the third (3rd) Business Day after upon deposit of that notice in the mail and the giving of any notice by any other means of delivery shall be deemed complete upon receipt of the notice by the delivery service. Section 13.05. Payments Due on Saturdays, Sundays and Holidays. If any Interest Payment Date or a date of maturity of the principal of any Bonds is a Saturday, Sunday or a day on which (i)the Trustee is required, or authorized or not prohibited, by law (including without limitation, executive orders)to close and is closed,then payment of interest and principal need not be made by the Trustee or the Paying Agent on that date, but that payment may be made on the next succeeding business day on which the Trustee and the Paying Agent are open for business with the same force and effect as if that payment were made on the Interest Payment Date or date of maturity, and no interest shall accrue for the period after that date, or (ii)a Paying Agent is required, or authorized or not prohibited, by law (including without limitation, executive orders) to close and is closed, then payment of interest and principal need not be made by that Paying Agent on that date, but that payment may be made on the next succeeding business day on which that Paying Agent is open for business with the same force and effect as if that payment were made on the Interest Payment Date or date of maturity and no interest shall accrue for the period after that date;provided, that if the Trustee is open for business on the applicable Interest Payment Date or date of maturity, it shall make any payment required hereunder with respect to payment of interest on outstanding Bonds and payment of principal of the Bonds presented to it for payment, regardless of whether the Paying Agent shall be open for business or closed on the applicable Interest Payment Date or date of maturity. Section 13.06. Instruments of Holders. Any writing, including without limitation, any consent, request, direction, approval, objection or other instrument or document, required under this Indenture to be executed by any Holder may be in any number of concurrent writings of similar tenor and may be executed by that Holder in person or by an agent or attorney appointed in writing. Proof of (i)the execution of any writing, including without limitation, any consent, request, direction, approval, objection or other instrument or document, (ii)the execution of any writing appointing any agent or attorney, and (iii)the ownership of Bonds, shall be sufficient for any of the purposes of this Indenture, if made in the following manner, and if so made, shall be conclusive in favor of the Trustee with regard to any action taken thereunder,namely: (a) The fact and date of the execution by any person of any writing may be proved by the certificate of any officer in any jurisdiction, who has power by law to take acknowledgments within that jurisdiction, that the person signing the writing acknowledged that execution before that officer, or by affidavit of any witness to that execution; and 53 2014-05-20 Agenda Packet Page 362 (b) The fact of ownership of Bonds shall be proved by the Register maintained by the Registrar. Nothing contained herein shall be construed to limit the Trustee to the foregoing proof, and the Trustee may accept any other evidence of the matters stated therein which it deems to be sufficient. Any writing, including without limitation, any consent, request, direction, approval, objection or other instrument or document, of the Holder of any Bond shall bind every future Holder of the same Bond, with respect to anything done or suffered to be done by the Issuer, the Borrower, the Trustee,the Registrar or the Paying Agent or Authenticating Agent pursuant to that writing. Section 13.07. Priority of this Indenture. This Indenture shall be superior to any liens which may be placed upon the Issuer Revenues or any other funds or accounts created pursuant to this Indenture. Section 13.08. Extent of Covenants; No Personal Liability. All covenants, stipulations, obligations and agreements of the Issuer contained in this Indenture are and shall be deemed to be covenants, stipulations, obligations and agreements of the Issuer to the full extent authorized by the Act and permitted by the Constitution of the State. No covenant, stipulation, obligation or agreement of the Issuer contained in this Indenture shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, officer, agent or employee of the Issuer or the Board in other than that person's official capacity. Neither the members of the Board nor any official executing the Bonds,this Indenture, the Loan Agreement or any amendment or supplement hereto or thereto shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance or execution hereof or thereof. Section 13.09. Binding Effect. This Indenture shall inure to the benefit of and shall be binding upon the Issuer and the Trustee and their respective successors and assigns, subject, however,to the limitations contained herein. Section 13.10. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument. Section 13.11. Governing Law. This Indenture and the Bonds shall be deemed to be contracts made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State. Section 13.12. Security Advice Waiver. The Issuer acknowledges that regulations of the Comptroller of the Currency grant the Borrower the right to receive brokerage confirmations of the security transactions as they occur. The Borrower specifically waives such notification to the extent permitted by law and will receive periodic cash transaction statements that will detail all investment transactions. Section 13.13. Patriot Act. To help the government fight the funding of terrorism and money laundering activities,Federal law requires all financial institutions to obtain,verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust or other legal entity the Trustee will request documentation to verify its formation and existence as a legal entity. Furthermore, if required by the Patriot Act, Trustee may 54 2014-05-20 Agenda Packet Page 363 request financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. Section 13.14. Subordination to Freddie Mac Loan Documents. Notwithstanding anything in this Indenture to the contrary, Borrower, Trustee and Issuer acknowledge that this Indenture, and any obligations of Borrower hereunder, are subject and subordinate to the Freddie Mac Loan Documents. Notwithstanding any provision in this Indenture to the contrary, no obligations of the Borrower or hereunder shall be payable except from(A) Surplus Cash or(B)funds that are not derived from (i)revenues of the Project, or (ii)any reserve or deposit made with the Freddie Mac Lender or any other party as required by Freddie Mac in connection with the Freddie Mac Loan Documents or(C) any proceeds of the Freddie Mac Loan which have been deposited into the Collateral Fund or the Initial Deposit Account of the Bond Fund by or at the direction of the Freddie Mac Lender. No claims or actions shall be made (or payable) under this Indenture against the Project or the assets of the Borrower, except for Surplus Cash of the Borrower. Proceeds from any condemnation award or from the payment of a claim under any hazard insurance policy relating to the Project will not be payable to the Trustee, but will be payable in accordance with the Freddie Mac Loan Documents. In addition, the rights and obligations of the parties under this Indenture and all other documents evidencing, implementing, or securing this Indenture (the "Other Bond Documents") are and shall be subordinated in all respects rights and obligations of the parties to and under the Freddie Mac Loan Documents. In the event of any conflict between the provisions of (i)this Indenture or the Other Bond Documents and (ii)the provisions of the Freddie Mac Loan Documents, the provisions of the Freddie Mac Loan Documents shall control. The provisions of this Section 13.14 shall control over any inconsistent provisions in this Indenture or the Other Bond Documents. Any subsequent amendment to this Indenture affecting the provisions of this Section 13.14 or the rights of the Freddie Mac Lender with respect to the Borrower or Project is subject to prior written approval of the Freddie Mac Lender and Freddie Mac (so long as the Project is subject to a mortgage held or under a commitment to purchase by Freddie Mac). The provisions of this Section shall survive the termination of this Indenture. [This Page intentionally left blank.] 55 2014-05-20 Agenda Packet Page 364 IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Trust Indenture to be executed and delivered by duly authorized officers thereof as of the day and year first written above. CHULA VISTA HOUSING AUTHORITY By: Executive Director ATTEST: Secretary [Issuer Signature Page to Trust Indenture] S-1 2014-05-20 Agenda Packet Page 365 [Trustee Signature Page to Trust Indenture] U.S. BANK NATIONAL ASSOCIATION,as trustee By: Name: Title: [Trustee Signature Page to Trust Indenture] S-2 2014-05-20 Agenda Packet Page 366 EXHIBIT A BONDFORM NOTICE: Unless this certificate is presented by an authorized representative of The Depository Trust Company to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede &Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co.,ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. REGISTERED REGISTERED NO. R-1 $[Bond Amount] [FORM OF FACE OF BOND] United States of America State of California CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (GARDEN VILLAS), SERIES 2014A INTEREST RATE: MATURITY DATE: DATED AS OF: CUSIP: % June 1, 2015 Date of Delivery REGISTERED OWNER: Cede &Co. PRINCIPAL AMOUNT: AND 00/100 DOLLARS Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California, for value received,promises to pay to the Registered Owner specified above or registered assigns, but solely from the sources and in the manner referred to herein, the principal amount on the Maturity Date specified above, which shall be equal to $[Bond Amount], and to pay from those sources interest thereon at the aforesaid Interest Rate on each June 1 and December 1, commencing December 1, 2014 (the "Interest Payment Dates") until the principal amount is paid or duly provided for. This Bond will bear interest from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from its date of delivery. The principal of this Bond is payable upon presentation and surrender hereof at the designated corporate trust office of the trustee, presently U.S. Bank National Association, a national banking association (the "Trustee"). Interest is payable on each Interest Payment Date by check or draft mailed to the person in whose name this Bond(or one or more predecessor bonds) is registered (the "Holder") at the close of business on the 15th day of the calendar month next preceding that Interest Payment Date (the "Regular Record Date") on the registration books for this issue maintained by the Trustee, as Registrar, at the address appearing therein. Any interest which is not A-1 2014-05-20 Agenda Packet Page 367 timely paid or duly provided for shall cease to be payable to the Holder hereof(or of one or more predecessor bonds) as of the Regular Record Date, and shall be payable to the Holder hereof(or of one or more predecessor bonds) at the close of business on a Special Record Date to be fixed by the Trustee for the payment of that overdue interest. Notice of the Special Record Date shall be mailed to Holders not less than ten days prior thereto. The principal of and interest on this Bond are payable in lawful money of the United States of America, without deduction for the services of the paying agent. While the Bonds are held in a book-entry system and in certain other circumstances, all as provided in the Indenture, principal of and interest on this Bond is required to be paid by wire transfer or other arrangement, other than any payment of the entire unpaid principal amount hereof. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY OUT OF THE REVENUES, RECEIPTS AND OTHER MONEYS PLEDGED THEREFOR UNDER THE INDENTURE. THE BONDS ARE NOT A DEBT OR BONDED INDEBTEDNESS OF THE STATE, THE ISSUER OR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE, AND NEITHER THE STATE, THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE STATE IS LIABLE FOR THE PAYMENT OF THE BONDS. NEITHER THE FAITH AND CREDIT OF THE STATE, THE ISSUER NOR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR OF INTEREST ON THE BONDS. NO MEMBER, OFFICER, AGENT, EMPLOYEE OR ATTORNEY OF THE ISSUER, INCLUDING ANY PERSON EXECUTING THE INDENTURE OR THE BONDS, SHALL BE LIABLE PERSONALLY ON THE BONDS OR FOR ANY REASON RELATING TO THE ISSUANCE OF THE BONDS. NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE BONDS, OR FOR ANY CLAIM BASED ON THE BONDS, OR OTHERWISE IN RESPECT OF THE BONDS, OR BASED ON OR IN RESPECT OF THE INDENTURE OR ANY SUPPLEMENTAL INDENTURE, AGAINST ANY MEMBER, OFFICER, EMPLOYEE OR AGENT, AS SUCH, OF THE ISSUER OR ANY SUCCESSOR, WHETHER BY VIRTUE OF ANY CONSTITUTION, STATUTE OR RULE OF LAW, OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, ALL SUCH LIABILITY BEING, BY THE ACCEPTANCE OF THIS BOND AND AS PART OF THE CONSIDERATION FOR THE ISSUE OF THE BONDS, EXPRESSLY WAIVED AND RELEASED. This Bond is one of a duly authorized issue of Multifamily Housing Revenue Bonds (Garden Villas), Series 2014A (the"Bonds"), issuable under the Trust Indenture dated as of June 1, 2014 (the "Indenture"), between the Issuer and the Trustee, aggregating in principal amount of$ and issued for the purpose of making a loan (the "Loan") to the Borrower and described therein (the "Borrower") to pay a portion of the costs of acquiring, rehabilitating, equipping and improving the Project, as defined in the Loan Agreement dated as of even date with the Indenture (the "Agreement"), between the Issuer and the Borrower. The Bonds are special obligations of the Issuer, issued or to be issued under and are to be secured and entitled equally and ratably to the protection given by the Indenture. The Bonds are issued pursuant to, under authority of and in compliance with the laws of the State of California, and including Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, as amended (the "Act"), and a resolution duly enacted by the Board of the Issuer. The Bonds are not subject to redemption prior to their stated maturity. A-2 2014-05-20 Agenda Packet Page 368 Reference is made to the Indenture for a more complete description of the Project, the provisions, among others, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the Issuer, the Trustee and the Holders of the Bonds, and the terms and conditions upon which the Bonds are issued and secured. Each Holder assents,by its acceptance hereof,to all of the provisions of the Indenture. Pursuant to the Loan Agreement, the Borrower has executed and delivered to the Trustee the Borrower's promissory note dated of even date herewith (the "Note"), in the principal amount of$ . The Borrower is required by the Loan Agreement and the Note to make payments to the Trustee in the amounts and at the times necessary to pay the principal of and interest (the "Bond Debt Service Charges") on the Bonds. In the Indenture, the Issuer has assigned to the Trustee, to provide for the payment of the Bond Debt Service Charges on the Bonds, the Issuer's right, title and interest in and to the Loan Agreement, except for Unassigned Issuer's Rights as defined in the Indenture. To secure its compliance with certain covenants in the Loan Agreement,the Borrower has executed and delivered the Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") among itself, the Issuer and the Trustee dated as of even date with the Indenture. The Indenture, and any obligations of Borrower thereunder, are subject and subordinate to the Freddie Mac Loan Documents as defined in the Indenture. Notwithstanding any provision in the Indenture to the contrary, no obligations of the Borrower or under the Indenture shall be payable except from (A) Surplus Cash as defined in the Indenture or (B)funds that are not derived from (i)revenues of the Project, or (ii)any reserve or deposit made with the Freddie Mac Lender or any other party as required by Freddie Mac in connection with the Freddie Mac Loan Documents or (C)any proceeds of the Freddie Mac Loan which have been deposited into the Collateral Fund or the Initial Deposit Account of the Bond Fund by or at the direction of the Freddie Mac Lender. No claims or actions shall be made (or payable) under this Indenture against the Project or the assets of the Borrower, except for Surplus Cash of the Borrower. In addition,the rights and obligations of the parties under the Indenture and all other documents evidencing, implementing, or securing the Indenture (the "Other Bond Documents") are and shall be subordinated in all respects rights and obligations of the parties to and under the Freddie Mac Loan Documents. In the event of any conflict between the provisions of(i)the Indenture or the Other Bond Documents and (ii)the provisions of the Freddie Mac Loan Documents,the provisions of the Freddie Mac Loan Documents shall control. Copies of the Indenture,the Loan Agreement, the Regulatory Agreement and the Note are on file in the principal corporate trust office of the Trustee. The Bond Debt Service Charges on the Bonds are payable solely from the Issuer Revenues, as defined and as provided in the Indenture (being, generally, the amounts payable under the Loan Agreement and the Note in repayment of the Loan, deposits to the Collateral Fund and any unexpended proceeds of the Bonds), and are an obligation of the Issuer only to the extent of the Issuer Revenues. The Bonds are not secured by an obligation or pledge of any moneys raised by taxation and do not represent or constitute a debt or pledge of the faith and credit of the Issuer. The Bonds are issuable only as fully registered bonds and, except as hereinafter provided, in printed or typewritten form, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), which shall be considered to be the Holder for all purposes of the Indenture, including,without limitation,payment by the Issuer of Bond Debt Service Charges, and receipt of notices to, giving of consents by and exercise of rights of, Holders. There A-3 2014-05-20 Agenda Packet Page 369 shall be a single Bond representing each maturity, and all Bonds shall be immobilized in the custody of DTC with the owners of beneficial interests in those Bonds (the "book entry interests") having no right to receive from the Issuer Bonds in the form of physical securities or certificates. Ownership of book entry interests in the Bonds shall be shown by book entry on the system maintained and operated by DTC, its participants (the "Participants") and certain persons acting through the Participants, and transfers of ownership of book entry interests shall be made only by that book entry system, the Issuer and the Trustee having no responsibility therefor. DTC is to maintain records of the positions of Participants in the Bonds, and the Participants and persons acting through Participants are to maintain records of the purchasers and owners of book entry interests in the Bonds. The Bonds as such shall not be transferable or exchangeable, except for transfer to another Depository (as defined in the Indenture) or to another nominee of a Depository, without further action by the Issuer and otherwise at the expense of the Borrower. If any Depository determines not to continue to act as a Depository for the Bonds for use in a book entry system, the Issuer may attempt to have established a securities depository/book entry system relationship with another qualified Depository under the Indenture. If the Issuer does not or is unable to do so,the Issuer and the Trustee, after the Trustee has made provision for notification of the owners of book entry interests by the then Depository, shall permit withdrawal of the Bonds from the Depository, and authenticate and deliver Bond certificates in fully registered form (in denominations of$5,000, or any integral multiple thereof) to the assignees of the Depository or its nominee, all at the cost and expense (including costs of printing or otherwise preparing and delivering replacement Bond certificates) of those persons requesting such authentication and delivery, if the event is not the result of Issuer action or inaction (including action at the request of the Borrower). The Indenture permits certain amendments or supplements to the Indenture, the Loan Agreement, the Regulatory Agreement and the Note not prejudicial to the Holders to be made without the consent of or notice to the Holders, and certain other amendments or supplements thereto to be made with the consent of the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding. The Holder of each Bond has only those remedies provided in the Indenture. The Bonds shall not constitute the personal obligation, either jointly or severally, of the members of the Board or of any other officer of the Issuer. This Bond shall not be entitled to any security or benefit under the Indenture or be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed. It is certified and recited that there have been performed and have happened in regular and due form, as required by law, all acts and conditions necessary to be done or performed by the Issuer or to have happened (i)precedent to and in the issuing of the Bonds in order to make them legal, valid and binding special obligations of the Issuer, and (ii)precedent to and in the execution and delivery of the Indenture and the Loan Agreement; that payment in full for the Bonds has been received; and that the Bonds do not exceed or violate any constitutional or statutory limitation. A-4 2014-05-20 Agenda Packet Page 370 This Bond shall not be entitled to any security or benefit under the Indenture or be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed. IN WITNESS WHEREOF,the Issuer has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Executive Director of the Issuer, and has caused its seal or a facsimile thereof to be reproduced hereon and attested by the manual or facsimile signature of the Secretary of the Issuer. CHULA VISTA HOUSING AUTHORITY By: Executive Director Attest: Secretary A-5 2014-05-20 Agenda Packet Page 371 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within-mentioned Indenture. Date of Registration and Authentication: __12014. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer A-6 2014-05-20 Agenda Packet Page 372 ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and irrevocably constitutes and appoints attorney to transfer that Bond on the books kept for registration thereof,with full power of substitution in the premises. Dated: Signature Guaranteed: Signature guarantee shall be made by a guarantor Notice: The assignor's signature to this institution participating in the Securities Transfer assignment must correspond with the name as it Agent Medallion Program or in such other appears upon the face of the within Bond in guarantee program acceptable to the Registrar. every particular,without alteration or any change whatever. Please insert social security number or other tax identification number of transferee Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Issuer or its agent 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 Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede& Co.,has an interest herein. A-7 2014-05-20 Agenda Packet Page 373 EXHIBIT B DESCRIPTION OF PROJECT B-1 2014-05-20 Agenda Packet Page 374 Stradling Yocca Carlson & Rauth Draft Dated May 12, 2014 LOAN AGREEMENT between CHULA VISTA HOUSING AUTHORITY and KIKU GARDENS HOUSING PARTNERS, LP,A CALIFORNIA LIMITED PARTNERSHIP CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (GARDEN VILLAS), SERIES 2014A Dated as of June 1, 2014 2014-05-20 Agenda Packet Page 375 TABLE OF CONTENTS (This Index is not a part of the Agreement but rather is for convenience of reference only.) Page ARTICLE I DEFINITIONS Section 1.1. Use of Defined Terms--------------------------------------------------------------------------------------------------- I Section1.2. Interpretation----------------------------------------------------------------------------------------------------------------- I Section 1.3. Captions and Headings-------------------------------------------------------------------------------------------------2 ARTICLE II REPRESENTATIONS AND COVENANTS Section 2.1. Representations of the Issuer........................................................................................2 Section 2.2. Representations and Covenants of the Borrower..........................................................2 ARTICLE III COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS Section 3.1. Acquisition, Rehabilitation, Installation, Equipment and Improvement.......................5 Section 3.2. Plans and Specifications-----------------------------------------------------------------------------------------------5 Section 3.3. Issuance of the Bonds;Application of Proceeds...........................................................5 Section 3.4. Disbursements from the Project Fund...........................................................................6 Section 3.5. Freddie Mac Loan Funds----------------------------------------------------------------------------------------------7 Section 3.6. Borrower Required to Pay Costs in Event Project Fund Insufficient...........................7 Section3.7. Completion Date-----------------------------------------------------------------------------------------------------------8 Section 3.8. Investment of Fund Moneys-----------------------------------------------------------------------------------------8 Section3.9. Rebate Fund------------------------------------------------------------------------------------------------------------------8 ARTICLE IV LOAN BY ISSUER; REPAYMENT OF THE LOAN; LOAN PAYMENTS AND ADDITIONAL PAYMENTS Section 4.1. Loan Repayment; Delivery of Note..............................................................................8 Section4.2. Additional Payments-----------------------------------------------------------------------------------------------------9 Section4.3. Place of Payments------------------------------------------------------------------------------------------------------- 10 Section 4.4. Obligations Unconditional.......................................................................................... 10 Section 4.5. Assignment of Agreement and Issuer Revenues......................................................... 10 i 2014-05-20 Agenda Packet Page 376 TABLE OF CONTENTS (Continued) Page ARTICLE V ADDITIONAL AGREEMENTS AND COVENANTS Section 5.1. Right of Inspection------------------------------------------------------------------------------------------------------ 10 Section 5.2. Borrower to Maintain its Existence; Sales of Assets or Mergers................................ 10 Section 5.3. Indemnification----------------------------------------------------------------------------------------------------------- 11 Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross Income of Interest onBonds--------------------------------------------------------------------------------------------------------------------- 12 Section 5.5. Affirmative Covenants------------------------------------------------------------------------------------------------ 12 Section 5.6. Additional Indebtedness.............................................................................................. 14 Section 5.7. Nature of Business------------------------------------------------------------------------------------------------------ 14 Section 5.8. Cooperation in Enforcement of Regulatory Agreement............................................. 14 Section 5.9. Tax Exempt Status of the Bonds................................................................................. 15 Section5.10. Useful Life------------------------------------------------------------------------------------------------------------------ 16 Section 5.11. Federal Guarantee Prohibition.................................................................................... 16 Section 5.12. Prohibited Facilities---------------------------------------------------------------------------------------------------- 16 ARTICLE VI PREPAYMENT Section 6.1. No Optional Prepayment--------------------------------------------------------------------------------------------- 16 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default-------------------------------------------------------------------------------------------------------- 16 Section 7.2. Remedies on Default--------------------------------------------------------------------------------------------------- 17 Section 7.3. No Remedy Exclusive------------------------------------------------------------------------------------------------- 18 Section 7.4. Agreement to Pay Attorneys' Fees and Expenses...................................................... 18 Section7.5. No Waiver------------------------------------------------------------------------------------------------------------------- 19 Section 7.6. Notice of Default--------------------------------------------------------------------------------------------------------- 19 Section 7.7. Investor Limited Partner's Cure Rights...................................................................... 19 ARTICLE VIII MISCELLANEOUS Section 8.1. Term of Agreement----------------------------------------------------------------------------------------------------- 19 Section 8.2. Amounts Remaining in Funds .................................................................................... 19 Section8.3. Notices------------------------------------------------------------------------------------------------------------------------ 19 Section 8.4. Extent of Covenants of the Issuer;No Personal Liability........................................... 19 Section8.5. Binding Effect-------------------------------------------------------------------------------------------------------------20 Section 8.6. Amendments and Supplements...................................................................................20 Section 8.7. Execution Counterparts-----------------------------------------------------------------------------------------------20 Section8.8. Severability-----------------------------------------------------------------------------------------------------------------20 Section8.9. Governing Law-----------------------------------------------------------------------------------------------------------20 ii 2014-05-20 Agenda Packet Page 377 TABLE OF CONTENTS (Continued) Page Section 8.10. Non-Recourse Obligations..........................................................................................20 Section 8.11. Limitation on Liability of the Issuer...........................................................................21 Section 8.12. Waiver of Personal Liability.......................................................................................21 Section 8.13. Delivery of Reports, Etc ---------------------------------------------------------------------------------------------21 Section 8.14. Subordination to Freddie Mac Loan Documents........................................................22 Signatures------------------------------------------------------------------------------------------------------------------------------------------- S-1 ExhibitA -FORM OF NOTE -----------------------------------------------------------------------------------------------------------A-1 Exhibit B -BORROWER'S CERTIFICATE TO FREDDIE MAC LENDER AND TRUSTEE.....B-1 Exhibit C -FORM OF COMPLETION CERTIFICATE..................................................................C-1 Exhibit D -FREDDIE MAC LENDER'S CERTIFICATE TO TRUSTEE......................................D-1 Exhibit E -BORROWER'S CERTIFICATE TO TRUSTEE ...........................................................E-1 2014-05-20 Agenda Packet Page 378 LOAN AGREEMENT THIS LOAN AGREEMENT (this"Loan Agreement"or"Agreement'')made and entered into as of June 1, 2014 between the Chula Vista Housing Authority (the "Issuer"), a public body corporate and politic, organized and existing under the laws of the State of California, and Kiku Gardens Housing Partners, LP, a California limited partnership (the "Borrower"), under the following circumstances summarized in the following recitals (the capitalized terms not defined in the recitals being used therein as defined in Article I hereof): A. Pursuant to the Act, the Issuer has determined to issue, sell and deliver its Bonds and to loan the proceeds derived from the sale thereof to the Borrower to assist in the financing of the Project to be undertaken by the Borrower. B. The Borrower and the Issuer each have full right and lawful authority to enter into this Agreement and to perform and observe the provisions hereof on their respective parts to be performed and observed. NOW THEREFORE, in consideration of the premises and the mutual representations and agreements hereinafter contained, the Issuer and the Borrower agree as follows (provided that any obligation of the Issuer created by or arising out of this Agreement shall never constitute a general debt of the Issuer or give rise to any pecuniary liability of the Issuer but shall be payable solely out of Issuer Revenues): ARTICLE I DEFINITIONS Section 1.1. Use of Defined Terms. In addition to the words and terms defined elsewhere in this Agreement, the words and terms in this Agreement shall have the meanings set forth in the Trust Indenture (the"Indenture"), dated as of the date of this Agreement between the Issuer and U.S. Bank National Association, as Trustee. For purposes of this Agreement the term "Project" shall mean the Garden Villas Project as more specifically described in the Regulatory Agreement. Section 1.2. Interpretation. Any reference herein to the Issuer, to the Board or to any member or officer of either includes entities or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or lawfully performing their functions. Any reference to a section or provision of the Constitution of the State or the Act, or to a section, provision or chapter of any statute of the State or to any statute of the United States of America, includes that section, provision or chapter as amended, modified, revised, supplemented or superseded from time to time; provided, that no amendment, modification, revision, supplement or superseding section, provision or chapter shall be applicable solely by reason of this provision, if it constitutes in any way an impairment of the rights or obligations of the Issuer, the Holders, the Trustee or the Borrower under this Agreement. Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa; the terms "hereof.. ..hereby," ..herein," ..hereto," ..hereunder" and similar terms refer to this Agreement; and the term"hereafter"means after, and the term"heretofore" 2014-05-20 Agenda Packet Page 379 means before, the date of delivery of the Bonds. Words of any gender include the correlative words of the other genders,unless the sense indicates otherwise. Section 1.3. Captions and Headings. The captions and headings in this Agreement are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections,paragraphs, subparagraphs or clauses hereof. ARTICLE II REPRESENTATIONS AND COVENANTS Section 2.1. Representations of the Issuer. The Issuer represents that: (a) it is a body corporate and politic of the State of California; (b) it has duly accomplished all conditions necessary to be accomplished by it prior to the issuance and delivery of the Bonds and the execution and delivery of this Agreement, the Indenture and the Regulatory Agreement; (c) it is not in violation of or in conflict with any provisions of the laws of the State that would impair its ability to carry out its obligations contained in this Agreement, the Indenture and the Regulatory Agreement; (d)it has the legal right and is empowered to enter into the transactions contemplated by this Agreement, the Indenture and the Regulatory Agreement; (e)it has duly authorized the execution, delivery and performance of this Agreement, the Indenture and the Regulatory Agreement; and (f)it will do all things in its power in order to maintain its existence or assure the assumption of its obligations under this Agreement,the Indenture and the Regulatory Agreement by any successor public body. The Issuer makes no representation or warranty that the Project will be adequate or sufficient for the purposes of the Borrower. Nothing in this Agreement shall be construed as requiring the Issuer to provide any financing for the Project other than the proceeds of the Loan or to provide sufficient moneys for all of the costs of the Project. Section 2.2. Representations and Covenants of the Borrower. The Borrower represents and covenants that: (a) It is a limited partnership duly formed and in full force and effect under the laws of the State. (b) It has full power and authority to execute, deliver and perform this Agreement, the Note and the Regulatory Agreement (collectively, the "Borrower Documents") and to enter into and carry out the transactions on its part contemplated by those documents. The execution, delivery and performance by it of the Borrower Documents do not, and will not, violate any provision of law applicable to the Borrower and do not, and will not, conflict with or result in a default under any agreement or instrument to which the Borrower is a party or by which it is bound. The Borrower Documents have, by proper action, been duly authorized, executed and delivered by the Borrower and all steps necessary have been taken to constitute the Borrower Documents valid and binding obligations of the Borrower. (c) The provision of financial assistance to be made available to it under this Agreement and the commitments therefor made by the Issuer have induced the Borrower to undertake the transactions contemplated by this Agreement. 2 2014-05-20 Agenda Packet Page 380 (d) It presently intends to use or operate the Project in a manner consistent with the Act and in accordance with the Regulatory Agreement for the life of the Bonds and knows of no reason why the Project will not be so operated. If, in the future, there is a cessation of that operation, it will use its best efforts to resume that operation or accomplish an alternate use by the Borrower or others approved in writing by the Issuer which will be consistent with the Act and the Regulatory Agreement. (e) The acquisition and rehabilitation of the Project will be completed in accordance with the Plans and Specifications and the portion of the Project funded with the proceeds of the Bonds will constitute a qualified residential rental project within the meaning of Section 142(d) of the Code and will be operated and maintained in such manner as to conform in all material respects with all applicable zoning, planning, building, environmental and other applicable Governmental regulations and as to be consistent with the Act. (f) The Project will be located entirely within the boundaries of the jurisdiction in which the Issuer was formed. (g) At least 95% of the net proceeds of the Bonds (as defined in Section 150 of the Code) will be used to provide a qualified residential rental project (as defined in Section 142(d) of the Code), and the Borrower will not request or authorize any disbursement from the Project Fund pursuant to Section 3.4 hereof, which, if paid, would result in less than 95% of the net proceeds of the Bonds being so used. (h) The costs of issuance financed by the Bonds will not exceed 2% of the proceeds of the Bonds (within the meaning of Section 147(g)of the Code), and the Borrower will not request or authorize any disbursement from the Project Fund pursuant to Section 3.4 hereof or otherwise, which, if paid, would result in more than 2% of the proceeds of the Bonds being so used. Except as permitted by Treasury Regulations 1.148-6(d)(3)(ii), none of the proceeds of the Bonds will be used for working capital purposes. (i) The proceeds of the Bonds shall be used or deemed used exclusively to pay costs that(i)are (A)capital expenditures (as defined in Section 1.150-1(a)of the Code's regulations) and (B)not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and (ii) are made exclusively with respect to a "qualified residential rental project" within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%)or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided,however,the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its partners and neither the Trustee nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or event of default under this Agreement or the Indenture. 0) Upon the execution and delivery thereof by the other parties thereto, each of the Borrower Documents will constitute valid and binding obligations of the Borrower, enforceable 3 2014-05-20 Agenda Packet Page 381 against the Borrower in accordance with their respective terms, except as limited by bankruptcy, insolvency,reorganization,moratorium or other similar laws or judicial decisions affecting creditors' rights generally and by judicial discretion in the exercise of equitable remedies. (k) The Borrower acknowledges, represents and warrants that it understands the nature and structure of the Project; that it is familiar with the provisions of all of the documents and instruments relating to the financing of the Project to which it is a party; that it understands the risks inherent in such transactions, including without limitation the risk of loss of the Project; and that it has not relied on the Issuer for any guidance or expertise in analyzing the financial or other consequences of such financing transactions or otherwise relied on the Issuer in any manner except to issue the Bonds in order to provide funds for the Loan. (1) The Borrower intends to hold the Project for its own account, has no current plans to sell and has not entered into any agreement to sell any of the units that comprise the Project. It is hereby acknowledged, however, that the Borrower's partnership agreement does provide for certain rights of one or more of its partners to acquire the Project, and for the possible acquisition of the Project following the fifteen year tax credit compliance period as identified in the Borrower's partnership agreement, and those provisions shall not result in a breach of this Section 2.2(1). (m) The Borrower shall use its best efforts to cause there to be deposited from time to time in the Collateral Fund, Available Moneys in such amount and at such times as may be necessary to allow the Trustee to disburse funds from the Project Fund pursuant to Section 5.03 of the Indenture upon the Trustee's receipt of a Disbursement Request from the Borrower to pay costs of the Project. (n) In the event the Loan proceeds are not sufficient to complete the acquisition and rehabilitation of the Project and the payment of all costs of issuance of the Bonds, the Borrower will furnish any additional moneys from any source determined by the Borrower as necessary to complete the acquisition and rehabilitation of the Project and pay all cost of issuance of the Bonds. (o) Less than 25% of the proceeds of the Loan will be used to pay or reimburse the Borrower for the cost of land or any interest therein. (p) The Borrower has not knowingly taken or permitted to be taken and will not knowingly take or permit to be taken any action which would have the effect, directly or indirectly, of causing interest on any of the Bonds to be included in the gross income of the owners thereof for purposes of federal income taxation. (q) The Borrower covenants that it shall not take, or knowingly permit or suffer to be taken by the Trustee or any party acting on its behalf, any action with respect to the proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be"arbitrage bonds"within the meaning of Section 148(a) of the Code. The Borrower acknowledges that the representations and covenants herein made by the Borrower have been expressly and specifically relied upon by the Issuer in determining to make the Loan to the Borrower and the Loan would not have been made but for such representations and covenants. 4 2014-05-20 Agenda Packet Page 382 ARTICLE III COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS Section 3.1. Acquisition, Rehabilitation, Installation, Equipment and Improvement. The Borrower(a)has acquired or is in the process of acquiring, the Project site and shall rehabilitate, install, improve and equip the Project with all reasonable dispatch and in substantial accordance with the Plans and Specifications, (b) shall pay when due all fees, costs and expenses incurred in connection with that acquisition, rehabilitation, installation, equipping and improving from funds made available therefor in accordance with this Agreement or otherwise, except to the extent being contested in good faith, and(c) shall ask, demand, sue for, levy,recover and receive all those sums of money, debts and other demands whatsoever which may be due, owing and payable under the terms of any contract, order, receipt, writing and instruction in connection with the acquisition, rehabilitation, improvement and equipping of the Project, and shall enforce the provisions of any contract, agreement, obligation, bond or other performance security with respect thereto. It is understood that the Project is that of the Borrower and any contracts made by the Borrower with respect thereto, whether acquisition contracts, construction contracts or otherwise, or any work to be done by the Borrower on the Project are made or done by the Borrower in its own behalf and not as agent or contractor for the Issuer. The Borrower agrees that it will compensate all workers employed in the rehabilitation and improvement of the Project as required by law. Section 3.2. Plans and Specifications. The Borrower may revise the Plans and Specifications from time to time, provided that no revision shall be made which would change the Project Purposes to other than purposes permitted by the Act and the Regulatory Agreement. At or prior to the execution and delivery of this Agreement, the Borrower shall provide to the Underwriter evidence acceptable to the Underwriter, in its sole discretion, of the availability of all financing contemplated by the plan of financing for the Project including, without limitation (and without regard to whether the immediate availability of such financing is a condition to undertaking the Project),the equity portion of the financing and all other public and private financing and any interim or bridge financing to be provided in anticipation of the closing of any of the foregoing aspects of the financing therefor. Any material changes in the plan of financing shall be communicated promptly to the Underwriter. Copies of all documents evidencing that financing, and the security therefor, all in form reasonably acceptable to the Underwriter, shall have been provided to the Underwriter. Section 3.3. Issuance of the Bonds; Application of Proceeds. To provide funds to make the Loan for purposes of assisting in paying the Project Costs, the Issuer will issue, sell and deliver the Bonds to the Underwriter. The Bonds will be issued pursuant to the Indenture in the aggregate principal amount, will bear interest and will mature as set forth therein. The Borrower hereby approves the terms and conditions of the Indenture and the Bonds, and of the terms and conditions under which the Bonds will be issued, sold and delivered. The proceeds from the sale of the Bonds in the amount of$ shall be loaned to the Borrower and paid over to the Trustee for the benefit of the Borrower and the Holders of the Bonds and deposited in the Project Fund. Pending disbursement pursuant to Section 3.4 hereof,the proceeds of the Bonds deposited in the Project Fund, together with any investment earnings thereon, shall constitute a part of the Issuer Revenues assigned by the Issuer to the Trustee as security for the payment of Bond Debt Service Charges as provided in the Indenture. 5 2014-05-20 Agenda Packet Page 383 Section 3.4. Disbursements from the Project Fund. Subject to the provisions below and so long as no Event of Default hereunder has occurred and is continuing for which the Loan Payments and principal amount of the Bonds has been declared to be immediately due and payable pursuant to Section 7.2 hereof and Section 7.03 of the Indenture, respectively, disbursements from the Project Fund shall be made only to pay any of the following Project Costs: (a) Costs incurred directly or indirectly for or in connection with the acquisition and rehabilitation of the Project, including costs incurred in respect of the Project for preliminary planning and studies; architectural, legal, engineering, accounting, consulting, supervisory and other services; labor, services and materials; and recording of documents and title work. (b) Premiums attributable to any surety bonds and insurance required to be taken out and maintained during the Construction Period with respect to the Project. (c) Taxes, assessments and other governmental charges in respect of the Project that may become due and payable during the Construction Period. (d) Costs incurred directly or indirectly in seeking to enforce any remedy against any contractor or subcontractor in respect of any actual or claimed default under any contract relating to the Project. (e) Subject to Section 22(h) hereof, financial, legal, accounting, printing and engraving fees, charges and expenses, and all other such fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of the Bonds, including, without limitation, the fees and expenses of the Trustee, the Registrar and any Paying Agent properly incurred under the Indenture that may become due and payable during the Construction Period. (f) Any other costs, expenses, fees and charges properly chargeable to the cost of acquisition and rehabilitation of the Project. (g) Payment of interest on the Bonds during the Construction Period. (h) Payments to the Rebate Fund. Any disbursements from the Project Fund shall be made by the Trustee only as permitted pursuant to Section 5.03 of the Indenture and upon the written request of the Borrower executed by an Authorized Borrower Representative substantially in the form attached hereto as Exhibit B,which requests shall be consecutively numbered and accompanied by invoices or other appropriate documentation supporting the payments or reimbursements requested. No disbursement shall be made by the Trustee upon the basis of any such disbursement request except upon satisfaction of the following conditions and pursuant to the following procedures: (i) An executed Certificate of the Freddie Mac Lender substantially in the form attached hereto as Exhibit D, or an executed Certificate of the Borrower substantially in the form attached hereto as Exhibit E, in each case related to the deposit of Available Moneys in to the Collateral Fund for the applicable disbursement request. (ii) An executed Certificate of the Borrower substantially in the form attached hereto as Exhibit B accompanied by a disbursement schedule listing the items for which the disbursement is sought and the total cost of each such item, together with invoices or other 6 2014-05-20 Agenda Packet Page 384 appropriate documentation (which may be a copy of an escrow agreement if a disbursement is to be made to an escrow account)for each such item. (iii) All Loan Payments that are then due shall have been paid. Any moneys in the Project Fund remaining after the Completion Date and payment, or provision for payment, in full of the Project Costs, at the direction of the Authorized Borrower Representative, promptly shall be paid into the Bond Fund for payment of Bond Debt Service Charges. Section 3.5. Freddie Mac Loan Funds. (a) The Borrower hereby acknowledges that the Freddie Mac Lender has determined to fund the Freddie Mac Loan, on the condition that the Freddie Mac Lender originate and service the Freddie Mac Loan in accordance with the Freddie Mac Loan Documents and the Freddie Mac Guide. (b) The Borrower hereby assigns all right, title and interest of the Borrower in and to the proceeds of the Freddie Mac Loan (in the amount set forth in Section 3.5(d)below) to the Trustee. (c) The Freddie Mac Lender has agreed to deliver or cause to be delivered to the Trustee the Freddie Mac Loan Funds upon its receipt and approval of a requisition from the Borrower requesting an advance under the Freddie Mac Loan for payments of Project Costs. (d) The amount of the Freddie Mac Loan Funds hereby assigned by the Borrower to the Trustee is hereby expressly limited to $ plus the Initial Deposit and the Borrower shall have no further interest therein. (e) The Borrower agrees to pay to the Freddie Mac Lender all amounts when due under the Freddie Mac Borrower Note and to abide by the provisions of the Freddie Mac Loan Documents. (f) The Trustee agrees upon receipt from the Freddie Mac Lender of (i)the Freddie Mac Loan Funds, and (ii)an approved requisition, from time to time, to disburse amounts from the Project Fund, in the exact same amount of the Freddie Mac Loan Funds received by the Trustee from the Freddie Mac Lender, to or for the benefit of the Borrower for application to the payment of the Project Costs set forth in the approved requisition. (g) The Borrower acknowledges that Freddie Mac Loan Funds assigned to the Trustee pursuant to this Section 3.5 by the Borrower shall be wired from the Freddie Mac Lender directly to the Trustee and disbursed and invested and applied by the Trustee in accordance with the provisions of Section 5.03 of the Indenture. Section 3.6. Borrower Required to Pay Costs in Event Proiect Fund Insufficient. If moneys in the Project Fund are not sufficient to pay all Project Costs,the Borrower,nonetheless,will complete the Project in substantial accordance with the Plans and Specifications and shall pay all such additional Project Costs from its own funds (or from other public or private financing sources available to the Borrower). The Borrower shall pay all costs of issuing the Bonds in excess of the amount permitted by Section 2.2(h)hereof. The Borrower shall not be entitled to any reimbursement 7 2014-05-20 Agenda Packet Page 385 for any such additional Project Costs or payment of issuance costs from the Issuer,the Trustee or any Holder; nor shall it be entitled to any abatement, diminution or postponement of the Loan Payments. Section 3.7. Completion Date. The Borrower shall notify the Issuer and the Trustee of the Completion Date by the delivery of a Completion Certificate signed by the Authorized Borrower Representative substantially in the form of Exhibit C attached hereto. The Completion Certificate shall be delivered as promptly as practicable after the occurrence of the events and conditions referred to in paragraphs (a)through(d) of the Completion Certificate. Section 3.8. Investment of Fund Moneys. At the written request of the Borrower, any moneys held as part of the Bond Fund, the Project Fund, the Collateral Fund and the Rebate Fund shall be invested or reinvested by the Trustee in Eligible Investments as provided in Section 5.05 of the Indenture. The Borrower covenants that it will restrict that investment and reinvestment and the use of the proceeds of the Bonds in such manner and to such extent, if any, as may be necessary, after taking into account reasonable expectations at the time of delivery of and payment for the Bonds or subsequent intentional acts, so that the Bonds will not constitute arbitrage bonds under Section 148 of the Code. No provision of this Agreement shall be construed to impose upon the Trustee any obligation or responsibility for compliance with arbitrage regulations. The Borrower shall provide the Issuer with, and the Issuer may base its certifications as authorized by the Bond Resolution on, a certificate of an appropriate officer, employee or agent of or consultant to the Borrower for inclusion in the transcript of proceedings for the Bonds, setting forth the reasonable expectations of the Borrower on the date of delivery of and payment for the Bonds regarding the amount and use of the proceeds of the Bonds and the facts, estimates and circumstances on which those expectations are based. Section 3.9. Rebate Fund. The Borrower agrees to make such payments to the Trustee as are required of it under Section 5.09 of the Indenture as well as the fees and expenses of any independent certified public accounting firm or qualified rebate analyst engaged in accordance with that Section. The obligation of the Borrower to make such payments shall remain in effect and be binding upon the Borrower notwithstanding the release and discharge of the Indenture. ARTICLE IV LOAN BY ISSUER; REPAYMENT OF THE LOAN; LOAN PAYMENTS AND ADDITIONAL PAYMENTS Section 4.1. Loan Repayment; Delivery of Note. Upon the terms and conditions of this Agreement, the Issuer will make the Loan to the Borrower. In consideration of and in repayment of the Loan, the Borrower shall deliver or cause to be delivered to the Trustee on or before each Loan Payment Date, Loan Payments, equal to the amount necessary to pay Bond Debt Service Charges due on the next Bond Payment Date. All such Loan Payments shall be paid to the Trustee in accordance with the terms of the Note for the account of the Issuer and shall be held and disbursed in accordance with the provisions of the Indenture and this Agreement. The Borrower shall be entitled to a credit against the Loan Payments required to be made hereunder, on any date, equal to the amounts, if any, transferred by the Trustee from the Initial Deposit Account, the Project Fund or the Collateral Fund on such date for the payment of Bond Debt Service Charges. 8 2014-05-20 Agenda Packet Page 386 To secure the Borrower's performance of its obligations under this Agreement,the Borrower shall execute and deliver, concurrently with the issuance and delivery of the Bonds,the Note and the Regulatory Agreement. Upon payment in full of the Bond Debt Service Charges on any or all of the Bonds, in accordance with the Indenture, whether at maturity, upon acceleration or otherwise, or upon provision for the payment of all other obligations herein and therein having been made in accordance with the provisions of the Indenture, (i)if with respect to less than all of the Bonds then outstanding, an appropriate notation shall be endorsed on the Note evidencing the date and amount of the principal payment(or prepayment) equal to the Bonds so paid, or with respect to which provision for payment has been made, and (ii)if with respect to all of the Bonds then outstanding, the Note shall be deemed fully paid, the obligations of the Borrower shall be terminated, and the Note shall be surrendered by the Trustee to the Borrower for cancellation. Unless the Borrower is entitled to a credit under express terms of this Agreement or the Note, all payments on the Note shall be in the full amount required thereunder. The Borrower and the Issuer each acknowledge that neither the Borrower nor the Issuer has any interest in the Bond Fund or the Collateral Fund and any moneys deposited therein shall be in the custody of and held by the Trustee in trust for the benefit of the Holders. Section 4.2. Additional Payments. The Borrower shall pay to the Issuer or the Trustee, as the case may be, as Additional Payments hereunder the following: (a) To the Issuer, on the Closing Date, and on each anniversary thereof while the Bonds are outstanding, an administrative fee equal to (one eighth of one percent) of the original principal amount of the Bonds on such date. (b) To the Issuer or the Trustee, as the case may be, whether or not an Event of Default has occurred hereunder, as payment for or reimbursement or prepayment of any and all costs, expenses, and liabilities (i) incurred or paid by the Issuer or the Trustee, as the case may be, in satisfaction of any obligations of the Borrower hereunder not performed by the Borrower in accordance with the provisions hereof, or(ii)incurred as a result of a written request by the Borrower or of a requirement of any Borrower Document or the Indenture and not otherwise required to be paid by the Borrower under this Agreement, or (iii)incurred in the defense of any action or proceeding with respect to the Project or any Borrower Document, or in enforcing any Borrower Document, or arising out of or based upon any other document related to the issuance of the Bonds; and (c) All reasonable fees, charges and expenses of the Trustee as trustee, registrar, authenticating agent and paying agent, and of any other paying agent, authenticating agent, and registrar on the Bonds under the Indenture, all as provided in the Indenture for services rendered under the Indenture, subject to the limitations set forth in Section 6.03 of the Indenture, as and when the same become due and payable. Upon the payment, prepayment, or incurrence of any such cost, expense, or liability described in this Section by any such party, the Additional Payments in respect thereof shall be payable upon written demand to the Borrower, which demand shall be accompanied by invoices or other appropriate documentation concerning the nature, amount and incurrence of such cost, expense or liability. If the Additional Payments payable under this Section are not paid by the Borrower 9 2014-05-20 Agenda Packet Page 387 within ten (10) days of the Borrower's receipt of such demand, such Additional Payments shall bear interest from such tenth (10th) date at the Interest Rate for Advances until the amount due shall have been fully paid. Section 4.3. Place of Payments. The Borrower shall make all Loan Payments directly to the Trustee at its designated corporate trust office. Additional Payments shall be made directly to the person or entity to whom or to which they are due. Section 4.4. Oblieations Unconditional. The obligations of the Borrower to make Loan Payments,Additional Payments and any payments required of the Borrower under Sections 5.09 and 6.03 of the Indenture shall be absolute and unconditional, and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including,without limitation, any defense, set-off,recoupment or counterclaim which the Borrower may have or assert against the Issuer, the Trustee or any other Person; provided that the Borrower may contest in good faith the necessity for any Extraordinary Services and Extraordinary Expenses and the amount of any Ordinary Services, Ordinary Expenses, Extraordinary Services or Extraordinary Expenses. Section 4.5. Assiinment of Agreement and Issuer Revenues. To secure the payment of Bond Debt Service Charges, the Issuer shall assign to the Trustee, by the Indenture, its rights under and interest in this Agreement (except for the Unassigned Issuer's Rights) and the Note. The Borrower hereby agrees and consents to those assignments. The Issuer shall not attempt to further assign, transfer or convey its interest in the Issuer Revenues or this Agreement or create any pledge or Lien of any form or nature with respect to the Issuer Revenues or Loan Payments hereunder. ARTICLE V ADDITIONAL AGREEMENTS AND COVENANTS Section 5.1. Rieht of Inspection. At all reasonable times and upon reasonable notice, the Borrower shall allow any duly authorized representative of the Issuer or the Trustee to visit and inspect the Project, to examine and make copies of and from its books of record and account, and to discuss its affairs, finances, and accounts with its officers, and shall furnish to the Issuer and the Trustee any information reasonably required regarding its business affairs and financial condition within a reasonable time after receipt of written request therefor. Section 5.2. Borrower to Maintain its Existence; Sales of Assets or Mergers. The Borrower shall maintain its existence, not dissolve or sell, transfer or otherwise dispose of all or substantially all of its assets and not consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided, that it may do so if the surviving, resulting or transferee entity is other than the Borrower, it assumes in writing all of the obligations of the Borrower under this Agreement and the Regulatory Agreement and it has a net worth equal to or greater than that of the Borrower immediately prior to such consolidation, merger, sale or transfer. The Borrower shall not permit one or more other entities to consolidate with or merge into it,without the prior written consent of the Issuer; or take any action or allow any action to be taken to terminate the existence of the Borrower except as provided herein. Nothing herein contained shall limit the rights of(i) any direct or indirect owners of interests in the Borrower to (a)transfer, convey, sell or otherwise dispose (a "Transfer") their ownership interests to any Affiliate, or in connection with any estate planning, or by operation of law, or (b)make Transfers among and between themselves, or 10 2014-05-20 Agenda Packet Page 388 (ii) Borrower to make Transfers as otherwise permitted by (or subject to the terms and conditions set forth in)the Regulatory Agreement. Notwithstanding anything to the contrary contained herein but subject to the consent of the Freddie Mac Lender (to the extent required under the Freddie Mac Loan Documents), the following shall be permitted and shall not require the prior written approval of Issuer or Trustee: (a)the transfer by the Investor Limited Partner of its interest in Borrower in accordance with the terms of Borrower's [Amended and Restated Limited Partnership Agreement], as it may be amended from time to time (the "Partnership Agreement"), (b)the removal of a general partner of Borrower in accordance with the Partnership Agreement and the replacement thereof with the Investor Limited Partner, or any of its affiliates, or the removal of the Special Limited Partner pursuant to the Partnership Agreement, (c)the transfer of ownership interests in the Investor Limited Partner, (d)the transfer of the interests of the Investor Limited Partner in Borrower to the Special Limited Partner or any of its affiliates, (e)any amendment to the Partnership Agreement to memorialize the transfers or removal described above, and (f) any transfer permitted in Section 10 of the Regulatory Agreement without consent of the Issuer. Section 5.3. Indemnification. The Borrower releases the Issuer and the Trustee from, agrees that the Issuer and the Trustee shall not be liable for, and indemnifies, defends and holds the Issuer and the Trustee harmless from and against, all liabilities, claims, costs and expenses and attorneys' fees imposed upon, incurred or asserted against the Issuer or the Trustee on account of- (i)any loss or damage to property or injury to or death of or loss by any person that may be occasioned by any cause whatsoever pertaining to the acquisition, financing, construction, occupation, possession, management, equipping, furnishing, maintenance, operation and use of the Project or from any work or thing done in or about the Project site, or any sidewalks, passageways, driveways, curbs, vaults and vault space, streets or parking areas on the Project site or adjacent thereto; (ii)any breach or default on the part of the Borrower in the performance of any covenant or agreement of the Borrower under this Agreement, the Regulatory Agreement,the Note or any related document, or arising from any act or failure to act by the Borrower, or any of its agents, contractors, servants, employees or licensees; (iii)the Borrower's failure to comply with any requirement of this Agreement including the covenant in Section 5.4 hereof, (iv)any action taken or omitted to be taken by the Issuer or the Trustee at the request of or with the written consent of the Borrower; (v)the issuance of the Bonds, to the extent that such issuance directly relates to the Borrower's furnishing information concerning the Project, the Borrower, its financial status or other matters relating to the Borrower; and (vi)any claim, action or proceeding brought with respect to any matter set forth in clause (i), (ii), (iii), (iv) or (v) above; provided, however, that the indemnification provided in this Section shall not apply to any matter arising or resulting from the gross negligence or willful misconduct of the Issuer or the Trustee. The Borrower agrees to indemnify the Trustee for and to hold it harmless against all liabilities, claims, costs and expenses incurred without negligence or willful misconduct on the part of the Trustee, on account of any action taken or omitted to be taken by the Trustee in accordance with the terms of this Agreement, the Bonds,the Regulatory Agreement,the Note or the Indenture or any action taken at the request of or with the consent of the Borrower, including the costs and expenses of the Trustee in defending itself against any such claim, action or proceeding brought in connection with the exercise or performance of any of its powers or duties under this Agreement, the Bonds,the Indenture,the Regulatory Agreement or the Note. 11 2014-05-20 Agenda Packet Page 389 In case any action or proceeding is brought against the Issuer or the Trustee in respect of which indemnity may be sought hereunder,the party seeking indemnity promptly shall give notice of that action or proceeding to the Borrower, and the Borrower upon receipt of that notice shall have the obligation and the right to assume the defense of the action or proceeding; provided, that failure of a party to give that notice shall not relieve the Borrower from any of its obligations under this Section unless that failure prejudices the defense of the action or proceeding by the Borrower. The indemnified party shall have the right to employ separate counsel in any such action or proceedings and to participate in the defense thereof, but, unless such separate counsel is employed with the approval and consent of the Borrower, or because the indemnified party has been advised by counsel that there may be a conflict of interest between the Borrower and the indemnified party,the Borrower shall not be required to pay the fees and expenses of such separate counsel. The Borrower shall not be liable for any settlement made without its consent, which consent shall not be unreasonably withheld, conditioned or delayed. The indemnification set forth above is intended to and shall include the indemnification of all affected officials, directors, officers, agents and employees of the Issuer and the Trustee, respectively. That indemnification is intended to and shall be enforceable by the Issuer and the Trustee,respectively,to the full extent permitted by law. Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross Income of Interest on Bonds. The Borrower hereby represents that it has taken and caused to be taken, and covenants that it will take and cause to be taken, all actions that may be required of it, alone or in conjunction with the Issuer, for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code. Section 5.5. Affirmative Covenants. Unless the Issuer or the Freddie Mac Lender shall otherwise consent in writing: (a) Maintenance of Properties. The Borrower shall maintain and preserve in good working order and condition, ordinary wear and tear and casualty loss excepted, all of its properties which are necessary or useful in the proper conduct of its business, and shall from time to time make all necessary repairs, renewals, replacements, additions and improvements to said properties. All damage to apartment units shall be repaired promptly and apartment units shall be maintained so as to be available at all times for habitation. (b) Keeping of Records and Books of Account. The Borrower shall keep adequate records and books of account in which complete entries will be made in accordance with GAAP or indicating deviations therefrom, reflecting all financial transactions. The Borrower shall deliver to the Trustee annually its year end financial statements accompanied by a written statement of the Borrower's independent certified public accountants that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Borrower has violated any of the terms, covenants or provisions of this Agreement insofar as it relates to accounting matters. (c) Payment of Taxes. Etc. The Borrower shall promptly pay and discharge: all taxes, assessments, fees, and other Government charges or levies imposed upon it or upon any of its properties, income or profits, before the same shall become delinquent; any Lien or other 12 2014-05-20 Agenda Packet Page 390 Indebtedness heretofore or hereafter incurred by it when due, and discharge, perform and observe covenants, provisions and conditions to be discharged, performed and observed by it in connection therewith, or in connection with any agreement or other instrument relating thereto or in connection with any Lien existing at any time upon any of its properties; provided, however, that the Borrower shall not be required to pay any of the foregoing if(a)the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings, (b) the Borrower shall have set aside on its books adequate reserves with respect thereto and (c)the title of the Borrower to, and its right to use, its properties is not materially and adversely affected thereby. The Borrower hereby agrees that, in the event it fails to pay or cause to be paid taxes, assessments, fees and other Government charges or levies or the premium on any required insurance and such failure constitutes a default under the Freddie Mac Loan Documents, the Trustee may make such payment, but is not obligated to do so, and the Trustee shall be reimbursed by the Borrower therefor with interest on the amount so advanced at the Interest Rate for Advances as provided in Section 4.2 hereof. (d) Insurance. The Borrower shall at all times maintain, or cause to be maintained, insurance of such types and in such amounts as required by the Freddie Mac Loan Documents. (e) Notice of Material Litigation. The Borrower shall promptly notify the Issuer and the Trustee in writing of any litigation, arbitration proceeding or administrative investigation, inquiry or other proceeding to which it may hereafter become a party or be subject to which may result in a change in the business or assets or in the condition, financial or otherwise, of the Borrower which would materially impair the ability of the Borrower to perform this Agreement,the Regulatory Agreement or the Note, or any other agreement or instrument herein or therein contemplated. (f) Notice of Default. In the event that any Event of Default occurs under this Agreement,the Borrower shall give prompt notice in writing of such happening to the Trustee. (g) Performance of Contracts. Etc. Except to the extent contested in good faith, the Borrower shall perform according to and shall comply with all of its Contractual Obligations and all Requirements of Law if nonperformance thereof would result in a change in the business or assets or in the condition, financial or otherwise, of the Borrower which would materially impair the ability of the Borrower to perform this Agreement, the Regulatory Agreement or the Note or any other agreement or instrument herein or therein contemplated. (h) Notice of Other Matters. The Borrower shall promptly notify the Trustee in writing of any of the following events: (i) Any with respect to the business or assets or in the condition, financial or otherwise, of the Borrower which would materially impair the ability of the Borrower to perform its obligations under this Agreement, the Regulatory Agreement or the Note or any other agreement or instrument herein or therein contemplated. (ii) A default by the Borrower in any material respect under any material agreement to which the Borrower is a party or by which the Borrower or its properties or assets may be bound, giving in each case the details thereof and specifying the action proposed to be taken with respect thereto. 13 2014-05-20 Agenda Packet Page 391 (i) Cooperation in Perfecting Security Interests, Etc. The Borrower shall promptly perform such acts as may be necessary or advisable to perfect and maintain a Lien on the Trust Estate or otherwise to carry out the intent of this Agreement. The Borrower shall, and shall promptly execute, deliver and perform or cause to be done, executed, delivered and performed all such documents, instruments, agreements, things and acts, including, without limitation, financing statements and continuation statements as may be necessary or advisable to perfect or maintain a Lien on the Trust Estate and all assets or rights owned by the Borrower, or any interest of the Borrower therein. 0) Environmental Matters. The Borrower will take and continue to take prompt action to remedy all environmental contamination,hazardous waste disposal and other environmental cleanup affecting the Project, if any, resulting from an order or request of a municipal, state, federal, administrative or judicial authority, or otherwise violating the law. The foregoing covenant shall not constitute or create a waiver of any rights the Borrower may have to pursue any legal rights or remedies against any third party for any environmental claims. (k) Non-discrimination. The Borrower will not discriminate, and will require each contractor, subcontractor and commercial tenant of the Project to covenant that it will not discriminate by reason of race, creed, color, handicap, national origin or sex in the employment of any Person employed by it in connection with the Project or working in or on the Project. The Borrower will require each manager of the Project to covenant that in the leasing of the Project it will not discriminate by reason of race, creed, color,handicap,national origin or sex. (1) Patriot Act. The Borrower covenants and agrees to provide documentation as reasonably requested or required by the Trustee to enable the Trustee to comply with the requirements of the USA Patriot Act as described in Section 13.13 of the Indenture. Section 5.6. Additional Indebtedness. So long as no Event of Default or default hereunder shall have occurred and be continuing, the Borrower shall be permitted to incur any Indebtedness for any Project Cost or other obligation or payment due under this Agreement, the Indenture or the Regulatory Agreement. Section 5.7. Nature of Business. The Borrower will not change the general character of its business as conducted at the date hereof, or engage in any type of business not reasonably related to its business as normally conducted. Section 5.8. Cooperation in Enforcement of Regulatory Agreement. In order to maintain the exclusion from gross income under federal tax law of interest on the Bonds and to assure compliance with the laws of the State (including the Act), the Borrower hereby agrees that it shall, concurrently with or before the execution and delivery of the Bonds, execute and deliver and cause to be recorded the agreement defined in the Indenture as the "Regulatory Agreement." The Borrower hereby covenants and agrees as follows: (a) to comply with all provisions of the Regulatory Agreement; (b) to advise the Issuer in writing promptly upon learning of any default with respect to the covenants, obligations and agreements of the Borrower set forth in the Regulatory Agreement; 14 2014-05-20 Agenda Packet Page 392 (c) upon written direction by the Issuer,to cooperate fully and promptly with the Issuer in enforcing the terms and provisions of the Regulatory Agreement; and (d) to file in accordance with the time limits established by the Regulatory Agreement all reports and certificates required thereunder, and the annual certification to the Secretary of the Treasury required by the Regulatory Agreement. The Issuer shall not incur any liability in the event of any breach or violation of a Regulatory Agreement by the Borrower, and the Borrower agrees to indemnify the Issuer from any claim or liability for such breach pursuant to Section 5.3 hereof. Section 5.9. Tax Exempt Status of the Bonds. (a) It is the intention of the Issuer and the Borrower that interest on the Bonds shall be and remain excludable from gross income for federal income taxation purposes, and to that end the covenants and agreements of the Borrower in this Section 5.9 are for the benefit of the owners of the Bonds and the Issuer. (b) The Borrower covenants and agrees that it will not(i)use or permit the use of any of the funds provided by the Issuer hereunder or any other funds of the Borrower, directly or indirectly, in such manner as would, or (ii) enter into, or allow any "related person" (as defined in Section 147(a)(2) of the Code)to enter into, any arrangement, formal or informal, for the purchase of the Bonds that would, or (iii)take or omit to take any other action that would, in each case cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code. (c) In the event that at any time the Borrower is of the opinion or becomes otherwise aware that for purposes of this Section 5.9 it is necessary to restrict or to limit the yield on the investment of any moneys held under the Indenture or otherwise by the Trustee, the Borrower shall determine the limitations and so instruct the Trustee in writing and cause the Trustee to comply with those limitations under the Indenture. (d) The Borrower will take such action or actions as may be reasonably necessary in the opinion of counsel to the Issuer, or of which it otherwise becomes aware,to fully comply with Section 148 of the Code as applicable to the Bonds. (e) The Borrower further agrees that it shall not discriminate on the basis of race, creed, color, sex, sexual preference, source of income (e.g. AFDC, SSI), physical disability, national origin or marital status in the lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the operation and management of the Project,to the extent required by applicable State or federal law. (f) The Borrower further warrants and covenants that it has not executed and will not execute any other agreement, or any amendment or supplement to any other agreement, with provisions contradictory to, or in opposition to, the provisions, of this Loan Agreement and of the Regulatory Agreement, and that in any event, the requirements of this Loan Agreement and the Regulatory Agreement are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements in conflict herewith and therewith. 15 2014-05-20 Agenda Packet Page 393 (g) The Borrower will use due diligence to complete the acquisition and rehabilitation of all of the units comprising the Project and reasonably expects to fully expend the entire $ principal amount of the Loan by the day before the Maturity Date. (h) The Borrower will take such action or actions as necessary to ensure compliance with Sections 2.2(e), (g), (h), (i), (1), (n), (o) and(p)hereof. Section 5.10. Useful Life. The Borrower hereby represents and warrants that, within the meaning of Section 147(a)(14) of the Code, the average maturity of the Bonds does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the proceeds of the Bonds. Section 5.11. Federal Guarantee Prohibition. The Borrower shall take no action, nor permit nor suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed"within the meaning of Section 149(b)of the Code. Section 5.12. Prohibited Facilities. The Borrower represents and warrants that no portion of the proceeds of the Loan shall be used to provide any airplane, skybox or other private luxury box, health club facility, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises, and no portion of the proceeds of the Loan shall be used for an office unless (a)the office is located on the premises of facilities constituting a portion of the Project and (b)not more than a de minimis amount of the functions to be performed at such office is not related to the day-to-day operations of the Project. ARTICLE VI PREPAYMENT Section 6.1. No Optional Prepavment. The Loan may not be prepaid by the Borrower in whole or in part. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default. Each of the following shall be an Event of Default: (a) The Borrower shall fail to pay any Loan Payment on or prior to the date on which that Loan Payment is due and payable or within the Loan Payment Cure Period; (b) The Borrower shall fail to observe and perform any other agreement, term or condition contained in this Agreement and the continuation of such failure for a period of thirty (30) days after written notice thereof shall have been given to the Borrower and the Investor Limited Partner by the Issuer or the Trustee, or for such longer period as the Issuer and the Trustee may agree to in writing; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure shall not constitute an Event of Default so long as the Borrower institutes curative action within the applicable period and diligently pursues that action to completion,which must be resolved within one hundred eighty (18 0) days after the aforementioned notice; 16 2014-05-20 Agenda Packet Page 394 (c) The Borrower shall: (i)admit in writing its inability to pay its debts generally as they become due; (ii)have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws, as now or hereafter in effect,which is not dismissed within ninety (90) days; (iii) voluntarily commence a proceeding under any other federal or state bankruptcy, insolvency,reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for ninety (90) days; (iv)make an assignment for the benefit of creditors; or(v)have a receiver or trustee appointed for it or for the whole or any substantial part of its property which appointment is not vacated within a period of ninety (90)days; (d) Any representation or warranty made by the Borrower herein or any statement in any report, certificate, financial statement or other instrument furnished in connection with this Agreement or with the purchase of the Bonds shall at any time prove to have been false or misleading in any adverse material respect when made or given; and (e) There shall occur an "Event of Default" as defined in the Indenture or the Regulatory Agreement. Notwithstanding the foregoing, if, by reason of Force Majeure, the Borrower is unable to perform or observe any agreement, term or condition hereof which would give rise to an Event of Default under subsection (b) hereof, the Borrower shall not be deemed in default during the continuance of such inability. However, the Borrower shall promptly give notice to the Trustee and the Issuer of the existence of an event of Force Majeure and shall use commercially reasonable efforts to remove the effects thereof, provided that the settlement of strikes or other industrial disturbances shall be entirely within its discretion. The term"Force Majeure" shall mean,without limitation,the following: (i) acts of God; strikes, lockouts or other industrial disturbances; acts of terrorism or of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or any of their departments, agencies, political subdivisions or officials, or any civil or military authority; insurrections; civil disturbances; riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes; tornados; storms; droughts; floods; arrests; restraint of government and people; explosions; breakage, malfunction or accident to facilities, machinery, transmission pipes or canals; partial or entire failure of utilities; shortages of labor, materials, supplies or transportation; or (ii) any cause, circumstance or event not reasonably within the control of the Borrower. The declaration of an Event of Default under subsection (c) above, and the exercise of remedies upon any such declaration, shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings. Section 7.2. Remedies on Default. Whenever an Event of Default shall have happened and be subsisting, any one or more of the following remedial steps may be taken: 17 2014-05-20 Agenda Packet Page 395 (a) If acceleration of the principal amount of the Bonds has been declared pursuant to Section 7.03 of the Indenture,the Trustee, as assignee of the Issuer, shall declare all Loan Payments to be immediately due and payable together with any other amounts payable by the Borrower under this Agreement and the Note whereupon the same shall become immediately due and payable; (b) The Trustee, as assignee of the Issuer, may exercise any or all or any combination of the remedies specified in this Agreement; (c) The Issuer or the Trustee may have access to, inspect, examine and make copies of the books,records, accounts and financial data of the Borrower pertaining to the Project; or (d) The Issuer or the Trustee may pursue all remedies now or hereafter existing at law or in equity to collect all amounts then due and thereafter to become due under this Agreement, the Regulatory Agreement and the Note or to enforce the performance and observance of any other obligation or agreement of the Borrower under those instruments. Notwithstanding the foregoing, neither the Issuer nor the Trustee, as assignee of the Issuer, shall be obligated to take any step which in its respective opinion will or might cause it to expend time or money or otherwise incur liability unless and until a satisfactory indemnity bond has been furnished to the Issuer or the Trustee, as applicable, at no cost or expense to the Issuer or the Trustee. Any amounts collected as Loan Payments or applicable to Loan Payments and any other amounts which would be applicable to payment of Bond Debt Service Charges collected pursuant to action taken under this Section shall be paid into the Bond Fund and applied in accordance with the provisions of the Indenture or, if the Outstanding Bonds have been paid and discharged in accordance with the provisions of the Indenture, shall be paid as provided in Section 5.08 of the Indenture for transfers of remaining amounts in the Bond Fund. The provisions of this Section are subject to the further limitation that the rescission by the Trustee of its declaration that all of the Bonds are immediately due and payable also shall constitute an annulment of any corresponding declaration made pursuant to paragraph (a) of this Section and a waiver and rescission of the consequences of that declaration and of the Event of Default with respect to which that declaration has been made, provided that no such waiver or rescission shall extend to or affect any subsequent or other default or impair any right consequent thereon. Section 7.3. No Remedy Exclusive. No remedy conferred upon or reserved to the Issuer or the Trustee by this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, the Regulatory Agreement or the Note, or now or hereafter existing at law, in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair that right or power or shall be construed to be a waiver thereof,but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than any notice required by law or for which express provision is made herein. Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. If an Event of Default should occur and the Issuer or the Trustee should incur expenses, including attorneys' fees, in connection with the enforcement of this Agreement, the Regulatory Agreement or the Note or the 18 2014-05-20 Agenda Packet Page 396 collection of sums due thereunder, the Borrower shall reimburse the Issuer and the Trustee, as applicable, for the expenses so incurred upon demand. Section 7.5. No Waiver. No failure by the Issuer or the Trustee to insist upon the strict performance by the Borrower of any provision hereof shall constitute a waiver of their right to strict performance and no express waiver shall be deemed to apply to any other existing or subsequent right to remedy the failure by the Borrower to observe or comply with any provision hereof. Section 7.6. Notice of Default. The Borrower shall notify the Trustee immediately if it becomes aware of the occurrence of any Event of Default hereunder or of any fact, condition or event which,with the giving of notice or passage of time or both,would become an Event of Default. Section 7.7. Investor Limited Partner's Cure Rights. The Issuer hereby agrees that any cure of any Event of Default hereunder made or tendered by the Investor Limited Partner shall be deemed to be cured by the Borrower, and shall be accepted or rejected by the Issuer on the same basis as if made or tendered by the Borrower. ARTICLE VIII MISCELLANEOUS Section 8.1. Term of Agreement. This Agreement shall be and remain in full force and effect from the date of delivery of the Bonds to the Holder until such time as all of the Bonds shall have been fully paid (or provision made for such payment) pursuant to the Indenture and all other sums payable by the Borrower under this Agreement and the Note shall have been paid, except for obligations of the Borrower under Sections 3.9, 4.2 and 5.3 hereof, which shall survive any termination of this Agreement. Section 8.2. Amounts Remaining in Funds. Any amounts in the Bond Fund remaining unclaimed by the Holders of Bonds for two years after the due date thereof (whether at stated maturity or otherwise), at the option of the Borrower, shall be deemed to belong to and shall be paid, at the written request of the Borrower, to the Borrower by the Trustee as overpayment of Loan Payments. With respect to that principal of and interest on the Bonds to be paid from moneys paid to the Borrower pursuant to the preceding sentence, the Holders of the Bonds entitled to those moneys shall look solely to the Borrower for the payment of those moneys. Further, any amounts remaining in the Bond Fund, the Project Fund and any other special funds or accounts created under this Agreement, the Regulatory Agreement or the Indenture after all of the Outstanding Bonds shall be deemed to have been paid and discharged under the provisions of the Indenture and all other amounts required to be paid under this Agreement, the Note, Regulatory Agreement and the Indenture have been paid, shall be paid to the Borrower to the extent that those moneys are in excess of the amounts necessary to effect the payment and discharge of the outstanding Bonds. Section 8.3. Notices. All notices, certificates, requests or other communications hereunder shall be given in the same manner as notices, certificates, requests and other communications are to be given under Section 13.03 of the Indenture. Section 8.4. Extent of Covenants of the Issuer; No Personal Liability. All covenants, obligations and agreements of the Issuer contained in this Agreement and the Indenture shall be effective to the extent authorized and permitted by applicable law. No such covenant, obligation or 19 2014-05-20 Agenda Packet Page 397 agreement shall be deemed to be a covenant, obligation or agreement of any present or future member, officer, agent or employee of the Issuer or the Board in other than his official capacity, and neither the members of the Board nor any official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof or by reason of the covenants, obligations or agreements of the Issuer contained in this Agreement or in the Indenture. Section 8.5. Binding Effect. This Agreement shall inure to the benefit of and shall be binding in accordance with its terms upon the Issuer, the Borrower and their respective permitted successors and assigns provided that this Agreement may not be assigned by the Borrower(except in connection with a sale or transfer of assets pursuant to Section 5.2 hereof) and may not be assigned by the Issuer except to the Trustee pursuant to the Indenture or as otherwise may be necessary to enforce or secure payment of Bond Debt Service Charges. This Agreement may be enforced only by the parties,their assignees and others who may,by law, stand in their respective places. Section 8.6. Amendments and Supplements. Except as otherwise expressly provided in this Agreement or the Indenture, subsequent to the issuance of the Bonds and prior to all conditions provided for in the Indenture for release of the Indenture having been met, this Agreement, the Regulatory Agreement and the Note may not be effectively amended, changed, modified, altered or terminated except in accordance with the provisions of Article XI of the Indenture, as applicable. Section 8.7. Execution Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument. Section 8.8. Severability. If any provision of this Agreement, or any covenant, obligation or agreement contained herein is determined by a court to be invalid or unenforceable, that determination shall not affect any other provision, covenant, obligation or agreement, each of which shall be construed and enforced as if the invalid or unenforceable portion were not contained herein. That invalidity or unenforceability shall not affect any valid and enforceable application thereof, and each such provision, covenant, obligation or agreement shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law. Section 8.9. Governing Law. This Agreement shall be deemed to be a contract made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State. Section 8.10. Non-Recourse Oblieations. Notwithstanding anything to the contrary set forth herein, in the Note and in any other document delivered in connection herewith, it is hereby expressly agreed and understood that the obligations of Borrower hereunder, under the Note and under every document executed and delivered in connection herewith, are non-recourse. Neither the Borrower nor any member, partner, officer, director or employee of the Borrower (each, a "Related Party") shall have any personal liability for the repayment of the Loan. In furtherance thereof, the Issuer and the Trustee shall be entitled to look solely and exclusively to the Issuer Revenues, the Project and any income derived therefrom for the payment and other obligations of Borrower hereunder, under the Note and all evidences of indebtedness secured hereby, and shall not seek a personal judgment against any member, partner, officer, director, member or stockholder of the Borrower, provided that nothing herein shall relieve any such Related Party from liability for any of the following: 20 2014-05-20 Agenda Packet Page 398 (a) rent collected for more than one month in advance and received by a Related Party and not applied to the reasonable operating requirements of the Project; (b) misappropriation or misapplication by a Related Party of insurance or eminent domain proceeds in violation of the Freddie Mac Loan Documents; (c) fraud or material misrepresentation by a Related Party against the Issuer or the Holder; (d) conversion by a Related Party of all or a material portion of the Project to use other than as a qualified residential rental housing facility under Section 142(d)of the Code; or (e) gross negligence, willful misconduct or intentional torts of a Related Party relating to the Project or the revenues therefrom. Section 8.11. Limitation on Liability of the Issuer. The Issuer shall not be obligated to pay the principal of or interest on the Bonds, except from moneys and assets received by the Trustee on behalf of the Issuer pursuant to this Loan Agreement, or from amounts held by the Trustee under the Indenture. Neither the faith and credit nor the taxing power of the State, or any political subdivision thereof, nor the faith and credit of the Issuer or the City of Chula Vista is pledged to the payment of the principal of or interest on the Bonds. Neither the Issuer nor the City of Chula Vista shall be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Loan Agreement, the Note, the Bonds,the Indenture or the Regulatory Agreement except only to the extent amounts are received for the payment thereof from the Borrower under this Loan Agreement, or from amounts held by the Trustee under the Indenture. The Borrower hereby acknowledges that the Issuer's sole source of moneys to repay the Bonds will be provided by the payments made by the Borrower pursuant to this Loan Agreement, and amounts in certain funds and accounts held by the Trustee under the Indenture, and hereby agrees that if the payments to be made hereunder shall ever prove insufficient to pay all principal of and interest on the Bonds as the same shall become due (whether by maturity, acceleration or otherwise), then upon notice from the Trustee, the Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal of or interest on the Bonds, including,but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Borrower, the Issuer or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor. Section 8.12. Waiver of Personal Liability. No Commissioner, officer, agent or employee of the Issuer shall be individually or personally liable for the payment of any principal of or interest on the Bonds or any other sum hereunder or be subject to any personal liability or accountability by reason of the execution and delivery of this Loan Agreement; but nothing herein contained shall relieve any such Commissioner, director, officer, agent or employee from the performance of any official duty provided by law or by this Loan Agreement. Section 8.13. Delivery of Reports, Etc. The delivery of reports, information and documents to the Issuer as provided herein is for informational purposes only and the Issuer's receipt of such shall not constitute constructive knowledge of any information contained therein or 21 2014-05-20 Agenda Packet Page 399 determinable from information contained therein. The Issuer shall have no duties or responsibilities except those that are specifically set forth herein, and no other duties or obligations shall be implied in this Loan Agreement against the Issuer. Section 8.14. Subordination to Freddie Mac Loan Documents. Notwithstanding anything herein to the contrary: Borrower, Trustee and Issuer acknowledge that the obligations of Borrower hereunder are subject and subordinate to the Freddie Mac Loan Documents. Notwithstanding any provision in this Loan Agreement to the contrary, no obligations of the Borrower hereunder shall be payable except from (A) Surplus Cash or (B) funds that are not derived from (i)revenues of the Project, or (ii)any reserve or deposit made with the Freddie Mac Lender or any other party as required by Freddie Mac in connection with the Freddie Mac Loan Documents or (C)any proceeds of the Freddie Mac Loan which have been deposited into the Collateral Fund or the Initial Deposit Account of the Bond Fund by or at the direction of the Freddie Mac Lender. No claims or actions shall be made (or payable) under this Loan Agreement against the Project or the assets of the Borrower, except for Surplus Cash of the Borrower. Proceeds from any condemnation award or from the payment of a claim under any hazard insurance policy relating to the Project will not be payable to the Trustee, but will be payable in accordance with the Freddie Mac Loan Documents. In addition, the rights and obligations of the parties under this Loan Agreement and all other documents evidencing, implementing, or securing this Loan Agreement (the "Other Bond Documents") are and shall be subordinated in all respects rights and obligations of the parties to and under the Freddie Mac Loan Documents. In the event of any conflict between the provisions of (i)this Loan Agreement or the Other Bond Documents and (ii)the provisions of the Freddie Mac Loan Documents, the provisions of the Freddie Mac Loan Documents shall control. The provisions of this Section 8.14 shall control over any inconsistent provisions in this Loan Agreement or the Other Bond Documents. Any subsequent amendment to this Agreement affecting the provisions of this Section 8.14 or the rights of the Freddie Mac Lender with respect to the Borrower or Project is subject to prior written approval of the Freddie Mac Lender and Freddie Mac (so long as the Project is subject to a mortgage held or under a commitment to purchase by Freddie Mac). The provisions of this Section shall survive the termination of this Loan Agreement. 22 2014-05-20 Agenda Packet Page 400 [Borrower Signature Page to Loan Agreement] KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory S-1 2014-05-20 Agenda Packet Page 401 [Issuer Signature Page to Loan Agreement] CHULA VISTA HOUSING AUTHORITY By: Executive Director ATTEST: Secretary S-2 2014-05-20 Agenda Packet Page 402 EXHIBIT A FORM OF NOTE This Note has not been registered under the Securities Act of 1933. Its transferability is restricted by the Trust Indenture and the Loan Agreement referred to herein. $ —, 20 Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"), for value received, promises to pay in installments to Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California, as Issuer (the "Issuer")under the Indenture hereinafter referred to,the principal sum of [BOND AMT SPELLED OUT]. and to pay interest on the unpaid balance of such principal sum from and after the date hereof at the rate of %per annum,until the payment of such principal sum has been made or provided for. The Principal Amount stated above shall be paid on or before the fifth Business Day (as defined in the Indenture defined herein) immediately preceding the Maturity Date (as defined in the Indenture defined herein). Interest shall be calculated on the basis of a 360-day year of 12 equal months. Interest on this Note shall be paid in Federal Reserve funds on the fifth Business Day next preceding each June 1 and December 1, commencing December 1, 2014 (the "Interest Payment Dates"). This Note has been executed and delivered by the Borrower to the Issuer pursuant to a certain Loan Agreement (the "Agreement") dated as of June 1, 2014, between the Issuer and the Borrower. Terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement and the Indenture, as defined below. Under the Agreement, the Issuer has loaned the Borrower a portion of the principal proceeds received from the sale of the Issuer's $ Multifamily Housing Revenue Bonds (Garden Villas), Series 2014A dated as of June 1, 2014 (the "Bonds") to assist in the financing of the Project, and the Borrower has agreed to repay such loan by making payments ("Loan Payments") at the times and in the amounts set forth in this Note for application to the payment of Bond Debt Service Charges on the Bonds as and when due. The Bonds have been issued, concurrently with the execution and delivery of this Note, pursuant to, and are secured by, the Trust Indenture (the "Indenture"), dated as of June 1, 2014, between the Issuer and U.S. Bank National Association, as Trustee (the "Trustee") and in the Indenture has been assigned by the Issuer to the Trustee to secure the repayment of principal and interest on the Bonds and other amounts owing under the Indenture. To provide funds to pay the principal of and interest on the Bonds as and when due as specified herein, the Borrower hereby agrees to and shall make Loan Payments in Federal Reserve funds on the 5th Business Day immediately preceding each Interest Payment Date in an amount equal to the Bond Debt Service Charges on the Bonds payable on the next succeeding Interest Payment Date. In addition, to provide funds to pay the Bond Debt Service Charges on the Bonds as and when due at any other time, the Borrower hereby agrees to and shall make Loan Payments in Federal Reserve funds on the fifth Business Day immediately preceding any other date on which any Bond Debt Service Charges on the Bonds shall be due and payable, whether at maturity, upon acceleration or otherwise, in an amount equal to those Bond Debt Service Charges. A-1 2014-05-20 Agenda Packet Page 403 If payment or provision for payment in accordance with the Indenture is made in respect of the Bond Debt Service Charges on the Bonds from moneys other than Loan Payments,this Note shall be deemed paid to the extent such payments or provision for payment of Bonds has been made. Consistent with the provisions of the immediately preceding sentence, the Borrower shall have credited against its obligation to make Loan Payments any amounts transferred from the Project Fund or the Collateral Fund to the Bond Fund to pay Bond Debt Service Charges. Subject to the foregoing, all Loan Payments shall be in the full amount required hereunder. All Loan Payments shall be made to the Trustee at its designated corporate trust office for the account of the Issuer and deposited in the Bond Fund created by the Indenture. Except as otherwise provided in the Indenture, the Loan Payments shall be used by the Trustee to pay the Bond Debt Service Charges on the Bonds as and when due. The obligation of the Borrower to make the payments required hereunder shall be absolute and unconditional and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, set-off, recoupment or counterclaim which the Borrower may have or assert against the Issuer,the Trustee or any other person. Whenever an Event of Default under Section 7.01 of the Indenture shall have occurred and, as a result thereof, the principal of and any premium on all Bonds then outstanding, and interest accrued thereon, shall have been declared to be immediately due and payable pursuant to Section 7.03 of the Indenture, the unpaid principal amount of and any premium and accrued interest on this Note shall also be due and payable in Federal Reserve funds on the date on which the principal of and premium and interest on the Bonds shall have been declared due and payable; provided that the annulment of a declaration of acceleration with respect to the Bonds shall also constitute an annulment of any corresponding declaration with respect to this Note. The payment obligations of this Note are non-recourse to the Borrower to the extent set forth in Section 8.10 of the Agreement. The obligations of the Borrower hereunder are subject and subordinate to the Freddie Mac Loan Documents. Notwithstanding any provision in this Note to the contrary, no obligations of the Borrower hereunder shall be payable except from (A) Surplus Cash or (B)funds that are not derived from (i)revenues of the Project, or (ii)any reserve or deposit made with the Freddie Mac Lender or any other party as required by Freddie Mac in connection with the Freddie Mac Loan Documents or (C) any proceeds of the Freddie Mac Borrower Note which have been deposited into the Collateral Fund or the Initial Deposit Account of the bond Fund by or at the direction of the Freddie Mac Lender. No claims or actions shall be made (or payable) against the Project or the assets of the Borrower, except for Surplus Cash of the Borrower. In addition, the rights and obligations of the parties under this Note and all other documents evidencing, implementing, or securing this Note (the "Other Loan Documents") are and shall be subordinated in all respects rights and obligations of the parties to and under the Freddie Mac Loan Documents. In the event of any conflict between the provisions of(i)this Note or the Other Loan Documents and (ii)the provisions of the Freddie Mac Loan Documents,the provisions of the Freddie Mac Loan Documents shall control. IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its name as of the date first above written. A-2 2014-05-20 Agenda Packet Page 404 KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory A-3 2014-05-20 Agenda Packet Page 405 EXHIBIT B BORROWER'S CERTIFICATE TO FREDDIE MAC LENDER AND TRUSTEE STATEMENT NO. REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF JUNE 1, 2014 BETWEEN THE CHULA VISTA HOUSING AUTHORITY AND KIKU GARDENS HOUSING PARTNERS, LP Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California (the "Issuer") and Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"), dated as of June 1, 2014, the undersigned Authorized Borrower Representative hereby requests and authorizes U.S. Bank National Association, as trustee (the "Trustee"), as depository of the Project Fund created by the Indenture, to disburse out of the moneys deposited in the Project Fund in the amount(s) and to the person(s) set forth in this certificate immediately upon a corresponding amount of Freddie Mac Loan Funds or other Available Moneys being deposited by the Freddie Mac Lender or the Borrower into the Collateral Fund. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Indenture referenced in the Agreement. To induce the Trustee to release moneys deposited in the Project Fund pursuant to the terms of the Indenture and the Agreement in the amounts(s) and to the person(s) set forth herein and in the Disbursement Schedule attached hereto, the undersigned Borrower represents, warrants and certifies to the Issuer and the Trustee: (a) Each item for which disbursement is requested hereunder either (i)are presently due and payable, constitute Project Costs properly incurred by the Borrower in connection with the Project being financed with the proceeds of the Loan, or are reimbursable Project Costs properly chargeable against the Loan; or (ii) are to be deposited to an escrow fund to be disbursed therefrom solely for Project Costs properly incurred by the Borrower in connection with the Project; and in each case none of the items for which disbursement is requested has formed the basis for any disbursement heretofore made from said Project Fund. The amount or amounts and the party or parties to whom the disbursements shall be made are specified in the Disbursement Schedule attached hereto (and may be the undersigned in the case of reimbursement for advances and payments made or cost incurred for work done by the undersigned). (b) Each such item is or was necessary in connection with the acquisition and rehabilitation of the Units of the Project. (c) The costs specified in the Disbursement Schedule attached hereto, when added to all previous disbursements under the Loan, will result in at least 95% of the aggregate amount of all disbursements having been used to pay or reimburse the Borrower for amounts which are Qualified Project Costs(as defined in the Regulatory Agreement referred to in the Agreement). (d) To the knowledge of the undersigned, there is no current or existing event of default pursuant to the terms of the Agreement or the Regulatory Agreement and no event exists B-1 2014-05-20 Agenda Packet Page 406 which by notice or passage of time or both would constitute an event of default under any of the foregoing documents. (e) No representation or warranty of the Borrower contained in the Agreement or the Regulatory Agreement is materially incorrect or inaccurate, except as the Borrower has set forth in writing, and there has been no event of default under the terms of any of those documents and which is continuing and no event shall exist which by notice, passage of time or both would constitute an event of default under any of those documents. (f) This statement and all exhibits hereto, including the Disbursement Schedule attached hereto, shall be conclusive evidence of the facts and statements set forth herein and shall constitute full warrant,protection and authority to the Trustee for its actions taken pursuant hereto. This statement constitutes the approval of the Borrower of the disbursement hereby requested and authorized. This day of 20 By: Authorized Borrower Representative [Name/Title] Schedule 1 Approved by Authorized Lender Representative: By: [Name/Title] B-2 2014-05-20 Agenda Packet Page 407 DISBURSEMENT SCHEDULE 1 TO STATEMENT NO. REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF JUNE 1, 2014 BETWEEN THE CHULA VISTA HOUSING AUTHORITY AND KIKU GARDENS HOUSING PARTNERS, LP PAYEE AMOUNT PURPOSE B-3 2014-05-20 Agenda Packet Page 408 EXHIBIT C CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (GARDEN VILLAS), SERIES 2014A COMPLETION CERTIFICATE To: U.S. Bank National Association Global Corporate Trust Services 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Chula Vista Housing Authority 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director Pursuant to Section 3.7 of the Loan Agreement (the "Agreement") between the Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California (the "Issuer") and Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"), dated as of June 1, 2014, and relating to the captioned Bonds, the undersigned Authorized Borrower Representative hereby certifies to that(with capitalized words and terms used and not defined in this Certificate having the meanings assigned in the Agreement): (a) The Project was substantially completed and available and suitable for use as multifamily housing on (b) All other facilities necessary in connection with the Project have been acquired,rehabilitated, equipped and improved. (c) The acquisition,rehabilitating, equipping and improvement of the Project and those other facilities have been accomplished in such a manner as to conform in all material respects with all applicable zoning, planning, building, environmental and other similar governmental regulations. (d) Except as provided in subsection (e) of this Certificate, all costs of that acquisition and installation due on or after the date of this Certificate and now payable have been paid. (e) The Trustee shall retain $ in the Project Fund for the payment of costs of the Project not yet due or for liabilities which the Borrower is contesting or which otherwise should be retained, for the following reasons: C-1 2014-05-20 Agenda Packet Page 409 (f) This Certificate is given without prejudice to any rights against third parties that now exist or subsequently may come into being. IN WITNESS WHEREOF, the Authorized Borrower Representative has set his or her hand as of the day of 2015. Authorized Borrower Representative By: [Name/Title] C-2 2014-05-20 Agenda Packet Page 410 EXHIBIT D FREDDIE MAC LENDER'S CERTIFICATE TO TRUSTEE Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California (the "Issuer') and Kiku Gardens Housing Partners, LP, a California limited partnership (the "Borrower"), dated as of June 1, 2014,the undersigned Freddie Mac Lender hereby certifies that the deposit of$ into the Collateral Fund on 120 was fully derived from Freddie Mac Loan Funds or other Available Moneys. Capitalized terms used herein and not otherwise defined herein shall have the meanings given them in the Indenture referenced in the Agreement. This day of 120 By: Citibank,N.A. [Name/Title] D-1 2014-05-20 Agenda Packet Page 411 EXHIBIT E BORROWER'S CERTIFICATE TO TRUSTEE Pursuant to Section 3.4 of the Loan Agreement (the "Agreement') between the Chula Vista Housing Authority, a public body corporate and politic, organized and existing under the laws of the State of California (the "Issuer') and Kiku Gardens Housing Partners, LP, a California limited partnership (the "Borrower'), dated as of June 1, 2014, the undersigned Authorized Borrower Representative hereby certifies that the deposit of $ into the Collateral Fund on 120 was fully derived from Available Moneys. Capitalized terms used herein and not otherwise defined herein shall have the meanings given them in the Indenture referenced in the Agreement. This day of 120 By: Authorized Borrower Representative [Name/Title] E-1 2014-05-20 Agenda Packet Page 412 BOND PURCHASE AGREEMENT Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A June ,2014 Housing Authority of the City of Chula Vista 276 Fourth Avenue Chula Vista,California 91910 Kiku Gardens Housing Partners,LP 5031 Birch Street, Suite F, Newport Beach,CA 92660 Attention: Socorro Vasquez With a copy to: Kiku Gardens Development,LLC PO Box 33882 San Diego,CA 92163 Ladies and Gentlemen: Citigroup Global Markets Inc. (the "Underwriter"), on its own behalf and not as your fiduciary, hereby offers to enter into this Bond Purchase Agreement (this `Bond Purchase Agreement") with the Housing Authority of the City of Chula Vista, a public body corporate and politic, organized and existing under the laws of the State of California (the "Issuer") and Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"). This offer is made subject to the Issuer's and the Borrower's acceptance on or before 10:00 a.m., Pacific time, of the date hereof, and, upon such acceptance, this Bond Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the Issuer,the Borrower and the Underwriter,all as of 12:30 p.m.,Pacific time, on the date hereof. The Issuer is authorized to issue the above-captioned bonds (the "Bonds")pursuant to Chapter I of Part 2 of Division 24 of the California Health and Safety Code,as amended(the "Act")and pursuant to the Bond Resolution. The Bonds shall be as described in and shall be issued pursuant to a Trust Indenture, dated as of June 1, 2014 (the "Indenture"), by and between the Issuer and U.S. Bank National Association, as trustee (the "Trustee"). Capitalized terms used herein but not defined herein shall have the meanings assigned thereto in the Indenture. Simultaneously with the issuance of the Bonds, there will be executed and delivered a Loan Agreement, dated as of the date of the Indenture (the "Loan Agreement"), between the Issuer and the Borrower, pursuant to which the Issuer will loan the proceeds of the Bonds to the Borrower(the "Bond Loan") for the purpose of financing the acquisition, rehabilitation and equipping of a 100-unit apartment complex known as Garden Villas, and located in the City of Chula Vista, California (the "Project"). To evidence its repayment obligations under the Loan Agreement, the Borrower will execute a promissory note,dated the Closing Date (the "Bond Note"). 2014-05-20 Agenda Packet Page 413 The Bonds are limited obligations of the Issuer, and the principal of and interest thereon will be payable solely from the revenues and other moneys assigned by the Indenture to secure such payment. At all times the Bonds will be secured by Eligible Investments and Available Moneys sufficient, without need for reinvestment, to pay all of the interest on the Bonds when due and to pay the principal of the Bonds at maturity,as further described herein. The Project is required to be operated in compliance with a Regulatory Agreement, dated as of the date of the Indenture (the "Regulatory Agreement"),between the Borrower and the Issuer. The Project will utilize a loan (the "Taxable Mortgage Loan")to be made by Citibank,N.A. (the "Freddie Mac Lender") pursuant to the Freddie Mac Guide and Freddie Mac Loan Commitment in the amount of $ which will be secured by a first lien Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement (California) (the "Taxable Mortgage") and certain other documents between the Borrower and the Freddie Mac Lender (collectively, the "Taxable Loan Documents") and is expected to be sold by the Freddie Mac Lender to Freddie Mac following the initial funding of the Taxable Mortgage Loan by the Freddie Mac Lender and satisfaction of certain conditions. Neither the owners of the Bonds nor the Trustee will have rights under the Taxable Loan Documents. Neither the owners of the Bonds nor the Trustee will have a lien on the real estate on which the Project is located. On or prior to the Closing Date, the Underwriter shall have received a copy of each of the following documents, duly executed by all parties thereto or certified to the satisfaction of the Underwriter: (a) Indenture; (b) Loan Agreement; (c) Regulatory Agreement; (d) Continuing Disclosure Agreement; (e) Bond Note; (f) Bonds; (g) Official Statement(as defined below); and (h) Bond Purchase Agreement. The foregoing documents are hereinafter collectively referred to as the "Bond Documents." The Bond Documents executed by the Issuer shall be referred to herein as the "Issuer Documents." The Bond Documents executed by the Borrower shall be referred to herein as the `Borrower Documents." The Bond Documents executed by the Trustee shall be referred to herein as the "Trustee Documents." 2 2014-05-20 Agenda Packet Page 414 SECTION 1. Purchase and Sale of the Bonds On the basis of the representations,warranties and agreements contained herein,but subject to the terms and conditions herein, the Underwriter hereby agrees to purchase from the Issuer, and the Issuer hereby agrees to sell to the Underwriter, all, but not less than all, of the Bonds for a purchase price of 100% of the principal amount of the Bonds. The Bonds shall bear interest at the rates and mature on the dates as provided in Schedule I hereto and have such other terms as provided in the Indenture and described in the Official Statement. The Borrower agrees to pay to the Underwriter, as compensation for its services, an underwriting fee equal to $ (the "Underwriting Fee"), from which the Underwriter will pay certain expenses including the fees and expenses of its counsel. The Underwriting Fee shall be due and payable in immediately available funds on the Closing Date, solely and exclusively from funds provided by the Borrower. The Issuer will deliver the Bonds to or for the account of the Underwriter against payment of the purchase price therefor by wire transfer of immediately available funds to the Trustee (the "Closing") at or prior to 10:00 a.m., Pacific time, on June , 2014, or at such other time not later than seven days thereafter as the Underwriter,the Borrower and the Issuer shall mutually agree (the "Closing Date"). One Bond will be delivered,registered in the name of Cede & Co. to the Trustee as agent for The Depository Trust Company on or prior to the Closing Date. The Bonds may be in printed, engraved, typewritten or photocopied form,and each such form shall constitute a"definitive"form. SECTION 2. Official Statement (a) The Borrower has delivered or will deliver to the Underwriter, without charge, in such quantities as the Underwriter has requested or may hereafter reasonably request,copies of the Preliminary Official Statement dated November 7,2013,prepared with respect to the Bonds(the"Preliminary Official Statement"),the final Official Statement dated or to be dated ,2014,prepared with respect to the Bonds(the "Official Statement") and any amendments or supplements thereto. The Borrower will be responsible for any costs associated with printing and mailing and the Preliminary Official Statement and the Official Statement. (b) The Issuer and the Borrower acknowledge that the Underwriter is required to comply with the requirements of Rule 15c2-12 of the Securities Exchange Act of 1934 (the "Rule")in connection with the offer and sale of the Bonds and each agrees to cooperate (at the cost and expense of the Borrower)with the Underwriter so as to enable the Underwriter to comply with the Rule. To this end,the Borrower has delivered to the Underwriter the Preliminary Official Statement that the Borrower deemed final as of its date, except for the omission of no more than the following information: the offering price(s),interest rate(s), selling compensation,aggregate principal amount,principal amount per maturity, delivery dates, ratings, other terms of the Bonds depending on such matters and the identity of the Underwriter. To evidence this,the Borrower will execute and deliver a certificate in the form attached as Exhibit C hereto. The Issuer has complied with all of its previous continuing disclosure obligations under the Rule, if any (except to the extent described in the Preliminary Official Statement and the Official Statement). The Borrower,its members and all entities affiliated with the Borrower and its members have complied with all of their previous continuing disclosure obligations under the Rule,if any(except to the extent described in the Preliminary Official Statement and the Official Statement). (c) The Issuer and the Borrower have authorized the delivery of the Preliminary Official Statement and the execution and delivery of the Official Statement. The Issuer and the Borrower each hereby approve the use by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the public offering of the Bonds by the Underwriter. 3 2014-05-20 Agenda Packet Page 415 (d) The Borrower will supply sufficient quantities of the Official Statement to enable the Underwriter (i) to send a single copy of the Official Statement with any confirmation that requests payment for a Bond, and in any event within seven business days after the date hereof, and to any potential customer upon request until the earlier of(A) 90 days after the End of the Underwriting Period (as defined below) or (B) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository, but in no case less than 25 days following the End of the Underwriting Period, and (ii) to comply with any applicable rules of the Municipal Securities Rulemaking Board. The Underwriter agrees to promptly file the Official Statement with a nationally recognized municipal securities information repository. The "End of the Underwriting Period" means the later of the delivery of the Bonds by the Issuer to the Underwriter or when the Underwriter no longer retains(directly or as a syndicate member)an unsold balance of the Bonds for sale to the public, provided that the "End of the Underwriting Period" will be deemed to be the Closing Date unless the Underwriter otherwise notifies the Issuer and the Borrower in writing prior to such date that there is an unsold balance of the Bonds. (e) If,during the period from the date hereof and ending on the earlier of(i)90 days after the End of the Underwriting Period or (ii) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository,but in no case less than 25 days following the End of the Underwriting Period, any event occurs as a result of which the Official Statement for the Bonds as then amended or supplemented might include an untrue statement of material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Issuer, if such event relates to the information included in the Official Statement under the captions "THE ISSUER" and "ABSENCE OF LITIGATION—The Issuer" (insofar as the information under such caption pertains to the Issuer), or the Borrower shall promptly notify the Underwriter thereof and shall (in either case, at the expense of the Borrower),upon the request of the Underwriter,prepare and deliver to the Underwriter,as many copies of an amendment or supplement which will correct such statement or omission as the Underwriter may reasonably request. (f) The Issuer and the Underwriter agree to cooperate with the Borrower to minimize any expenses incurred in connection with the preparation and distribution of any amendments or supplements to the Preliminary Official Statement,the Official Statement and/or any remarketing memoranda required by the foregoing provisions. SECTION 3. Issuer's Representations and Warranties and Agreements. The Issuer represents, warrants to,and covenants and agrees with,the Underwriter and the Borrower that: (a) On the date hereof and on the Closing Date,the statements and information pertaining to the Issuer,including,without limitation,its functions,duties and responsibilities,contained in the Official Statement, are and will be true, correct and complete in all material respects, and the Official Statement does not and will not omit any statement or information which is necessary to make such statements and information pertaining to the Issuer,including without limitation,its functions,duties and responsibilities, in light of the circumstances under which they are made,not misleading in any material respect. (b) To the best knowledge of the Issuer, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending or threatened against the Issuer in any way: (i) Affecting the organization of the Issuer,or the legal or corporate existence of the Issuer, or the title of the members of the Issuer to their respective offices, or any powers of the Issuer under the Constitution or the laws of the State pursuant to which the Issuer was created; 4 2014-05-20 Agenda Packet Page 416 (ii) Seeking to prohibit, restrain or enjoin the issuance, sale or delivery of the Bonds or the collection of revenues from the Borrower derived from payments under the Loan Agreement,or the pledge thereof, (iii) Contesting or affecting the validity or enforceability of the Bonds or the Issuer Documents; (iv) Contesting the power of the Issuer to enter into, execute and deliver the Issuer Documents or to consummate the transactions contemplated by such documents and the Official Statement; (v) Contesting in any way the completeness or accuracy of the Official Statement or any amendment or supplement thereto (nor to the actual knowledge of the Issuer, is there any basis therefor); or (vi) Wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Issuer Documents,the financial position or condition of the Issuer or the exclusion from gross income for federal income tax purposes of the interest on the Bonds. (c) The Issuer is a duly organized and existing public body corporate and politic and an instrumentality of the State, established by and acting pursuant to the Act, and has, and at the Closing Date will have, full legal right, power and authority under the Constitution and the laws of the State: (i) to enter into the Issuer Documents; (ii) to adopt the Bond Resolution; (iii) to issue, sell and deliver the Bonds to the Underwriter under the Indenture and as provided herein; (iv) to pledge and assign the revenue, other money, securities, funds, accounts, guarantees, insurance, and other items pledged under the terms of the Indenture,as provision of and security for the payment of the principal of and interest on the Bonds, and to similarly pledge all money, securities and earnings held in the funds and accounts held under the Indenture, all in the manner described in the Bond Resolution, the Indenture and the Loan Agreement; and(v)to carry out,give effect to and consummate all the other transactions contemplated by the Issuer Documents,the Bond Resolution and the Official Statement. (d) The Issuer has duly and validly adopted the Bond Resolution, has duly authorized and approved the execution and delivery of the Bonds,the Issuer Documents and the Official Statement, and has duly authorized and approved the performance by the Issuer of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by,each of those documents, and at the Closing Date,the Bonds and the Issuer Documents will constitute the valid, legal and binding obligations of the Issuer (assuming due authorization, execution and delivery by the other parties thereto, where necessary) in accordance with their respective terms and the Bond Resolution and will be in full force and effect. (e) The Issuer's execution and delivery of the Bonds and the Issuer Documents, the Issuer's consummation of the transactions contemplated by such documents, and the Issuer's fulfillment of or compliance with the terms, conditions or provisions thereof will not conflict with,violate or result in the breach of any of the terms, conditions or provisions of any constitutional provision or statute of the State or of any agreement, instrument, statute, governmental rule or regulation, law and order, judgment or decree to which the Issuer is now a party or by which it is bound, and will not constitute a default under any of the foregoing which has not been waived or consented to in writing by the appropriate party or parties, and will not result in the creation or imposition of any lien, charge, security interest or encumbrance of any nature upon any property or assets of the Issuer prohibited under the terms of any such agreement,instrument, statute,governmental rule or regulation,court order,judgment or decree. 5 2014-05-20 Agenda Packet Page 417 (f) Upon delivery of the Bonds, the Issuer will have good right, full power and lawful authority to pledge and assign the trust estate described in the Indenture to the Trustee as provided in the Indenture and the Bond Resolution. (g) The Issuer has complied, and will at the Closing Date be in compliance, in all respects with the Bond Resolution and the Issuer Documents. (h) All approvals, consents, authorization, elections and orders of or filings or registrations with any governmental authority, board, agency or issuer having jurisdiction which would constitute a condition precedent to,or the absence of which would materially adversely affect,the performance by the Issuer of its obligations hereunder or under the Bonds or any of the Issuer Documents have been obtained and are in full force and effect. (i) The Bonds, when delivered in accordance with the Indenture and paid for by the Underwriter on the Closing Date as provided herein, will be validly issued and outstanding limited obligations of the Issuer entitled to all the benefits and security of the Indenture. 0) The Issuer will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate, provided that in connection therewith the Issuer shall not be required to file a general consent to service of process in any jurisdiction. In particular, the Issuer will comply with all securities laws, rules and regulations relating to continuing disclosure applicable to the Bonds or the Project, and will cause the Borrower and any other parties to which such laws,rules and regulations apply to comply with such requirements at all times that any of the Bonds are outstanding. (k) Any certificate signed by the Authorized Signatory or other authorized officer of the Issuer shall be deemed a representation and warranty by the Issuer to the Underwriter as to the statements made therein. (1) The Issuer will apply the proceeds of the Bonds in accordance with the Indenture and as contemplated by the Official Statement. (m) The Issuer has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. (n) The Issuer has not taken or omitted to take on or before the date hereof any action that would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds. The execution and delivery of this Bond Purchase Agreement by the Issuer shall constitute a representation to the Underwriter that the representations and warranties contained in this Section are true as of the date hereof. SECTION 4. Representations, Warranties and Agreements of the Borrower. The Borrower represents and covenants with the Issuer and the Underwriter as follows: (a) The Borrower is duly organized and existing as a limited partnership under the laws of the State of California, has full legal right, power and authority to own its properties and to conduct its business as described in the Official Statement and to enter into and to carry out and consummate the 6 2014-05-20 Agenda Packet Page 418 transactions contemplated by the Borrower Documents,and is duly qualified to do such business and is in good standing wherever such qualification and/or standing are required,including the State. (b) The information in the Official Statement under the headings"PLAN OF FINANCING," "THE PROJECT AND THE PRIVATE PARTICIPANTS" and "NO LITIGATION—The Borrower" was, on the date thereof, and is, on the date hereof, true and correct and did not, on the date thereof, and does not,on the date hereof,contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made,not misleading. (c) By all necessary action, the Borrower has duly authorized the Borrower Documents and approved the execution and delivery of the Borrower Documents, and the performance by the Borrower of its obligations in connection with the issuance of the Bonds on its part contained in the Borrower Documents and the consummation by it of all other transactions contemplated by the Indenture and the Borrower Documents in connection with the issuance of the Bonds. (d) On the Closing Date,the Borrower Documents will constitute the valid,legal and binding obligations of the Borrower (assuming due authorization, execution and delivery by the respective other parties thereto, where necessary), enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability affecting the enforcement of creditors' rights and to general principles of equity,regardless of whether such enforceability is considered in equity or in law. (e) As of the date hereof, the Borrower is not in any material respect in violation of, breach of or default under any applicable constitutional provision or law of any state or of the United States, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or any of its activities,properties or assets,or any indenture,mortgage,deed of trust,resolution, note agreement(including,without limitation,the Borrower Documents)or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound,which violation or breach of or default would have a material adverse affect upon the transactions contemplated by this Bond Purchase Agreement,and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instruments; and the execution and delivery of the Borrower Documents, and compliance with the provisions on the Borrower's part contained therein,to the best of Borrower's knowledge,do not and will not conflict with or constitute on the part of the Borrower a violation or breach of or default under any constitutional provision or law of any state or of the United States, or any order,rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note agreement (including, without limitation,the Borrower Documents)or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound which violation,breach or default would have a material adverse affect upon the transactions contemplated by this Bond Purchase Agreement,nor will any such 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 the property or assets of the Borrower or under the terms of any such law,regulation or instrument,except as provided by the Bonds or the Borrower Documents. (f) All consents, approvals, authorizations, and orders of or filings or registrations with any governmental authority, board, agency or issuer of any state or of the United States having jurisdiction required in connection with,or the absence of which would materially adversely affect,the execution and delivery by the Borrower of the Borrower Documents or the performance by the Borrower of its obligations thereunder have been obtained or made and are in full force and effect. 7 2014-05-20 Agenda Packet Page 419 (g) As of the date hereof,there is no action, suit,proceeding, inquiry or investigation, at law or in equity, before or by any judicial or administrative court or governmental agency or body, state, federal or other, pending or, to Borrower's actual knowledge, threatened against the Borrower, affecting the existence of the Borrower or the titles of its officers executing this Bond Purchase Agreement to their respective offices, or contesting or affecting as to the Borrower the validity or enforceability of the Act, the Bonds, any Borrower Document or the execution and delivery or adoption by the Borrower of any Borrower Document,or in any way contesting or challenging the completeness or accuracy of the Official Statement or the powers of the Borrower or its authority with respect to the Borrower Documents or the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the Borrower, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the Borrower's financial condition or operations, the validity of the authorization, execution, delivery or performance by the Borrower of any Borrower Document or the exclusion from gross income for federal income tax purposes of the interest on the Bonds. (h) The Borrower will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order(i)to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and(ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Borrower shall not be required to register as a dealer or broker of securities or execute a general or special consent to service of process or qualify to do business in any jurisdiction where it is not now so subject. (i) Any certificate signed by the Borrower and delivered to the Underwriter or the Issuer pursuant to the Indenture or the Borrower Documents shall be deemed a representation and warranty by the Borrower to the Underwriter and the Issuer as to the statements made therein as of the date thereof. 0) The Borrower will not take or omit to take any action,within its direct or indirect control, which action or omission will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds. (k) The Borrower shall honor all other Borrower covenants contained in the Borrower Documents,which agreements are incorporated herein and made a part of this Bond Purchase Agreement. The execution and delivery of this Bond Purchase Agreement by the Borrower shall constitute a representation to the Underwriter that the representations and warranties contained in this Section are true and correct in all material respects as of the date hereof. SECTION 5. Indemnification (a) The Borrower agrees to pay, defend, protect, indemnify, save and hold harmless the Issuer, the Underwriter and each affiliate, member, officer, director, official, supervisor, employee and agent past, present and future of the Issuer and the Underwriter and each person,if any,who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (collectively referred to herein as the "Indemnified Parties"), against any and all liabilities, losses, damages, costs, expenses (including reasonable attorneys' fees), causes of action (whether in contract, tort or otherwise), suits, claims, demands and judgments of any kind, character and nature (collectively referred to herein as the "Liabilities") except any Liability arising from the gross negligence or willful misconduct of the 8 2014-05-20 Agenda Packet Page 420 Underwriter or the gross negligence or willful misconduct of the Issuer caused by or directly or indirectly arising from or in any way relating to (i)the Bonds,the Project,the Bond Loan,the Loan Agreement,the Indenture, this Bond Purchase Agreement or any document related to the Bonds, the Project, the Bond Loan (the "Transaction Documents") or any transaction or agreement, written or oral, pertaining to the foregoing or(ii)any untrue or misleading statement or alleged untrue or alleged misleading statement of a material fact contained in the Official Statement under the headings "PLAN OF FINANCING," "THE PROJECT AND THE PRIVATE PARTICIPANTS"and"NO LITIGATION—The Borrower,"or caused by any omission or alleged omission from the above-referenced sections of the Official Statement of any material fact necessary to be stated therein in order to make the statements made therein, in light of the circumstances under which they were made,not misleading. (b) The Borrower also agrees to pay, defend, protect, indemnify, save and hold harmless the Underwriter and each affiliate, member, officer,director, official,employee and agent of the Underwriter from and against the Liabilities directly or indirectly arising from or relating to any errors or omissions of any nature whatsoever contained in any legal proceedings or other official representation or inducement made by the Issuer pertaining to the Bonds. (c) Any Indemnified Party shall notify the Borrower of the existence of any Liability to which this indemnification obligation would apply and shall give to the Borrower an opportunity to defend the same at the Borrower's expense and with counsel satisfactory to the Indemnified Party, provided that the Indemnified Party shall at all times also have the right to fully participate in the defense and shall have the right to review and approve or disapprove any compromise or settlement which approval shall not be unreasonably withheld. If there may be legal defenses available to the Indemnified Party that are different from or in addition to those available to the Borrower,if conflicts of interest exist or arise between the Borrower and the Indemnified Party or if the Borrower shall, after this notice and within a period of time necessary to preserve any and all defenses to any claim asserted,fail to assume the defense or to employ counsel for that purpose satisfactory to the Indemnified Party,the Indemnified Party shall have the right, but not the obligation, to undertake the defense of, and to compromise or settle the claim or other matter on behalf of, for the account of, and at the risk and expense of, the Borrower. Notwithstanding the foregoing provisions of this Section 5,the Borrower shall not be personally liable for the payment of principal or interest on the Bond Note. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity provided for in paragraph (a)or(b)of this Section is for any reason held to be unavailable,the Borrower and the Underwriter shall contribute proportionately to the aggregate Liabilities to which the Borrower and the Indemnified Parties may be subject, so that the Underwriter is responsible for that portion represented by the percentage that the fees paid by the Borrower to the Underwriter in connection with the issuance and administration of the Bonds bear to the aggregate offering price of the Bonds,with the Borrower responsible for the balance; provided, however, that in no case shall the Underwriter be responsible for any amount in excess of the fees paid by the Borrower to the Underwriter in connection with the issuance and administration of the Bonds and provided further that the Borrower shall not be required to contribute for Liabilities arising from the gross negligence or willful misconduct of the Underwriter. No person guilty of fraudulent misrepresentation (within the meaning of Section 10(b) of the Securities Act of 1933) shall be entitled to contribution from any person who was not guilty of such misrepresentation. (e) The Indemnified Parties, other than the Issuer and the Underwriter, shall be considered to be third-party beneficiaries of this Bond Purchase Agreement for purposes of this section. The provisions of this Section will be in addition to all liability that the Borrower may otherwise have and shall survive any termination of this Bond Purchase Agreement,the offering and sale of the Bonds and the payment or provisions for payment of the Bonds. 9 2014-05-20 Agenda Packet Page 421 (f) The indemnification hereunder shall be in addition to, and shall not limit, any indemnity granted by the Borrower pursuant to the Loan Agreement, the Regulatory Agreement or any other document. All obligations under this Section are subject to the limitations in Section 18 of this Bond Purchase Agreement. SECTION 6. Closing At 10:00 a.m., Pacific time, on the Closing Date, or at such time on such earlier or later date as shall be agreed upon in writing by the Issuer,the Borrower and the Underwriter,the Issuer shall direct the Trustee to deliver the Bonds to the Underwriter through the facilities of The Depository Trust Company ("DTC"), New York, New York, in definitive form, duly executed and authenticated by the Trustee. Subject to the terms and conditions hereof, the Issuer shall deliver at the Issuer's offices the Bond Documents and the Underwriter shall accept delivery of the Bonds and the Bond Documents and pay the purchase price for the Bonds by wire transfer, to the Trustee, in immediately available federal funds, for the account of the Issuer or as the Issuer shall direct. As a condition precedent to such acceptance, the Underwriter shall have received the Underwriting Fee by wire transfer in immediately available federal funds to the order of the Underwriter, in such manner as shall be agreed upon by the Borrower and the Underwriter. If the Underwriter shall make such request,the applicable Bonds shall be made available to the Underwriter one business day before the Closing at the offices of DTC for purposes of inspection and packaging. The ownership of one fully registered Bond in the aggregate principal amount of the Bonds, each bearing a proper,duly assigned CUSIP number will be issued initially in the name of Cede &Co.,as nominee of DTC. SECTION 7. Closing Conditions of the Underwriter The obligation of the Underwriter to purchase the Bonds and the obligation of the Issuer to sell the Bonds to the Underwriter shall be subject to the following conditions precedent: (a) The representations of the Issuer and the Borrower in this Bond Purchase Agreement and the representations and warranties made in each of the Bond Documents by the respective parties shall be true and correct on this date and on the Closing Date,as if made on the Closing Date, and each such party to the Bond Documents shall deliver a certificate to such effect. The Issuer and the Borrower shall have performed all of their obligations under this Bond Purchase Agreement, and the Issuer and the Borrower shall deliver certificates to such effect. The Official Statement (as the same may be amended or supplemented with the written approval of the Underwriter) shall be true and correct in all material respects and shall not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made,not misleading. (b) Except as may have been agreed to by Underwriter, as of the Closing Date, each of the Bond Documents and all other official action of the Issuer relating thereto shall be in full force and effect and shall not have been amended, modified or supplemented, and the Official Statement shall not have been amended or supplemented. (c) The Issuer and the Underwriter shall have received the legal opinion of Bond Counsel,in substantially the form set forth in Appendix B to the Official Statement, and the Underwriter shall have received a supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Underwriter in substantially the form set forth in Exhibit A hereto. 10 2014-05-20 Agenda Packet Page 422 (d) No default or event of default (as defined in any of the Bond Documents) shall have occurred and be continuing, and no event shall have occurred and be continuing which, with the lapse of time or the giving of notice or both,would constitute such a default or event of default. (e) No material adverse change shall have occurred, nor shall any development involving a prospective material and adverse change in, or affecting the affairs, business, financial condition, results of operations,prospects or properties (including the Project) of,the Issuer or the Borrower have occurred between the date hereof and the Closing Date. (f) On or prior to the Closing Date, all actions required to be taken as of the Closing Date in connection with the Bonds and the Bond Documents by the Issuer and the Borrower shall have been taken, and the Issuer and the Borrower shall each have performed and complied with all agreements, covenants and conditions required to be performed or complied with by the Bond Documents, and the Issuer and the Borrower shall deliver a certificate to such effect insofar as the foregoing actions, agreements, covenants and conditions apply to each such party, and each of such agreements shall be in full force and effect and shall not have been amended, modified or supplemented, except as has been agreed to by the Underwriter. (g) Each of the Bond Documents shall have been executed and delivered by each of the respective parties thereto,all such documents shall be in forms exhibited to Underwriter on this date with only such changes as the Underwriter may approve, and each of the Bond Documents shall be in full force and effect. (h) None of the events referred to in Section 8 of this Bond Purchase Agreement shall have occurred. (i) The Underwriter shall have received the opinion of counsel to the Borrower covering the points identified in Exhibit B hereto. Borrower hereby authorizes and directs its counsel to render such opinion to and for the benefit of the Underwriter. 0) The Underwriter shall have received written evidence that Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, has issued its rating of"A-1[+]" with respect to the Bonds,and as of the Closing Date,the rating shall not have been withdrawn or lowered. (k) The Underwriter shall have received a certificate of the Borrower to the effect that: (A) each of the representations and warranties set forth in the Borrower Documents is true and correct in all material respects on the Closing Date with the same effect as if made on the Closing Date, (B) no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which is necessary to be disclosed therein in order to make the statements and information therein not misleading in any material respect, and (C) Borrower has complied with all agreements and satisfied all the conditions on its part to be performed or satisfied under the Borrower Documents at or prior to the Closing Date. (1) The Underwriter shall have received an opinion of its counsel in substantially the form attached as Exhibit D hereto. (m) The Underwriter shall have received certificates, dated the Closing Date, and signed by an Authorized Signatory of the Issuer, to the effect that the representations and warranties of the Issuer contained in this Bond Purchase Agreement are true and correct in all material respects on the date thereof with the same effect as if made on the date thereof, no event affecting the Issuer has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the 11 2014-05-20 Agenda Packet Page 423 purpose for which it is to be used or which is necessary to be disclosed therein in order to make the statements and information therein not misleading in any material respect; and that the Issuer has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Bonds and the Issuer Documents at or prior to the date thereof. (n) The Underwriter shall have received a tax certificate of the Issuer and the Borrower, dated the Closing Date,with respect to the facts,estimates and circumstances and reasonable expectations pertaining to Section 148 of the Code to support the conclusion that, among other things, none of the Bonds will be an"arbitrage bond." (o) The Underwriter shall have received a closing certificate from the Trustee in a form acceptable to the Underwriter. (p) The Underwriter shall have received such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request. If any conditions to the obligations of the Underwriter or Issuer contained in this Bond Purchase Agreement are not satisfied and the satisfaction of such conditions shall not be waived by the Underwriter and the Issuer, then, at the option of the Underwriter and the Issuer, (i) the Closing Date shall be postponed for such period, not to exceed seven (7) days, as may be necessary for such conditions to be satisfied or (ii) without limiting the generality of Section 8 of this Bond Purchase Agreement, the obligations of the Underwriter and Issuer under this Bond Purchase Agreement shall terminate, and neither the Underwriter nor Issuer shall have any further obligations or liabilities under this Bond Purchase Agreement. All of the legal opinions, certificates, proceedings, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions of this Bond Purchase Agreement if, but only if, they are in form and substance reasonably satisfactory to the Underwriter,the Borrower and the Issuer. SECTION 8. Termination The Underwriter may terminate its obligations under this Bond Purchase Agreement by written notice to the Issuer and the Borrower if,at any time subsequent to this date and on or prior to the Closing Date: (a) (i) Legislation shall have been enacted by the Congress,or recommended to the Congress for passage by the President of the United States or the Department of the Treasury of the United States or the Internal Revenue Service or any member of the United States Congress, or favorably reported for passage to either House of the Congress by any Committee of such House to which such legislation has been referred for consideration, or (ii) a decision shall have been rendered by a court established under Article III of the Constitution of the United States,or the United States Tax Court,or(iii)an order,ruling, regulation or communication (including a press release) shall have been issued by the Department of the Treasury of the United States or the Internal Revenue Service, in each case referred to in clauses (i), (ii) and (iii), with the purpose or effect, directly or indirectly, of imposing federal income taxation upon interest to be received on obligations of the general character of the Bonds. (b) Legislation shall have been enacted or a decision by a court of the United States shall be rendered or any action taken by the Securities and Exchange Commission which, in the opinion of counsel to the Underwriter,has the effect of requiring the offer or sale of the Bonds to be registered under 12 2014-05-20 Agenda Packet Page 424 the Securities Act of 1933, as amended, or the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, or any event shall have occurred that, in the judgment of the Underwriter, makes untrue or incorrect in any material respect any statement or information contained in the Official Statement or that, in the judgment of the Underwriter, should be reflected therein in order to make the statements contained therein not misleading in any material respect and the Official Statement shall not have been supplemented or amended to reflect such event. (c) (i) In the judgment of the Underwriter, the market price of the Bonds is adversely affected because: (A) additional material restrictions not in force as of this date shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (B) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose,as to the Bonds or similar obligations,any material restrictions not now in force,or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; (C) a general banking moratorium shall have been established by federal, New York or State authorities; or (D) a war involving the United States of America shall have been declared, or any other national or international calamity shall have occurred, or any conflict involving the armed forces of the United States of America shall have escalated to such a magnitude as to materially affect the ability of the Underwriter to market the Bonds; (ii) any litigation shall be instituted, pending or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way contesting or affecting any authority or security for or the validity of the Bonds, or the existence or powers of the Issuer;or(iii)legislation shall have been introduced in or enacted by the Legislature of the State with the purpose or effect,directly or indirectly,of imposing State income taxation upon interest to be received by any owners of the Bonds or that would, in the reasonable judgment of the Underwriter, adversely affect an investment in or the security pledged for the Bonds. (d) There shall have occurred any change that, in the reasonable judgment of the Underwriter,makes unreasonable or unreliable any of the assumptions upon which: (i)yield on the Bonds for purposes of compliance with the Code, (ii)payment of debt service on the Bonds,or(iii)the basis for the exclusion from gross income for federal income tax purposes of interest on the Bonds,is predicated. (e) The marketability of the Bonds or the market price thereof, in the opinion of the Underwriter,has been materially and adversely affected by disruptive events,occurrences or conditions in the securities or debt markets. (f) There shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal or negative change in credit watch status by any national rating service to any of the Issuer's or Borrower's obligations. SECTION 9. Expenses The Underwriter shall be under no obligation to pay,and the Borrower hereby agrees to pay, any expenses incident to the performance of the Issuer's obligations hereunder, including, but not limited to, (a) the costs of printing and preparation for printing or other reproduction for distribution and use in connection with the public offering of the Bonds such number of copies as may be requested by the Underwriter of the Preliminary Official Statement, the Official Statement, the Indenture, the Bond Resolution and the blue sky survey, as well as any delivery costs incurred in connection with the distribution of the foregoing documents; (b) the cost of preparing the defmitive Bonds; (c) the fees and disbursements of Bond Counsel in connection with the authorization and issuance of the Bonds; the fees and expenses of Issuer's counsel; the fees and expenses of the Trustee and its counsel; any application or administrative fee of the Issuer; and the fees and disbursements of the Issuer's financial advisor and any other experts or consultants retained by the Issuer; (d) the fees of rating agencies in connection with the 13 2014-05-20 Agenda Packet Page 425 rating of the Bonds; (e) the fees of Digital Assurance Certification, L.L.C. for a continuing disclosure undertaking compliance review; (f)the fees and expenses of counsel to the Underwriter; (g)the expenses relating to the meals, transportation, lodging, and entertainment incidental to implementing this Bond Purchase Agreement;and(h)all other expenses in connection with the public offer and sale of the Bonds. The Issuer shall have no obligation to pay any fees, expenses or costs associated with or resulting from the issuance and delivery of the Bonds. The Borrower shall pay for any expenses incurred on behalf of the Issuer's employees which are incidental to implementing this Bond Purchase Agreement. The Underwriter is required to pay fees to the California Debt and Investment Advisor Commission in connection with the Bond offering. Notwithstanding that such fees are solely the legal obligation of the Underwriter,the Borrower agrees to reimburse the Underwriter for such fees. SECTION 10. Notices Any notice or other communication to be given to the Issuer or the Borrower under this Bond Purchase Agreement may be given by delivering the same in writing to the Issuer or the Borrower at their respective addresses set forth on the first page hereof. Any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Citigroup Global Markets Inc., Citi Community Capital, 1801 California Street, Suite 3700, Denver, CO 80202,Attention: Brad Edgar. SECTION 11. Parties in Interest This Bond Purchase Agreement is made solely for the benefit of the Issuer,the Borrower and the Underwriter(including any successor or assignees of the Underwriter),and,except as provided in Section 5 hereof,no other party or person shall acquire or have any right hereunder or by virtue hereof. SECTION 12. Amendments This Bond Purchase Agreement may not be amended without the written consent of the Issuer, the Borrower and the Underwriter. SECTION 13. Survival of Representations and Warranties The representations and warranties of the Issuer and the Borrower shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Issuer and the Borrower and regardless of delivery of and payment for the Bonds. SECTION 14. Execution in Counterparts This Bond Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original,but all such counterparts shall together constitute but one and the same instrument. SECTION 15. No Prior Agreements This Bond Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds for the Issuer. 14 2014-05-20 Agenda Packet Page 426 SECTION 16. Effective Date This Bond Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Issuer and the Borrower and shall be valid and enforceable as of the time of such acceptance. SECTION 17. Governing Law This Bond Purchase Agreement shall be governed by the internal laws of the State without giving effect to the conflict of law principles of the State. SECTION 18. Underwriter Not Acting as Advisor or Fiduciary The Issuer and the Borrower each acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm's-length commercial transaction among the Issuer, the Borrower, and the Underwriter, (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction,the Underwriter is and has been acting solely as a principal and is not acting as the agent, advisor, or fiduciary of the Issuer or the Borrower, (iii) the Underwriter has not assumed individually or collectively an advisory or fiduciary responsibility in favor of the Issuer or the Borrower with respect to the offering contemplated hereby or the discussions,undertakings and procedures leading thereto (irrespective of whether the Underwriter has advised or provided other services or is currently advising or providing other services to the Issuer or the Borrower on other matters) and the Underwriter has no obligation to the Issuer or the Borrower with respect to the offering contemplated hereby except the obligations expressly set forth in this Bond Purchase Agreement and (iv) the Issuer and the Borrower have consulted their own legal, financial and other advisors to the extent they deem appropriate in connection with the offering of the Bonds. [Remainder of Page Left Blank Intentionally] 15 2014-05-20 Agenda Packet Page 427 [Underwriter's Signature Page to the Garden Villas Bond Purchase Agreement] CITIGROUP GLOBAL MARKETS INC. By: Brad Edgar,Director 2014-05-20 Agenda Packet Page 428 [Issuer's Signature Page to the Garden Villas Bond Purchase Agreement] HOUSING AUTHORITY OF THE CITY OF CHULA VISTA By: Executive Director 2014-05-20 Agenda Packet Page 429 [Borrower Signature Page to the Garden Villas Bond Purchase Agreement] KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory 2014-05-20 Agenda Packet Page 430 SCHEDULEI AMOUNT,MATURITY,INTEREST RATE AND PRICE Principal Amount Maturi , Date Interest Rate Price $ [June 1,2015] % % 2014-05-20 Agenda Packet Page 431 EXHIBIT A SUPPLEMENTAL OPINION OF BOND COUNSEL June ,2014 Citigroup Global Markets Inc. Denver,CO Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A [After appropriate introductory language,the opinion shall state substantially as follows:] We are of the opinion, as of the date hereof,as follows: 1. The Bond Purchase Agreement has been duly authorized, executed and delivered by, and constitutes the legally valid and binding agreement of the Issuer,enforceable in accordance with its terms. 2. The Bonds constitute exempted securities within the meaning of the Securities Act of 1933, as amended, and the Indenture is exempt from application of the Trust Indenture Act of 1939, as amended,and it is not necessary,in connection with the public offering and sale of the Bonds,to register any securities under said Securities Act or to qualify any indenture under said Trust Indenture Act. 3. The Bonds and the Documents conform to the descriptions thereof contained in the Official Statement, and the statements contained in the Official Statement on the cover and under the captions "INTRODUCTION," "THE BONDS" (except under the subcaption "Book-Entry System"), "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "TAX MATTERS," and in Appendices A, B, C, D and E, insofar as such statements purport to summarize certain provisions of the Bonds and the Documents and our Bond Counsel opinion, present a fair and accurate summary of such provisions. Very truly yours, 2014-05-20 Agenda Packet Page 432 EXHIBIT B BORROWER'S COUNSEL OPINION June , 2014 Citigroup Global Markets Inc. U.S. Bank National Association Housing Authority of the City of Chula Vista Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A [After appropriate introductory language,the opinion shall state substantially as follows:] 1. The Borrower is a limited partnership, duly organized, validly existing and in good standing under the laws of the State of California and has all requisite limited partnership power and all material government licenses, authorizations, consents and approvals necessary to own and operate its property and conduct its business. The Borrower is qualified to do business in the State of California. 2. The Borrower has full legal right, power and authority (a) to own its properties and conduct its business as described in the Official Statement and (b) to enter into and to carry out and consummate the transactions contemplated by the Borrower Documents. 3. The Managing General Partner is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of California and has all requisite limited liability company power and all material government licenses, authorizations, consents and approvals necessary to own and operate its property and conduct its business. The Managing General Partner is qualified to do business in the State of California. 4. By all necessary action, the Borrower has duly authorized and adopted the Borrower Documents, and approved the execution and delivery of, and the performance by the Borrower of the obligations in connection with the issuance of the Bonds on its part contained in the Bonds and the Borrower Documents and the consummation by it of all other transactions contemplated by the Indenture and the Borrower Documents in connection with the issuance of the Bonds. The individual[s] who have executed the Borrower Documents on behalf of the Managing General Partner of the Borrower have the authority to bind the Managing General Partner,and thereby the Borrower,to the terms and conditions of the Borrower Documents. 5. The Borrower Documents have been duly executed and delivered by the Borrower and, assuming the due authorization,execution and delivery of such agreements by the respective other parties thereto where necessary, if any, constitute legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability affecting the enforcement of creditors' rights and to general principles of equity, regardless of whether such enforceability is considered in equity or in law. 6. The execution and delivery of the Borrower Documents, the performance by Borrower of its obligations thereunder and the consummation of the transactions contemplated therein are within the 2014-05-20 Agenda Packet Page 433 organizational powers of Borrower and will not(i) conflict with or constitute a breach of the Borrower's organizational documents;(ii)to our knowledge,constitute a default under any indenture,mortgage,deed of trust or other material lien, lease, contract, note, order,judgment, decree or other material agreement, instrument or restriction of any kind to which Borrower is a party or by which any of its properties are bound or affected; or(iii)result in a violation of any constitutional or statutory provision or any material order,rule,regulation,decree or ordinance of any court, government or governmental authority known to us to be applicable to over the Borrower or its property. 7. To the best of our knowledge after due and diligent inquiry, as of the Closing Date, the Borrower is not in any material respect in violation of, breach of or default under any applicable constitutional provision or law of any state or of the United States, or any order,rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note, agreement (including, without limitation,the Borrower Documents)or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound,and no event has occurred and is continuing which with the passage of time or the giving of notice,or both,would constitute such a default or event of default under any such instruments; and the execution and delivery of the Bonds and the Borrower Documents, and compliance with the provisions on the Borrower's part contained therein, do not and will not conflict with,or constitute on the part of the Borrower a violation of,breach of or default under, any applicable constitutional provision or law of any state or of the United States, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Borrower or any of its activities, properties or assets, or any indenture, mortgage, deed of trust, resolution, note, agreement or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound, nor will any such 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 the property or assets of the Borrower or under the terms of any such law, regulation or instrument,except as provided by the Bonds or the Borrower Documents. 8. As of the Closing Date, all consents, approvals,authorizations,and orders of or filings or registrations with any governmental authority,board, agency or issuer of any state or of the United States having jurisdiction required in connection with, or the absence of which would materially adversely affect,the execution and delivery by the Borrower of the Borrower Documents or the performance by the Borrower of its obligations thereunder have been obtained or made and are in full force and effect. 9. To the best of our knowledge after due and diligent inquiry, as of the Closing Date,there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any judicial or administrative court or governmental agency or body, state,federal or other,pending or,to the best of our knowledge, threatened against the Borrower, affecting the existence of the Borrower or the titles of its officers to their respective offices, or contesting or affecting as to the Borrower the validity or enforceability of the Act, the Bonds, any Borrower Document or the execution and delivery or adoption by the Borrower of any Borrower Document,or in any way contesting or challenging the completeness or accuracy of the Official Statement or the powers of the Borrower or its authority with respect to the Borrower Documents or the consummation of the transactions contemplated thereby; nor, to the best of our knowledge, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the financial condition or operations of the Borrower or the validity of the authorization,execution, delivery or performance by the Borrower of any Borrower Document. 10. Nothing has come to our attention that would lead us to believe that the statements and information with respect to Project and the Private Participants contained in the Official Statement under the captions "PLAN OF FINANCING," "THE PROJECT AND THE PRIVATE PARTICIPANTS," and B-2 2014-05-20 Agenda Packet Page 434 "NO LITIGATION—The Borrower" (except as to the statistical and financial data included in the Official Statement with respect to which we do not express any opinion),contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made,not misleading. 11. The Borrower may not plead the defense of usury or maintain an action for usury with respect to the loan(s)being made under the Transaction Documents. Very truly yours, B-3 2014-05-20 Agenda Packet Page 435 EXHIBIT C BORROWER'S RULE 15c2-12 CERTIFICATE Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A The undersigned hereby certifies and represents to Citigroup Global Markets Inc. (the "Underwriter")that he/she is authorized to execute and deliver this certificate on behalf of Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"), and hereby further certifies to the Underwriter as follows: (a) This Certificate is delivered to enable the Underwriter to comply with Securities and Exchange Issuer Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") in connection with the issuance and sale of the above-captioned bonds(the "Bonds"). (b) In connection with the issuance and sale of the Bonds, there has been prepared a Preliminary Official Statement, dated the date of this certificate, setting forth information concerning the Bonds and the Borrower(the "Preliminary Official Statement'). (c) As used herein, "Permitted Omissions" shall mean the offering price(s), interest rate(s), accreted values, yield to maturity, selling compensation, aggregate principal amount, principal amount per maturity,delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the underwriter(s),all with respect to the issuance and sale of the Bonds. (d) The Preliminary Official Statement is, as of the date thereof, deemed final within the meaning of the Rule,except for Permitted Omissions. (e) The sections of the Preliminary Official Statement entitled "CONTINUING DISCLOSURE" and "APPENDIX F—FORM OF CONTINUING DISCLOSURE AGREEMENT" describes the agreement the Borrower expects to make for the benefit of the Bondholders in the Continuing Disclosure Agreement, dated as of June 1, 2014,by and between the Borrower and U.S. Bank National Association, in its capacity as trustee and dissemination agent,by which the Borrower will undertake to provide continuing disclosure in accordance with the Rule. (f) The Borrower, its members and all entities affiliated with the Borrower and its members have complied with all of their previous continuing disclosure obligations under the Rule,if any(except to the extent described in the Preliminary Official Statement). Dated: June ,2014 [Remainder of Page Intentionally Left Blank] 2014-05-20 Agenda Packet Page 436 [Signature Page to Borrower's Rule 15c2-12 Certificate] IN WITNESS WHEREOF,I have hereunto set my hand this as of the date set forth above. KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory C-2 2014-05-20 Agenda Packet Page 437 EXHIBIT D UNDERWRITER'S COUNSEL OPINION June ,2014 Citigroup Global Markets Inc. 390 Greenwich Street,2nd Floor New York,NY 10013 Housing Authority of the City of Chula Vista Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A Ladies and Gentlemen: We have acted as counsel to Citigroup Global Markets Inc. (the "Underwriter") in connection with the issuance of the above-captioned bonds(the "Bonds"),issued pursuant to a Trust Indenture, dated as of June 1, 2014(the "Indenture"),by and between the Housing Authority of the City of Chula Vista,a joint exercise of powers agency duly organized and validly existing under the laws of the State of California(the"Issuer")and U.S.Bank National Association,as trustee (the "Trustee"). As such counsel, we have reviewed such records, certificates, opinions and documents as we have deemed necessary or appropriate for the purpose of this opinion. Upon the basis of such examination, we are of the opinion that (a) under the existing laws, the Bonds may be offered and sold without registration under the Securities Act of 1933,as amended,and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended and (b) assuming the validity of the Continuing Disclosure Agreement, dated as of the date of the Indenture (the "Continuing Disclosure Agreement"), by and between Kiku Gardens Housing Partners, LP, a California limited partnership(the `Borrower"), and the Trustee,the undertakings contained therein are sufficient to comply with the requirements of Section (b)(5)(i) of Rule 15c2-12 under the Securities Exchange Act of 1934,as amended. In connection with the preparation of the Official Statement (the "Offering Document") used in connection with the initial issuance and sale of the Bonds on the date hereof, we have reviewed generally information furnished to us by, and have participated in conferences with, representatives of the Issuer, Stradling, Yocca, Carlson & Rauth, Bond Counsel, the Borrower, Katten Muchin Rosenman LLP, counsel to the Borrower, Hessel, Aluise and Neun, P.C., counsel to the Borrower, the Trustee and the Underwriter. We also have reviewed the documents relating to the Bonds described in the Offering Document and other documents and records relating to the issuance and sale of the Bonds. In addition, we have relied upon certificates of officials of the Issuer,the Borrower and the Trustee and opinions from Bond Counsel and Borrower's counsel. However,we have not independently verified any factual matters in connection with or apart from the aforementioned review and conferences and, accordingly,we do not express any view or belief as to matters that might have been disclosed by independent verification. Although we have made no independent investigation or verification of the accuracy,correctness, fairness or completeness of, and do not assume any responsibility for, the information included in the Offering Document(subject to the qualifications set forth herein),no information came to the attention of the attorneys in our firm rendering legal services in connection with the issuance of the Bonds which causes us to believe that the Offering Document (except for the financial statement, financial, statistical 2014-05-20 Agenda Packet Page 438 and numerical information, forecasts, estimates, assumptions and expressions of opinion, as to which we express no view), as of its date contained,or as of the date of this opinion contains, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein,in light of the circumstances under which they were made,not misleading. In rendering this opinion, as to matters of California law, we reviewed and assumed the correctness of the authorizing opinion of Bond Counsel, and of the opinion of counsel to the Borrower, each dated the date hereof, and we have relied upon the other opinions and certificates delivered in connection with the purchase of the Bonds. No opinion is expressed herein with respect to the status of the offer or sale of the Bonds under the Blue Sky laws of any jurisdiction. This letter, and the legal opinions and other statements herein, are intended for the information solely of the addressees hereof and solely for the purposes of the transactions contemplated by the Indenture and are not to be relied upon by any other person or entity, or for any other purpose, or quoted in whole or in part, or otherwise referred to, in any document, or to be filed with any governmental or other administrative agency or other person or entity for any purpose without our prior written consent. We bring to your attention the fact that our legal opinions and conclusions are an expression of professional judgment and are not a guarantee of a result. We do not undertake to advise you of matters which may come to our attention subsequent to the date hereof which may affect our legal opinions and conclusions expressed herein. Respectfully submitted, EICHNER NORRIS&NEUMANN PLLC By: D-2 2014-05-20 Agenda Packet Page 439 O O O os, PRELIMINARY OFFICIAL STATEMENT DATED _,2013 Fn-0 a) E°c NEW ISSUE-BOOK ENTRY ONLY EXPECTED RATING:Standard&Poor's:"A-1[+]" co o a) See"RATING"herein o Co In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing Qm= statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements X o a, described herein, interest on the Bonds is excluded from gross income for federal income tax purposes, except for interest on any Bond for any period c during which such Bond is held by a "substantial user"of arty facilities financed with the proceeds of the Bonds or by a "related person"as such terms are 0-0 c° used in Section 147(a)of the Internal Revenue Code of 1986, as amended(the "Code'),but interest on the Bonds is an item of tax preference for purposes O O T s of calculating the federal alternative minimum tax imposed on individuals and corporations. Bond Counsel is also of the opinion that interest on the Bonds E s O is exempt from State of California personal income tax. See"TAX MATTERS"herein. Nc� co .o $ x M E a3 rna b CHULA VISTA HOUSING AUTHORITY bin o MULTIFAMILY HOUSING REVENUE BONDS a� (GARDEN VILLAS)SERIES 2014A OH_c 0) 0.0 C"j N U co a°i N Dated: Date of Delivery Maturity:As shown below U p X m 0. 3 The Bonds will be issued under the provisions of the Trust Indenture dated as of June 1,2014(the"Indenture"),between the Chula Vista Housing U)m 0 3 a Authority(the"Issuer")and U.S.Bank National Association,as trustee(the"Trustee"). The Bonds will be issued for the purpose of making a loan(the -co "Loan") to Kiku Gardens Housing Partners, LP, a California limited partnership (the "Borrower") to finance a portion of the costs of acquiring, 7 U�� i25�o m rehabilitating, equipping and otherwise improving an existing 100-unit apartment complex, as more fully described under"THE PROJECT AND THE c b PRIVATE PARTICIPANTS"herein. a>0 co 5 m The Bonds will be issued as fully registered bonds in book entry form and book entry interests in the Bonds will be available for purchase in -c°c.N ai principal amounts of$5,000 or any integral multiple thereof. Interest on the Bonds is payable on June 1 and December 1 of each year,commencing June 1, 3_E o 2014. Owners of book entry interests in the Bonds will not receive physical delivery of bond certificates. The Depository Trust Company,New York,New c�°U° rY P Y rY P rY E c a°i York("DTC")will act as a securities depository for the Bonds. DTC,or its nominee,will receive all payments with respect to the Bonds from the Trustee. Eaa) DTC is required by its rules and procedures to remit such payments to participants in DTC for subsequent disbursement to the owners of book entry a)c,_a) interests. See"THE BONDS—Book Entry System"herein. a� °�c ..T 3 The Bonds,when,as and if issued will be limited obligations of the Issuer,payable solely from the revenues and other moneys assigned by the °°2 c Indenture to secure that payment,which include the payments required to be made b the Borrower under the Loan Agreement dated as of June 1,2014 the �°�o P Y P Y q Y g ° 2 "Loan Agreement"),between the Borrower and the Issuer. O E "U Q-O U2 °°c ca At all times the Bonds will be secured by Eligible Investments and Available Moneys sufficient,without need for reinvestment,to pay all O.6�a of the interest on the Bonds when due and to pay the principal of the Bonds at maturity, as further described herein. See"SECURITY AND a SOURCES OF PAYMENT FOR THE BONDS." THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY OUT OF THE REVENUES, a'c m RECEIPTS AND OTHER MONEYS PLEDGED THEREFOR UNDER THE INDENTURE. THE BONDS ARE NOT A GENERAL Ea> rn -0 a° s i °�' OBLIGATION,DEBT OR BONDED INDEBTEDNESS OF THE STATE,THE ISSUER OR OF ANY OTHER POLITICAL SUBDIVISION OF -0 N ° THE STATE,AND NEITHER THE STATE,THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE STATE IS LIABLE FOR E '-Co o c m THE PAYMENT OF THE BONDS AND THE HOLDERS OF THE BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR co E TAXES LEVIED BY THE ISSUER OR BY THE STATE OR ANY POLITICAL SUBDIVISION THEREOF FOR THE PAYMENT OF THE N S PRINCIPAL OF AND ANY PREMIUM AND INTEREST ON THE BONDS. THE ISSUER HAS NO TAXING POWER. NEITHER THE _o.�c ISSUER NOR THE STATE NOR ANY POLITICAL SUBDIVISION OF THE STATE WILL BE OBLIGATED TO PAY THE PRINCIPAL OF 'T)E AND THE INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE ISSUER REVENUES PLEDGED ir' =� UNDER THE INDENTURE. aa 0 c 3 The Bonds are not subject to redemption prior to their stated maturity. See"THE BONDS-No Redemption"herein. o THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. THIS COVER PAGE IS NOT INTENDED TO BE A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THIS ENTIRE OFFICIAL STATEMENT,INCLUDING THE °N o APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT co c�, E N-o m DECISION. _OUa)U C�00 >w Maturity Date Amount Interest Rate Price CUSIP w June 1,2015 $ * % 100% b�-O C N E- O U a�i° .1 w The Bonds are offered,subject to prior sale,when,as and if issued b the Issuer and accepted b the Underwriter,subject to,among other things, co °-° s J P Y P Y J g g a 0 the approving opinion of Stradling,Yocca,Carlson&Rauth,Newport Beach,California,Bond Counsel. Certain legal matters will be passed upon for the E 3 Underwriter by Eichner Norris & Neumann PLLC, Washington, D.C., and for the Borrower by Katten Muchin Rosenman LLP, Chicago, Illinois, and c Hessel,Aluise and Neun,P.C.,Washington,D.C.. It is expected that the Bonds will be available for delivery in definitive form on or about June 2014 aa)00.. through the services of DTC against payment therefor. �._ -Fo ° _E 7.; Citigroup U a)(-'C 0 -,,� i0 O.C_S f° The date of this Official Statement is 12014. Eon° U 2.S$1-0 a� � Q -0;PjW t gen&f�a t to change. Page 440 REGARDING THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Bonds identified on the cover hereof. No person has been authorized to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy,and there shall not be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information and expression of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor the sale of any of the Bonds shall,under any circumstances,create any implication that the information herein is correct as of any time subsequent to the date hereof. Information herein has been obtained from the Issuer (only as to the Sections labeled "The Issuer''and"No Litigation"as it pertains to the Issuer) and the Borrower and other sources believed to be reliable, but it is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by,the Underwriter. The Issuer has not confirmed, and assumes no responsibility for, the accuracy, completeness, sufficiency or fairness of any statements in the Official Statements or any amendments thereof or supplements thereto, other than in the Sections labeled "The Issuer" and 'No Litigation" as it pertains to the Issuer, and or in any reports, financial information, offering or disclosure documents or other information relating to the Underwriter, the Project, the Borrower, or the history, businesses, properties, organization, management, financial condition, market area or any other matter relating to the Borrower or contained otherwise in the Official Statement. The Trustee has neither reviewed nor participated in the preparation of this Official Statement, except for the contents of the Section labeled"Trustee." The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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. Upon issuance,the Bonds will not be registered by the Issuer under the Securities Act of 1933, as amended, or any state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon the accuracy or adequacy of this Official Statement or, other than the Issuer(to the extent described herein)approved the Bonds for sale. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. 2014-05-20 Agenda Packet Page 441 TABLE OF CONTENTS Page INTRODUCTION........................................................................................................................................1 THEISSUER................................................................................................................................................2 PLANOF FINANCING...............................................................................................................................3 THE PROJECT AND THE PRIVATE PARTICIPANTS............................................................................4 THEBONDS................................................................................................................................................7 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS..........................................................10 THETRUSTEE..........................................................................................................................................11 CERTAIN BONDHOLDERS' RISKS.......................................................................................................11 NOLITIGATION.......................................................................................................................................13 UNDERWRITING.....................................................................................................................................13 MULTIPLE ROLES OF PARTIES............................................................................................................14 TAXMATTERS.........................................................................................................................................14 LEGALMATTERS....................................................................................................................................16 RATING.....................................................................................................................................................16 CONTINUING DISCLOSURE..................................................................................................................17 MISCELLANEOUS...................................................................................................................................17 APPENDIX A DEFINITIONS OF CERTAIN TERMS APPENDIX B FORM OF BOND COUNSEL OPINION APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT 2014-05-20 Agenda Packet Page 442 OFFICIAL STATEMENT CHULA VISTA HOUSING AUTHORITY MULTIFAMILY HOUSING REVENUE BONDS (GARDEN VILLAS)SERIES 2014A INTRODUCTION This Official Statement, including the Appendices, is furnished in connection with the original issuance and sale by the Chula Vista Housing Authority (the "Issuer") of the Bonds identified on the cover page (the "Bonds"). The Bonds are being issued by the Issuer pursuant to a Trust Indenture (the "Indenture") dated as of June 1, 2014 between the Issuer and U.S. Bank National Association,as Trustee (the "Trustee"). The Trustee is expected to also serve as Registrar. Capitalized terms used but not otherwise defined herein are defined in Appendix A. The Issuer will loan the proceeds of the sale of the Bonds to Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower"), pursuant to the Loan Agreement (the "Loan Agreement") dated as of June 1, 2014, between the Issuer and the Borrower to pay a portion of the costs of acquiring,rehabilitating, equipping and otherwise improving an existing 100-unit Section 8 subsidized apartment complex presently known as Garden Villas (the"Project"),to be owned by the Borrower. See "THE PROJECT AND THE PRIVATE PARTICIPANTS." Pursuant to the Loan Agreement, the Borrower has agreed to make payments to the Issuer in amounts sufficient to pay the principal of and interest on the Bonds when due (the "Bond Debt Service Charges") to the extent that amounts otherwise available for such payment are insufficient therefor. The Loan will be evidenced by a promissory note in the principal amount of $ * (the "Note") from the Borrower to the Trustee. The Loan Agreement, except for Unassigned Issuer's Rights,will be assigned without recourse by the Issuer to the Trustee. To provide and secure funds for the repayment of the Loan, the Borrower shall simultaneously with the execution and delivery hereof, proceed with obtaining the Freddie Mac Loan from the Freddie Mac Lender. Subject to the conditions set forth in the Freddie Mac Loan Documents, the Freddie Mac Lender will pay$ * from the proceeds of the Freddie Mac Loan to the Trustee for deposit into the Collateral Fund to enable the Trustee to disburse an equal amount of Bond proceeds from the Project Fund as approved by the Freddie Mac Lender. See"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS"herein. None of the owners of the Bonds, the Trustee or the Issuer will have rights with respect to the Freddie Mac Loan or under the Freddie Mac Loan Documents. Furthermore, none of the owners of the Bonds, the Trustee or the Issuer will have a lien on any funds, accounts or reserves established, maintained and/or collected by the Freddie Mac Lender in connection with the Freddie Mac Loan. Freddie Mac does not provide enhancement with respect to the Loan or the Bonds. It is anticipated that the aggregate funds on deposit in the Project Fund and the Collateral Fund will, at all times, equal the principal amount of Bonds Outstanding. It is anticipated that interest on the Bonds will be paid from amounts on deposit in the Initial Deposit Account of the Bond Fund and that the Bond Debt Service Charges will otherwise be paid from amounts on deposit in the Collateral Fund, the Bond Fund (including the Initial Deposit Account of the Bond Fund) and the Project Fund (collectively, the "Special Funds"), and investment earnings thereon. Amounts on deposit in the Special Funds will be invested in Eligible Investments. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS"herein. *Preliminary; subject to change. 2014-05-20 Agenda Packet Page 443 The Bonds shall bear interest on the outstanding principal amount thereof at a rate equal to % per annum from their date, payable on each June 1 and December 1, commencing December 1, 2014(each an"Interest Payment Date"). The Bonds are limited obligations of the Issuer, and the principal of and interest thereon will be payable solely from the revenues and other moneys assigned by the Indenture to secure such payment. At all times the Bonds will be secured by Eligible Investments and Available Moneys sufficient, without need for reinvestment, to pay all of the interest on the Bonds when due and to pay the principal of the Bonds at maturity, as further described herein. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "PLAN OF FINANCING"herein. The Borrower will be required to operate the Project in compliance with a Regulatory Agreement and Declaration of Restrictive Covenants (the"Regulatory Agreement") dated as of June 1, 2014, by and among the Issuer, the Trustee and the Borrower. The Regulatory Agreement requires, among other things,that the Project be operated as a qualified residential rental project with at least 30%of completed units of the Project occupied by Low Income Tenants, i.e., tenants whose income does not exceed sixty percent (60%) of the area median gross income ("AMP'), adjusted for family size, during the Qualified Project Period in accordance with Section 142(d) of the Code, and at least 10% of completed units of the Project occupied by Very Low Income Tenants, i.e.,tenants whose income does not exceed fifty percent (50%) of AMI, adjusted for family size, during the Qualified Project Period in accordance with Section 142(d) of the Code. Failure to comply with these requirements could result in the loss of the federal tax exemption of the Bonds retroactive to their date of issuance. See"TAX MATTERS"and"APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT." In addition to the rental restrictions imposed upon the Project by the Regulatory Agreement, the Project will be further encumbered by a tax credit restrictive covenant (the "Tax Credit Extended Use Agreement"), to be executed by the Borrower in connection with the low-income housing tax credits (the "LIHTCs") anticipated to be granted for the Project and in compliance with the requirements of Section 42 of the Code. See"THE PROJECT AND THE PRIVATE PARTICIPANTS." Brief descriptions of the Issuer, the Project, the Borrower, the use of proceeds of the Bonds and the Bonds together with summaries of the Indenture,the Loan Agreement and the Regulatory Agreement are provided below. All information with respect to the Borrower and the Project contained in this Official Statement has been furnished by the Borrower. The descriptions and summaries of the Loan Agreement, the Indenture and the Regulatory Agreement and other documents contained herein do not purport to be comprehensive or definitive and are qualified in their entirety by reference to those documents, and all references to the Bonds are qualified in their entirety by the definitive forms thereof included in the Indenture. See"MISCELLANEOUS"for the availability of those documents. THE ISSUER The information under this heading has been provided solely by the Issuer and has not been independently verified by the Trustee, the Borrower, the Underwriter, Freddie Mac, the Servicer or any of their respective counsel, members, officers or employees or Bond Counsel. No representation whatsoever as to the accuracy, adequacy or completeness of such information is made by the Trustee, the Borrower, the Underwriter, Freddie Mac, the Servicer or any of their respective counsel, members, officers or employees or Bond Counsel. The Issuer is the Chula Vista Housing Authority, a public body, corporate and politic duly organized and existing under the laws of the State of California. The Issuer is authorized to issue the Bonds and to loan the proceeds thereof to the Borrower for the purpose of financing the Project. The 2 2014-05-20 Agenda Packet Page 444 Issuer was created in 1993. Members of the City Council of the City of Chula Vista serve as the five- member Board of Directors of the Issuer. The Bonds are special limited obligations of the Issuer, payable solely from and secured by the pledge of revenues pursuant to the Indenture. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS"herein. Upon delivery of the Bonds, the Issuer will have approved the Indenture and the issuance of the Bonds. The Issuer has not prepared any material for inclusion in this Official Statement except the material under this heading and under the heading"NO LITIGATION—The Issuer." PLAN OF FINANCING* The sources and uses of funds for the Project are projected to be approximately as follows: Sources of Funds* Bond Proceeds $8,000,000 Taxable Loan Proceeds(in excess of Bond Proceeds) 3,300,000 Deferred Developer Fee 140,000 Low Income Housing Tax Credit Proceeds 4,630,000 Capitalized Interest Paid from Operations 65,000 Release of Replacement Reserves 494,990 Total 16.629.990 Uses of Funds* Land and Building Costs $ 8,000,000 Renovation Costs 4,250,000 Indirect Costs 2,694,277 Developer Fees 1,685,713 Total 16.629.990 Simultaneously with the closing and issuance of the Bonds, the Borrower will obtain a mortgage loan (the "Freddie Mac Loan") in the amount of$11,300,000*from Citibank, N.A., a national banking association(the"Freddie Mac Lender"),to provide for the acquisition of and permanent financing for the Project. The Freddie Mac Loan is to bear interest at the rate of % per annum. Subject to the conditions set forth in the Freddie Mac Loan Documents, a portion of the Freddie Mac Loan proceeds equal to the aggregate principal amount of the Bonds will be disbursed on the Closing Date by the Freddie Mac Lender to the Trustee on behalf of the Borrower for deposit into the Collateral Fund under the Indenture. The Freddie Mac Loan will be evidenced by a Multifamily Note (the "Freddie Mac Borrower Note") made by the Borrower in favor of the Freddie Mac Lender and secured by a first-lien priority Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Freddie Mac Mortgage")on the Project. None of the owners of the Bonds,the Trustee or the Issuer will have rights with respect to the Freddie Mac Loan or under the Freddie Mac Loan Documents. Furthermore, none of the owners of the Bonds, the Trustee or the Issuer will have a lien on any funds, accounts or reserves established, maintained and/or collected by the Freddie Mac Lender in connection with the Freddie Mac Loan. Freddie Mac does not provide enhancement with respect to the Loan or the Bonds. *Preliminary; subject to change. 3 2014-05-20 Agenda Packet Page 445 The Bonds will be initially secured by their own proceeds to be deposited in the Project Fund under the Indenture(plus the Initial Deposit to the Initial Deposit Account to cover capitalized interest on the Bonds through the Maturity Date). The proceeds of the Loan will be disbursed to the Borrower on the Closing Date to pay Project costs upon the deposit of a like amount of Freddie Mac Loan proceeds in the Collateral Fund. The Bonds will thus remain at all times 100%collateralized by Eligible Investments and Available Moneys on deposit in the Special Funds under the Indenture. The Issuer has directed the Trustee to deposit all payments made by the Borrower pursuant to the Note and the Loan Agreement into the Bond Fund established and maintained pursuant to the Indenture. Bond Debt Service Charges shall be payable as they become due, in the case of interest (i) in the first instance from the money on deposit in the Initial Deposit Account of the Bond Fund, (ii)next from other money on deposit in the Bond Fund, (iii) next from money on deposit in the Collateral Fund and transferred as necessary to the Bond Fund, and (iv)thereafter,from money on deposit in the Project Fund and transferred as necessary to the Bond Fund. Investments of money in the Bond Fund and the Collateral Fund shall mature or be redeemable at the option of the Trustee at the times and in the amounts necessary to provide money to pay Bond Debt Service Charges on the Bonds as they become due on each Interest Payment Date or at stated maturity. Each investment of money in the Project Fund shall mature or be redeemable at the option of the Trustee at the times and in the amounts as may be necessary to make anticipated payments from the Project Fund. All investment earnings from amounts on deposit in the Project Fund and the Collateral Fund will be credited to the Bond Fund. See "APPENDIX C – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Application of Loan Payments, Disbursements from the Project Fund,Bond Fund and Investment of Special Funds and Rebate Fund." In addition, on the Closing Date as described under the caption "THE PROJECT AND THE PRIVATE PARTICIPANTS" below, CREA Garden Villas, LLC, a Delaware limited liability company (the "Investor Limited Partner"), will acquire a limited partnership interest in the Borrower intended to allow the Investor Limited Partner to claim 99.989% of LIHTCs available to the Borrower in exchange for the Investor Limited Partner's agreement to fund equity in the approximate amount of$4,632,799*. THE PROJECT AND THE PRIVATE PARTICIPANTS The information under this caption has been provided solely by the Borrower and has not been independently verified by the Issuer, the Trustee, the Underwriter, Freddie Mac, the Servicer or any of their respective counsel, members, officers or employees or Bond Counsel. No representation whatsoever as to the accuracy, adequacy or completeness of such information is made by the Issuer, the Trustee, the Underwriter, Freddie Mac, the Servicer or any of their respective counsel, members, officers or employees or Bond Counsel. The Project Garden Villas is a 100-unit affordable senior project located at 1260 3rd Avenue, Chula Vista, California. Built in 1983, Garden Villas consists of one 3-story, elevator-served building. The 3.32 acre site also has a maintenance building. The rehabilitation of the Project is expected to last from June 2014-December 2014. Hard construction costs are estimated to be$3.1* million and will include a new roof,fire sprinkler installation, upgrades to the community rooms, new hot water boilers, energy efficient windows and appliances, cabinets, countertops, and kitchen flooring. The building includes a community dining room with commercial kitchen on the first floor, full time service coordinator,two lounge areas with one including a *Preliminary; subject to change. 4 2014-05-20 Agenda Packet Page 446 computer room, a library, exercise space located at the ends of each floor, and one laundry room on the second floor. The site is also improved with a maintenance building,a courtyard/picnic area, a community garden, 76 surface parking spaces,and a gated perimeter. Number of Units Composition S.F. (Uprox.) 100 1 Bedroom— 1 Bath 571 The Project consists of 100 units which 99 units are subject to an existing HAP contract (the "HAP Contract"). The remaining unit is a manager's unit. At closing the Project will continue to benefit from the HAP Contract. The HAP Contract Funding under the HAP Contract is subject to annual Congressional appropriations, as more particularly described below. The Section 8 project-based housing assistance payment program (the "Section 8 Program") is authorized by Section 8 of the United States Housing Act of 1937, as amended, and in the case of Section 8 contracts is administered by contract administrators or HUD. Renewals of Section 8 HAP contracts are governed by the Multifamily Housing Mortgage and Assistance Restructuring Act, as amended ("MAHRA"). The Section 8 Program authorizes housing assistance payments to owners of qualified housing for the benefit of low-income families (defined generally as families whose incomes do not exceed 80% of the area median income for the area as determined by HUD), and very low-income families (defined generally as families whose income do not exceed 50% of the AMI as determined by HUD). Section 8 housing assistance payments generally represent the difference between the "contract rent" for the unit approved by HUD and the eligible tenant's contribution,which is generally 30% of income, as adjusted for family size and certain expenses, subject to a minimum rent contribution. The rents approved by HUD for the Project, as they may be adjusted from time to time with procedures set forth in MAHRA and the HAP Contract,are the"contract rents"for the Project. The HAP Contract will require the Borrower to maintain the Project in decent, safe and sanitary condition and to comply with other statutory and regulatory requirements governing the operation of the Project,use of project funds, and other matters. If the Borrower fails to comply with the terms of the HAP Contract, HUD or the contract administrator could seek to abate or terminate the payments under the HAP Contract,or take other sanctions. MAHRA requires that upon the request of the Borrower,HUD shall renew the HAP Contract under the Section 8 Program. However,because the HAP Contract is subject to receipt of annual appropriations by Congress, there is no assurance that the HAP Contract will be renewed or replaced upon its expiration. Funding for HAP contracts is appropriated by Congress on an annual basis, and there is no assurance that adequate funding will be appropriated each year during the term of the HAP Contract. Since payments received under the HAP Contract constitute a primary source of revenues for the Project, the expiration of the HAP Contract, or the failure of Congress to appropriate funds sufficient to fund the HAP Contract during each year of its term, would have a material adverse effect on the ability of the Project to generate revenues sufficient to pay the principal of and interest of the Loan. The Borrower The Borrower is Kiku Gardens Housing Partners,LP,a California limited partnership, formed for the sole purpose of acquiring, rehabilitating and operating the Project. The managing general partner of the Borrower is Hearthstone Housing Foundation (the "General Partner") owning a .005% ownership interest in the Borrower. Kiku Gardens Development, LLC, a California limited liability company (the 5 2014-05-20 Agenda Packet Page 447 "Special Limited Partner"), is a limited partner of Borrower and will own a .005% ownership interest in the Borrower. The Investor Limited Partner will be admitted as a limited partner of Borrower and will own a 99.989%interest in Borrower and an affiliate of Investor Limited Partner will hold a 0.01%limited partnership interest in Borrower as a class A special limited partner. The Special Limited Partner has substantial real estate development experience. The General Partner was founded in California in 1992 and is qualified to do business in California, Oregon, Texas and Washington. It received a determination letter from the Internal Revenue Service stating that it is exempt from income tax as a non-profit corporation organized for charitable purposes under Internal Revenue Code §501(c)(3) and currently serves as a general partner or managing member of over 175 limited partnership or limited liability company owners of apartment complexes with rent and tenant income restricted units located in California,Oregon,Texas and Washington. The Borrower has not acquired and does not intend to acquire any substantial assets or engage in any substantial business activities other than those related to the Project. However, affiliates of the Borrower may engage in the acquisition, development, ownership and management of other senior apartment projects that may compete with the Project. Regulatory Agreements Bond Regulatory Agreement The Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") imposes certain requirements with respect to the tax exempt status of the Bonds under the Code, which include a set aside of at least 30% of the units for rental to persons or families having incomes at or below 60% of area median gross income, adjusted for family size and determined in accordance with Section 142(d) of the Code, with monthly rent restricted to one twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of area gross median income, and at least 10% of the units for rental to persons or families having incomes at or below 50% of area median gross income, adjusted for family size and determined in accordance with Section 142(d) of the Code, with monthly rent restricted to one twelfth(1/12th)of thirty percent(30%)of fifty percent(50%)of area gross median income, for a period not less than fifty-five (55) years. See "APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT" for a description of the requirements affecting the operation of the Project in order to assume compliance with the Code. Tax Credit Regulatory Agreement. In connection with the sale of low-income housing tax credits by the Borrower, the Borrower will execute a Tax Credit Regulatory Agreement with the California Tax Credit Allocation Committee in accordance with Section 42 of the Code. Pursuant to this agreement,the Borrower must, among other things,rent 100 of the residential rental units (including one manager's unit) in the Project to individuals or households earning 60% or less of area median gross income for the area in which the Project is located, [and 16 of the residential rental units in the Project to individuals or households earning 50% or less of area median gross income for the area in which the Project is located], in each instance adjusted for household size, as determined by the United States Department of Housing and Urban Development. Monthly rents on such units in the Project are limited to 1/12 of 30% of 60% or 50%, as applicable, of the applicable area median gross income for the area in which the Project is located, adjusted for an imputed household size. The tenant income limits and rental restrictions under Section 42 of the Code assume that studio apartments are occupied by one person and that one-bedroom apartments are occupied by an average of 1.5 persons. Violation of the tax credit covenants and restrictions may result in loss or recapture of tax credits and penalties against the partners of the Borrower,among other things. 6 2014-05-20 Agenda Packet Page 448 Project Management The Manager of the Project will be Royal Property Management (the "Manager"). The Manager obtained its first client on June 1, 1995. Over the intervening years has steadily increased its portfolio of properties under management. The Manager currently manages 20 buildings throughout three counties. Eleven of its buildings are HUD insured apartment complexes, four are public housing sites, and four are tax credit properties. The Manager has received high REAC scores and has done well on its occupancy reviews. The Manager strives to maintain quality affordable housing, emphasizing residential services while promoting residents to play an active role in their community. The Manager prides itself in developing Communities of Helping Hands, which has motivated families and individuals to work in partnership, in the improvement of properties,resident services and community enhancement. Limited Recourse to Borrower The Borrower and its partners will not (subject to certain exceptions to nonrecourse liability set forth in the Reimbursement Agreement) be personally liable for payments on the Bond Mortgage Note, the payments on which are to be applied to pay the principal of and interest on the Bonds; nor will the Borrower (subject to certain exceptions to nonrecourse liability set forth in the Reimbursement Agreement) be personally liable under the other documents executed in connection with the issuance of the Bonds and the making of the Bond Mortgage Loan. Furthermore, no representation is made that the Borrower will have substantial funds available for the Project. Accordingly, neither the Borrower's financial statements nor those of its partners are included in this Official Statement. THE BONDS General The Bonds will be dated, will be payable in the amounts and on the dates, will bear interest (computed on the basis of a 360-day year) at the rates and payable on the dates, and will mature as described on the cover page. The Bonds will be issued as fully registered bonds in book entry form and book entry interests in the Bonds will be available for purchase in principal amounts of$5,000 or any integral multiple thereof. The Trustee, in its capacity as Registrar, will keep all books and records necessary for registration,exchange and transfer of the Bonds. Discussion of the Bonds being issued only under the Book Entry System is provided below. Details regarding the procedures for and manner of payment, issuance, exchange and transfer of the Bonds if ever issued in certificated form as provided in the Bond proceedings are also stated below. Book Entry System The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Borrower believes to be reliable, but neither the Issuer nor the Borrower take responsibility for the accuracy thereof. The Depository Trust Company,New York,New York("DTC"),will act as securities depository for the Bonds. The Bonds will be initially issued and issuable only as one fully registered Bond 7 2014-05-20 Agenda Packet Page 449 certificate for each maturity, registered in the name of Cede & Co. as partnership nominee of DTC. Those fully registered Bonds will be deposited with and retained in the custody of DTC. For ease of reference in this and other discussions, reference to "DTC"includes when applicable any successor securities depository and the nominee of the depository. For all purposes under the Bond proceedings, DTC will be and will be considered by the Issuer and the Trustee to be the owner or Holder of the Bonds. Owners of book entry interests in the Bonds (book entry interest owners)will not receive or have the right to receive physical delivery of Bonds, and will not be or be considered by the Issuer and the Trustee to be,and will not have any rights as,owners or holders of Bonds under the Bond proceedings. DTC is a limited-purpose trust company organized under, and 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 securities that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges,in deposited securities through electronic computerized book entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond(the book entry interest owner)is in turn to be recorded on the Direct and Indirect Participant's records. Book entry interest owners will not receive written confirmation from DTC of their purchase,but are 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 book entry interest owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of book entry interest owners. Book entry interest owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book entry system for the Bonds is discontinued (see "Revision of Book Entry System; Replacement Bonds"). To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in actual ownership. DTC has no knowledge of the book entry interest owners (or beneficial owners) of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the book entry interest owners. Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to book entry 8 2014-05-20 Agenda Packet Page 450 interest owners, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Debt service payments on the Bonds will be made by the Trustee to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to book entry interest owners will be governed by standing instructions and customary practices,as is the case with securities held for the accounts of customers in bearer form or registered in"street name,"and will be the responsibility of such Participant and not of DTC,the Trustee, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of debt service to DTC is the responsibility of the Issuer or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the book entry interest owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Trustee. The Issuer may decide to discontinue use of the book entry system if DTC (or a successor securities depository) determines not to continue to act as securities depository for the Bonds. See"Revision of Book Entry System; Replacement Bonds." The information above in this section concerning DTC and DTC's book entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for its accuracy. Direct Participants and Indirect Participants may impose service charges on book entry interest owners in certain cases. Purchasers of book entry interests should discuss that possibility with their brokers. The Issuer,the Borrower and the Trustee have no role in the purchases,transfers or sales of book entry interests. The rights of book entry interest owners to transfer or pledge their interests, and the manner of transferring or pledging those interests, may be subject to applicable state law. Book entry interest owners may want to discuss with their legal advisers the manner of transferring or pledging their book entry interests. The Issuer, the Borrower and Trustee have no responsibility or liability for any aspects of the records or notices relating to, or payments made on account of, book entry interest ownership, or for maintaining, supervising or reviewing any records relating to that ownership. The Issuer and the Borrower cannot and do not give any assurances that DTC,Direct Participants, Indirect Participants or others will distribute to the book entry interest owners payments of debt service on the Bonds made to DTC as the registered owner, or any notices, or that they will do so on a timely basis, or that DTC will serve and act in a manner described in this Official Statement. Revision of Book Entry System; Replacement Bonds Replacement Bonds ("Replacement Bonds')may be issued directly to the owners of Bonds other than a depository, or its nominee, but only in the event that (a)the depository determines not to continue to act as securities depository for the Bonds (which determination shall become effective no less than 90 days after written notice to such effect to the Issuer and the Trustee); or (b) the Issuer has advised a depository of its determination (which determination is conclusive as to the depository and owners of the Bonds)that the depository is incapable of discharging its duties as securities depository for the Bonds; or (c) the Issuer has determined (which determination is conclusive as to the depository and the owners of 9 2014-05-20 Agenda Packet Page 451 the Bonds) that the interests of the beneficial owners of the Bonds might be adversely affected if such book-entry only system of transfer is continued. Upon occurrence of any of the foregoing events, the Issuer and the Borrower shall use commercially reasonable efforts to attempt to locate another qualified securities depository. If the Issuer and the Borrower fail to locate another qualified securities depository to replace the depository, the Issuer and the Borrower, at the Borrower's expense, shall cause to be authenticated and delivered Replacement Bonds, in certificate form, to the owners of the Bonds. In the event that the Issuer makes the determination noted in (b) or (c) above (provided that the Issuer undertakes no obligation to make any investigation to determine the occurrence of any events that would permit the Issuer to make any such determination), and has made provisions to notify the owners of Bonds of such determination by mailing an appropriate notice to the depository, the Issuer and the Borrower shall cause to be issued Replacement Bonds in certificate form to the owners of Bonds as shown on the records of the depository provided to the Issuer. Debt service on Replacement Bonds will be payable when due without deduction for the services of the Trustee as paying agent. Principal will be payable to the registered owner upon presentation and surrender of the Bonds then due and payable at the designated corporate trust office of the Trustee. Interest will be payable on the interest payment date by the Trustee by check, mailed to the registered owner of record on the Register at the close of business on the 15th day of the month preceding the interest payment date. Replacement Bonds will be exchangeable for Replacement Bonds of authorized denominations, and transferable, at the designated office of the Trustee without charge (except taxes or governmental fees). No Redemption The Bonds shall not be subject to redemption prior to the Maturity Date thereof and the Borrower shall not have an option to prepay the Note prior to the Bond Maturity Date. SECURITY AND SOURCES OF PAYMENT FOR THE BONDS At all times the Bonds will be secured by Eligible Investments and Available Moneys sufficient, without need for reinvestment, to pay all of the interest on the Bonds when due and to pay the principal of the Bonds at maturity,as further described herein. To the extent provided in and except as otherwise permitted by the Indenture, (i) the Bonds will be special obligations of the Issuer and the Bond Debt Service Charges thereon shall be payable equally and ratably solely from the Issuer Revenues, including but not limited to moneys and investments in the Special Funds, (ii) the payment of Bond Debt Service Charges on the Bonds shall be secured by the assignment of Issuer Revenues under and by the Indenture,and(iii)payments due on the Bonds also shall be secured by the Note. Issuer Revenues include the payments required to be made by the Borrower under the Loan Agreement and the Note; all other moneys received by the Issuer or the Trustee for the account of the Issuer with respect to repayment of the Loan; moneys and investments in or allocated to the Special Funds; and the income and profit from the investment of the Loan Payments and such other moneys,and the investments of those moneys. The Issuer has directed the Trustee to fund the Collateral Fund pursuant to the terms of the Indenture. Pursuant to the Indenture,to the extent funds available in the Bond Fund and the Project Fund on any Loan Payment Date are insufficient to pay Bond Debt Service Charges on any Interest Payment Date, funds on deposit in the Collateral Fund will be transferred to the Trustee to pay the Bond Debt 10 2014-05-20 Agenda Packet Page 452 Service Charges. Amounts so transferred from the Collateral Fund shall be a credit to the Borrower against the Loan Payments due pursuant to the Loan Agreement and the Note. The funds on deposit in the Special Funds will be invested in Eligible Investments. No fees of the Issuer or the Trustee will be payable from the Issuer Revenues. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY OUT OF THE REVENUES, RECEIPTS AND OTHER MONEYS PLEDGED THEREFOR UNDER THE INDENTURE. THE BONDS ARE NOT A GENERAL OBLIGATION, DEBT OR BONDED INDEBTEDNESS OF THE STATE, THE ISSUER OR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE,AND NEITHER THE STATE,THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE STATE IS LIABLE FOR THE PAYMENT OF THE BONDS AND THE HOLDERS OF THE BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE ISSUER OR BY THE STATE OR ANY POLITICAL SUBDIVISION THEREOF FOR THE PAYMENT OF THE PRINCIPAL OF AND ANY PREMIUM AND INTEREST ON THE BONDS. THE ISSUER HAS NO TAXING POWER. NEITHER THE ISSUER NOR THE STATE NOR ANY POLITICAL SUBDIVISION OF THE STATE WILL BE OBLIGATED TO PAY THE PRINCIPAL OF AND THE INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE ISSUER REVENUES PLEDGED UNDER THE INDENTURE. THE TRUSTEE The information under this heading has been provided solely by the Trustee and has not been independently verified. No representation whatsoever as to the accuracy, adequacy or completeness of such information is being made. U.S. Bank National Association will act as Trustee pursuant to the Indenture. The obligations of the Trustee are described in the Indenture. The Trustee has undertaken only those duties and obligations that are expressly set forth in the Indenture. The Trustee has not independently passed upon the validity of the Bonds, the security of the payment therefor, the value or condition of any assets pledged to the payment thereof, the adequacy of the provisions for such payment, the status for federal or state income tax purposes of the interest on the Bonds,or the investment quality of the Bonds. Except for the contents in this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and has assumed no responsibility for the nature, content, accuracy or completeness of the information included in this Official Statement. CERTAIN BONDHOLDERS' RISKS The following is a summary of certain risks associated with a purchase of the Bonds. There are other possible risks not discussed below. The Bonds are payable from the payments to be made by the Borrower under the Loan Agreement and the Note, and from amounts on deposit in the Special Funds and the interest earnings thereon. The Borrower's obligation to make payments pursuant to the Loan Agreement and the Note are nonrecourse obligations with respect to which the Borrower and its partners have no personal liability (except as otherwise provided in the Note) and as to which the Borrower and its partners have not pledged any of their respective assets. General Payment of the Bond Service Charges, and the Borrower's obligations with respect to the Bond Service Charges,will be primarily secured by and payable from Bond proceeds held in the Project Fund 11 2014-05-20 Agenda Packet Page 453 and moneys deposited into the Collateral Fund and the Bond Fund,including the Initial Deposit Account held in the Bond Fund. Although the Borrower will execute the Note to evidence its obligation to repay the Loan, it is not expected that any revenues from the Project or other amounts, except moneys in the Special Funds, will be available to satisfy that obligation. The Indenture requires the Trustee to verify, before any disbursement of funds from the Project Fund, that the sum of the funds on deposit in the Project Fund and the Collateral Fund is at least equal to the then outstanding principal amount of the Bonds. It is expected that funds on deposit in the Collateral Fund and Initial Deposit Account of the Bond Fund,and the interest earnings thereon will be sufficient to pay the debt service on the Bonds. Limited Security for Bonds The Bonds are not secured by the Project or any mortgage on the Project. Investors should look exclusively to amounts on deposit in the Special Funds under the Indenture and investment earnings on each as the source of payment of debt service on the Bonds. Issuer Limited Liability The Bonds will not be insured or guaranteed by any governmental entity or by the Issuer or any member or program participant of the foregoing. The Holders of the Bonds will have no recourse to the Issuer in the event of an Event of Default on the Bonds. The Trust Estate for the Bonds will be the only THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY OUT OF THE REVENUES, RECEIPTS AND OTHER MONEYS PLEDGED THEREFOR UNDER THE INDENTURE. THE BONDS ARE NOT A GENERAL OBLIGATION, DEBT OR BONDED INDEBTEDNESS OF THE STATE, THE ISSUER OR OF ANY OTHER POLITICAL SUBDIVISION OF THE STATE, AND NEITHER THE STATE, THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE STATE IS LIABLE FOR THE PAYMENT OF THE BONDS AND THE HOLDERS OF THE BONDS DO NOT HAVE THE RIGHT TO HAVE ANY EXCISES OR TAXES LEVIED BY THE ISSUER OR BY THE STATE OR ANY POLITICAL SUBDIVISION THEREOF FOR THE PAYMENT OF THE PRINCIPAL OF AND ANY PREMIUM AND INTEREST ON THE BONDS. THE ISSUER HAS NO TAXING POWER. NEITHER THE ISSUER NOR THE STATE NOR ANY POLITICAL SUBDIVISION OF THE STATE WILL BE OBLIGATED TO PAY THE PRINCIPAL OF AND THE INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE ISSUER REVENUES PLEDGED UNDER THE INDENTURE. Enforceability of Remedies upon an Event of Default The remedies available to the Trustee and the owners of the Bonds upon an Event of Default under the Indenture, the Loan Agreement, the Tax Regulatory 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 Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Bonds 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. Tax Exemption In the event the Borrower does not maintain the Project as a"qualified residential rental project" for the Qualified Project Period, the interest on the Bonds may be or become taxable from the date of 12 2014-05-20 Agenda Packet Page 454 original issuance to the Holders of the Bonds for federal income tax purposes. Such an event will not constitute an immediate default under the Loan and is not the basis for an increase in the rate of interest payable on the Bonds or give rise to the payment to the owners of the Bonds of any amount denoted as "supplemental interest," "additional interest," "penalty interest," "liquidated damages" or otherwise, in addition to the amounts payable to the owners of the Bonds prior to the occurrence of the event which results in the interest payable on the Bonds being includable,for federal income tax purposes,in the gross income of the owners of the Bonds. Secondary Markets and Prices No representation is made concerning the existence of any secondary market for the Bonds. The Underwriter will not be obligated to repurchase any of the Bonds,nor can any assurance be given that any secondary market will develop following the completion of the offering of the Bonds. Further, there can be no assurance that the initial offering prices for the Bonds will continue for any period of time. Furthermore, the Bonds should be purchased for their projected returns only and not for any resale potential,which may or may not exist. Summary The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Bonds. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with this entire Official Statement and the Appendices hereto. NO LITIGATION The Issuer At the time of delivery and payment for the Bonds, the Issuer will deliver, or cause to be delivered,a certificate of the Issuer substantially to the effect that there is no litigation or other proceeding now pending or threatened against the Issuer of which the Issuer has notice or, to the knowledge of the Issuer, any basis therefor, seeking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the Issuer taken with respect to the issuance or sale thereof or the financing of the Loan or the pledge or application of any moneys or security provided for the payment of the Bonds or the existence or powers of the Issuer, or contesting in any material respect the completeness or accuracy of the Official Statement or any supplement or amendment thereto, or challenging the exclusion of interest on the Bonds from gross income for Federal income tax purposes. The Borrower The Borrower has represented that there is no litigation now pending or threatened that if decided adversely to the interests of the Borrower would have a material adverse effect on the operations or financial position of the Borrower. UNDERWRITING Pursuant and subject to the terms and conditions set forth in a Bond Purchase Agreement (the "Bond Purchase Agreement"), among Citigroup Global Markets Inc. (the "Underwriter"), the Issuer and the Borrower, the Underwriter has agreed to purchase the Bonds at the price of % of the original principal amount of the Bonds. For its services relating to the transaction, the Underwriter will receive a 13 2014-05-20 Agenda Packet Page 455 fee of$ *. From its fees, the Underwriter will be obligated to pay certain costs and expenses of the financing. The Underwriter's obligations are subject to certain conditions precedent, and the Underwriter will purchase all the Bonds, if any are purchased. Pursuant to the Bond Purchase Agreement, the Borrower has agreed to indemnify the Underwriter and the Issuer against certain civil liabilities,including liabilities under federal securities laws. It is intended that the Bonds will be offered to the public initially at the offering prices set forth on the cover page of this Official Statement and that such offering prices subsequently may change without any requirement of prior notice. The Underwriter may offer the Bonds to other dealers at prices lower than those offered to the public. The Underwriter has entered into a retail distribution agreement with each of TMC Bonds L.L.C. ("TMC") and UBS Financial Services Inc. ("UBSFS"). Under these distribution agreements, the Underwriter may distribute municipal securities to retail investors through the financial advisor network of UBSFS and the electronic primary offering platform of TMC. As part of this arrangement, the Underwriter may compensate TMC (and TMC may compensate its electronic platform member firms) and UBSFS for their selling efforts with respect to the Bonds. The Underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Underwriter and its affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the Issuer for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Issuer. MULTIPLE ROLES OF PARTIES Citibank,N.A., an affiliate of the Underwriter, is originating and servicing the Freddie Mac Loan and is being separately compensated for its service in such capacity. Citigroup Global Markets Inc. will serve as the Underwriter for the Bonds. Conflicts of interest could arise by reason of the different capacities in which Citigroup Global Markets Inc. and its affiliates act in connection with the Bonds and the Freddie Mac Loan. TAX MATTERS In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation,Newport Beach, California ("Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes, except for interest on any Bond for any period during which such Bond is held by a "substantial user" of any facilities financed with the proceeds of the Bonds or by a "related person" as such terms are used in Section 147(a) of the Code, but interest on the Bonds is an item of tax preference for purposes of *Preliminary; subject to change. 14 2014-05-20 Agenda Packet Page 456 calculating the federal alternative minimum tax imposed on individuals and corporations. Bond Counsel is also of the opinion that interest on the Bonds is exempt from State of California personal income tax. Bond Counsel's opinion as to the exclusion from gross income of interest on the Bonds is based upon certain representations of fact and certifications made by the Issuer,the Borrower,and others and is subject to the condition that the Issuer and Borrower comply with all requirements of the Code,that must be satisfied subsequent to the issuance of the Bonds,to assure that interest on the Bonds will not become included in gross income for federal income tax purposes. In particular,the Code includes a requirement that a certain percentage of rental units in the Project financed by the Bonds be occupied by persons as specified income levels continuously during a period specified under the Code, and that such Project be rented or available for rental on a continuous basis during a period specified under the Code. Failure to comply with such requirements of the Code might cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Issuer and Borrower have covenanted to comply with all such requirements. The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of other similar bonds). It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds). No assurance can be given that, in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the execution and delivery of the Bonds to the extent that it adversely affects the exclusion from gross income of interest on the Bonds or their market value. Bond Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the Closing Date. Bond Counsel has not undertaken to determine, or to inform any person,whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson&Rauth, a Professional Corporation. Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes provided the Issuer and Borrower continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds. SUBSEQUENT TO THE ISSUANCE OF THE BONDS, 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 BONDS OR THE MARKET VALUE OF THE BONDS. 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 BONDS. THE INTRODUCTION OR ENACTMENT OF ANY OF SUCH CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO 15 2014-05-20 Agenda Packet Page 457 ASSURANCE CAN BE GIVEN THAT, SUBSEQUENT TO THE ISSUANCE OF THE BONDS, SUCH CHANGES (OR OTHER CHANGES) WILL NOT BE INTRODUCED OR ENACTED OR INTERPRETATIONS WILL NOT OCCUR. BEFORE PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS. A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix B. LEGAL MATTERS Legal matters incident to the authorization, issuance and sale of the Bonds and with regard to the tax exempt status of the interest thereon (see "TAX MATTERS") are subject to the approving legal opinion of Stradling,Yocca,Carlson&Rauth,Newport Beach,California,Bond Counsel. A signed copy of that opinion,dated and speaking only as of the date of original delivery of the Bonds,will be delivered to the Underwriter at the time of such original delivery. A copy of such opinion will accompany the Bonds and a draft of that opinion is attached hereto as Appendix B. In rendering its approving opinion, Bond Counsel will rely on certifications and representations of fact to be contained in the transcript of proceedings which Bond Counsel will not have independently verified. Certain legal matters will be passed upon for the Underwriter by its counsel, Eichner Norris & Neumann PLLC, Washington, D.C., and for the Borrower by Katten Muchin Rosenman LLP, Chicago, Illinois,and Hessel,Aluise and Neun, P.C.,Washington,D.C. RATING It is a condition precedent to the Underwriter's acceptance of the Bonds on the date of issuance that Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business (the "Rating Agency"), has assigned the rating to the Bonds as shown on the cover page of this Official Statement. There is no assurance that such rating will continue for any given period of time or that it will not be revised or withdrawn entirely by such rating agency, if in its judgment, circumstances so warrant. A revision or withdrawal of such rating may have an effect on the market price of the Bonds. The rating is not a recommendation to buy, sell, or hold the Bonds. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the rating agency originally establishing the rating, circumstances so warrant. The Issuer has not undertaken responsibility either to bring to the attention of the registered owner of the Bonds any proposed revision or withdrawal of the rating of the Bonds or to oppose any such proposed revision or withdrawal. Any such change in or withdrawal of such a rating could have an adverse effect on the market price of the Bonds if a registered owner attempts to sell the same. The Issuer has not assumed any responsibility either to notify the owners of any proposed change in or withdrawal of such rating subsequent to the date of the Official Statement and the Borrower has such responsibility only in connection with the reporting of events as provided in the Continuing Disclosure Agreement (as defined below). Neither of them has any responsibility to contest any such revision or withdrawal. 16 2014-05-20 Agenda Packet Page 458 CONTINUING DISCLOSURE The Issuer has determined that no financial or operating data concerning the Issuer is material to an evaluation of the offering of the Bonds or to any decision to purchase, hold or sell Bonds and the Issuer will not provide any such information. The Issuer shall have no liability to the Holders of the Bonds or any other person with respect to Rule 15c2-12 promulgated by the Securities and Exchange Commission(the"Rule"). The Borrower will enter into a Continuing Disclosure Agreement dated as of June 1, 2014 (the "Continuing Disclosure Agreement"),with the Trustee, acting as the Dissemination Agent, obligating the Borrower to send, or cause to be sent, certain financial information with respect to the Project to certain information repositories annually and to provide notice, or cause notice to be provided, to the Municipal Securities Rulemaking Board, if any,of certain enumerated events for the benefit of the beneficial owners and Holders of any of the Bonds, in order to allow the Underwriter to meet the requirements of Section (b)(5)(i)of the Rule. A failure by the Borrower to comply with the provisions of the Continuing Disclosure Agreement will not constitute a default under the Indenture or the Loan Agreement (although Holders of the Bonds will have any available remedy at law or in equity for obtaining necessary disclosures). Nevertheless, such a failure to comply is required to be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds. Neither the Borrower, nor its members, nor any entity affiliated with the Borrower nor the members has defaulted in connection with its or their continuing disclosure undertakings or obligations in connection with any issuance of bonds subject to the Rule. See "APPENDIX F — FORM OF CONTINUING DISCLOSURE AGREEMENT"herein. MISCELLANEOUS The foregoing references to and summaries or descriptions of provisions of the Bonds, the Loan Agreement, the Indenture and the Regulatory Agreement, and all references to other materials not stated to be quoted in full are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of the provisions thereof. After the Closing Date, copies of the Loan Agreement, the Indenture, the Note, the Regulatory Agreement may be obtained from the Trustee at its designated corporate trust office. [Remainder of page intentionally left blank] 17 2014-05-20 Agenda Packet Page 459 The Official Statement has been duly authorized, executed and delivered by the Borrower. KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory 2014-05-20 Agenda Packet Page 460 APPENDIX A DEFINITION OF CERTAIN TERMS "Act" means Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code, as amended. "Additional Payments" means the amounts required to be paid by the Borrower pursuant to the provisions of the Loan Agreement. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the policies of such Person, directly or indirectly, whether through the power to appoint and remove its directors, the ownership of voting securities, by contract, or otherwise; and the terms "controlling" and "controlled"have meanings correlative to the foregoing. "Agreement" means the Loan Agreement dated as of even date with the Indenture, between the Issuer and the Borrower and assigned by the Issuer,except for Unassigned Issuer's Rights,to the Trustee, as amended or supplemented from time to time. "Authorized Borrower Representative" means the person or persons designated to act on behalf of the Borrower by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by an officer of the manager of either of the general partners of the Borrower,which certificate may designate an alternate or alternates. "Authorized Denomination" means (a) so long as the Bonds are rated "A," without regard to a modifier (or the equivalent) or higher by a Rating Agency, $5,000 or any integral multiple of$5,000 in excess thereof, or (b) at any other time, $100,000, or any integral multiple of$0.01 in excess thereof, except that in each case one Bond of each series may be in a principal amount equal to the then Outstanding principal amount of the Bonds of such series. "Authorized Official" means the Chairperson or the Executive Director of the Issuer, and any other officer of the Issuer designated by certificate of any of the foregoing as authorized by the Issuer to perform a specified act, sign a specified document or otherwise take action with respect to the Bonds. The Trustee may conclusively presume that a person designated in a written certificate filed with it as an Authorized Official is an Authorized Official until such time as such provider files with it a written certificate identifying a different person or persons to act in such capacity. "Available Moneys"means,as of any date of determination,any of the following, as applicable: (a) the proceeds of the Bonds; (b) proceeds from advances on the Freddie Mac Loan deposited directly with the Trustee by the Freddie Mac Lender; (c) any other amounts, including the proceeds of refunding bonds, for which the Trustee has received an opinion of counsel to the effect that the use of such amounts to make payments on the Bonds would not violate Section 362(a) of the Bankruptcy Code (or that relief from the automatic stay provisions of such Section 362(a) would be available from the bankruptcy court) or be avoidable as 2014-05-20 Agenda Packet Page 461 preferential payments under Section 547 of the Bankruptcy Code should the Issuer or the Borrower become a debtor in proceedings commenced under the Bankruptcy Code; (d) the proceeds of any letter of credit; or (e) investment earnings derived from the investment of moneys described in (a), (b), (c), or (d). "Bankruptcy Code"means Title 11 of the United States Code entitled"Bankruptcy," as in effect now and in the future,or any successor statute. "Board"means the Board of the Issuer. "Bond Counsel" shall mean, collectively, Stradling, Yocca Carlson & Rauth, a Professional Corporation or any other attorney or firm of attorneys designated by the Issuer and approved by a Majority of the Holders of the Bonds and who has a national reputation for skill in connection with the authorization and issuance of municipal obligations under Sections 103 and 141 through 150 (or any successor provisions)of the Code. "Bond Debt Service Charges"means, for any period or payable at any time, the principal of and interest on the Bonds for that period or payable at that time whether due at maturity or upon acceleration. "Bond Fund"means the Bond Fund created in the Indenture. "Bond Payment Date" means each Interest Payment Date and any other date Bond Debt Service Charges on the Bonds are due,whether at maturity,upon acceleration or otherwise. "Bond Resolution" means that certain Bond Resolution relating to the Project, adopted by the Board on May 20,2014. "Bond Year" means each annual period of twelve months the first of which commences on the date of the original issuance and delivery of the Bonds and the last of which ends on the maturity of the Bonds,except that the first and last Bond Year may be less than twelve months. "Bonds" means the Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A of the Issuer authorized in the Bond Resolution and the Indenture in an amount of$ *. "Book Entry Form"or"Book Entry System"means, with respect to the Bonds,a form or system, as applicable, under which (i) physical Bond certificates in fully registered form are issued only to a Depository or its nominee, with the physical Bond certificates "immobilized" in the custody of the Depository and (ii) the ownership of book entry interests in Bonds and Bond Debt Service Charges thereon may be transferred only through a book entry made by Persons other than the Issuer or the Trustee. The records maintained by Persons other than the Issuer or the Trustee constitute the written record that identifies the owners, and records the transfer, of book entry interests in the Bonds and Bond Debt Service Charges thereon. "Borrower"means Kiku Gardens Housing Partners, LP, a California limited partnership, and its lawful successors and assigns to the extent permitted by the Loan Agreement. *Preliminary; subject to change. A-2 2014-05-20 Agenda Packet Page 462 "Borrower Documents"has the meaning given to such term in the Loan Agreement. "Business Day" means a day of the week, other than a Saturday or a Sunday, on which commercial banks located in the city in which the principal corporate trust office of the Trustee are not required or authorized to remain closed. "Closing Date"means June ,2014. "Code" means the Internal Revenue Code of 1986, as amended, and all applicable regulations (whether proposed,temporary or final)under the Code and the statutory predecessor of the Code,and any official rulings and judicial determinations under the foregoing applicable to the Bonds. "Collateral Fund"means the Collateral Fund created pursuant to the Indenture. "Completion Date" means the date of substantial completion of the Project evidenced in accordance with the requirements of the Loan Agreement. "Construction Period" means the period between the beginning of the acquisition, rehabilitation, remodeling,improving and equipping of the Project and the Completion Date. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of June 1,2014,between the Borrower and U.S. Bank National Association, as Dissemination Agent. "Contractual Obligation"means for any Person any obligation, covenant, or condition contained in any evidence of Indebtedness or any agreement or instrument under or pursuant to which any evidence of Indebtedness has been issued, or any other material agreement, instrument or guaranty, to which such Person is a party or by which such Person or any of its assets or properties are bound. "Costs of Issuance Fund"means the Costs of Issuance Fund created pursuant to the Indenture. "Depository" means, with respect to the Bonds, DTC, until a successor Depository shall have become such pursuant to the applicable provisions of the Indenture,and thereafter,Depository shall mean the successor Depository. Any Depository shall be a securities depository that is a clearing agency under federal law operating and maintaining,with its participants or otherwise, a Book Entry System to record ownership of book entry interests in the Bonds or Bond Debt Service Charges thereon, and to effect transfers of book entry interests in the Bonds. "Disbursement Request"shall have the meaning set forth in the Indenture. "Dissemination Agent" means U.S. Bank National Association, acting in its capacity as dissemination agent under the Continuing Disclosure Agreement, or any successor dissemination agent designated in accordance with the Continuing Disclosure Agreement. "DTC" means The Depository Trust Company (a limited purpose trust company), New York, New York, and its successors or assigns. "DTC Participant"means any participant contracting with DTC under its book entry system and includes securities brokers and dealers,banks and trust companies and clearing corporations. "Eligible Investments"means (i)non-AMT tax exempt obligations rated in the highest short term category by S&P; or (ii) money market mutual funds (including funds of the Trustee or affiliates) A-3 2014-05-20 Agenda Packet Page 463 registered under the Investment Company Act of 1940, as amended, investing solely in investments described in (i) which are rated in the highest short term category by S&P, which in any case, shall mature or be subject to tender or redemption at par on or prior to the earlier of(A) 35 days from the date of investment or(B)the date such moneys are needed for the purposes thereof. "Event of Default"means any of the events described as an Event of Default in the Indenture or the Loan Agreement. "Extraordinary Services" and `Extraordinary Expenses" mean all services rendered and all reasonable expenses properly incurred by the Trustee under the Indenture, other than Ordinary Services and Ordinary Expenses. Extraordinary Services and Extraordinary Expenses shall specifically include services rendered or expenses incurred by the Trustee in connection with, or in contemplation of, an Event of Default. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term"Fair Market Value" means the acquisition price in a bona fide, arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is a commingled investment fund in which the Issuer and related parties do not own more than a 10% beneficial interest therein if the return paid by the fund is without regard to the source of the investment. To the extent required by applicable regulations under the Code, the term"investment"will include a"hedge." "Fees and Expenses"means the fees, advances, out-of-pocket expenses, costs and other charges payable by the Borrower from time to time (other than fees for Extraordinary Services and Extraordinary Expenses)pursuant to the Loan Agreement. "Fiscal Year" means, with respect to a Person, that period beginning on January 1 of each year and ending on December 31 of that year or such other fiscal year as shall be designated by such Person as its annual accounting period. "Force Majeure" means any of the causes, circumstances or events described as constituting Force Majeure in the Loan Agreement. "Freddie Mac"means the Federal Home Loan Mortgage Corporation. "Freddie Mac Borrower Note" means the $ * Multifamily Note dated 2014 from Borrower to Freddie Mac Lender to evidence its indebtedness under the Freddie Mac Loan. "Freddie Mac Guide" means the Freddie Mac Multifamily Seller/Servicer Guide, as the same may be amended from time to time. *Preliminary; subject to change. A-4 2014-05-20 Agenda Packet Page 464 "Freddie Mac Lender" means Citibank, N.A., a national banking association, its successors and assigns,including Freddie Mac,if and when Freddie Mac acquires the Freddie Mac Loan. "Freddie Mac Loan"means the mortgage loan in the original principal amount of$ to be advanced by the Freddie Mac Lender to the Borrower. "Freddie Mac Loan Commitment" means, collectively, the commitments for the Freddie Mac Loan with respect to the Project, from the Freddie Mac Lender and from Freddie Mac. "Freddie Mac Loan Documents" means the documents related to the Freddie Mac Loan, including the Freddie Mac Loan Commitment, the Freddie Mac Borrower Note, the Freddie Mac Mortgage and any and all other documents, agreements, or instruments which evidence or secure the indebtedness evidenced by the Freddie Mac Borrower Note. "Freddie Mac Loan Funds"means proceeds of the Freddie Mac Loan in the principal amount of $ plus the Initial Deposit, which proceeds have been assigned by the Borrower to the Trustee pursuant to the Loan Agreement. "Freddie Mac Mortgage"means the first-lien priority Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of , 2014 from Borrower for the benefit of the Freddie Mac Lender to secure the repayment of the Freddie Mac Borrower Note. "GAAP"means generally accepted accounting principles applied on a consistent basis. "Government" shall mean the government of the United States of America, the government of any other nation,any political subdivision of the United States of America or any other nation(including, without limitation, any state, territory, federal district, municipality or possession) and any department, agency or instrumentality thereof; and "Governmental" shall mean of, by, or pertaining to any Government. "HUD"means the United States Department of Housing and Urban Development. "Holder," "Holders," or "Holder of a Bond" means the Person in whose name a Bond is registered on the Register. "Indebtedness"shall mean for any Person(a) all indebtedness or other obligations of such Person for borrowed money or for the deferred purchase price of property or services, (b) all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services, the payment or collection of which such Person has guaranteed (except by reason of endorsement for deposit or collection in the ordinary course of business) or in respect of which such Person is liable, contingently or otherwise, including, without limitation, by way of agreement to purchase,to provide funds for payment,to supply funds to or otherwise to invest in such other Person,or otherwise to assure a creditor against loss, (c)all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien, upon or in property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness or other obligations, (d) all direct or contingent obligations of such Person in respect of letters of credit, (e) all lease obligations which have been or should be, in accordance with GAAP, capitalized on the books of such Person as lessee, and (f) guaranties of any of the foregoing; provided that Indebtedness does not include accounts payable and accrued expenses incurred in the ordinary course of business. A-5 2014-05-20 Agenda Packet Page 465 "Indenture" means the Trust Indenture, dated as of June 1, 2014, between the Issuer and the Trustee,as amended or supplemented from time to time in accordance with the Indenture. "Independent" when used with respect to a specified Person means such Person has no specific financial interest direct or indirect in the Borrower or any Affiliate of the Borrower and in the case of an individual is not a director, trustee, officer, partner or employee of the Borrower or any Affiliate of the Borrower and in the case of an entity, does not have a partner, director, trustee, officer, partner or employee who is a director,trustee, officer or employee of any partner of the Borrower or any Affiliate of the Borrower. "Information Services" means in accordance with then-current guidelines of the Securities and Exchange Commission, the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(1) of the Securities Exchange Act of 1934, or any successor entity or entities designated by the Securities and Exchange Commission. "Initial Deposit"means the deposit of Available Moneys in the amount of$ * which the Borrower shall cause to be made from Available Moneys other than the proceeds of the Bonds to the Initial Deposit Account of the Bond Fund on the Closing Date. "Initial Deposit Account"means the Initial Deposit Account within the Bond Fund created in the Indenture. "Interest Payment Date"means each June 1 and December 1, commencing December 1,2014. "Interest Rate"means %per annum. "Interest Rate for Advances" means the rate of twelve percent per annum (12%) or the rate per annum which is two percent plus that interest rate announced by the Trustee in its lending capacity as a bank as its "Prime Rate"or its "Base Rate,"whichever is greater and lawfully chargeable,in whole or in part. "Issuer"means the Chula Vista Housing Authority,a public body corporate and politic,organized and existing under the laws of the State of California. "Investor Limited Partner" means CREA Garden Villas, LLC, a Delaware limited liability company,its permitted successors and assigns. "Issuer Revenues"means (a)the Loan Payments, (b) all other moneys received or to be received by the Issuer or the Trustee in respect of repayment of the Loan,including without limitation, all moneys and investments in the Bond Fund, (c)any moneys and investments in the Project Fund and the Collateral Fund, and (d) all income and profit from the investment of the foregoing moneys. The term "Issuer Revenues" does not include any moneys or investments in the Rebate Fund and the Costs of Issuance Fund. "Lien" means any mortgage, deed of trust, lien, charge, security interest or encumbrance of any kind upon, or pledge of, any property, whether now owned or hereafter acquired, and includes the acquisition of, or agreement to acquire, any property subject to any conditional sale agreement or other title retention agreement, including a lease on terms tantamount thereto or on terms otherwise substantially equivalent to a purchase. *Preliminary; subject to change. A-6 2014-05-20 Agenda Packet Page 466 "Loan"means the loan by the Issuer to the Borrower with the proceeds received from the sale of the Bonds. "Loan Payment Cure Period"means a period of four Business Days following any Loan Payment Date. "Loan Payment Date"means the fifth Business Day preceding each Bond Payment Date. "Loan Payments" means the amounts required to be paid by the Borrower in repayment of the Loan pursuant to the provisions of the Note and the Loan Agreement. "Majority of the Holders of the Bonds"means the Holders of more than fifty percent(50%) of the principal amount of the then Outstanding Bonds. "Maturity Date"means June 1,2015. "Minimum Trustee Rating"means a long term rating of the Trustee's unsecured obligations with maturities in excess of one year of not less than"A"by S&P,or,if the Trustee does not have such a rating from S&P, it must have a minimum rating of its unsecured obligations with maturities of one year or less of"A-1"from S&P. "Note"means the Promissory Note, dated as of the Closing Date,in the form attached to the Loan Agreement as Exhibit A, in the original principal amount of$ *, evidencing the obligation of the Borrower to make Loan Payments. "Notice Address"has the meanings set forth in the Indenture. "Opinion of Bond Counsel"means an opinion of Bond Counsel. "Ordinary Services" and"Ordinary Expenses"mean those services normally rendered, and those expenses normally incurred,by a trustee under instruments similar to the Indenture. Without limiting the generality of this defmition, Ordinary Services and Ordinary Expenses shall include, without limitation, services provided by the Trustee in connection with any meetings of Holders of the Bonds as provided in the Indenture. "Outstanding Bonds,""Bonds outstanding" or"outstanding" as applied to Bonds mean, as of the applicable date, all Bonds which have been authenticated and delivered, or which are being delivered by the Trustee under the Indenture,except: (a) Bonds cancelled upon surrender, exchange or transfer, or cancelled because of payment on or prior to that date; (b) Bonds, or the portion thereof, for the payment or purchase for cancellation of which sufficient money has been deposited and credited with the Trustee or the Paying Agents on or prior to that date for that purpose(whether upon or prior to the maturity of those Bonds); (c) Bonds, or the portion thereof, which are deemed to have been paid and discharged or caused to have been paid and discharged pursuant to the provisions of the Indenture; and *Preliminary; subject to change. A-7 2014-05-20 Agenda Packet Page 467 (d) Bonds in lieu of which others have been authenticated under the Indenture. "Paying Agent"means the Trustee acting as such, or any other bank or trust company designated as a Paying Agent by or in accordance with the Indenture. "Person" or words importing persons mean firms, associations, partnerships (including without limitation, general and limited partnerships),joint ventures, societies, estates,trusts, corporations, limited liability companies,public or governmental bodies,other legal entities and natural persons. "Plans and Specifications" means the plans and specifications describing the Project as now prepared and as they may be changed as provided in the Indenture from time to time. "Predecessor Bond" of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by the particular Bond. For the purposes of this definition,any Bond authenticated and delivered under the Indenture in lieu of a lost, stolen or destroyed Bond shall, except as otherwise provided in the Indenture, be deemed to evidence the same debt as the lost, stolen or destroyed Bond. "Project" means the acquisition, rehabilitation and equipping of an existing 99-unit plus one manager's unit apartment complex known as "Garden Villas" (1ka Kiku Gardens), and located at 1260 3rd Avenue in Chula Vista,California. "Project Costs"means the costs of the Project specified in the Loan Agreement. "Project Fund"means Project Fund created in the Indenture. "Project Purposes"means the operation of the Project in accordance with the Act, the Code and the Regulatory Agreement. "Rating Agency" means Standard & Poor's Ratings Services ("S&P"), Moody's Investors Service, Inc. ("Moody's") or any other nationally recognized municipal securities rating agency acceptable to the Holders. "Rebate Fund"means the Rebate Fund created in the Indenture. "Register"means the books kept and maintained by the Registrar for registration and transfer of Bonds pursuant to the Indenture. "Registrar" means the Trustee, until a successor Registrar shall have become such pursuant to applicable provisions of the Indenture; each Registrar shall be a transfer agent registered in accordance with Section 17A(c)of the Securities Exchange Act of 1934. "Regular Record Date"means,the fifteenth day of the calendar month next preceding an Interest Payment Date applicable to that Bond. "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants,by and among the Issuer,the Borrower and the Trustee,dated as of June 1, 2014. "Securities Act"means the United States Securities Act of 1933,as in effect on the Closing Date. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City,New York 11530,Fax(516)227 4039 or 4191; or, in accordance with the then current guidelines of A-8 2014-05-20 Agenda Packet Page 468 the Securities and Exchange Commission to such other addresses and/or such other securities depositories or,as the Issuer may designate in a request of the Issuer delivered to the Trustee,to no such depositories. "S&P"means Standard&Poor's Ratings Services. "Special Funds" means, collectively, the Bond Fund, the Collateral Fund and the Project Fund, and any accounts therein,all as created in the Indenture. "Special Limited Partner"means Kiku Gardens Development, LLC, a California limited liability company. "Special Record Date" means, with respect to any Bond, the date established by the Trustee in connection with the payment of overdue interest or principal on that Bond. "State"means the State of California. "Supplemental Indenture" means any indenture supplemental to the Indenture entered into between the Issuer and the Trustee in accordance with the Indenture. "Surplus Cash"means, with respect to any period, any revenues of the Borrower remaining after paying, or setting aside funds for paying, (i) all sums due or currently required to be paid under the Freddie Mac Loan Documents that are due or currently payable,and(ii)all reasonable operating expenses of the Project, including but not limited to real estate taxes, insurance premiums, utilities, building maintenance,painting and repairs,management fees,payroll,administrative expenses,legal expenses and audit expenses (including any fees, deposits or escrows payable under the Borrower's organizational documents,but excluding any developer fees payable with respect to the Project). "Tax Certificate"means the Tax Certificate,dated the Closing Date executed by the Issuer. "Trustee" means U.S. Bank National Association, until a successor Trustee shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, "Trustee" shall mean the successor Trustee. "Unassigned Issuer's Rights"means all of the rights of the Issuer to receive Additional Payments under the Loan Agreement, to be held harmless and indemnified under the Loan Agreement, to be an insured under the Loan Agreement, to be reimbursed for attorney's fees and expenses under the Loan Agreement, to receive notices pursuant to the Loan Agreement and to give or withhold consent to amendments, changes, modifications, alterations and termination of the Loan Agreement under the Loan Agreement. "Underwriter''shall mean Citigroup Global Markets Inc. A-9 2014-05-20 Agenda Packet Page 469 APPENDIX B FORM OF BOND COUNSEL OPINION The form of the approving legal opinion of Stradling, Yocca, Carlson & Rauth, Bond Counsel, is set forth below. The actual opinion will be delivered on the date of delivery of the 2013 Series A Bonds referred to therein and may vary from the form set forth to reflect circumstances both factual and legal at the time of such delivery. Recirculation of the final Official Statement shall create no implication that Stradling, Yocca, Carlson & Rauth has reviewed any of the matters set forth in such opinion subsequent to the date of such opinion. [Closing Date] Chula Vista Housing Authority Chula Vista,California Re: $ Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas), Series 2014A Ladies and Gentlemen: We have acted as Bond Counsel to the Chula Vista Housing Authority(the"Housing Authority") in connection with the issuance of its $ Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas), Series 2014A (the "Bonds"). We have examined certified copies of the proceedings of the Housing Authority and other information and documents submitted to us relative to the issuance and sale of the Bonds. The Bonds have been issued pursuant to a resolution of the Housing Authority adopted on , 2014 (the "Resolution"), the provisions of Chapter 1 of Part 2 of Division 24 of the Health and Safety Code of the State of California(the"Act"),and a Trust Indenture dated as of June 1,2014(the "Indenture"), between the Housing Authority and U.S. Bank National Association, as trustee (the "Trustee"). Capitalized terms used herein and not defined shall have the meanings given to them in the Indenture. The Bonds are dated as of the date of delivery and mature on the date and bear interest at the rates per annum set forth in the Indenture. The Bonds are issuable only as a single, fully registered Bond in the form set forth in the Indenture,redeemable in the amounts, at the times and in the manner provided for in the Indenture. The Bonds are being issued for the purpose of financing the acquisition, rehabilitation and equipping of a multifamily rental housing project (the "Project") known as "Garden Villas" to be rehabilitated by Kiku Gardens Housing Partners, LP,a California limited partnership (the`Borrower") in the City of Chula Vista. The proceeds of the Bonds are being loaned to the Borrower to acquire, rehabilitate and equip the Project. In rendering our opinion, we have examined the Act and originals or certified copies of the Resolution, the Indenture, the Loan Agreement dated as of June 1, 2014 (the "Loan Agreement"), between the Housing Authority and the Borrower, the Regulatory Agreement and Declaration of Restrictive Covenants dated as of June 1,2014 (the"Regulatory Agreement"),by and among the Housing Authority, the Trustee and the Borrower, the Promissory Note executed by the Borrower in favor of the Housing Authority, and the Tax Certificate executed by the Housing Authority, and such other 2014-05-20 Agenda Packet Page 470 information and documents as we have deemed necessary to render the opinions set forth herein. As to questions of fact material to the opinions stated herein, we have relied upon representations made by the Housing Authority in the Indenture, and by the Housing Authority and the Borrower in the Regulatory Agreement and the Tax Certificate, the certified proceedings of the Housing Authority and certifications of public officials of the Housing Authority, the Borrower, the initial purchaser of the Bonds and others furnished to us without undertaking to verify through independent investigation the accuracy of the representations and certifications relied upon by us. In rendering this opinion, we have assumed the genuineness of all signatures and documents presented to us. Based upon our examination of all of the foregoing,and in reliance thereon, and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: (1) the Housing Authority is a public body, corporate and politic, duly and validly organized and existing under the Constitution and laws of the State of California, with full power and authority to adopt the Resolution, to execute and deliver the Indenture, the Loan Agreement and the Regulatory Agreement (collectively,the "Bond Documents"),to perform its obligations under the Bond Documents, and to issue, sell and deliver the Bonds; (2) the execution and delivery of the Bond Documents have been duly authorized by the Housing Authority and, assuming proper authorization, execution and delivery by the respective other parties thereto, are valid and binding obligations of the Housing Authority enforceable against the Housing Authority in accordance with their terms; (3) the Bonds have been duly and validly authorized, executed and delivered by the Housing Authority and are legal, valid and binding special and limited obligations of the Housing Authority, payable solely out of the revenues and receipts provided therefor in the Indenture and the Bonds are enforceable in accordance with their terms and the terms of the Indenture; (4) the Indenture creates a valid pledge,to secure the payment of the principal of and interest on the Bonds, of the Issuer's interest in the Trust Estate (as defined in the Indenture) held or set aside under the Indenture, subject to the application thereof to the purposes and on the terms and conditions permitted by the Indenture; (5) assuming continuing compliance subsequent to the issuance of the Bonds with the applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes, except for interest on any Bond for any period during which such Bond is held by a "substantial user" of the property financed with the proceeds of the Bonds or a "related person," as such terms are used in Section 147(a) of the Code. Interest on the Bonds is an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; and (6) interest on the Bonds is exempt from State of California personal income tax. The opinions expressed in paragraphs (2), (3) and (4) above are subject to the condition that the enforceability of the Bond Documents and the Bonds may be limited by moratorium, bankruptcy, reorganization, fraudulent conveyance, insolvency,by other laws affecting creditors' rights generally, by the exercise of judicial discretion in accordance with general principles of equity and by limitations on legal remedies against public agencies in the State of California. In addition, we express no opinion as to B-2 2014-05-20 Agenda Packet Page 471 the enforceability of any indemnification, contribution, choice of law, choice of forum,penalty or waiver provisions contained in the Bond Documents or the Bonds. The opinion expressed in paragraph (5) above as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is subject to the condition that the applicable requirements of the Code are complied with subsequent to the issuance of the Bonds. Failure to comply with such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Borrower has covenanted in the Loan Agreement and the Regulatory Agreement to comply with such requirements. Except as expressly set forth in paragraph(5)above,we express no opinion as to any federal tax consequences with respect to the Bonds. Certain requirements and procedures contained or referred to in the Bond Documents and the Tax Certificate may be changed, and certain actions may be taken,under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the effect on the exclusion of interest on the Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken upon the advice or approval of counsel other than Stradling Yocca Carlson&Rauth,a Professional Corporation. Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction and express no opinion as to the enforceability of the choice of law provisions contained in the Bond Documents. The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and we expressly disclaim any duty to advise the owners of the Bonds with respect to matters contained in the Official Statement. Our engagement with respect to the Bonds terminates upon their issuance, and we disclaim any obligation to update the matters set forth herein. Respectfully submitted, B-3 2014-05-20 Agenda Packet Page 472 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following, in addition to the information provided under "THE BONDS", summarizes certain provisions of the Indenture, to which reference is made for the detailed provisions thereof. Creation of Trust To secure the payment of Bond Debt Service Charges on the Bonds, the Issuer will assign to the Trustee its right, title and interest in (i) the Issuer Revenues, including, without limitation, all Loan Payments and other amounts receivable by or on behalf of the Issuer under the Loan Agreement in respect of repayment of the Loan, (ii) the Special Funds, including all accounts in those funds and all moneys deposited therein and the investment earnings on such moneys, (iii)all right,title and interest of the Issuer in the proceeds derived from the sale of the Bonds, and any securities in which moneys in the Special Funds are invested, and (except for moneys in the Rebate Fund and otherwise required to be rebated to the United States of America under the Code) the proceeds derived therefrom, and any and all other real or personal property of every name and nature from time to time hereafter by delivery or by writing of any kind pledged, assigned or transferred,as and for additional security under the Indenture by the Issuer or by anyone in its behalf,or with its written consent,to the Trustee,which is authorized by the Indenture to receive any and all such property at any and all times and to hold and apply the same subject to the terms of the Indenture,and(iv)the Loan Agreement,except for the Unassigned Issuer's Rights. Creation of Funds; Allocation of Bond Proceeds (a) The following funds and accounts as created in the Indenture. Each fund and account is to be maintained in the custody of the Trustee as a separate fund or account. The funds and accounts are: (1) the Bond Fund designated"Bond Fund,"and the"Initial Deposit Account"therein; (2) the Project Fund designated"Project Fund"; (3) the Collateral Fund designated"Collateral Fund"; (4) the Costs of Issuance Fund designated"Costs of Issuance Fund"; and (5) the Rebate Fund designated"Rebate Fund." (b) The proceeds of the sale of the Bonds(including without limitation,premium,if any, and interest accrued thereon), shall be deposited by the Trustee on the Closing Date to the Project Fund. On the Closing Date, the Trustee shall deposit $ received by or on behalf of the Borrower, from money other than the proceeds of the Bonds, in the Costs of Issuance Fund. In addition, the Trustee shall cause the Initial Deposit to be deposited by the provider thereof to the Initial Deposit Account of the Bond Fund. Allocation of Bond Proceeds All moneys received upon the sale of the Bonds,other than accrued interest to be deposited in the Bond Fund, will be deposited in the Project Fund created by the Indenture and used in accordance with 2014-05-20 Agenda Packet Page 473 the Indenture to pay or provide for the payment of a portion of the costs of acquiring, rehabilitating, equipping and otherwise improving the Project. Application of Loan Payments So long as there are any Outstanding Bonds, any payments made by the Borrower pursuant to the Notes and the Loan Agreement (other than payments made pursuant to Unassigned Issuer's Rights) shall be paid on each Loan Payment Date directly to the Trustee, and deposited into the Bond Fund to be used to pay the interest and principal (if any) on the Bonds on the next succeeding Interest Payment Date; provided that so long as there are amounts available therefor, for purposes of paying interest on the Loan when due the Trustee shall debit the Initial Deposit Account in the amounts and with respect to the Interest Payment Dates as specified in the Indenture and transfer the same to the Bond Fund to pay interest due on the Bonds on each Interest Payment Date; and provided further that so long as there are amounts available therefor, for purposes of making principal payments on the Loan when due the Trustee shall debit the Collateral Fund and transfer the same to the Bond Fund to pay the principal of the Bonds on the date set for payment of the Bonds on the Maturity Date. Disbursements from the Project Fund (a) Requisitions. Subject to the provisions of the Indenture described below, the Trustee shall make disbursements from the Project Fund to pay Project Costs only upon the receipt of a written request of the Borrower signed by an Authorized Borrower Representative (which request shall be in the form attached to the Loan Agreement)a"Disbursement Request." (b) Project Fund. When the Trustee receives a Disbursement Request from the Project Fund in accordance with the provisions described in the preceding paragraph and the Loan Agreement, subject to the following paragraph, the Trustee shall confirm that Available Moneys equal to or greater than the sum of(i) the amount set forth in the Disbursement Request and (ii) all prior disbursements made by the Trustee from the Project Fund, are on deposit in the Collateral Fund. Upon confirmation of the items above, the Trustee shall thereafter disburse the funds from the Project Fund to pay Project Costs in the amount pursuant to the Disbursement Request directly to (1) the Freddie Mac Lender, to the extent the corresponding deposit of Available Moneys to the Collateral Fund was made by or at the direction of the Freddie Mac Lender(as confirmed in the Disbursement Request) or (2) the Borrower (or any other party designated in the Disbursement Request)to the extent the corresponding deposit of Available Moneys to the Collateral Fund was made by or at the direction of the Borrower or such other party. Any interest earnings on the Project Fund shall be credited to the Bond Fund. The Trustee is hereby authorized and directed to transfer, without the need to receive a signed Disbursement Request, funds from the Project Fund to the Bond Fund, as referenced under the heading"Bond Fund"below,for the purpose of covering any shortfall or delinquency in the Bond Fund as to payments of Bond Service Charges. There shall be deposited from time to time in the Collateral Fund Available Moneys in such amounts and at such times as may be necessary to allow the Trustee to disburse funds from the Project Fund,pursuant to the Indenture,upon the Trustee's receipt of a Disbursement Request from the Borrower to pay Project Costs. (c) Records. The Trustee shall cause to be kept and maintained adequate records pertaining to the Project Fund and all disbursements therefrom as provided in the Indenture. If requested by the Issuer or the Borrower,or the Investor Limited Partner,after the filing by the Borrower of the Completion Certificate with the Trustee as provided in the Indenture, the Trustee shall file copies of the records pertaining to the Project Fund and disbursements therefrom with the Issuer upon written request and the Borrower and the Investor Limited Partner. C-2 2014-05-20 Agenda Packet Page 474 The proceeds of the Bonds shall be used or deemed used exclusively to pay costs that (i) are (A) capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations), and (ii) are made exclusively with respect to a"qualified residential rental project"within the meaning of Section 142(d)of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to the building in the Project and the land on which it is located so that the building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided, however,the foregoing representation,covenant and warranty is made for the benefit of the Borrower and its partners and neither the Trustee nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation,the Borrower,the partners of the Borrower,any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation,covenant and warranty; and provided further,failure to comply with this representation,covenant and warranty shall not constitute a default or Event of Default under the Indenture. Upon the occurrence and continuance of an Event of Default under the Indenture because of which the principal amount of the Bonds has been declared to be due and immediately payable described below, any moneys remaining in the Project Fund shall be promptly transferred by the Trustee to the Bond Fund. Bond Fund There shall be deposited in the Bond Fund (1)the amounts described above, (2) interest earnings on the Project Fund and the Collateral Fund and(3)amounts described below. The Bond Fund (and the Initial Deposit Account therein) and the moneys and Eligible Investments therein shall be used solely and exclusively for the payment of Bond Debt Service Charges as they become due and at stated maturity, or upon acceleration, all as provided in the Indenture and in the Loan Agreement. The Trustee shall transmit to the Paying Agent, as appropriate, from moneys on deposit in the Bond Fund, amounts sufficient to make timely payments of Bond Debt Service Charges on the Bonds. To the extent that the amount needed by the Paying Agent is not sufficiently predictable,the Trustee may make any credit arrangements with the Paying Agent which will permit those payments to be made. The Issuer authorizes and directs the Trustee to cause withdrawal of moneys from the Bond Fund which are available for the purpose of paying,and are sufficient to pay,Bond Debt Service Charges on the Bonds as they become due and payable, for the purposes of paying or transferring moneys to the Paying Agent which are necessary to pay such Bond Debt Service Charges. Amounts credited to or on deposit in the Initial Deposit Account shall be transferred to the Bond Fund on each Loan Payment Date in order to provide for the payment of Bond Debt Service Charges on the next succeeding Bond Payment Date. In the event that amounts on deposit in the Bond Fund on any Loan Payment Date are insufficient to make the payment of Bond Debt Service Charges due on the next succeeding Bond Payment Date, the Trustee shall transfer funds in the following order to the Bond Fund and use such funds, together with amounts then on deposit in the Bond Fund, to pay the Bond Debt Service Charges due on the next succeeding Bond Payment Date: (1) first,from amounts on deposit in the Initial Deposit Account of the Bond Fund; (2) second, from amounts on deposit in the Collateral Fund; and C-3 2014-05-20 Agenda Packet Page 475 (3) third,from amounts on deposit in the Project Fund. Investment of Special Funds and the Rebate Fund (a) Any money held as part of the funds and accounts created under the Indenture shall be invested or reinvested by the Trustee solely in Eligible Investments pursuant to written direction from the Borrower consistent with the terms of the Indenture. All such Eligible Investments shall mature or be subject to withdrawal or redemption without discount or penalty prior to the next Interest Payment Date. In addition, following receipt of written notice of an Event of Default of the Borrower, the Trustee shall invest and reinvest the money it holds as part of the funds and accounts in Eligible Investments consistent with the terms of this Indenture. Except as described below,any investment made with money on deposit in a fund or account shall be held by or under control of the Trustee and shall be deemed at all times a part of the fund or account where such money was on deposit, and the interest and profits realized from such investment shall be credited to such fund or account and any loss resulting from such investment shall be charged to such fund or account. In the absence of the receipt of any investment instructions as provided herein, the Trustee is authorized to invest all money under its control in money market mutual funds described in clause (ii) of the definition of Eligible Investments. Further, in the absence of written directions from the Borrower and except for funds required to be invested at a restricted yield pursuant to Section 148 of the Code,the Trustee is expressly authorized to implement its automated cash investment system,to assure that cash on hand is invested,and to charge its normal cash investment fees,which may be deducted from income earned on investments; provided that such fees are separately stated and accounted for. (b) The Trustee may make any investment through its own bond department, investment department or other commercial banking department or Affiliate of the Trustee providing investment services. The Trustee, any such department or the Trustee's Affiliates may receive reasonable and customary compensation in connection with any investment made under this Indenture. (c) The Trustee shall have no liability or responsibility for any depreciation of the value of any investment made in accordance with the provisions of this section or for any loss resulting from such investment or redemption, sale or maturity thereof. (d) Unless otherwise confirmed in writing, an account statement delivered by the Trustee to the Borrower shall be deemed written confirmation by said party that the investment transactions identified therein accurately reflect the investment directions given to the Trustee by said party, unless said party notifies the Trustee in writing to the contrary within 30 days of the date of receipt of such statement. (e) The Issuer(and the Borrower by its execution of the Loan Agreement)acknowledges that to the extent regulations of the Office of the Comptroller of the Currency or other applicable regulatory entity grant the Issuer or the Borrower the right to receive brokerage confirmations of security transactions as they occur,the Issuer and the Borrower specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish to the Issuer,the Borrower and the Investor Limited Partner periodic cash transaction statements that include detail for all investment transactions made by the Trustee hereunder. (f) Except as otherwise provided in subsection (g) of this section, the Issuer and the Borrower covenant that all investments of amounts deposited in any fund or account created by or pursuant to the Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by the Indenture or the Code)at Fair Market Value. C-4 2014-05-20 Agenda Packet Page 476 (g) The Issuer (and the Borrower by its execution of the Loan Agreement) covenants that investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in any reserve fund shall be valued at their present value(within the meaning of Section 148 of the Code). Repayment to the Borrower from the Bond Fund Except as described under the caption"Rebate Fund"below, any amounts remaining in the Bond Fund (i) after all of the outstanding Bonds shall be deemed paid and discharged under the provisions of the Indenture, and (ii) after payment of all fees, charges and expenses of the Trustee, the Registrar, the Paying Agents and the Issuer, and of all other amounts required to be paid under the Indenture, the Loan Agreement,the Regulatory Agreement and the Note, shall be paid to the Borrower to the extent that those amounts are in excess of those necessary to effect the payment and discharge of the outstanding Bonds. Rebate Fund Any provision of the Indenture to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien under the Indenture. The Trustee shall furnish to the Borrower all information reasonably requested by the Borrower with respect to the Bonds and investments of the funds and accounts maintained by the Trustee under the Indenture. The Trustee shall make deposits to and disbursements from the Rebate Fund(including rebate payments to the United States required to be made by the Tax Certificate), as well as investments of the amounts therein, in accordance with the written directions received from the Borrower pursuant to the Tax Certificate. Anything in the Indenture to the contrary notwithstanding, the provisions of the Tax Certificate may be superseded or amended by an amendment or supplement to the Tax Certificate effected in accordance with the terms thereof. Collateral Fund There shall be deposited from time to time in the Collateral Fund, Available Moneys in such amounts and at such times as may be necessary to allow the Trustee to disburse funds from the Project Fund, pursuant to the provisions described under the captions "Disbursements from the Project Fund" above and "APPENDIX D - SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT— Disbursements from the Project Fund," upon the Trustee's receipt of a disbursement request from the Borrower. Moneys in the Collateral Fund shall be invested in Eligible Investments. The Collateral Fund shall only be used and applied for, and irrevocably committed to, the payment of(i) the Bond Debt Service Charges on the Bonds which are due and payable on any Interest Payment Date or Maturity Date and (ii)the Bond Debt Service Charges on the Bonds as and when due at any other Bond Payment Date. Any interest earnings on the Collateral Fund shall be credited to the Bond Fund. Costs of Issuance Fund The Trustee shall use money on deposit to the credit of the Costs of Issuance Fund, if any,to pay the costs of issuance on the Closing Date or as soon as practicable thereafter in accordance with written instructions to be given to the Trustee by the Borrower, as set forth in a certificate of the Borrower delivered to the Trustee on the Closing Date or as otherwise directed by the Borrower, upon delivery to the Trustee of appropriate invoices for such expenses. Investment earnings on amounts on deposit in the Costs of Issuance Fund shall be retained in such fund. Amounts remaining on deposit in the Costs of C-5 2014-05-20 Agenda Packet Page 477 Issuance Fund sixty (60) days after the Closing Date shall be returned to the Borrower. Upon such final disbursement,the Trustee shall close the Costs of Issuance Fund. Defaults; Events of Default The occurrence of any of the following events is defined as and declared to be and to constitute an Event of Default under the Indenture: (a) Payment of any interest on any Bond is not made when and as that interest becomes due and payable; (b) Payment of the principal of any Bond is not made when and as that principal becomes due and payable,whether at stated maturity,upon acceleration or otherwise; (c) Failure by the Issuer to observe or perform any other covenant, agreement or obligation on its part to be observed or performed contained in the Indenture or in the Bonds,which failure will have continued for a period of 30 days after written notice,by registered or certified mail,to the Issuer and the Borrower specifying the failure and requiring that it be remedied, which notice may be given by the Trustee in its discretion and will be given by the Trustee at the written request of the Holders of not less than 25% in aggregate principal amount of Bonds then outstanding; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period,that failure will not constitute an Event of Default so long as the Issuer or the Borrower institutes curative action within the applicable period and diligently pursues that action to completion, which must be resolved within one hundred eighty(180)days after the aforementioned notice; and (d) The occurrence and continuance of an Event of Default as defined in the Loan Agreement. The term"default"or"failure"as used in the Indenture means (i)a default or failure by the Issuer in the observance or performance of any of the covenants, agreements or obligations on its part to be observed or performed contained in the Indenture or in the Bonds, or (ii) a default or failure by the Borrower under the Loan Agreement, exclusive of any period of grace or notice required to constitute an Event of Default, as provided above or in the Loan Agreement. Notwithstanding the occurrence and continuation of an Event of Default,it is understood that the Trustee shall pursue no remedies against the Borrower or the Project Fund if no Loan Agreement Default has occurred and is continuing. An Event of Default under the Indenture shall not in and of itself constitute a Loan Agreement Default. Notice of Default If an Event of Default shall occur,the Trustee shall give written notice of the Event of Default,by registered or certified mail,to the Issuer,the Borrower,the Investor Limited Partner, the Registrar or the Paying Agent and Authenticating Agent, within five days after the Trustee has notice of the Event of Default pursuant to the Indenture. If an Event of Default occurs of which the Trustee has notice pursuant to the Indenture,the Trustee shall give written notice thereof,within thirty days after the Trustee's receipt of notice of its occurrence, to the Holders of all Bonds then outstanding as shown by the Register at the close of business fifteen days prior to the mailing of that notice. The Investor Limited Partner shall be entitled to cure any Event of Default under the Indenture within the time frame provided to the Borrower thereunder. Issuer and Trustee agree that cure of any C-6 2014-05-20 Agenda Packet Page 478 default or Event of Default made or tendered by the Investor Limited Partner shall be deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or tendered by the Borrower. Acceleration Upon the occurrence of an Event of Default described in in subsection (a) or (b) under the heading"Defaults; Events of Default"above,the Trustee may declare, and upon the written request of the Holders of not less than 25% in aggregate principal amount of Bonds then outstanding the Trustee will declare, by a notice in writing delivered to the Issuer and the Borrower, the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. Upon the occurrence of any Event of Default other than those described in subsections (a) and(b)under the heading"Defaults; Events of Default"above,the Trustee,with the written consent of all Holders of Bonds then outstanding, may declare by a notice in writing delivered to the Issuer and Borrower, the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon,to be due and payable immediately. Upon such declaration,the principal and interest on the Bonds will become and be due and payable immediately. Interest on the Bonds will accrue to the date determined by the Trustee for the tender of payment to the Holders pursuant to that declaration;provided, that interest on any unpaid principal of Bonds outstanding will continue to accrue from the date determined by the Trustee for the tender of payment to the Holders of those Bonds. The provisions of the preceding paragraph are subject, however, to the condition that if, at any time after declaration of acceleration and prior to the entry of a judgment in a court for enforcement under the Indenture(after an opportunity for hearing by the Issuer and the Borrower), (a) all sums payable under the Indenture (except the principal of and interest on Bonds which have not reached their stated maturity dates but which are due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Bonds in respect of which the default shall have occurred, shall have been duly paid or provision shall have been duly made therefor by deposit with the Trustee or Paying Agents,and (b) all existing Events of Default will have been cured, then and in every case,the Trustee will waive the Event of Default and its consequences and will rescind and annul that declaration. No waiver or rescission and annulment will extend to or affect any subsequent Event of Default or will impair any rights consequent thereon. Other Remedies; Rights of Holders With or without taking action as described under the caption "Acceleration" above, upon the occurrence and continuance of an Event of Default, the Trustee may pursue any available remedy, including without limitation actions at law or equity to enforce the payment of Bond Debt Service Charges or the observance and performance of any other covenant, agreement or obligation under the Indenture,the Loan Agreement,the Regulatory Agreement or the Note or any other instrument providing security,directly or indirectly,for the Bonds. If,upon the occurrence and continuance of an Event of Default,the Trustee is requested so to do by the Holders of at least 25%in aggregate principal amount of Bonds outstanding,the Trustee(subject to the Trustee's rights, duties and obligations as set forth in the Indenture) shall exercise any rights and powers conferred by the Indenture. C-7 2014-05-20 Agenda Packet Page 479 No remedy conferred upon or reserved to the Trustee (or to the Holders) by the Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given thereunder or otherwise to the Trustee or to the Holders now or hereafter existing. No delay in exercising or omission to exercise any remedy, right or power accruing upon any default or Event of Default shall impair that remedy,right or power or shall be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy,right and power may be exercised from time to time and as often as may be deemed to be expedient. No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the Holders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any remedy,right or power consequent thereon. As the assignee of all right, title and interest of the Issuer in and to the Loan Agreement (except for the Unassigned Issuer's Rights), the Trustee is empowered to enforce each remedy, right and power granted to the Issuer under the Loan Agreement. In exercising any remedy,right or power thereunder or under the Indenture, the Trustee shall take such action as may be directed by the requisite percentage of the Holders of the Bonds then outstanding,applying the standards described in the Indenture. Right of Holders to Direct Proceedings Anything to the contrary in the Indenture notwithstanding, the Holders of at least a majority in aggregate principal amount of Bonds then outstanding shall have the right at any time to direct, by an instrument or instruments in writing executed and delivered to the Trustee, the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture,or any other proceedings thereunder; provided, that (i) any direction shall not be otherwise than in accordance with the provisions of law and the Indenture, and (ii) the Trustee will be indemnified as provided in the Indenture. Rights and Remedies of Holders A Holder shall not have any right to institute any suit,action or proceeding for the enforcement of the Indenture or for the execution of any trust under the Indenture or any remedy under the Indenture, unless(a)there has occurred and is continuing an Event of Default of which the Trustee has been notified or is deemed to have notice pursuant to the Indenture, (b) the Holders of at least 25% in aggregate principal amount of Bonds then outstanding will have made written request to the Trustee and will have afforded the Trustee reasonable opportunity to proceed to exercise the remedies, rights and powers provided in the Indenture or to institute the suit, action or proceeding in its own name, and will have offered indemnity to the Trustee as provided for in the Indenture, and (c)the Trustee thereafter has failed or refused to exercise the remedies,rights and powers under the Indenture or to institute the suit,action or proceeding in its own name. At the option of the Trustee, that notification (or notice), request, opportunity and offer of indemnity are conditions precedent in every case, to the institution of any suit, action or proceeding described above. No one or more Holders of the Bonds will have any right to affect, disturb or prejudice in any manner whatsoever the security or benefit of the Indenture by its or their action, or to enforce, except in the manner provided herein, any remedy, right or power under the Indenture. Any suit, action or proceedings will be instituted, had and maintained in the manner provided herein for the benefit of the C-8 2014-05-20 Agenda Packet Page 480 Holders of all Bonds then outstanding. Nothing in the Indenture will affect or impair, however,the right of any Holder to enforce the payment of the Bond Debt Service Charges on any Bond owned by that Holder at and after the maturity thereof,at the place,from the sources and in the manner expressed in that Bond. Waivers of Events of Default The Trustee shall waive any Event of Default under the Indenture upon the conditions stated therein and its consequences and may rescind and annul any declaration of maturity of principal of or interest on, the Bonds upon the written request of the Holders of (a) at least a majority in aggregate principal amount of all Bonds then outstanding in respect of which an Event of Default in the payment of Bond Debt Service Charges exists, or (b) at least 25% in aggregate principal amount of all Bonds then outstanding, in the case of any other Event of Default. There will not be so waived,however, any Event of Default described in subsection(a)or(b)under the heading"Defaults; Events of Default'above or any declaration of acceleration in connection therewith rescinded or annulled,unless at the time of that waiver or rescission and annulment payments of the amounts provided in the Indenture for waiver and rescission and annulment in connection with acceleration of maturity have been made or provision has been made therefor. In the case of the waiver or rescission or annulment, or in case any suit, action or proceedings taken by the Trustee on account of any Event of Default will have been discontinued, abandoned or determined adversely to it, the Issuer, the Trustee and the Holders will be restored to their former positions and rights under the Indenture, respectively. No such waiver or rescission will extend to any subsequent or other Event of Default,or impair any right consequent thereon. Supplemental Indentures Without the consent of, or notice to,any of the Holders,the Issuer and the Trustee may enter into indentures supplemental to the Indenture for any one or more of the following purposes: (a) to cure any ambiguity, inconsistency or formal defect or omission in the Indenture; (b)to grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority that lawfully may be granted to or conferred upon the Holders or the Trustee; (c) to assign additional revenues under the Indenture; (d) to accept additional security and instruments and documents of further assurance with respect to the Project; (e) to add to the covenants, agreements and obligations of the Issuer under the Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders, or to surrender or limit any right, power or authority reserved to or conferred upon the Issuer in the Indenture; (f) to evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer under the Indenture, the Loan Agreement and the Bonds; (g) to permit the Trustee to comply with any obligations imposed upon it by law; (h) to specify further the duties and responsibilities of, and to define further the relationship among, the Trustee, the Registrar and any Authenticating Agents or Paying Agents; (i) to achieve compliance of the Indenture with any applicable federal securities or tax law; 0) to make amendments to the provisions of the Indenture relating to arbitrage matters under Section 148 of the Code,if, in the Opinion of Bond Counsel, those amendments would not cause the interest on the Bonds outstanding to be included in gross income of the Holders for federal income tax purposes which amendments may, among other things, change the responsibility for making the relevant calculations, provided that in no event will such amendment delegate to the Trustee without its consent, in its sole discretion the obligation to make or perform the calculations required by Section 148 of the Code; and (k) to permit any other amendment which is not materially adverse to the Trustee,in the judgment of the Trustee,or the Holders. The provisions of subsections (h) and 0) above shall not be deemed to constitute a waiver by the Trustee, the Registrar, the Issuer or any Holder of any right which it may have in the absence of those provisions to contest the application of any change in law to the Indenture or the Bonds. C-9 2014-05-20 Agenda Packet Page 481 Discharge of Lien The lien of the Indenture will be discharged if(i) the Issuer shall pay or cause to be paid and discharged all the Outstanding Bonds, or there shall otherwise be paid to the Holders of the Outstanding Bonds all the Bond Debt Service Charges due or to become due thereon, and (ii) provision also shall be made for the payment of all other sums payable under the Indenture or the Loan Agreement, the Regulatory Agreement and the Note. All or any part of the Outstanding Bonds will be deemed to have been paid and discharged within the meaning of the Indenture if(a)the Trustee as paying agent and the Paying Agents shall have received, in trust and irrevocably committed for such payment, sufficient moneys, or (b) the Trustee shall have received, in trust and irrevocably committed for such payment, noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America certified by an independent public accounting firm or such other firm experienced with such certifications of national reputation to be of such maturities and interest payment dates, and to bear such interest, as will be sufficient together with moneys referred to in (a) above, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which earnings are to be held likewise in trust and so irrevocably committed, except as provided in the Indenture), for the payment of all Bond Debt Service Charges on those Bonds at their maturity. Any moneys so held by the Trustee may be invested by the Trustee only in noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America having maturity dates, or having redemption dates which, at the option of the Holder of those obligations, shall be not be later than the date or dates at which moneys will be required for the purposes described above. To the extent that any income or interest earned by, or increment to, the investments held under the provisions of the Indenture described herein is determined from time to time by the Trustee to be in excess of the amount required to be held by the Trustee for the purposes set forth above, that income, interest or increment shall be transferred at the time of that determination in the manner provided in the Indenture for transfers of amounts remaining in the Bond Fund. If any Bonds shall be deemed paid and discharged pursuant to the provisions described above, then within 15 days after such Bonds are so deemed paid and discharged the Trustee shall cause a written notice to be given to each Holder as shown on the Register on the date on which such Bonds are deemed paid and discharged. Such notice shall state the numbers of the Bonds deemed paid and discharged or state that all Bonds are deemed paid and discharged and shall set forth a description of the obligations held pursuant to the provisions described above. Amendments to Loan Agreement,Regulatory Agreement and Note Without the consent of or notice to the Holders, the Issuer, the Borrower and the Trustee may consent to any amendment,change or modification of the Loan Agreement,the Regulatory Agreement or the Note as may be required (i) by the provisions of the Loan Agreement, the Regulatory Agreement or the Indenture, (ii) for the purpose of curing any ambiguity, inconsistency or formal defect or omission in the Loan Agreement, the Regulatory Agreement or any of the Note, (iii) in connection with an amendment or to effect any purpose for which there could be an amendment of the Indenture without the consent of the Holders as provided in the Indenture, or (iv) in connection with any other change therein which is not to the prejudice of the Trustee or the Holders of the Bonds, in the judgment of the Trustee, applying the standards set forth in the Indenture. Except for such amendments, changes or modifications described above, neither the Issuer nor the Trustee shall consent to (a) any amendment, change or modification of the Loan Agreement or the C-10 2014-05-20 Agenda Packet Page 482 Note which would change the amount or time as of which Loan Payments are required to be paid,without the giving of notice as provided in the Indenture of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of all of the then Outstanding Bonds affected by such amendment, change or modification, or (b) any other amendment, change or modification of the Loan Agreement, the Regulatory Agreement or the Note without the giving of notice as provided in the Indenture of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding affected by such amendment,change or modification. The consent of the Holders shall be obtained as provided in the Indenture with respect to Supplemental Indentures. If the Issuer or the Authorized Borrower Representative shall request at any time the consent of the Trustee to any proposed amendment, change or modification of the Loan Agreement, the Regulatory Agreement or the Note contemplated in clauses (a) or (b) above, upon being indemnified satisfactorily with respect to expenses, the Trustee shall cause notice of the proposed amendment, change or modification to be provided in the manner which is required by the Indenture with respect to notice of Supplemental Indentures. The notice shall set forth briefly the nature of the proposed amendment,change or modification and shall state that copies of the instrument or document embodying it are on file at the designated corporate trust office of the Trustee for inspection by all Holders. Extent of Issuer's Covenants; No Personal Liability All covenants, stipulations, obligations and agreements of the Issuer contained in the Indenture will be deemed to be covenants, stipulations, obligations and agreements of the Issuer to the full extent authorized by the Act and permitted by the Constitution of the State. No covenant, stipulation,obligation or agreement of the Issuer contained in the Indenture will be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, officer, agent or employee of the Issuer or the Board in other than that person's official capacity. Neither the members of the Board nor any official executing the Bonds,the Indenture,the Loan Agreement or any amendment or supplement thereto will be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance or execution thereof. Subordination to Freddie Mac Loan Documents Notwithstanding anything in the Indenture to the contrary, Borrower, Trustee and Issuer acknowledge that the Indenture, and any obligations of Borrower thereunder, are subject and subordinate to the Freddie Mac Loan Documents. Notwithstanding any provision in the Indenture to the contrary, no obligations of the Borrower or thereunder shall be payable except from(A) Surplus Cash or(B)funds that are not derived from(i)revenues of the Project, or(ii)any reserve or deposit made with the Freddie Mac Lender or any other party as required by Freddie Mac in connection with the Freddie Mac Loan Documents or (C) any proceeds of the Freddie Mac Loan which have been deposited into the Collateral Fund or the Initial Deposit Account of the Bond Fund by or at the direction of the Freddie Mac Lender. No claims or actions shall be made(or payable)under the Indenture against the Project or the assets of the Borrower, except for Surplus Cash of the Borrower. Proceeds from any condemnation award or from the payment of a claim under any hazard insurance policy relating to the Project will not be payable to the Trustee,but will be payable in accordance with the Freddie Mac Loan Documents. In addition,the rights and obligations of the parties under the Indenture and all other documents evidencing, implementing, or securing the Indenture (the"Other Bond Documents") are and shall be subordinated in all respects rights and obligations of the parties to and under the Freddie Mac Loan Documents. In the event of any conflict between the provisions of(i) the Indenture or the Other Bond Documents and (ii) the provisions of the C-11 2014-05-20 Agenda Packet Page 483 Freddie Mac Loan Documents, the provisions of the Freddie Mac Loan Documents shall control. The provisions of this section shall control over any inconsistent provisions in the Indenture or the Other Bond Documents. Any subsequent amendment to the Indenture affecting the provisions of this section or the rights of the Freddie Mac Lender with respect to the Borrower or Project is subject to prior written approval of the Freddie Mac Lender and Freddie Mac (so long as the Project is subject to a mortgage held or under a commitment to purchase by Freddie Mac). The provisions of this section shall survive the termination of the Indenture. C-12 2014-05-20 Agenda Packet Page 484 APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT The following summarizes certain provisions of the Loan Agreement, to which reference is made for the detailed provisions thereof. The Loan and Loan Payments;Issuance of the Bonds Under the Loan Agreement, the Issuer agrees to issue the Bonds and to loan the proceeds thereof to the Borrower to assist in the financing of the Project. The Borrower agrees to repay the loan by making Loan Payments at the times required by the Loan Agreement and the Note delivered to the Trustee in connection with the Bonds. The Loan Payments will generally equal in the aggregate the amount of Bond Debt Service Charges on the Bonds. Furthermore, funds on deposit in the Project Fund and the Collateral Fund are available to pay Bond Debt Service Charges on the Bonds to the extent funds available in the Bond Fund on any Loan Payment Date are insufficient to make such payments. The Borrower will be entitled to a credit against the Loan Payments required to be made with respect to the Bonds,on any date, equal to the amounts, if any,transferred by the Trustee from the Initial Deposit Account, the Project Fund or the Collateral Fund on such date for the payment of Bond Debt Service Charges. It is expected that Bond Debt Service Charges will be paid from funds transferred to the Trustee from the Project Fund. Disbursements from the Project Fund Subject to the provisions described below and so long as no Event of Default under the Loan Agreement has occurred and is continuing for which the Loan Payments and principal amount of the Bonds has been declared to be immediately due and payable pursuant to the Loan Agreement and the Indenture,respectively,disbursements from the Project Fund shall be made only to pay Project Costs. Any disbursements from the Project Fund shall be made by the Trustee only as permitted pursuant to the Indenture and upon the written request of the Borrower executed by an Authorized Borrower Representative substantially in the form attached as an exhibit to the Loan Agreement, which requests shall be consecutively numbered and accompanied by invoices or other appropriate documentation supporting the payments or reimbursements requested. No disbursement shall be made by the Trustee upon the basis of any such disbursement request except upon satisfaction of the following conditions and pursuant to the following procedures: (i) An executed Certificate of the Freddie Mac Lender substantially in the form attached to the Loan Agreement, or an executed Certificate of the Borrower substantially in the form attached to the Loan Agreement, in each case related to the deposit of Available Moneys in to the Collateral Fund for the applicable disbursement request. (ii) An executed Certificate of the Borrower substantially in the form attached to the Loan Agreement accompanied by a disbursement schedule listing the items for which the disbursement is sought and the total cost of each such item, together with invoices or other appropriate documentation (which may be a copy of an escrow agreement if a disbursement is to be made to an escrow account)for each such item. (iii) All Loan Payments that are then due shall have been paid. 2014-05-20 Agenda Packet Page 485 Any moneys in the Project Fund remaining after the Completion Date and payment, or provision for payment, in full of the Project Costs, at the direction of the Authorized Borrower Representative, promptly shall be paid into the Bond Fund for payment of Bond Debt Service Charges. Freddie Mac Loan Funds (a) The Borrower acknowledges that the Freddie Mac Lender has determined to fund the Freddie Mac Loan, on the condition that the Freddie Mac Lender originate and service the Freddie Mac Loan in accordance with the Freddie Mac Loan Documents and the Freddie Mac Guide. (b) The Borrower assigns all right,title and interest of the Borrower in and to the proceeds of the Freddie Mac Loan(in the amount set forth in subsection(d)below)to the Trustee. (c) The Freddie Mac Lender has agreed to deliver or cause to be delivered to the Trustee the Freddie Mac Loan Funds upon its receipt and approval of a requisition from the Borrower requesting an advance under the Freddie Mac Loan for payments of Project Costs. (d) The amount of the Freddie Mac Loan Funds hereby assigned by the Borrower to the Trustee is hereby expressly limited to $ plus the Initial Deposit and the Borrower shall have no further interest therein. (e) The Borrower agrees to pay to the Freddie Mac Lender all amounts when due under the Freddie Mac Borrower Note and to abide by the provisions of the Freddie Mac Loan Documents. (f) The Trustee agrees upon receipt from the Freddie Mac Lender of (i) the Freddie Mac Loan Funds, and (ii) an approved requisition, from time to time, to disburse amounts from the Project Fund,in the exact same amount of the Freddie Mac Loan Funds received by the Trustee from the Freddie Mac Lender, to or for the benefit of the Borrower for application to the payment of the Project Costs set forth in the approved requisition. (g) The Borrower acknowledges that Freddie Mac Loan Funds assigned to the Trustee by the Borrower pursuant to this section shall be wired from the Freddie Mac Lender directly to the Trustee and disbursed and invested and applied by the Trustee in accordance with the provisions of the Indenture. Borrower Required to Pay Costs in Event Project Fund Insufficient If moneys in the Project Fund are not sufficient to pay all Project Costs, the Borrower, nonetheless, agrees that the Borrower will complete the Project in substantial accordance with the Plans and Specifications and shall pay all such additional Project Costs from its own funds(or from other public or private financing sources available to the Borrower). The Borrower is required to pay all costs of issuing the Bonds in excess of the amount permitted, if any,to be paid from the Bond proceeds pursuant to the Tax Certificate. The Borrower shall not be entitled to any reimbursement for any such additional Project Costs or payment of issuance costs from the Issuer, the Trustee or any Holder; nor shall it be entitled to any abatement,diminution or postponement of the Loan Payments. Completion Date The Borrower shall notify the Trustee of the Completion Date by the delivery of a Completion Certificate signed by the Authorized Borrower Representative substantially in the form attached to the Loan Agreement. The Completion Certificate shall be delivered as promptly as practicable after the D-2 2014-05-20 Agenda Packet Page 486 occurrence of the events and conditions referred to in paragraphs (a) through (d) of the Completion Certificate. Loan Repayment;Delivery of Note Upon the terms and conditions of the Loan Agreement, the Issuer will make the Loan to the Borrower. In consideration of and in repayment of the Loan, the Borrower is required to deliver or cause to be delivered to the Trustee on or before each Loan Payment Date, Loan Payments,equal to the amount necessary to pay Bond Debt Service Charges due on the next Bond Payment Date. All such Loan Payments shall be paid to the Trustee in accordance with the terms of the Note for the account of the Issuer and shall be held and disbursed in accordance with the provisions of the Indenture and the Loan Agreement. The Borrower shall be entitled to a credit against the Loan Payments required to be made under the Loan Agreement, on any date, equal to the amounts, if any,transferred by the Trustee from the Initial Deposit Account, the Project Fund or the Collateral Fund on such date for the payment of Bond Debt Service Charges. To secure the Borrower's performance of its obligations under the Loan Agreement,the Borrower shall execute and deliver, concurrently with the issuance and delivery of the Bonds, the Note and the Regulatory Agreement. Upon payment in full of the Bond Debt Service Charges on any or all of the Bonds,in accordance with the Indenture, whether at maturity, upon acceleration or otherwise, or upon provision for the payment of all other obligations in the Loan Agreement and therein having been made in accordance with the provisions of the Indenture, (i) if with respect to less than all of the Bonds then outstanding, an appropriate notation shall be endorsed on the Note, evidencing the date and amount of the principal payment(or prepayment) equal to the Bonds so paid, or with respect to which provision for payment has been made, and (ii) if with respect to all of the Bonds then outstanding, the Note shall be deemed fully paid,the obligations of the Borrower shall be terminated,and the Note shall be surrendered by the Trustee to the Borrower for cancellation. Unless the Borrower is entitled to a credit under express terms of the Loan Agreement or the Note,all payments on the Note shall be in the full amount required thereunder. The Borrower and the Issuer each acknowledge that neither the Borrower nor the Issuer has any interest in the Bond Fund or the Collateral Fund and any moneys deposited therein shall be in the custody of and held by the Trustee in trust for the benefit of the Holders. Additional Payments The Borrower shall pay to the Issuer or the Trustee, as the case may be, as Additional Payments under the Loan Agreement the following: (a) To the Issuer, on the Closing Date, and on each anniversary thereof while the Bonds are outstanding, an administrative fee equal to one eighth of one percent of the original principal amount of the Bonds on such date; (b) To the Issuer or the Trustee, as the case may be, whether or not an Event of Default has occurred under the Loan Agreement,as payment for or reimbursement or prepayment of any and all costs, expenses,and liabilities(i)incurred or paid by the Issuer or the Trustee,as the case may be,in satisfaction of any obligations of the Borrower hereunder not performed by the Borrower in accordance with the provisions hereof, or (ii) incurred as a result of a written request by the Borrower or of a requirement of D-3 2014-05-20 Agenda Packet Page 487 any Borrower Document or the Indenture and not otherwise required to be paid by the Borrower under the Loan Agreement, or(iii)incurred in the defense of any action or proceeding with respect to the Project or any Borrower Document, or in enforcing any Borrower Document, or arising out of or based upon any other document related to the issuance of the Bonds; and (c) All reasonable fees, charges and expenses of the Trustee as trustee, registrar, authenticating agent and paying agent, and of any other paying agent, authenticating agent, and registrar on the Bonds under the Indenture, all as provided in the Indenture for services rendered under the Indenture, subject to the limitations set forth in the Indenture, as and when the same become due and payable. Upon the payment, prepayment, or incurrence of any such cost, expense, or liability described in this section by any such party, the Additional Payments in respect thereof shall be payable upon written demand to the Borrower, which demand shall be accompanied by invoices or other appropriate documentation concerning the nature, amount and incurrence of such cost, expense or liability. If the Additional Payments payable under this section are not paid by the Borrower within ten (10) days of the Borrower's receipt of such demand, such Additional Payments shall bear interest from such tenth (10th) date at the Interest Rate for Advances until the amount due shall have been fully paid. Special Covenants At all reasonable times and upon reasonable notice,the Borrower will allow any duly authorized representative of the Issuer or the Trustee to visit and inspect the Project,to examine and make copies of and from its books of record and account, and to discuss its affairs, finances, and accounts with its officers, and will furnish to the Issuer and the Trustee any information regarding its business affairs and financial condition within a reasonable time after receipt of written request therefor. The Borrower agrees to maintain its existence, not dissolve or sell, transfer or otherwise dispose of all or substantially all of its assets and not consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided, that it may do so if the surviving, resulting or transferee entity is other than the Borrower,it assumes in writing all of the obligations of the Borrower under the Loan Agreement and the Regulatory Agreement and it has a net worth equal to or greater than that of the Borrower immediately prior to such consolidation, merger, sale or transfer. The Borrower shall not permit one or more other entities to consolidate with or merge into it,without the prior written consent of the Trustee; or take any action or allow any action to be taken to terminate the existence of the Borrower except as provided under the Loan Agreement. Nothing contained in the Loan Agreement shall limit the rights of(i) any direct or indirect owners of interests in the Borrower to (a) transfer, convey, sell or otherwise dispose (a "Transfer") their ownership interests to any Affiliate, or in connection with any estate planning, or by operation of law, or (b) make Transfers among and between themselves, or (ii) Borrower to make Transfers as otherwise permitted by (or subject to the terms and conditions set forth in)the Regulatory Agreement. Notwithstanding anything to the contrary in the Loan Agreement but subject to the consent of the Freddie Mac Lender(to the extent required under the Freddie Mac Loan Documents),the following shall be permitted and shall not require the prior written approval of Issuer or Trustee, (a) the transfer by the Investor Limited Partner of its interest in Borrower in accordance with the terms of Borrower's [Amended and Restated] Limited Partnership Agreement, as it may be amended from time to time (the "Partnership Agreement"), (b) the removal of a general partner of Borrower in accordance with the Partnership Agreement and the replacement thereof with the Investor Limited Partner, or any of its affiliates, or the removal of the Special Limited Partner pursuant to the Partnership Agreement, (c) the transfer of ownership interests in the Investor Limited Partner, (d)the transfer of the interests of the Investor Limited D-4 2014-05-20 Agenda Packet Page 488 Partner in Borrower to the Special Limited Partner or any of its affiliates, (e) any amendment to the Partnership Agreement to memorialize the transfers or removal described above, and (f) any transfer permitted as described under the caption"APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT—Sale or Transfer of the Project"without consent of the Issuer. The Borrower has agreed to release the Issuer and the Trustee from,agrees that the Issuer and the Trustee will not be liable for, and indemnifies, defends and holds the Issuer and the Trustee harmless against, all liabilities, claims, costs and expenses (including attorneys' fees) imposed upon, incurred or asserted against the Issuer or the Trustee on account o£ :(i) any loss or damage to property or injury to or death of or loss by any person that may be occasioned by any cause whatsoever pertaining to the acquisition, financing, construction, occupation, possession, management, equipping, furnishing, maintenance,operation and use of the Project or from any work or thing done in or about the Project site, or any sidewalks, passageways, driveways, curbs, vaults and vault space, streets or parking areas on the Project site or adjacent thereto; (ii) any breach or default on the part of the Borrower in the performance of any covenant or agreement of the Borrower under the Loan Agreement,the Regulatory Agreement,the Note or any related document, or arising from any act or failure to act by the Borrower, or any of its agents, contractors, servants, employees or licensees; (iii) the Borrower's failure to comply with any requirement of the Loan Agreement; (iv) any action taken or omitted to be taken by the Issuer or the Trustee at the request of or with the written consent of the Borrower; (v)the issuance of the Bonds,to the extent that such issuance directly relates to the Borrower's furnishing information concerning the Project, the Borrower, its financial status or other matters relating to the Borrower; and (vi) any claim, action or proceeding brought with respect to any matter set forth in clause(i), (ii), (iii), (iv) or(v)above; provided, however, that the indemnification provided in this section shall not apply to any matter arising or resulting from the gross negligence or willful misconduct of the Issuer or the Trustee. The Borrower agrees to indemnify the Trustee for and to hold it harmless against all liabilities, claims, costs and expenses incurred without negligence or willful misconduct on the part of the Trustee, on account of any action taken or omitted to be taken by the Trustee in accordance with the terms of the Loan Agreement, the Bonds,the Regulatory Agreement, the Note or the Indenture or any action taken at the request of or with the consent of the Borrower, including the costs and expenses of the Trustee in defending itself against any such claim, action or proceeding brought in connection with the exercise or performance of any of its powers or duties under the Loan Agreement, the Bonds, the Indenture, the Regulatory Agreement or the Note. In case any action or proceeding is brought against the Issuer or the Trustee in respect of which indemnity may be sought under the Loan Agreement, the party seeking indemnity promptly shall give notice of that action or proceeding to the Borrower, and the Borrower upon receipt of that notice shall have the obligation and the right to assume the defense of the action or proceeding; provided, that failure of a party to give that notice shall not relieve the Borrower from any of its obligations under this Section unless that failure prejudices the defense of the action or proceeding by the Borrower. The indemnified party shall have the right to employ separate counsel in any such action or proceedings and to participate in the defense thereof,but,unless such separate counsel is employed with the approval and consent of the Borrower, or because the indemnified party has been advised by counsel that there may be a conflict of interest between the Borrower and the indemnified party, the Borrower shall not be required to pay the fees and expenses of such separate counsel. The Borrower shall not be liable for any settlement made without its consent,which consent shall not be unreasonably withheld,conditioned or delayed. The indemnification set forth above is intended to and shall include the indemnification of all affected officials, directors, officers, agents and employees of the Issuer and the Trustee, respectively. That indemnification is intended to and shall be enforceable by the Issuer and the Trustee,respectively,to the full extent permitted by law. D-5 2014-05-20 Agenda Packet Page 489 The Borrower represents that it has taken and caused to be taken, and covenants that it will take and cause to be taken,all actions that may be required of it,alone or in conjunction with the Issuer, for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code. The Borrower has agreed to maintain and preserve in good working order and condition, ordinary wear and tear and casualty loss excepted, all of its properties which are necessary or useful in the proper conduct of its business, and will from time to time make all necessary repairs, renewals, replacements, additions and improvements to said properties. All damage to apartment units will be repaired promptly and all apartment units will be maintained so as to be available at all times for habitation. The Borrower will keep adequate records and books of account in which complete entries will be made in accordance with GAAP or indicating deviations therefrom, reflecting all financial transactions. The Borrower will deliver to the Trustee annually its year-end financial statements accompanied by a written statement of the Borrower's independent certified public accountants that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Borrower has violated any of the terms, covenants or provisions of the Loan Agreement insofar as it relates to accounting matters. The Borrower will promptly pay and discharge: all taxes, assessments, fees, and other Government charges or levies or imposed upon it or upon any of its properties, income or profits, before the same will become delinquent; any Lien or other Indebtedness heretofore or hereafter incurred by it when due, and discharge, perform and observe covenants, provisions and conditions to be discharged, performed and observed by it in connection therewith, or in connection with any agreement or other instrument relating thereto or in connection with any Lien existing at any time upon any of its properties; provided, however, that the Borrower will not be required to pay any of the foregoing if(a) the amount, applicability or validity thereof will currently be contested in good faith by appropriate proceedings, (b) the Borrower will have set aside on its books adequate reserves with respect thereto, and (c) the title of the Borrower to, and its right to use, its properties is not materially and adversely affected thereby. The Borrower agrees that, in the event it fails to pay or cause to be paid taxes, assessments, fees and other Government charges or levies or the premium on any required insurance and such failure constitutes a default under the Freddie Mac Loan Documents,the Trustee may make such payment,but is not obligated to do so, and the Trustee will be reimbursed by the Borrower therefor with interest on the amount so advanced at the Interest Rate for Advances as provided in the Loan Agreement. The Borrower will at all times maintain or cause to be maintained,insurance of such types and in such amounts as required by the Freddie Mac Loan Documents. The Borrower will promptly notify the Issuer and the Trustee in writing of any litigation, arbitration proceeding or administrative investigation, inquiry or other proceeding to which it may hereafter become a party or be subject to which may result in a change in the business or assets or in the financial condition of the Borrower which would materially impair the ability of the Borrower to perform the Loan Agreement, the Regulatory Agreement or the Note, or any other agreement or instrument contemplated therein. Except to the extent contested in good faith,the Borrower has agreed to perform according to and will comply with all of its Contractual Obligations and all requirements of law if nonperformance thereof would result in a material adverse change in the business or assets or in the financial condition of the D-6 2014-05-20 Agenda Packet Page 490 Borrower which would materially impair the ability of the Borrower to perform the Loan Agreement, the Regulatory Agreement or the Note or any other agreement or instrument contemplated therein. The Borrower will take and continue to take prompt action to remedy all environmental contamination, hazardous waste disposal and other environmental cleanup affecting the Project, if any, resulting from an order or request of a municipal, state, federal, administrative or judicial authority, or otherwise violating the law. The foregoing covenant shall not constitute or create a waiver of any rights the Borrower may have to pursue any legal rights or remedies against any third party for any environmental claims. The Borrower will not discriminate, and will require each contractor, subcontractor and commercial tenant of the Project to covenant that it will not discriminate, by reason of race, creed, color, handicap, national origin or sex in the employment of any Person employed by it in connection with the Project or working in or on the Project. The Borrower will require the manager of the Project to covenant that in the leasing of the Project it will not discriminate by reason of race,creed,color,handicap,national origin or sex. The Borrower will not change the general character of its business as conducted at the date of the Loan Agreement, or engage in any type of business not reasonably related to its business as normally conducted. Additional Indebtedness So long as no Event of Default or Default under the Loan Agreement has occurred and be continuing, the Borrower will be permitted to incur any Indebtedness for any Project Cost or other obligation or payment due under the Loan Agreement,the Indenture or the Regulatory Agreement. Cooperation in Enforcement of Regulatory Agreement In order to maintain the exclusion from gross income under federal tax law of interest on the Bonds and to assure compliance with the laws of the State(including the Act),the Borrower agrees that it shall, concurrently with or before the execution and delivery of the Bonds,execute and deliver and cause to be recorded the agreement defined in the Indenture as the "Regulatory Agreement." The Borrower covenants and agrees as follows: (a) to comply with all provisions of the Regulatory Agreement; (b) to advise the Issuer in writing promptly upon learning of any default with respect to the covenants,obligations and agreements of the Borrower set forth in the Regulatory Agreement; (c) upon written direction by the Issuer, to cooperate fully and promptly with the Issuer in enforcing the terms and provisions of the Regulatory Agreement; and (d) to file in accordance with the time limits established by the Regulatory Agreement all reports and certificates required thereunder, and the annual certification to the Secretary of the Treasury required by the Regulatory Agreement. The Issuer shall not incur any liability in the event of any breach or violation of a Regulatory Agreement by the Borrower, and the Borrower agrees to indemnify the Issuer from any claim or liability for such breach pursuant to the Loan Agreement. D-7 2014-05-20 Agenda Packet Page 491 Tax Exempt Status of the Bonds (a) It is the intention of the Issuer and the Borrower that interest on the Bonds shall be and remain excludable from gross income for federal income taxation purposes,and to that end the covenants and agreements of the Borrower in this section are for the benefit of the owners of the Bonds and the Issuer. (b) The Borrower covenants and agrees that it will not (i)use or permit the use of any of the funds provided by the Issuer under the Loan Agreement or any other funds of the Borrower, directly or indirectly, in such manner as would, or (ii) knowingly enter into, or allow any "related person" (as defined in Section 147(a)(2) of the Code) to enter into, any arrangement, formal or informal, for the purchase of the Bonds that would, or (iii) take or omit to take any other action that would, in each case cause the Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code. (c) In the event that at any time the Borrower is of the opinion or becomes otherwise aware that for purposes of this section it is necessary to restrict or to limit the yield on the investment of any moneys held under the Indenture or otherwise by the Trustee,the Borrower shall determine the limitations and so instruct the Trustee in writing and cause the Trustee to comply with those limitations under the Indenture. (d) The Borrower will take such action or actions as may be reasonably necessary in the opinion of counsel to the Issuer, or of which it otherwise becomes aware, to fully comply with Section 148 of the Code as applicable to the Bonds. (e) The Borrower further agrees that it shall not discriminate on the basis of race, creed, color, sex, sexual preference, source of income (e.g. AFDC, SSI), physical disability, national origin or marital status in the lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the operation and management of the Project, to the extent required by applicable State or federal law. (f) The Borrower further warrants and covenants that it has not executed and will not execute any other agreement, or any amendment or supplement to any other agreement, with provisions contradictory to, or in opposition to, the provisions, of the Loan Agreement and of either of the Regulatory Agreement, and that in any event, the requirements of the Loan Agreement and the Regulatory Agreement are paramount and controlling as to the rights and obligations set forth in the Loan Agreement and supersede any other requirements in conflict herewith and therewith. (g) The Borrower will use due diligence to complete the acquisition and rehabilitation of all of the units comprising the Project and reasonably expects to fully expend the entire $ principal amount of the Loan by the day before the Maturity Date. (h) The Borrower will take such action or actions as necessary to ensure compliance with the Loan Agreement. Useful Life The Borrower represents and warrants that, within the meaning of Section 147(a)(14) of the Code,the average maturity of the Bonds does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the proceeds of the Bonds. D-8 2014-05-20 Agenda Packet Page 492 Federal Guarantee Prohibition The Borrower shall take no action,nor permit nor suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed"within the meaning of Section 149(b) of the Code. Prohibited Facilities The Borrower represents and warrants that no portion of the proceeds of the Loan shall be used to provide any airplane, skybox or other private luxury box, health club facility, facility primarily used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises, and no portion of the proceeds of the Loan shall be used for an office unless (a) the office is located on the premises of facilities constituting a portion of the Project and (b) not more than a de minimis amount of the functions to be performed at such office is not related to the day-to-day operations of the Project. No Optional Prepayment The Loan may not be prepaid by the Borrower in whole or in part. Events of Default The Loan Agreement provides that each of the following is an "Event of Default": (a) the Borrower shall fail to pay any Loan Payment on or prior to the date on which that Loan Payment is due and payable or within the Loan Payment Cure Period; (b) the Borrower shall fail to observe or perform any other agreement,term or condition under the Loan Agreement and the continuation of such failure for a period of 30 days after written notice thereof shall have been given to the Borrower and the Investor Limited Partner by the Issuer or the Trustee, or for such longer period as the Issuer and the Trustee may agree to in writing; provided,that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure will not constitute an Event of Default so long as the Borrower institutes curative action within the applicable period and diligently pursues that action to completion, which must be resolved within 180 days after the aforementioned notice; (c) the Borrower shall (i) admit in writing its inability to pay its debts generally as they become due; (ii) have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws, as now or hereafter in effect and not dismissed within ninety(90) days; (iii)voluntarily commence a proceeding under any other federal or state bankruptcy,insolvency,reorganization or similar law, or has such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for ninety (90) days; (iv)make an assignment for the benefit of creditors; or(v)have a receiver or trustee appointed for it or for the whole or any substantial part of its property which appointment is not vacated within a period of (90) days; (d) any representation or warranty made by the Borrower in the Loan Agreement or any statement in any report, certificate, financial statement or other instrument furnished in connection with the Loan Agreement or with the purchase of the Bonds shall at any time prove to have been false or misleading in any adverse material respect when made or given; and (e) there shall occur an "Event of Default"as defined in the Indenture or the Regulatory Agreement. Remedies If any Event of Default occurs and continues, the Trustee may, if payment of the Bonds is accelerated pursuant to the Indenture, declare all Loan Payments, together with any other amounts payable by the Borrower under the Loan Agreement and the Note,to be immediately due and payable and D-9 2014-05-20 Agenda Packet Page 493 any amounts collected will be paid into the Bond Fund and applied in accordance with the provisions of the Indenture. The Trustee or the Issuer may also pursue any remedies at law or in equity to collect all amounts due and thereafter to become due under the Loan Agreement,the Regulatory Agreement and the Note, or enforce performance and observance of any other obligation, agreement or covenant of the Borrower under those instruments. Amendments,Changes and Modifications of the Loan Agreement Except as otherwise expressly provided in the Loan Agreement or the Indenture, subsequent to the issuance of the Bonds and prior to all conditions provided for in the Indenture for release of the Indenture having been met, the Loan Agreement, the Regulatory Agreement and the Note may not be effectively amended, changed,modified,altered or terminated except in accordance with the provisions of the Indenture, as applicable. See "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Amendments to Loan Agreement,Regulatory Agreement and Note." Subordination to Freddie Mac Loan Documents Notwithstanding anything in the Loan Agreement to the contrary, Borrower, Trustee and Issuer acknowledge that the obligations of Borrower under the Loan Agreement are subject and subordinate to the Freddie Mac Loan Documents. Notwithstanding any provision in this Loan Agreement to the contrary, no obligations of the Borrower under the Loan Agreement shall be payable except from (A) Surplus Cash or (B) funds that are not derived from (i) revenues of the Project, or (ii) any reserve or deposit made with the Freddie Mac Lender or any other party as required by Freddie Mac in connection with the Freddie Mac Loan Documents or (C) any proceeds of the Freddie Mac Loan which have been deposited into the Collateral Fund or the Initial Deposit Account of the Bond Fund by or at the direction of the Freddie Mac Lender. No claims or actions shall be made (or payable) under the Loan Agreement against the Project or the assets of the Borrower,except for Surplus Cash of the Borrower.Proceeds from any condemnation award or from the payment of a claim under any hazard insurance policy relating to the Project will not be payable to the Trustee, but will be payable in accordance with the Freddie Mac Loan Documents. In addition, the rights and obligations of the parties under the Loan Agreement and all other documents evidencing, implementing, or securing the Loan Agreement (the "Other Bond Documents") are and shall be subordinated in all respects rights and obligations of the parties to and under the Freddie Mac Loan Documents. In the event of any conflict between the provisions of(i) the Loan Agreement or the Other Bond Documents and(ii)the provisions of the Freddie Mac Loan Documents,the provisions of the Freddie Mac Loan Documents shall control. The provisions under this heading shall control over any inconsistent provisions in the Loan Agreement or the Other Bond Documents. Any subsequent amendment to the Loan Agreement affecting the provisions under this heading or the rights of the Freddie Mac Lender with respect to the Borrower or Project is subject to prior written approval of the Freddie Mac Lender and Freddie Mac (so long as the Project is subject to a mortgage held or under a commitment to purchase by Freddie Mac). The provisions described in this section shall survive the termination of the Loan Agreement. D-10 2014-05-20 Agenda Packet Page 494 APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE REGULATORY AGREEMENT The following is a brief summary of the Regulatory Agreement. The summary does not purport to be complete or definitive and is qualified in its entirety by reference to such Regulatory Agreement, copies of which are on file with the Trustee. Definitions Unless otherwise expressly provided in the Regulatory Agreement or unless the context clearly requires otherwise, capitalized terms not defined in the Regulatory Agreement shall bear the meaning given them in the Indenture. "Adjusted Income"—The adjusted income of a person who intends to reside in a residential unit (together with the adjusted income of all persons the age of 18 years or older who intend to reside with such person in one residential unit)as calculated in the manner prescribed in Regulation Section 1.103-8. "Affiliated Party" — (1)a Person whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b) of the Code, (2)a Person who together with the Borrower are members of the same controlled group of corporations(as defined in Section 1563(a)of the Code, except that "more than 50 percent" shall be substituted for "at least 80 percent" each place it appears therein), (3)a partnership and each of its partners (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b)of the Code or (4)an S Corporation and each of its shareholders (and their spouses and minor children) whose relationship with the Borrower would result in a disallowance of losses under Section 267 or 707(b)of the Code. "Area"—The San Diego County,California, Primary Statistical Area. "Bonds" — The $ Chula Vista Housing Authority Multifamily Housing Revenue Bonds(Garden Villas) Series 2014A. "Borrower's Tax Certificate"—The certificate of the Borrower,dated as of the Closing Date,with respect to certain Project Costs delivered to the Issuer by the Borrower. "CDLAC"—The California Debt Limit Allocation Committee. "CDLAC Resolution" — Resolution No. adopted by CDLAC on 2014, as amended. "Certificate of Continuing Program Compliance" —The certificate with respect to the Project to be filed by the Borrower with the Issuer,which shall be substantially in the form attached as an exhibit to the Regulatory Agreement. "Closing Date"—June ,2014. "Costs of Issuance"—All costs incurred in connection with the issuance of the Bonds, generally those treated as Costs of Issuance under present Treasury Department regulations and rulings, and including all costs incurred in connection with the authorization, sale and issuance of the Bonds and the transactions contemplated in the Regulatory Agreement, including, but not limited to (1) counsel fees 2014-05-20 Agenda Packet Page 495 (including bond counsel,purchaser's counsel, Issuer's counsel,Trustee's counsel, Borrower's counsel, as well as any other specialized counsel fees and expenses incurred in connection with the borrowing); (2) financial advisor fees and expenses incurred in connection with the borrowing; (3)rating agency fees, if any; (4)initial and prepaid Trustee's fees incurred in connection with the borrowing; (5)paying agent and certifying and authenticating agent fees related to issuance of the Bonds; (6) accountant fees related to issuance of the Bonds; (7) costs incurred in connection with the required public approval process (e.g., publication costs for public notices generally and costs of the public hearing or voter referendum); (8) costs of engineering and feasibility studies necessary to the issuance of the Bonds (as opposed to such studies related to acquisition or rehabilitation of the Project, but not to the borrowing); and (9) the Issuer fees. ,,Income Certification" — The Income Computation and Certification Form in substantially the form attached to the Regulatory Agreement. "Indenture"—The Trust Indenture between the Issuer and the Trustee, dated as of June 1, 2014, as it may be amended from time to time. "Issuer Fee"—The administrative fee of the Issuer payable on the Closing Date in the amount of one-eighth of one percent (1/8%) of the aggregate original principal amount of the Bonds and (i)the ongoing administrative fee payable in advance every six (6) months commencing on the Closing Date in the amount of one-half (1/2) of one-eighth of one percent (1/8%) of the aggregate original principal amount of the Bonds. "Loan"—The Loan made by the Issuer to the Borrower pursuant to the Loan Agreement for the purpose of providing funds to the Borrower to finance the acquisition,rehabilitation and equipping of the Project. "Low Income Tenants"—Individuals or families with Adjusted Income which does not exceed 60 percent of the Median Income for the Area as adjusted in a manner consistent with the determination of lower income families under Section 8 of the United States Housing Act of 1937 and as adjusted for household size as set forth below. In no event, however, will the occupants of a residential unit be considered to be Low Income Tenants if all the occupants are students,as defined in Section 151(c)(4)of the Code, as such may be amended, no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4)defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on- farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. Household Size Adjustment 1 70% 2 80% 3 90% 4 100% 5 108% 6 116% 7 124% 8 132% E-2 2014-05-20 Agenda Packet Page 496 "Low Income Units" — The dwelling units in the Project designated for occupancy by Low Income Tenants pursuant to the Regulatory Agreement. "Median Income for the Area" — The median gross income for the Area as most recently determined by the Secretary of Treasury pursuant to Section 142(d)(2)(B)of the Code. "Project"—The Project Facilities and the Project Site. "Project Costs"—To the extent authorized by the Code, the Regulations and the Act, any and all costs incurred by the Borrower with respect to the acquisition,rehabilitation and equipping of the Project, whether paid or incurred prior to or after the sixtieth day preceding December 10, 2013, including, without limitation, costs for site preparation, the planning of housing and related facilities and improvements, the acquisition of property, the removal or demolition of existing structures, the rehabilitation and equipping of housing and related facilities and improvements, and all other work in connection therewith, and all costs of financing, including, without limitation, the costs of consultant, accounting and legal services, other expenses necessary or incident to determining the feasibility of the Project, administrative and other expenses necessary or incident to the Project and the financing thereof (including reimbursement to any municipality,county or entity for expenditures made for the Project)and all other costs approved by Bond Counsel. "Project Facilities"—The buildings, structures and other improvements to be rehabilitated on the Project Site that are being financed with proceeds of the Bonds,and all fixtures and other property owned by the Borrower and located on, or used in connection with, such buildings, structures and other improvements. "Project Site" or "Property" — The parcel or parcels of real property described in an exhibit, which is attached to the Regulatory Agreement,and all rights and appurtenances thereunto appertaining. "Qualified Project Costs" — The Project Costs (excluding Costs of Issuance) incurred after the sixtieth day preceding December 10, 2013,which either constitute land or property of a character subject to the allowance for depreciation under Section 167 of the Code or are chargeable to a capital account with respect to the Project for federal income tax and financial accounting purposes, or would be so chargeable either with a proper election by the Borrower or but for the proper election by the Borrower to deduct those amounts within the meaning of Regulation Section 1.103-8(a)(1)(i); provided, however, that only such portion of interest accrued during rehabilitation of the Project shall constitute a Qualified Project Cost as bears the same ratio to all such interest as the Qualified Project Costs bear to all Project Costs paid from Bond proceeds and interest earnings thereon; and provided further that interest accruing after the completion date shall not constitute a Qualified Project Cost; and provided still further that if any portion of the Project is being rehabilitated by an Affiliated Party (whether as a general contractor or a subcontractor), "Qualified Project Costs" shall include only the actual out-of-pocket costs incurred by such Affiliated Party in rehabilitating the Project (or any portion thereof) within the meaning of Section 147(d)(2)of the Code,as provided in the Tax Certificate. "Qualified Project Period"—The period beginning on the later of(i)the first day on which at least ten percent (10%) of the dwelling units in the Project are first occupied, and (ii) the Closing Date and ending on the later of(a)the date which is 55 years after the date on which fifty percent (50%) of the dwelling units are occupied, (b)the first day on which no tax exempt bonds with respect to the Project are Outstanding, or (c)the date on which any assistance provided with respect to the Project under Section 8 of the United States Housing Act of 1937 terminates; provided that the Qualified Project Period may be shortened with the written consent of the Issuer and CDLAC in their sole discretion, and upon receipt by E-3 2014-05-20 Agenda Packet Page 497 the Issuer of an opinion of Bond Counsel that such action, in and of itself, will not cause interest on the Bonds to be includable in gross income for federal tax purposes. "Very Low Income Tenants" — Individuals or families with Adjusted Income which does not exceed 50 percent of the Median Income for the Area as adjusted in a manner consistent with determination of lower income families under Section 8 of the United States Housing Act of 1937 and as adjusted for household size as set forth below. In no event, however, will the occupants of a residential unit be considered to be Very Low Income Tenants if all the occupants are students, as defined in Section 151(c)(4)of the Code,as such,may be amended,no one of which is entitled to file a joint federal income tax return. Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time student during each of 5 calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or is an individual pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. Household Size Adjustment 1 70% 2 80% 3 90% 4 100% 5 108% 6 116% 7 124% 8 132% "Very Low Income Units"—The dwelling units in the Project designated for occupancy by Very Low Income Tenants pursuant to the Regulatory Agreement. Capitalized terms which are not defined in the Regulatory Agreement shall have the meanings assigned to them in the Indenture. Acquisition,Rehabilitation,Equipping and Completion of the Project. The Borrower represents, as of the date of the Regulatory Agreement, and covenants, warrants and agrees as follows: (a) The Borrower has incurred a substantial binding obligation to acquire, rehabilitate and equip the Project,pursuant to which the Borrower is obligated to expend at least ninety five percent of the net sale proceeds of the Bonds. (b) The Borrower's reasonable expectations respecting the total cost of the acquisition, rehabilitation and equipping of the Project and the disbursement of Bond proceeds are accurately set forth in the Borrower's Tax Certificate attached to the Tax Certificate which has been delivered to the Issuer. (c) The Borrower will proceed with due diligence to complete the acquisition, rehabilitation and equipping of the Project and expects to expend the full amount of the proceeds of the Loan for Project Costs prior to three years from the Closing Date. (d) The statements made in the various certificates delivered by the Borrower to the Issuer or the Trustee are true and correct. E-4 2014-05-20 Agenda Packet Page 498 (e) Money on deposit in any fund or account in connection with the Bonds, whether or not such money was derived from other sources, shall not be used by or under the direction of the Borrower, in a manner which would cause the Bonds to be "arbitrage bonds"within the meaning of Section 148 of the Code, and the Borrower specifically agrees that the investment of money in any such fund shall be restricted as may be necessary to prevent the Bonds from being"arbitrage bonds"under the Code. (f) The Borrower(and any person related to it within the meaning of Section 147(a)(2)of the Code) will not take or omit to take, as is applicable, any action if such action or omission would in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to the requirements of the Indenture,the Loan Agreement or the Regulatory Agreement. (g) The Borrower shall comply with all applicable requirements of Section 65863.10 of the California Government Code, including the requirements for providing notices in Sections (b), (c), (d) and(e)thereof. Residential Rental Property. The Borrower acknowledges and agrees that the Project will be owned,managed and operated as a "qualified residential rental project" (within the meaning of Section 142(d) of the Code) until the expiration of the Qualified Project Period. To that end,and for the term of the Regulatory Agreement,the Borrower represents, as of the date of the Regulatory Agreement, and covenants,warrants and agrees as follows: (a) The Project is being acquired, rehabilitated and equipped for the purpose of providing multifamily residential rental property, and the Borrower shall own, manage and operate the Project as a project to provide multifamily residential rental property comprised of a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities, and no other facilities, in accordance with applicable provisions of Section 142(d) of the Code and Section 1.103-8(b) of the Regulations, and the Act, and in accordance with such requirements as may be imposed thereby on the Project from time to time. (b) All of the dwelling units in the Project will be similarly rehabilitated units, and, to the extent required by the Code and the Regulations, each dwelling unit in the Project will contain complete separate and distinct facilities for living, sleeping, eating, cooking and sanitation for a single person or a family, including a sleeping area, bathing and sanitation facilities and cooking facilities equipped with a cooking range,refrigerator and sink; provided that any tenant may,but shall not be obligated to,provide a refrigerator for the unit to be occupied. (c) None of the dwelling units in the Project will at any time be utilized on a transient basis, or will ever be used as a hotel,motel, dormitory, fraternity house, sorority house,rooming house, nursing home,hospital, sanitarium,rest home,retirement house or trailer court or park. (d) No part of the Project will at any time be owned or used as a condominium or by a cooperative housing corporation,nor shall the Borrower take any steps in connection with a conversion to such ownership or uses. The Borrower shall not take any steps in connection with a conversion of the Project to a condominium or cooperative ownership except with the prior written approving opinion of Bond Counsel that by reason of any such action the interest on the Bonds will not become includable in gross income for federal income tax purposes. (e) All of the dwelling units (except for two manager's units described in (g) below) will be available for rental on a continuous basis to members of the general public and the Borrower will not give E-5 2014-05-20 Agenda Packet Page 499 preference to any particular class or group in renting the dwelling units in the Project,except to the extent that dwelling units are required by the Regulatory Agreement or any other restriction to be imposed on the Project to be leased or rented to Low Income Tenants, Very Low Income Tenants and to holders of Section 8 certificates or vouchers or, in the case of any other restrictions imposed on the Project, to tenants meeting the income and affordability restrictions required thereby. (f) The Project Site consists of a parcel or parcels that are contiguous except for the interposition of a road, street or stream, and all of the Project Facilities will comprise a single geographically and functionally integrated project for residential rental property, as evidenced by the ownership,management,accounting and operation of the Project. (g) No dwelling unit in any building in the Project shall be occupied by the Borrower unless the building contains five or more dwelling units, in which case two units may be occupied by the Borrower or by persons related to or affiliated with the Borrower such as a resident manager or maintenance personnel. Subject to the foregoing limitation, one unit in the Project may be occupied by resident managers or maintenance personnel. (h) Should involuntary noncompliance with the provisions of Section 1.103-8(b) of the Regulations be caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure,change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer from enforcing the requirements of the Regulations, or condemnation or similar event, the Borrower covenants that, within a"reasonable period" determined in accordance with the Regulations, it will either prepay the Loan and thereby cause the Bonds to be redeemed or apply any proceeds received as a result of any of the preceding events to reconstruct the Project to meet the requirements of Section 142(d)of the Code and the Regulations. (i) The Borrower shall not discriminate on the basis of race, religion, creed, color, ethnic group identification, sex, sexual preference, age, source of income (e.g. AFDC, SSI), mental or physical disability, national origin or marital status in the rental, lease, use or occupancy of the Project or in connection with the employment or application for employment of persons for the operation and management of the Project. 0) Following the expiration or termination of the Qualified Project Period, Low Income Units and Very Low Income Units shall remain available to the Low Income Tenants and Very Low Income Tenants then occupying such units at the date of expiration or termination of the Qualified Project Period at a rent not greater than the rent determined pursuant to the provisions of the Regulatory Agreement described in paragraphs (a)(i) and (ii)under the heading"Low Income and Very Low Income Units."below until the earliest of any of the following occurs: (i) The household's income exceeds 140 percent of the income at which such household would qualify as a Low Income Tenant or Very Low Income Tenant, applicable. (ii) The household voluntarily moves or is evicted for "good cause." For these purposes, "good cause" means the nonpayment of rent or allegation of facts necessary to prove major, or repeated minor, violations of material provisions of the lease agreement which detrimentally affect the health and safety of other persons or the structure, the fiscal integrity of the Project,or the purposes or special programs of the Project. (iii) Thirty(30)years after the commencement of the Qualified Project Period. E-6 2014-05-20 Agenda Packet Page 500 (iv) The Borrower pays the relocation assistance and benefits to such Low Income Tenants or Very Low Income Tenants, as applicable, as provided in Section 7264(b) of the Government Code of the State of California. (k) The Issuer may but shall not be required to monitor the Borrower's compliance with the provisions described in subparagraph 0)above. Low Income and Very Low Income Units. (a) Pursuant to the requirements of Section 142(d) of the Code and applicable provisions of the Act, the Borrower represents, as of the date of the Regulatory Agreement, and warrants, covenants and agrees as follows: (i) During the Qualified Project Period, not less than ten percent (10%) of the units in the Project shall be designated as Very Low Income Units and shall be continuously occupied by or held available for occupancy by Very Low Income Tenants at monthly rents paid by tenants which do not exceed one-twelfth of the amount obtained by multiplying 30% times 50% of the Median Income for the Area, as adjusted for household size utilizing the percentages set forth above under the definition of Very Low Income Tenant less a reasonable deduction for utilities paid by the tenant as determined by the Issuer and assuming (solely for purposes of the above- described limit on the amount of monthly rent, and not for purposes of determining whether individuals or families are Very Low Income Tenants for purposes of Section 142(d) of the Code),the following unit sizes and household sizes: Unit Size Household Size One Bedroom Two Persons Two Bedrooms Three Persons Three Bedrooms Four Persons Such Very Low Income Units shall be of comparable quality and offer a range of sizes and number of bedrooms comparable to those units which are available to other tenants and shall be distributed throughout the Project. A unit occupied by a Very Low Income Tenant who at the commencement of the occupancy is a Very Low Income Tenant shall be treated as occupied by a Very Low Income Tenant until a recertification of such tenant's income in accordance with the provisions described in paragraph 4(c)(i) below demonstrates that such tenant no longer qualifies as a Very Low Income Tenant and thereafter such unit shall be treated as any residential unit of comparable or smaller size in the Project occupied by a new resident other than a Very Low Income Tenant. Moreover, a unit previously occupied by a Very Low Income Tenant and then vacated shall be considered occupied by a Very Low Income Tenant until reoccupied, other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (3 1)days. (ii) In addition to the Very Low Income Units set aside under paragraph (i) above, during the Qualified Project Period not less than another thirty percent (30%) of the units in the Project shall be designated as Low Income Units and shall be continuously occupied by or held available for occupancy by Low Income Tenants at monthly rents which do not exceed one- twelfth of the amount obtained by multiplying 30% times 60% of the Median Income for the Area, as adjusted for household size utilizing the percentages set forth above under the definition of Low Income Tenant less a reasonable deduction for utilities paid by the tenant as determined E-7 2014-05-20 Agenda Packet Page 501 by the Issuer and assuming (solely for purposes of the above-described limit on the amount of monthly rent, and not for purposes of determining whether individuals or families are Low Income Tenants for purposes of Section 142(d) of the Code), the following unit sizes and household sizes: Unit Size Household Size One Bedrooms Two Persons Two Bedrooms Three Persons Three Bedrooms Four Persons Such Low Income Units shall be of comparable quality and offer a range of sizes and number of bedrooms comparable to those units which are available to other tenants and shall be distributed throughout the Project. A unit occupied by a Low Income Tenant who at the commencement of the occupancy is a Low Income Tenant shall be treated as occupied by a Low Income Tenant until a recertification of such tenant's income in accordance with the provisions described in paragraph (c)(ii) below demonstrates that such tenant no longer qualifies as a Low Income Tenant and thereafter such unit shall be treated as any residential unit of comparable or smaller size in the Project occupied by a new resident other than a Low Income Tenant. Moreover,a unit previously occupied by a Low Income Tenant and then vacated shall be considered occupied by a Low Income Tenant until reoccupied,other than for a temporary period, at which time the character of the unit shall be redetermined. In no event shall such temporary period exceed thirty-one (31) days. (b) Immediately prior to a Very Low Income Tenant's occupancy of a Very Low Income Unit and a Low Income Tenant's occupancy of a Low Income Unit, the Borrower will obtain and maintain on file an Income Certification from each Very Low Income Tenant occupying a Very Low Income Unit and each Low Income Tenant occupying a Low Income Unit, dated immediately prior to the initial occupancy of such Very Low Income Tenant or Low Income Tenant, as applicable, in the Project. In addition, the Borrower will provide such further information as may be required in the future by the State of California, the Issuer, the Act, Section 142(d) of the Code and the Regulations, as the same may be amended from time to time,or in such other form and manner as may be required by applicable rules, rulings,policies,procedures or other official statements now or hereafter promulgated, proposed or made by the Department of the Treasury or the Internal Revenue Service with respect to obligations issued under Section 142(d)of the Code. The Borrower shall verify that the income provided by an applicant is accurate by taking one or more of the following steps as a part of the verification process: (1)obtain a federal income tax return for the most recent tax year, (2)obtain a written verification of income and employment from the applicant's current employer, (3)if an applicant is unemployed or did not file a tax return for the previous calendar year, obtain other verification of such applicant's income satisfactory to the Issuer or(4)such other information as may be reasonably requested by the Issuer. Copies of the most recent Income Certifications for Low Income Tenants and Very Low Income Tenants shall be attached to the quarterly report to be filed with the Issuer as required in the provisions described in paragraph(d)below. (c) (i) Immediately prior to the first anniversary date of the occupancy of a Very Low Income Unit by one or more Very Low Income Tenants, and on each anniversary date thereafter, the Borrower shall recertify the income of the occupants of each Very Low Income Unit by obtaining a completed Income Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds 140%of the income at which such E-8 2014-05-20 Agenda Packet Page 502 household would qualify as Very Low Income Tenants, such household will no longer qualify as Very Low Income Tenants, and to the extent necessary to comply with the requirements of the provisions described in paragraph (a)(i) above, the Borrower will rent the next available unit of comparable or smaller size to one or more Very Low Income Tenants. No tenants shall be denied continued occupancy in the Project because, after occupancy, their income increases to make them no longer qualify as Very Low Income Tenants. (ii) Immediately prior to the first anniversary date of the occupancy of a Low Income Unit by one or more Low Income Tenants,and on each anniversary date thereafter,the Borrower shall recertify the income of the occupants of each Low Income Unit by obtaining a completed Income Certification based upon the current income of each occupant of the unit. In the event the recertification demonstrates that such household's income exceeds 140% of the income at which such household would qualify as Low Income Tenants, such household will no longer qualify as Low Income Tenants and to the extent necessary to comply with the requirements of the provisions described in paragraph 4(a)(ii)above,the Borrower will rent the next available unit of comparable size to one or more Low Income Tenants. (d) Upon commencement of the Qualified Project Period,and within ten days of the last day of each quarter thereafter during the term of the Regulatory Agreement, the Borrower shall advise the Issuer of the status of the occupancy of the Project by delivering to the Issuer a Certificate of Continuing Program Compliance. (e) The Borrower shall maintain complete and accurate records pertaining to the Low Income Units and Very Low Income Units, and shall permit any duly authorized representative of the Issuer, the Agent, the Department of the Treasury or the Internal Revenue Service to inspect the books and records of the Borrower pertaining to the Project, including those records pertaining to the occupancy of the Low Income Units and Very Low Income Units. (f) The Borrower shall submit to the Secretary of the Treasury annually on the anniversary date of the start of the Qualified Project Period, or such other date as is required by the Secretary, a certification that the Project continues to meet the requirements of Section 142(d) of the Code, and shall provide a copy of such certification to the Issuer. (g) The Borrower shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. The Borrower shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants. The Borrower shall not collect any additional fees or payments from a Low Income Tenant or a Very Low Income Tenant except security deposits or other deposits required of all tenants. The Borrower shall not collect security deposits or other deposits from Section 8 certificate or voucher holders in excess of those allowed under the Section 8 Program. The Borrower shall not discriminate against applicants for Low Income Units or Very Low Income Units on the basis of source of income (i.e., AFDC or SSI),and the Borrower shall consider a prospective tenant's previous rent history of at least one year as evidence of the ability to pay the applicable rent(ability to pay shall be demonstrated if an applicant can show that the same percentage or more of the applicant's income has been paid for rent in the past as will be required to be paid to rent the Very Low Income Unit to be occupied). (h) Each lease pertaining to a Low Income Unit or Very Low Income Unit shall contain a provision to the effect that the Borrower has relied on the Income Certification and supporting information supplied by the applicant in determining qualification for occupancy of the Low Income Unit E-9 2014-05-20 Agenda Packet Page 503 or Very Low Income Unit, as applicable, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. Each lease will also contain a provision that failure to cooperate with the annual recertification process reasonably instituted by the Borrower pursuant to the provisions described in paragraph (c) above may, at the option of the Borrower, disqualify the unit as a Low Income Unit or Very Low Income Unit, as applicable, or provide grounds for termination of the lease. (i) Prior to the Closing Date,the Borrower agrees to provide to the Issuer a copy of the form of application and lease to be provided to prospective Low Income Tenants and Very Low Income Tenants. The term of the lease shall be not less than thirty(30)days. 0) To the extent required by law, notwithstanding the termination of the Qualified Project Period, the rent of"in-place" Low Income Tenants and Very Low Income Tenants at the conclusion of the Qualified Project Period will continue to be governed by the applicable affordability restrictions described in this section, so long as those tenants continue to live in the Project. The foregoing shall not prevent the Borrower from terminating a tenant's occupancy in accordance with the terms of such tenant's lease or from declining to extend such tenant's lease. Tax-Exempt Status of Bonds (a) The Borrower and the Issuer will not knowingly take or permit, or omit to take or cause to be taken,as is appropriate,any action that would adversely affect the Tax Exempt nature of the interest on the Bonds and, if either of them should take or permit, or omit to take or cause to be taken, any such action, it will take all lawful actions necessary to rescind or correct such actions or omissions promptly upon obtaining knowledge thereof. (b) The Borrower and the Issuer will file of record such documents and take such other steps as are necessary,in the written opinion of Bond Counsel filed with the Issuer and the Trustee(with a copy to the Borrower), in order to insure that the requirements and restrictions of the Regulatory Agreement will be binding upon all owners of the Project,including,but not limited to,the execution and recordation of the Regulatory Agreement in the real property records of the County. Sale or Transfer of the Project. The Borrower represents in the Regulatory Agreement that it intends to hold the Project for its own account,has no current plans to sell, transfer or otherwise dispose of the Project, and covenants and agrees not to sell, transfer or otherwise dispose of the Project, or any portion thereof (other than for individual tenant use as contemplated in the Regulatory Agreement), without obtaining the prior written consent of the Issuer(except as provided in the second to last paragraph set forth below) and upon receipt by the Issuer(except as provided in the second to last paragraph set forth below) of(i)such certifications as deemed necessary by the Issuer to establish that the Borrower shall not be in default under the Regulatory Agreement or under the Loan Agreement or, if any such defaults exist, the purchaser or assignee undertakes to cure such defaults to the satisfaction of the Issuer; (ii)a written instrument by which the Borrower's purchaser or transferee has assumed in writing and in full the Borrower's duties and obligations under the Regulatory Agreement, (iii)an opinion of counsel for the transferee that the transferee has duly assumed the obligations of the Borrower under the Regulatory Agreement and that such obligations and the Regulatory Agreement are binding on the transferee, (iv)documentation from the transferee reflecting the transferee's experience or, should the transferee choose to have a property manager run the Project, a property manager's experience with owning and/or operating multifamily housing projects such as the Project and with use and occupancy restrictions similar to those contained in the Regulatory Agreement, and (v)an opinion of Bond Counsel addressed to the Issuer to the effect that E-10 2014-05-20 Agenda Packet Page 504 such transfer will not cause interest on the Bonds, to become includable in the gross income of the recipients thereof for federal income tax purposes. The Borrower shall not allow any non-profit entity, which is not as of the date of the Regulatory Agreement a general partner of the Borrower, to become a general partner of the Borrower nor release any non-profit entity which is a general partner of the Borrower as of the date of the Regulatory Agreement from the limited partnership without the prior written consent of an Authorized Officer of the Issuer(which consent shall not be unreasonably withheld, delayed or conditioned). No transfer of the Project shall operate to release the Borrower from its obligations under the Regulatory Agreement with respect to any action or inaction taken prior to such transfer. It is expressly stipulated and agreed in the Regulatory Agreement that any sale, transfer or other disposition of the Project in violation of the transfer provisions described herein shall be null, void and without effect, shall cause a reversion of title to the Borrower, and shall be ineffective to relieve the Borrower of its obligations under the Regulatory Agreement. Not less than 30 days prior to consummating any sale,transfer or disposition of any interest in the Project,the Borrower shall deliver to the Issuer and the Trustee a notice in writing explaining the nature of the proposed transfer. Notwithstanding the above, the following transfers will be permitted without consent of the Issuer: (a) a transfer of partnership interests in Borrower to or by the tax credit investor(the "Tax Credit Investor")under the limited partnership agreement of the Borrower(the "Partnership Agreement"), or its designee pursuant to the partnership agreement of the Borrower; (b) a transfer of the limited partner interests in the Borrower of the Tax Credit Investor to an affiliate of the Tax Credit Investor; (c) a transfer of the limited partner interests in the Borrower of the Tax Credit Investor to nonaffiliates of the Tax Credit Investor; (d) the removal and replacement of the general partner of the Borrower under the Partnership Agreement (the "General Partner") pursuant to the Partnership Agreement or pursuant to the assignment of general partnership interests of the Borrower to the Freddie Mac Lender, or the removal of the Special Limited Partner pursuant to the Partnership Agreement; (e)the transfer of ownership interests in the Investor Limited partner or the Special Limited Partner, (f) the transfer of the interests of the Investor Limited Partner in Borrower to Borrower's Special Limited partner or any of its affiliates, and (g) any amendment to the Partnership Agreement to memorialize the transfers or removal described above. Prior to any transfer of partnership interests or removal of the General Partner permitted in the provisions described in paragraph (d) above, the Issuer shall receive an opinion of counsel acceptable to the Issuer to the effect that such transfer will not cause interest on the Bonds,to become includable in the gross income of the recipients thereof for federal income tax purposes. Foreclosure. Notwithstanding anything contained in the transfer provisions described above to the contrary, neither the consent of the Issuer nor the delivery of items (i) through (v) of the first paragraph of the transfer provisions described above (the"Transfer Conditions") shall be required in the case of a transfer by foreclosure or deed in lieu of foreclosure,whereby the Freddie Mac Lender becomes the owner of the Project, and nothing shall otherwise affect the right of the Trustee to foreclose on the Project or accept a deed in lieu of foreclosure. The Transfer Conditions shall be applicable to any subsequent transfer by the Trustee. Term. The Regulatory Agreement and all and several of the terms thereof shall become effective upon its execution and delivery and shall remain in full force and effect during the Qualified Project Period, or for such longer period as is provided in the provisions described under the captions "Residential Rental E-11 2014-05-20 Agenda Packet Page 505 Property" above, and in the CDLAC Resolution, it being expressly agreed and understood that the provisions of the Regulatory Agreement are intended to survive the retirement of the Bonds and expiration of the Indenture, the Loan Agreement and the Loan. Notwithstanding any other provisions of the Regulatory Agreement to the contrary, the entire Regulatory Agreement, or any of the provisions or sections thereof,may be terminated prior to the expiration of the Qualified Project Period upon agreement by the Issuer, the Trustee (if Bonds are still outstanding) and the Borrower only if there shall have been received by the Issuer an opinion of Bond Counsel that such termination will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the exemption from State personal income taxes of the interest on the Bonds. The terms of the Regulatory Agreement to the contrary notwithstanding (except as to certain indemnification provisions), the Regulatory Agreement, and each and all of the terms of the Regulatory Agreement, shall terminate and be of no further force or effect in the event of an involuntary noncompliance by the Borrower with the provisions of the Regulatory Agreement caused by fire, seizure, requisition, change in a federal law or an action of a federal agency after the Closing Date which prevents the Issuer and the Trustee from enforcing the provisions of the Regulatory Agreement, foreclosure on the Project or delivery of a deed in lieu of foreclosure or condemnation or a similar event,but only if within a reasonable period thereafter the Bonds are (or have been) redeemed or retired or amounts received as a consequence of such event are used to provide a project that meets the requirements of the Code set forth in the Regulatory Agreement; provided, however, that the preceding provisions of this sentence shall cease to apply and the restrictions contained in the Regulatory Agreement shall be reinstated if, at any time subsequent to the termination of such provisions as the result of the foreclosure on the Project or the delivery of a deed in lieu of foreclosure or a similar event,the Borrower or any Affiliated Party obtains an ownership interest in the Project for federal income tax purposes. Upon the termination of the terms of the Regulatory Agreement, the parties agree to execute, deliver and record appropriate instruments of release and discharge of the terms of the Regulatory Agreement; provided, however, that the execution and delivery of such instruments shall not be necessary or a prerequisite to the termination of the Regulatory Agreement in accordance with its terms. Covenants to Run With the Land. In the Regulatory Agreement,the Borrower subjects the Project(including the Project Site)to the covenants, reservations and restrictions set forth in the Regulatory Agreement. The Issuer and the Borrower declare their express intent that the covenants, reservations and restrictions set forth in the Regulatory Agreement shall be deemed covenants running with the land and shall pass to and be binding upon the Borrower's successors in title to the Project; provided, however, that on the termination of the Regulatory Agreement said covenants,reservations and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Project or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract,deed or other instruments. Enforcement. If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in the Regulatory Agreement,and if such default remains uncured for a period of 60 days after written notice thereof shall have been given by the Issuer or the Trustee to the Borrower (or such longer period if the Borrower provides the Issuer (if any Bonds are outstanding) with an opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds),then the Issuer may, or upon the direction of the Issuer, the Trustee may, subject to certain provisions of the Regulatory Agreement,and to E-12 2014-05-20 Agenda Packet Page 506 the extent indemnified pursuant to the provisions of the Indenture, and acting on its own behalf or on behalf of the Issuer, declare an "Event of Default" to have occurred under the Regulatory Agreement, and, at its option,may take any one or more of the following steps: (i) by mandamus or other suit, action or proceeding at law or in equity, require the Borrower to perform its obligations and covenants under the Regulatory Agreement or enjoin any acts or things which may be unlawful or in violation of the rights of the Issuer or the Trustee under the Regulatory Agreement; (ii) have access to and inspect, examine and make copies of all of the books and records of the Borrower pertaining to the Project; (iii) take such other action at law or in equity as may appear necessary or desirable to enforce the obligations, covenants and agreements of the Borrower under the Regulatory Agreement. The Borrower agrees that specific enforcement of the Borrower's agreements contained in the Regulatory Agreement is the only means by which the Issuer may fully obtain the benefits of such agreements made by the Borrower therein, and the Borrower therefore agrees to the imposition of the remedy of specific performance against it in the case of any Event of Default by the Borrower under the Regulatory Agreement. The Trustee shall have the right, in accordance with the provisions of the Regulatory Agreement and the provisions of the Indenture, upon notice to but without the consent or approval of the Issuer, but subject to the Unassigned Issuer's Rights of the Issuer,to exercise any or all of the rights or remedies of the Issuer under the Regulatory Agreement. All fees, costs and expenses of the Trustee (including, without limitation, reasonable attorneys fees) incurred in taking any action pursuant to the Regulatory Agreement shall be the sole responsibility of the Borrower. After the Indenture has been discharged, or if the Trustee fails to act under the Regulatory Agreement,the Issuer may act on its own behalf to declare an"Event of Default"to have occurred and to take any one or more of the steps specified above to the same extent and with the same effect as if taken by the Trustee. After the date on which no Bonds remain outstanding as provided in the Indenture, the Trustee shall no longer have any duties or obligations under the Regulatory Agreement,and all references to the Trustee in the Regulatory Agreement shall be deemed references to the Issuer. Notwithstanding anything contained in the Regulatory Agreement or the Indenture to the contrary,the occurrence of an Event of Default under the Regulatory Agreement shall not (i) be deemed, under any circumstances whatsoever, to constitute a default under the Indenture, the Loan Agreement, or the Freddie Mac Loan Documents, except as may be otherwise specified therein or (ii) impair, defeat or render invalid the lien of the Freddie Mac Mortgage. Under no circumstances shall the Issuer or the Trustee: (i) initiate or take any action which may have the effect, directly or indirectly, of impairing the ability of the Borrower to timely pay the principal of, interest on, or other amounts due and payable under,the Freddie Mac Loan; or (ii) interfere with or attempt to influence the exercise by Freddie Mac Lender of any of its rights with respect to the Freddie Mac Loan, including, without limitation, Freddie Mac E-13 2014-05-20 Agenda Packet Page 507 Lender's remedial rights under the Freddie Mac Loan Documents upon the occurrence of an event of default by the Borrower under the Freddie Mac Loan Documents. The rights of the Trustee under the Regulatory Agreement are in addition to all rights conferred upon the Trustee under the Indenture and in no way limit those rights. Obligation of Borrower; Limitations on Recourse to Borrower. Notwithstanding any provisions of the Regulatory Agreement to the contrary, all obligations of the Borrower under the Regulatory Agreement for the payment of money (including payment of the Issuer Fee and any other fees, costs and expenses of the Issuer) and all claims for damages against the Borrower occasioned by breach or alleged breach by the Borrower of its obligations under the Regulatory Agreement, including indemnification obligations, shall not be secured by or in any manner constitute a lien on the Project and no person shall have the right to enforce such obligations other than directly against the Borrower without recourse to the Project, and all such obligations shall be subordinate in priority, in right to payment and in all other respects to the obligations, liens, rights (including without limitation the right to payment) and interests arising or created under the Loan Documents. Except as otherwise provided in the Regulatory Agreement, no subsequent owner of the Project shall be liable or obligated for the breach or default of any obligation of any prior owner of the Project (including the Borrower)under the Regulatory Agreement. Such obligations shall be the Obligations of the Person who was the owner of the Project at the time the default or breach was alleged to have occurred, and such Person shall remain liable for any and all damages occasioned by the default or breach even after such Person ceases to be the owner of the Project. The following obligations of the Borrower shall, subject to the limitations set forth in the preceding paragraph,and elsewhere in the Regulatory Agreement,be and remain the joint and several full recourse obligations of the Borrower and each general partner of the Borrower (other than any nonprofit general partner): (i) the Borrower's obligations to the Issuer and the Trustee and the Borrower's obligation to pay any and all rebate amounts that may be owed with respect to the Bonds as provided in the Loan Agreement; and (ii) the Borrower's obligations to indemnify the Issuer and the Trustee of the Regulatory Agreement. CDLAC Requirements. The acquisition, rehabilitation, equipping and operation of the Project and the financing thereof are and shall be in compliance with the conditions set forth in the CDLAC Resolution, a copy of which is attached as an exhibit to the Regulatory Agreement. The Issuer shall monitor and enforce the Borrower's compliance with the provisions described in this paragraph (the "CDLAC Provisions"). The Borrower shall prepare and submit to CDLAC on each anniversary of the Closing Date, and on such other date as is reasonably requested by CDLAC, a Certificate of Compliance in substantially the form attached as an exhibit to the Regulatory Agreement,executed by an authorized representative of the Borrower. CDLAC shall be a third-party beneficiary of the Regulatory Agreement solely for purposes of enforcing the terms of the CDLAC Resolution. CDLAC shall have the right to enforce the terms of the CDLAC Resolution through an action for specific performance or any other available remedy; provided, however, that CDLAC shall not take any action or enforce any remedy that would be materially adverse to the interests of the Bondholders and any such action or enforcement shall otherwise be subject to the terms,conditions and limitations applicable to the enforcement of remedies under the Regulatory Agreement. E-14 2014-05-20 Agenda Packet Page 508 E-15 2014-05-20 Agenda Packet Page 509 APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas)Series 2014A This Continuing Disclosure Agreement, dated as of June 1, 2014 (this "Continuing Disclosure Agreement"), is executed and delivered by Kiku Gardens Housing Partners, LP, a California limited partnership (the `Borrower") and U.S. Bank National Association, as dissemination agent (the "Dissemination Agent") and trustee (the "Trustee") for the above-captioned bonds (the "Bonds"). The Bonds are being issued pursuant to a Trust Indenture,dated as of June 1, 2014 (the"Indenture")between the Chula Vista Housing Authority(the"Issuer")and the Trustee. Pursuant to the Indenture and the Loan Agreement dated as of June 1, 2014 (the "Agreement), the Dissemination Agent and the Borrower covenant and agree as follows: Section 1. Purpose of the Continuing Disclosure Agreement. This Continuing Disclosure Agreement is being executed and delivered by the Borrower and the Dissemination Agent for the benefit of the Holders and in order to assist the Participating Underwriter in complying with the Rule (defined below). The Borrower and the Dissemination Agent acknowledge that the Issuer has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Continuing Disclosure Agreement, and has no liability to any Person, including any holder of the Bonds or Beneficial Owner,with respect to any such reports,notices or disclosures. Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Continuing Disclosure Agreement unless otherwise defined in this Section,the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Borrower pursuant to, and as described in, Sections 3 and 4 of this Continuing Disclosure Agreement. "Audited Financial Statements"means,in the case of the Borrower,the annual audited financial statements of the Borrower prepared in accordance with generally accepted accounting principles,if any. "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 Bonds (including Persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. Disclosure Representative" shall mean, with respect to the Borrower, the administrator of the Project or his or her designee, or such other Person as the Borrower shall designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" shall mean U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Borrower and which has filed with the Trustee a written acceptance of such designation. "Material Events" shall mean any of the events listed in Section 5(a) of this Continuing Disclosure Agreement. 2014-05-20 Agenda Packet Page 510 `MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(1) of the Securities Exchange Act of 1934. All documents provided to the MSRB shall be in an electronic format and accompanied by identifying information, as prescribed by the MSRB. Initially, all document submissions to the MSRB pursuant to this Continuing Disclosure Agreement shall use the MSRB's Electronic Municipal Market Access (EMMA) system at www.emma.msrb.org. "Participating Underwriter" means, together, Citigroup Global Markets Inc. and U.S. Bancorp Municipal Securities Group., and their successors and assigns. "Rule"means Rule 15c2-12(b)(5)adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934,as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) The Borrower will, or will cause the Dissemination Agent to, not later than 180 days following the end of the Borrower's fiscal year, commencing with the fiscal year ending in 2013, provide to the MSRB an Annual Report which is consistent with the requirements described below. No later than 15 Business Days prior to said date, the Borrower will provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). In each case, the Annual Report of the Borrower may be submitted as a single document or as separate documents comprising a package and may cross reference other information, provided that the audited financial statements for the prior calendar year of the Borrower may be submitted separately from the balance of its Annual Report. (b) If by 15 Business Days prior to the date specified in subsection (a) for providing an Annual Report to the MSRB, the Dissemination Agent has not received a copy of the Annual Report,the Dissemination Agent will contact the Disclosure Representative to determine if the Borrower is in compliance with subsection(a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent will send a notice to the MSRB in substantially the form attached as Exhibit B to this Continuing Disclosure Agreement. (d) The Dissemination Agent will file a report with the Borrower and (if the Dissemination Agent is not the Trustee)the Trustee certifying that the Annual Report has been provided pursuant to this Continuing Disclosure Agreement, stating the date it was provided. Section 4. Content of Annual Reports. The Borrower's Annual Report will contain or incorporate by reference the financial information or operating data with respect to the Project, provided at least annually, of the type included in Exhibit A hereto, which Annual Report may, but is not required to,include Audited Financial Statements. If the Borrower's audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report will contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement,and the audited financial statements will be filed in the same manner as the Annual Report when they become available; and Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues with respect to which the Borrower is an "Obligated Person" (as defined by the Rule),which have been filed with the MSRB. The Borrower will clearly identify each such other document so incorporated by reference. F-2 2014-05-20 Agenda Packet Page 511 Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events (each,a"Material Event"): (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults,if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulty; (iv) Unscheduled draws on credit enhancements reflecting financial difficulty; (v) Substitution of credit or liquidity providers,or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (vii) Modifications to rights of Holders,if material; (viii) Bond calls,if material,and tender offers; (ix) Defeasances; (x) Release, substitution or sale of property securing repayment of the Bonds, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the Borrower. For purposes of this clause(xii),any such event shall be considered to have occurred when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Borrower 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 Borrower, 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 Borrower; (xiii) The consummation of a merger, consolidation, or acquisition involving the Borrower or the sale of all or substantially all of the assets of the Borrower, 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,if material; and (xiv) Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent,if material. (b) The Dissemination Agent shall, within three (3) Business Days of obtaining actual knowledge of the occurrence of any potential Material Event,pursuant to subsection (c)of this Section or otherwise, provide the Disclosure Representative with notice (by facsimile transmission confirmed by telephone). While the Dissemination Agent is also the Trustee, the Dissemination Agent shall not be F-3 2014-05-20 Agenda Packet Page 512 deemed to have actual knowledge of those items listed in clauses (ii), (vi), (vii), (x), and (xi) above without the Dissemination Agent having received written notice of such event. While the Dissemination Agent is not also the Trustee, the Dissemination Agent shall not be deemed to have actual knowledge of those items listed in clauses (i) - (xiv) above without the Dissemination Agent having received written notice of such event. For purposes of providing notice to the Disclosure Representative, the Dissemination Agent shall assume that the unscheduled draws described in clauses (iii) and (iv) reflect financial difficulty. (c) Whenever the Borrower obtains knowledge of the occurrence of a potential Material Event, the Borrower shall, within five (5) Business Days of obtaining such knowledge and in any event no more than eight(8)Business Days after the occurrence of such event,determine if such event is in fact a Material Event that is required by the Rule to be disclosed and provide the Dissemination Agent with notice and instructions pursuant to subsections (d)or(e)below,as applicable. (d) If the Borrower has determined that a Material Event is required to be disclosed,then the Borrower shall prepare a written notice describing the Material Event and provide the same to the Dissemination Agent along with instructions to file the same pursuant to subsection(f)below. (e) If the Borrower determines that an event is not required to be disclosed as a Material Event then the Borrower shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection(f). (f) If the Dissemination Agent has been provided with a written notice describing a Material Event pursuant to subsection(c) of this Section or otherwise, and is instructed by the Borrower to report the occurrence of such Material Event,the Dissemination Agent shall,within two (2)Business Days of its receipt of such written notice and in any event no more than ten (10) Business Days after the occurrence of the Material Event, file the notice with the MSRB and send a copy to the Borrower. The foregoing notwithstanding, notice of a Material Event described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice(if any) of the underlying event is given to the Holders of affected Bonds pursuant to the Indenture. Section 6. Amendment; Waiver. Notwithstanding any other provision of this Continuing Disclosure Agreement,the Borrower and the Dissemination Agent may amend this Continuing Disclosure Agreement (and the Trustee will agree to any amendment so requested by the Borrower) and any provision of this Continuing Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions described under paragraph (a)under "Provision of Annual Reports," "Contents of Annual Reports" or paragraph (a) under "Reporting of Material Events," it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law or change in the identity, nature or status of an Obligated Person with respect to the Bonds or the type of business conducted; (b) The undertaking,as amended or taking into account such waiver,would,in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds,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 Holders of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders or (ii) F-4 2014-05-20 Agenda Packet Page 513 does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Continuing Disclosure Agreement, the Borrower will describe such amendment in the next Annual Report and will 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 Borrower. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i)notice of such change will be given in the same manner as for a Material Event under Section 5(f)hereof 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 quantitative form)between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 7. Default. In the event of a failure of the Borrower or the Dissemination Agent to comply with any provision of this Continuing Disclosure Agreement,the Dissemination Agent may(and, at the request of any Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding Bonds, will), or the Borrower or any Holder or Beneficial Borrower of the Bonds may, take such actions as may be necessary and appropriate, including seeking, or specific performance by court order, to cause the Borrower or the Dissemination Agent, as the case may be, to comply with its obligations under this Continuing Disclosure Agreement. A default under this Continuing Disclosure Agreement will not be deemed an Event of Default under the Indenture or the Loan Agreement, and the sole remedy under this Continuing Disclosure Agreement in the event of any failure of the Borrower or the Dissemination Agent to comply with this Continuing Disclosure Agreement will be an action to compel performance. Section 8. Beneficiaries. This Continuing Disclosure Agreement will inure solely to the benefit of the Borrower, the Trustee, the Dissemination Agent, the Participating Underwriter and Holders from time to time of the Bonds and will create no rights in any other Person or entity. Section 9. Additional Information. Nothing in this Continuing Disclosure Agreement shall be deemed to prevent the Borrower from disseminating any other information, using the means of dissemination set forth in this Continuing Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Continuing Disclosure Agreement. If the Borrower chooses to include any information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is specifically required by this Continuing Disclosure Agreement, the Borrower shall have no obligation under this Continuing Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 10. Duties,Immunities and Liabilities of Trustee and Dissemination Agent. Article VII of the Indenture is hereby made applicable to this Continuing Disclosure Agreement as if this Continuing Disclosure Agreement were (solely for this purpose) contained in the Indenture and the Dissemination Agent shall be entitled to the same protections, limitations from liability and indemnities afforded the Trustee thereunder. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Continuing Disclosure Agreement, and the Borrower agrees to indemnify and save the Dissemination Agent, the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their rights, obligations, powers and duties hereunder, including the costs and expenses (including reasonable attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or Trustee's respective negligence or willful misconduct. The F-5 2014-05-20 Agenda Packet Page 514 obligations of the Borrower under this Section shall survive the termination of this Continuing Disclosure Agreement, the resignation or removal of the Dissemination Agent or the Trustee and payment of the Bonds. The Dissemination Agent and the Trustee shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the Borrower,the Holders,or any other party. Neither the Trustee or the Dissemination Agent shall have any liability to the Holders or any other party for any monetary damages or financial liability of any kind whatsoever related to or arising from the breach of this Continuing Disclosure Agreement. The Dissemination Agent agrees to disseminate the information provided to it hereunder in the form delivered by the Borrower The Dissemination Agent is acting hereunder solely in an agency capacity and as such is merely a conduit for the Borrower, and shall have no liability or responsibility for the form, content, accuracy or completeness of any information furnished hereunder. Any such information may contain a legend to that effect. The Dissemination Agent shall have no obligation to make disclosure concerning the Bonds, the Project or any other matter except as expressly set out herein, provided that no provision of this Continuing Disclosure Agreement shall limit the duties,trusts,rights,powers or obligations of the Trustee under the Indenture. The fact that the Trustee has or may have any banking, fiduciary or other relationship with the Borrower or any other party in connection with the Project or otherwise, apart from the relationship created by the Indenture and this Continuing Disclosure Agreement, shall not be construed to mean that the Trustee has knowledge or notice of any event or condition relating to the Bonds or the Project except in its respective capacities under such agreements. No provision of this Continuing Disclosure Agreement shall require or be construed to require the Borrower or the Dissemination Agent to interpret or provide an opinion concerning any information disclosed hereunder. The Annual Report may contain such disclaimer language as the Borrower may deem appropriate. Any information disclosed hereunder by the Dissemination Agent may contain such disclaimer language as the Dissemination Agent may deem appropriate. The Borrower hereby agrees to compensate the Dissemination Agent for the services provided and the expenses incurred pursuant to this Continuing Disclosure Agreement, in an amount to be agreed upon from time to time hereunder, and to reimburse the Dissemination Agent upon its request for all reasonable expenses, disbursements and advances incurred by the Dissemination Agent hereunder (including any reasonable compensation and expenses of counsel)except any such expense,disbursement or advance that may be attributable to its negligence or willful misconduct. The Dissemination Agent may consult with counsel of its choice and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon,it being understood that for purposes of this provision,that such counsel may be counsel to the Borrower. No provision of this Continuing Disclosure Agreement shall require the Dissemination Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder,or in the exercise of any of its rights of powers. Section 11. Notices. Any notices or communications to or among any of the parties to this Continuing Disclosure Agreement may be given at the addresses set forth in the Indenture. Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s)to which subsequent notices of communications should be sent,effective only upon receipt. F-6 2014-05-20 Agenda Packet Page 515 Section 12. Governing Law. This Continuing Disclosure Agreement shall be governed by the laws of the State of California. Section 13. Termination of this Continuing Disclosure Agreement. The Borrower or the Dissemination Agent may terminate this Continuing Disclosure Agreement by giving written notice to the other party at least 30 days prior to such termination. The Dissemination Agent shall be fully discharged at the time any such termination is effective. Also,this Continuing Disclosure Agreement shall terminate automatically upon payment or provision for payment of the Bonds. Section 14. Counterparts. This Continuing Disclosure 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 instrument. [Remainder of Page Left Blank Intentionally] F-7 2014-05-20 Agenda Packet Page 516 [Borrower's Signature Page to Continuing Disclosure Agreement] KIKU GARDENS HOUSING PARTNERS,LP By: Hearthstone Housing Foundation, its managing general partner By: Name: Velma de la Rosa Title: Authorized Signatory F-8 2014-05-20 Agenda Packet Page 517 [Counterpart Signature Page to Continuing Disclosure Agreement] U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent and Trustee By: Name: Alicia Estrada Title: Senior Vice President F-9 2014-05-20 Agenda Packet Page 518 EXHIBIT A ANNUAL REPORT Chula Vista Housing Authority Multifamily Housing Revenue Bonds (Garden Villas) Series 2014A Report for Period Ending THE PROJECT Name: Garden Villas Address: Occupancy Number of Units Number of Units Occupied as of Report Date OPERATING HISTORY OF THE PROJECT The following table sets forth a summary of the operating results of the Project for fiscal year ended ,as derived from the Borrower's [un]audited financial statements. Revenues Operating Expenses' Net Operating Income Debt Service on the Loan Net Operating Income/(Loss) After Debt Service The average occupancy of the Project for the fiscal year ended was %. 'Excludes depreciation and other non-cash expenses,includes management fee. F-10 2014-05-20 Agenda Packet Page 519 EXHIBIT B NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Chula Vista Housing Authority Name of Bond Issue: $ Chula Vista Housing Authority Multifamily Housing Revenue Bonds(Garden Villas) Series 2014A Name of Borrower: Kiku Gardens Housing Partners,LP,a California limited partnership Date of Issuance: June ,2014 NOTICE IS HEREBY GIVEN that the above-referenced borrower (the `Borrower") has not provided an Annual Report in connection with the above-named bonds (the "Bonds") as required by a Trust Indenture, dated as of June 1, 2014 (the "Indenture"), between the above-named Issuer (the "Issuer") and U.S. Bank National Association, as trustee (the "Trustee"). The undersigned has been informed by the Borrower that it anticipates that the Annual Report will be filed by Dated: U.S.BANK NATIONAL ASSOCIATION, as Trustee By: Name: Alicia Estrada Title: Senior Vice President cc: Kiku Gardens Housing Partners,LP F-11 2014-05-20 Agenda Packet Page 520 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0249, Item#: 4. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR SERVICES TO WINBOURNE CONSULTING, LLC TO PROVIDE PROJECT MANAGEMENT SERVICES RECOMMENDED ACTION Council adopt the resolution. SUMMARY The Department recently advertised the need for project management of the Mobile Data Computer replacement project for the Chula Vista Police Department. The Department received three qualified bids, and is seeking award of a contract for service to Winbourne Consulting, LLC to provide project management services for the Department. 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 City of Chula Vista Police Department is in need of replacing the fleet of Mobile Data Computers (MDC's) throughout the department. A great majority of these MDC's are located in patrol vehicles, and are used on a daily basis by patrol officers to monitor information from Computer Aided Dispatch software (CAD), as well as input police reports to the department's report management system, NetRMS. Officers also access various law enforcement databases from the MDC's to check information on suspects to see if there are any warrants for arrest. Nearly 90 percent of the MDC fleet is nearing eight years of service. Due to significant technology changes over the last eight years, and the proliferation of 4G LTE broadband wireless technology available from various wireless services carriers, the department is moving forward with replacement of the MDC's. With this replacement, there are a variety of complex technical issues that need to be addressed, as well as submitting a document with the State of California to make changes to our law enforcement network to accommodate these new MDC's. Because of these highly technical issues, the department is seeking a consultant whose expertise in these areas will benefit the department. Staff advertised the need for a consultant on CJISGROUP.COM, which is a website that posts City of Chula Vista Page 1 of 3 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 521 File#: 14-0249, Item#: 4. various project leads for consultants who specialize in law enforcement technology implementations. The Department received three quotes for services from qualified bidders (see table below). Staff selected Winbourne Consulting, LLC based upon their experience and low bid amount. Consultant Qualified? Bid Amount Winbourne Consulting, LLC YES $84,000 CD Telecom, LLC YES $89,900 FM YES 1$95,000 Winbourne Consultanting, LLC has significant experience with large scale MDC replacements and the associated technology changes/enhancements that will be part of the Department's replacement of the MDC fleet. The consultant, who will serve as the project manager from Winbourne Consulting, previously worked with the San Diego County Sheriff's Department on the county-wide implementation of NetRMS. This is the report management software that the City utilizes to take crime reports electronically in the field. 4I+s -b Background with NetRMS is one of the critical factors in the selection of Winbourne Consulting. 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 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 project supports the goals of Strong and Secure Neighborhoods and Operational Excellence as the new MDC's and associated technology improvements will provide officers with up-to-date equipment and software to provide efficient, high quality public safety service to the community. CURRENT YEAR FISCAL IMPACT The contract with Windbourne Consulting Services for project management services totals $84,000. The Police Department has identified sufficient savings in their fiscal year 2013-14 budget for this contract. Staff is requesting to transfer funds to the correct expenditure category as part of the budget changes presented in the Third Quarter Financial Report, which the City Council is also considering on May 20, 2014. ONGOING FISCAL IMPACT Costs associated with the contract award to Windbourne Consulting are one-time costs. Related equipment and software purchases for the MDC replacement will be addressed in future requests to the City Council. City of Chula Vista Page 2 of 3 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 522 File#: 14-0249, Item#: 4. ATTACHMENTS 1. Contract for service - Winbourne Consulting, LLC City of Chula Vista Page 3 of 3 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 523 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR SERVICES TO WINBOURNE CONSULTING, LLC TO PROVIDE PROJECT MANAGEMENT SERVICES WHEREAS, the City of Chula Vista Police Department is in need of replacing the mobile data computers (MDC's) throughout the patrol fleet; and WHEREAS, the MDC's provide officers with timely and critical law enforcement data; and WHEREAS, there are complex and highly technical information technology issues in properly setting up a secure network for the MDC's which meet Federal criminal justice information systems requirements; and WHEREAS, the Chula Vista Police Department advertised the need for a specialized consultant to provide project management and technical services for the MDC replacement project; and WHEREAS, Consultant warrants and represents that it is experienced and staffed in a manner such that it can deliver the services required of Consultant to City in accordance with the time frames and the terms and conditions of this Agreement. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does hereby accept bids and award a contract for services to Winbourne Consulting, LLC to provide project management services. Presented by: Approved as to form by: David Bejarano Glen R. Googins Police Chief City Attorney 2014-05-20 Agenda Packet Page 524 ' I i I THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL 1 1 Glen R. Googins City Attorney Dated: AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND WINBOURNE CONSULTING, LLC FOR MOBILE DATA COMPUTER UPGRADE PROJECT MANAGEMENT 2014-05-20 Agenda Packet Page 525 Agreement between City of Chula Vista and WINBOURNE CONSULTING,LLC, For MOBILE DATA COMPUTER UPGRADE PROJECT MANAGEMENT This agreement (Agreement), effective May 20, 2014, is between the City-related entity whose name and business form is indicated on Exhibit A, Paragraph 2, (City), and the entity whose name, business form, place of business and telephone numbers are indicated on Exhibit A, Paragraphs 4 through 6, (Consultant), and is made with reference to the following facts: RECITALS WHEREAS, the City of Chula Vista desires to replace approximately 80 mobile data computers (MDC's) in the Police Department as well as make certain modifications to the computer network to facilitate CJIS security requirements as well as faster network transmition; and WHEREAS, the Chula Vista Police Department seeks a consultant who can provide the expertise to ensure that the new MDC's are optimumly configured and meet United States Department of Justice Criminal Justice Information Systems (CJIS) and State of California Law Enforcement Telecommunications (CLETS) standards; and WHEREAS, the Police Department also desires that the network configuration for these MDC's is optimumly configured to provide fast and reliable data transmission speeds; and WHEREAS, Consultant warrants and represents that it is experienced and staffed in a manner such that it can deliver the services required of Consultant to City in accordance with the time frames and the terms and conditions of this Agreement. [End of Recitals. Next Page Starts Obligatory Provisions.] Page 1 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20C 111V.- t mop Winbournecontact.dox ne2014-0 Page 526 OBLIGATORY PROVISIONS PAGES NOW, THEREFORE,for valuable consideration the City and Consultant do hereby mutually agree as follows: All of the Recitals above are incorporated into this Agreement by this reference. ARTICLE I. CONSULTANT'S OBLIGATIONS A. General 1. General Duties. Consultant shall perform all of the services described on Exhibit A, Paragraph 7 (General Duties). 2. Scope of Work and Schedule. In performing and delivering the General Duties, Consultant shall also perform the services, and deliver to City the "Deliverables" described in Exhibit A, Paragraph 8, entitled "Scope of Work and Schedule," according to, and within the time frames set forth in Exhibit A, Paragraph 8, time being of the essence of this agreement. The General Duties and the work and Deliverables required in the Scope of Work and Schedule shall be referred to as the "Defined Services." Failure to complete the Defined Services by the times indicated does not, except at the option of the City, terminate this Agreement. a. Reductions in Scope of Work. City may independently, or upon request from Consultant, from time to time, reduce the Defined Services to be performed by the Consultant under this Agreement. Upon doing so, City and Consultant agree to meet in good faith and confer for the purpose of negotiating a corresponding reduction in the compensation associated with the reduction. b. Additional Services. In addition to performing the Defined Services, City may require Consultant to perform additional consulting services related to the Defined Services (Additional Services), and upon doing so in writing, if they are within the scope of services offered by Consultant, Consultant shall perform same on a time and materials basis at the rates set forth in the "Rate Schedule" in Exhibit A, Paragraph 10(C), unless a separate fixed fee is otherwise agreed upon. All compensation for Additional Services shall be paid monthly as billed. 3. Standard of Care. The Consultant expressly warrants that the work to be performed pursuant to this Agreement, whether Defined Services or Additional Services, shall be performed in accordance with the standard of care ordinarily exercised by members of the profession currently practicing under similar conditions and in similar locations. a. No Waiver of Standard of Care. Where approval by City is required, it is understood to be conceptual approval only and does not relieve the Consultant of responsibility for complying with all laws, codes, industry standards, and liability for damages caused by negligent acts, errors, omissions, noncompliance with industry standards, or the willful misconduct of the Consultant or its subcontractors. Page 2 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20C 111V.- t mop Winbournecontact.dox ne2014-0 Page 527 B. Application of Laws. Should a federal or state law pre-empt a local law, or regulation, the Consultant must comply with the federal or state law and implementing regulations. No provision of this Agreement requires the Consultant to observe or enforce compliance with any provision, perform any other act, or do any other thing in contravention of federal, state, territorial, or local law, regulation, or ordinance. If compliance with any provision of this Agreement violates or would require the Consultant to violate any law, the Consultant agrees to notify City immediately in writing. Should this occur, the City and the Consultant agree that they will make appropriate arrangements to proceed with or, if necessary, amend or terminate this Agreement, or portions of it, expeditiously. 1. Subcontractors. Consultant agrees to take appropriate measures necessary to ensure that all participants utilized by the Consultant to complete its obligations under this Agreement, such as subcontractors, comply with all applicable laws, regulations, ordinances, and policies, whether federal, state, or local, affecting Project implementation. In addition, if a subcontractor is expected to fulfill any responsibilities of the Consultant under this Agreement, the Consultant shall ensure that the subcontractor carries out the Consultant's responsibilities as set forth in this Agreement. C. Insurance 1. General. Consultant must procure and maintain, during the period of performance of this Agreement, and for twelve months after completion, policies of insurance from insurance companies to protect against claims for injuries to persons or damages to property that may arise from or in connection with the performance of the work under this Agreement and the results of that work by the Consultant, his agents, representatives, employees or subcontractors, and provide documentation of same prior to commencement of work. 2. Minimum Scope of Insurance. Coverage must be at least as broad as: a. CGL. Insurance Services Office Commercial General Liability coverage (occurrence Form CG0001). b.Auto. Insurance Services Office Form Number CA 0001 covering Automobile Liability, Code 1 (any auto). c.WC. Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance. d.E&O. Professional Liability or Errors & Omissions Liability insurance appropriate to the Consultant's profession. Architects' and Engineers' coverage is to be endorsed to include contractual liability. 3. Minimum Limits of Insurance. Consultant must maintain limits no less than those included in the table below: Page 3 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 528 i. General Liability: $1,000,000 per occurrence for bodily injury,personal injury, (Including (including death), and property damage. If Commercial General operations, Liability insurance with a general aggregate limit is used, either products and the general aggregate limit must apply separately to this completed Project/location or the general aggregate limit must be twice the operations, as required occurrence limit. applicable) ii. Automobile $1,000,000 per accident for bodily injury, including death, and Liability: property damage. iii. Workers' Statutory Compensation $1,000,000 each accident Employer's $1,000,000 disease-policy limit Liability: $1,000,000 disease-each employee iv. Professional $1,000,000 each occurrence Liability or Errors & Omissions Liability: 4. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the City. At the option of the City, either the insurer will reduce or eliminate such deductibles or self-insured retentions as they pertain to the City, its officers, officials, employees and volunteers; or the Consultant will provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. 5. Other Insurance Provisions. The general liability, automobile liability, and where appropriate, the worker's compensation policies are to contain, or be endorsed to contain, the following provisions: a. Additional Insureds. City of Chula Vista, its officers, officials, employees, agents, and volunteers are to be named as additional insureds with respect to all policies of insurance, including those with respect to liability arising out of automobiles owned, leased, hired or borrowed by or on behalf of the Consultant, where applicable, and, with respect to liability arising out of work or operations performed by or on behalf of the Consultant, 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 Consultant's insurance using ISO CG 2010 (11/85) or its equivalent. Specifically, the endorsement must not exclude Products/Completed Operations coverage. b. Primary Insurance. The Consultant's General Liability insurance coverage must be primary insurance as it pertains 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 the Page 4 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg % � t t mop Winbournecontact.dox e2014-0 . Page 529 Consultant and in no way relieves the Consultant from its responsibility to provide insurance. c. Cancellation. The insurance policies required by this Agreement shall not be canceled by either party, except after thirty days' prior written notice to the City by certified mail, return receipt requested. The words "will endeavor" and "but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents, or representatives" shall be deleted from all certificates. d. Waiver of Subrogation. Consultant's insurer will provide a Waiver of Subrogation in favor of the City for each required policy providing coverage for the term required by this Agreement. In addition, Consultant waives any right it may have or may obtain to subrogation for a claim against the City. 6. Claims Forms. If General Liability, Pollution and/or Asbestos Pollution Liability and/or Errors & Omissions coverage are written on a claims-made form: a. Retro Date. The "Retro Date" must be shown, and must be before the date of the Agreement or the beginning of the work required by the Agreement. b. Maintenance and Evidence. Insurance must be maintained and evidence of insurance must be provided for at least five years after completion of the work required by the Agreement. c. Cancellation. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a "Retro Date" prior to the effective date of the Agreement, the Consultant must purchase "extended reporting" coverage for a minimum of five years after completion of the work required by the Agreement. d. Copies. A copy of the claims reporting requirements must be submitted to the City for review. 7. Acceptability of Insurers. Insurance is to be placed with licensed insurers admitted to transact business in the State of California with a current A.M. Best's rating of no less than A V. If insurance is placed with a surplus lines insurer, insurer must be listed on the State of California List 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. 8. Verification of Coverage. Consultant shall furnish the City with original certificates and amendatory endorsements effecting coverage required by Section I.C. of this Agreement. The endorsements should be on insurance industry forms, provided those endorsements or policies conform to the requirements of this Agreement. All certificates and endorsements are to be received and approved by the City before work commences. The City reserves the right to require, at any time, complete, certified copies of all required Page 5 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg % � t t mop Winbournecontact.dox e2014-0 . Page 530 insurance policies, including endorsements evidencing the coverage required by these specifications. 9. Subcontractors. Consultant must include all subconsultants as insureds under its policies or furnish separate certificates and endorsements for each subconsultant. All coverage for subconsultants is subject to all of the requirements included in these specifications. 10.Not a Limitation of Other Obligations. Insurance provisions under this Article shall not be construed to limit the Consultant's obligations under this Agreement, including Indemnity. 11. Additional Coverage. To the extent that Insurance coverage exceeds the minimums identified in section 3, recovery shall not be limited to the insurance minimums, but shall instead extend to the actual policy limits. D. Security for Performance 1. Performance Bond. In the event that Exhibit A, at Paragraph 18, indicates the need for Consultant to provide a Performance Bond (indicated by a check mark in the parenthetical space immediately preceding the subparagraph entitled "Performance Bond"), then Consultant shall provide to the City a performance bond, in the amount indicated at Exhibit A, Paragraph 18, in the form prescribed by the City and by such sureties which are authorized to transact such business in the State of California, listed as approved by the United States Department of Treasury Circular 570, http://www.fms.treas.gov/c570, and whose underwriting limitation is sufficient to issue bonds in the amount required by the Agreement, 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. All bonds signed by an agent must be accompanied by a certified copy of such agent's authority to act. Surety companies must be duly licensed or authorized in the jurisdiction in which the Project is located to issue bonds for the limits so required. Form must be satisfactory to the Risk Manager or City. 2. Letter of Credit. In the event that Exhibit A, at Paragraph 18, indicates the need for Consultant to provide a Letter of Credit (indicated by a check mark in the parenthetical space immediately preceding the subparagraph entitled "Letter of Credit"), then Consultant shall provide to the City an irrevocable letter of credit callable by the City at its unfettered discretion by submitting to the bank a letter, signed by the City Manager, stating that the Consultant is in breach of the terms of this Agreement. The letter of credit shall be issued by a bank, and be in a form and amount satisfactory to the Risk Manager or City Attorney which amount is indicated in the space adjacent to the term, "Letter of Credit," in Exhibit A, Paragraph 18. 3. Other Security. In the event that Exhibit A, at Paragraph 18, indicates the need for Consultant to provide security other than a Performance Bond or a Letter of Credit (indicated by a check mark in the parenthetical space immediately preceding the subparagraph entitled "Other Security"), then Consultant shall provide to the City such Page 6 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 531 other security therein listed in a form and amount satisfactory to the Risk Manager or City Attorney. E. Business License. Consultant agrees to obtain a business license from the City and to otherwise comply with Title 5 of the Chula Vista Municipal Code. ARTICLE IL CITY OBLIGATIONS A. Consultation and Cooperation. City shall regularly consult the Consultant for the purpose of reviewing the progress of the Defined Services and Schedule, and to provide direction and guidance to achieve the objectives of this Agreement. The City shall allow Consultant access to its office facilities, files and records, as deemed necessary and appropriate by the City, throughout the term of this Agreement. In addition, City agrees to provide the materials identified at Exhibit A, Paragraph 9, with the understanding that delay in the provision of those materials beyond thirty days after authorization to proceed, shall constitute a basis for the justifiable delay in the Consultant's performance. B. Compensation. 1. Following Receipt of Billing. Upon receipt of a properly prepared bill from Consultant, submitted to the City as indicated in Exhibit A, Paragraph 17, but in no event more frequently than monthly, on the day of the period indicated in Exhibit A, Paragraph 17, City shall compensate Consultant for all services rendered by Consultant according to the terms and conditions set forth in Exhibit A, Paragraph 10, adjacent to the governing compensation relationship indicated by a "checkmark" next to the appropriate arrangement, subject to the requirements for retention set forth in Paragraph 18 of Exhibit A, and shall compensate Consultant for out of pocket expenses as provided in Exhibit A, Paragraph 11. 2. Supporting Information. Any billing submitted by Consultant shall contain sufficient information as to the propriety of the billing, including properly executed payrolls, time records, invoices, contracts, or vouchers describing in detail the nature of the charges to the Project in order to permit the City to evaluate that the amount due and payable is proper, and such billing shall specifically contain the City's account number indicated on Exhibit A, Paragraph 17(C) to be charged upon making such payment. 3. Exclusions. In determining the amount of the compensation City will exclude any cost: 1) incurred prior to the effective date of this Agreement; or 2) arising out of or related to the errors, omissions, negligence or acts of willful misconduct of the Consultant, its agents, employees, or subcontractors. a. Errors and Omissions. In the event that the City Administrator determines that the Consultant's negligence, errors, or omissions in the performance of work under this Agreement has resulted in expense to City greater than would have resulted if there were no such negligence, errors, omissions, Consultant shall reimburse City for any additional expenses incurred by the City. Nothing in this Page 7 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg % � t t mop Winbournecontact.dox e2014-0 . Page 532 paragraph is intended to limit City's rights under other provisions of this Agreement. 4. Payment Not Final Approval. The Consultant understands and agrees that payment to the Consultant for any Project cost does not constitute a City final decision about whether that cost is allowable and eligible for payment under the Project and does not constitute a waiver of any violation of Consultant of the terms of the Agreement. The Consultant acknowledges that City will not make a final determination about the eligibility of any cost until the final payment has been made on the Project or the results of an audit of the Project requested by the City has been completed, whichever occurs latest. If City determines that the Consultant is not entitled to receive any portion of the compensation due or paid, City will notify the Consultant in writing, stating its reasons. The Consultant agrees that Project closeout will not alter the Consultant's responsibility to return any funds due City as a result of later refunds, corrections, or other similar transactions; nor will Project closeout alter the right of City to disallow costs and recover funds provided for the Project on the basis of a later audit or other review. a. Consultant's Obligation to Pay. Upon notification to the Consultant that specific amounts are owed to City, whether for excess payments or disallowed costs, the Consultant agrees to remit to City promptly the amounts owed, including applicable interest. ARTICLE III. ETHICS A. Financial Interests of Consultant 1. Consultant is Designated as an FPPC Filer. If Consultant is designated on Exhibit A, Paragraph 14, as an "FPPC filer," Consultant is deemed to be a "Consultant" for the purposes of the Political Reform Act conflict of interest and disclosure provisions, and shall report economic interests to the City Clerk on the required Statement of Economic Interests in such reporting categories as are specified in Paragraph 14 of Exhibit A, or if none are specified, then as determined by the City Attorney. 2. No Participation in Decision. Regardless of whether Consultant is designated as an FPPC Filer, Consultant shall not make, or participate in making or in any way attempt to use Consultant's position to influence a governmental decision in which Consultant knows or has reason to know Consultant has a financial interest other than the compensation promised by this Agreement. 3. Search to Determine Economic Interests. Regardless of whether Consultant is designated as an FPPC Filer, Consultant warrants and represents that Consultant has diligently conducted a search and inventory of Consultant's economic interests, as the term is used in the regulations promulgated by the Fair Political Practices Commission, and has determined that Consultant does not, to the best of Consultant's knowledge, have an economic interest which would conflict with Consultant's duties under this Agreement. Page 8 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.UC f or Mobile Data Computer Upgrade Project Managermen 5-20Cg % � t t mop Winbournecontact.dox e2014-0 . Page 533 4. Promise Not to Acquire Conflicting Interests. Regardless of whether Consultant is designated as an FPPC Filer, Consultant further warrants and represents that Consultant will not acquire, obtain, or assume an economic interest during the term of this Agreement which would constitute a conflict of interest as prohibited by the Fair Political Practices Act. 5. Duty to Advise of Conflicting Interests. Regardless of whether Consultant is designated as an FPPC Filer, Consultant further warrants and represents that Consultant will immediately advise the City Attorney if Consultant learns of an economic interest of Consultant's that may result in a conflict of interest for the purpose of the Fair Political Practices Act, and regulations promulgated thereunder. 6. Specific Warranties Against Economic Interests. Consultant warrants, represents and agrees that: a. Neither Consultant, nor Consultant's immediate family members, nor Consultant's employees or agents (Consultant Associates) presently have any interest, directly or indirectly,whatsoever in any property which may be the subject matter of the Defined Services, or in any property within 2 radial miles from the exterior boundaries of any property which may be the subject matter of the Defined Services, (Prohibited Interest), other than as listed in Exhibit A, Paragraph 14. b. No promise of future employment, remuneration, consideration, gratuity or other reward or gain has been made to Consultant or Consultant Associates in connection with Consultant's performance of this Agreement. Consultant promises to advise City of any such promise that may be made during the Term of this Agreement, or for twelve months thereafter. c. Consultant Associates shall not acquire any such Prohibited Interest within the Term of this Agreement, or for twelve months after the expiration of this Agreement, except with the written permission of City. d. Consultant may not conduct or solicit any business for any party to this Agreement, or for any third party that may be in conflict with Consultant's responsibilities under this Agreement, except with the written permission of City. IV. LIQUIDATED DAMAGES A. Application of Section. The provisions of this section apply if a Liquidated Damages Rate is provided in Exhibit A, Paragraph 13. 1. Estimating Damages. It is acknowledged by both parties that time is of the essence in the completion of this Agreement. It is difficult to estimate the amount of damages resulting from delay in performance. The parties have used their judgment to arrive at a reasonable amount to compensate for delay. Page 9 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.UC f or Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 534 2. Amount of Penalty. Failure to complete the Defined Services within the allotted time period specified in this Agreement shall result in the following penalty: For each consecutive calendar day in excess of the time specified for the completion of the respective work assignment or Deliverable, the Consultant shall pay to the City, or have withheld from monies due, the sum of Liquidated Damages Rate provided in Exhibit A, Paragraph 13 (Liquidated Damages Rate). 3. Request for Extension of Time. If the performance of any act required of Consultant is directly prevented or delayed by reason of strikes, lockouts, labor disputes, unusual governmental delays, acts of God, fire, floods, epidemics, freight embargoes, or other causes beyond the reasonable control of the Consultant, as determined by the City, Consultant shall be excused from performing that act for the period of time equal to the period of time of the prevention or delay. In the event Consultant claims the existence of such a delay, the Consultant shall notify the City's Contract Administrator, or designee, in writing of that fact within ten calendar days after the beginning of any such claimed delay. Extensions of time will not be granted for delays to minor portions of work unless it can be shown that such delays did or will delay the progress of the work. ARTICLE V. INDEMNIFICATION A. Defense, Indemnity, and Hold Harmless. 1. General Requirement. To the maximum extent allowed by law, Consultant shall defend, indemnify, protect and hold harmless the City, its elected and appointed officers, agents and employees, from and against any and all claims, demands, causes of action, costs, expenses, (including reasonable attorney's fees and actual costs), liability, loss, damage or injury, in law or equity, to property or persons, including wrongful death, in any manner arising out of or incident to any alleged acts, omissions, negligence, or willful misconduct of Consultant, its officials, officers, employees, agents, and contractors, arising out of or in connection with the performance of the Defined Services, the results of such performance, or this Agreement. This indemnity provision does not include any claims, damages, liability, costs and expenses arising from the sole negligence or sole willful misconduct of the City, its officers, employees. Also covered is liability arising from, connected with, caused by or claimed to be caused by the active or passive negligent acts or omissions of the City, its agents, officers, or employees which may be in combination with the active or passive negligent acts or omissions of the Consultant, its employees, agents or officers, or any third party. 2. Design Professional Services. Notwithstanding the forgoing, if the services provided under this Agreement are design professional services, as defined by California Civil Code section 2782.5, as may be amended from time to time, the defense and indemnity obligation under Section 1, above, shall be limited to the extent required by California Civil Code section 2782.8. 3. Costs of Defense and Award. Included in the obligations in Sections A.I and A.2, above, is the Consultant's obligation to defend, at Consultant's own cost, expense and risk, any Page 10 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 535 and all suits, actions or other legal proceedings, that may be brought or instituted against the City, its directors, officials, officers, employees, agents and/or volunteers, subject to the limitations in Sections A.1. and A.2. Subject to the limitations in Sections A.1. and A.2., Consultant shall pay and satisfy any judgment, award or decree that may be rendered against City or its directors, officials, officers, employees, agents and/or volunteers, for any and all related legal expenses and costs incurred by each of them. 4. Insurance Proceeds. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the City, its directors, officials, officers, employees, agents, and/or volunteers. 5. Declarations. Consultant's obligations under Article V shall not be limited by any prior or subsequent declaration by the Consultant. 6. Enforcement Costs. Consultant agrees to pay any and all costs City incurs enforcing the indemnity and defense provisions set forth in Article V. 7. Survival. Consultant's obligations under Article V shall survive the termination of this Agreement. 8. No Alteration of Other Obligations. This Article V, shall in no way alter, affect or modify any of the Consultant's other obligations and duties under this Agreement. ARTICLE VI. TERMINATION OF AGREEMENT A. Termination for Cause. If, through any cause, Consultant shall fail to fulfill in a timely and proper manner Consultant's obligations under this Agreement, or if Consultant shall violate any of the covenants, agreements or stipulations of this Agreement, City shall have the right to terminate this Agreement by giving written notice to Consultant of such termination and specifying the effective date thereof at least five (5) days before the effective date of such termination. In that event, all finished or unfinished documents, data, studies, surveys, drawings, maps, reports and other materials prepared by Consultant shall, at the option of the City, become the property of the City, and Consultant shall be entitled to receive just and equitable compensation, in an amount not to exceed that payable under this Agreement and less any damages caused City by Consultant's breach, for any work satisfactorily completed on such documents and other materials up to the effective date of Notice of Termination. B. Termination of Agreement for Convenience of City. City may terminate this Agreement at any time and for any reason, by giving specific written notice to Consultant of such termination and specifying the effective date thereof, at least thirty (30) days before the effective date of such termination. In that event, all finished and unfinished documents and other materials described hereinabove shall, at the option of the City, become City's sole and exclusive property. If the Agreement is terminated by City as provided in this paragraph, Consultant shall be entitled to receive just and equitable compensation, in an amount not to exceed that payable under this Agreement, for any satisfactory work completed on such documents and other materials to the effective date of such termination. Consultant hereby Page 11 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 536 expressly waives any and all claims for damages or compensation arising under this Agreement except as set forth in this section. ARTICLE VII. RECORD RETENTION AND ACCESS A. Record Retention. During the course of the Project and for three (3) years following completion, the Consultant agrees to maintain, intact and readily accessible, all data, documents,reports,records, contracts, and supporting materials relating to the Project as City may require. B. Access to Records of Consultant and Subcontractors. The Consultant agrees to permit, and require its subcontractors to permit City or its authorized representatives, upon request, to inspect all Project work, materials, payrolls, and other data, and to audit the books, records, and accounts of the Contractor and its subcontractors pertaining to the Project. C. Project Closeout. The Consultant agrees that Project closeout does not alter the reporting and record retention requirements of this Agreement. ARTICLE VIII. PROJECT COMPLETION, AUDIT,AND CLOSEOUT A. Project Completion. Within ninety (90) calendar days following Project completion or termination by City, Consultant agrees to submit a final certification of Project expenses and audit reports, as applicable. B. Audit of Consultants. Consultant agrees to perform financial and compliance audits the City may require. The Consultant also agrees to obtain any other audits required by City. Consultant agrees that Project closeout will not alter Consultant's audit responsibilities. Audit costs are allowable Project costs. C. Project Closeout. Project closeout occurs when City notifies the Consultant that City has closed the Project, and either forwards the final payment or acknowledges that the Consultant has remitted the proper refund. The Consultant agrees that Project closeout by City does not invalidate any continuing requirements imposed by the Agreement or any unmet requirements set forth in a written notification from City ARTICLE IX. MISCELLANEOUS PROVISIONS A. Assignability. The services of Consultant are personal to the City, and Consultant shall not assign any interest in this Agreement, and shall not transfer any interest in the same (whether by assignment or notation),without prior written consent of City. 1. Limited Consent. City hereby consents to the assignment of the portions of the Defined Services identified in Exhibit A, Paragraph 16 to the subconsultants identified as "Permitted Subconsultants." Page 12 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 537 B. Ownership, Publication, Reproduction and Use of Material. All reports, studies, information, data, statistics, forms, designs, plans, procedures, systems and any other materials or properties produced under this Agreement shall be the sole and exclusive property of City. No such materials or properties produced in whole or in part under this Agreement shall be subject to private use, copyrights or patent rights by Consultant in the United States or in any other country without the express written consent of City. City shall have unrestricted authority to publish, disclose (except as may be limited by the provisions of the Public Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any such reports, studies, data, statistics, forms or other materials or properties produced under this Agreement. C. Independent Contractor. City is interested only in the results obtained and Consultant shall perform as an independent contractor with sole control of the manner and means of performing the services required under this Agreement. City maintains the right only to reject or accept Consultant's work products. Consultant and any of the Consultant's agents, employees or representatives are, for all purposes under this Agreement, independent contractors and shall not be deemed to be employees of City, and none of them shall be entitled to any benefits to which City employees are entitled including but not limited to, overtime, retirement benefits, worker's compensation benefits, injury leave or other leave benefits. Therefore, City will not withhold state or federal income tax, social security tax or any other payroll tax, and Consultant shall be solely responsible for the payment of same and shall hold the City harmless with regard to them. 1. Actions on Behalf of City. Except as City may specify in writing, Consultant shall have no authority, express or implied, to act on behalf of City in any capacity whatsoever, as an agent or otherwise. Consultant shall have no authority, express or implied, to bind City or its members, agents, or employees, to any obligation whatsoever, unless expressly provided in this Agreement. 2. No Obligations to Third Parties. In connection with the Project, Consultant agrees and shall require that its agents, employees, subcontractors agree that City shall not be responsible for any obligations or liabilities to any third party, including its agents, employees, subcontractors, or other person or entity that is not a party to this Agreement. Notwithstanding that City may have concurred in or approved any solicitation, subagreement, or third party contract at any tier, City shall have no obligation or liability to any person or entity not a party to this Agreement. D. Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this Agreement, against City unless a claim has first been presented in writing and filed with City and acted upon by 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 amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by City in the implementation of same. Upon request by City, Consultant shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. Page 13 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.UC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 538 E. Administration of Contract. Each party designates the individuals (Contract Administrators) indicated on Exhibit A, Paragraph 12, as that party's contract administrator who is authorized by the party to represent it in the routine administration of this Agreement. F. Term. This Agreement shall terminate when the parties have complied with all executory provisions hereof. G. Statement of Costs. In the event that Consultant prepares a report or document, or participates in the preparation of a report or document in performing the Defined Services, Consultant shall include, or cause the inclusion of, in the report or document, a statement of the numbers and cost in dollar amounts of all contracts and subcontracts relating to the preparation of the report or document. H. Consultant is Real Estate Broker and/or Salesman. If the box on Exhibit A, Paragraph 15 is marked, the Consultant and/or its principals is/are licensed with the State of California or some other state as a real estate broker or salesperson. Otherwise, Consultant represents that neither Consultant, nor its principals are licensed real estate brokers or salespersons. L Notices. All notices, demands or requests provided for or permitted to be given pursuant to this Agreement must be in writing. All notices, demands and requests to be sent to any party shall be deemed to have been properly given or served if personally served or deposited in the United States mail, addressed to such party, postage prepaid, registered or certified, with return receipt requested, at the addresses identified in this Agreement as the places of business for each of the designated parties. J. Integration. This Agreement, together with any other written document referred to or contemplated in it, embody the entire Agreement and understanding between the parties relating to the subject matter hereof. Neither this Agreement nor any provision of it may be amended, modified, waived or discharged except by an instrument in writing executed by the party against which enforcement of such amendment,waiver or discharge is sought. K. Capacity of Parties. Each signatory and party to this Agreement warrants and represents to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all necessary resolutions or other actions have been taken so as to enable it to enter into this Agreement. L. Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action arising under or relating to this Agreement shall be brought only in the federal or state courts located in San Diego County, State of California, and if applicable, the City of Chula Vista, or as close thereto as possible. Venue for this Agreement, and performance under it, shall be the City of Chula Vista. (End of page. Next page is signature page.) Page 14 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 539 To: Edword Chcw Dane�of 2 20-lu-OS-1'�A 2A�.T(p MT) Frpr.�_of Kruml • Signature Page iu Agreement between City of Chula Vista and NVINBOURNE CONSULTING,LLC for MOBILE DATA COMPUTER UPGRADE PROJECT MANAGEMENT. i W WT7WF-S S W1dEREOF, City and Consultant have oNcouted this Agreement, indicating that They have read and understood same, and indicate their full and complete consent to its?erms: City of Chula Vista By: _ Jim Sandoval,City Manager Attest: Donna Norris, City Clcrk Approved as to form: I Glen R.Googins, city Attorney Wi ne Consulting,LLC By: Alan Kruml Chief Operating Officer , Exhibit List to Agreement: Exhibit A Attachment "A" - Winbourne Consulting, LLC p:•uposal 12/09/2013 Page 15 7tkv Porn+Aprenrretrf 6elnten lire Cflj+ojGtula t?Sfa nurl If trbounle CansnkL� Il_C fgr 1 br! Ca»r i�lzr f Sr 'ee M1fQrtR rmtrlf C:H}sc�s1T(delsx�'AppE1��I.ocahN.rcrascA54ra�dai�slTm�pors�•krtcmet FJei�Cm:rr7.Q.ttbok�2 kLtCWF15W in�curr_i.LC3tDCProjx103172o3d(Zl�c 2014-05-20 Agenda Packet Page 540 Exhibit A to Agreement between City of Chula Vista and WINBOURNE CONSULTING,LLC 1. Effective Date: The Agreement shall take effect upon full execution of the Agreement, as of the effective date stated on page 1 of the Agreement. 2. City-Related Entity: (X) City of Chula Vista, a municipal chartered corporation of the State of California O The Chula Vista Public Financing Authority, a O The Chula Vista Industrial Development Authority, a O Other: , a [insert business form] (City) 3. Place of Business for City: City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 4. Consultant: Winbourne Consulting,LLC 5. Business Form of Consultant: O Sole Proprietorship ( ) Partnership (X) Corporation 6. Place of Business, Telephone and Fax Number of Consultant: 1611 N. Kent Street, Suite 802 Arlington,VA (703) 584-5350 (f)(703) 935-1147 Page 16 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 541 7. General Duties: Perform project management and provide information technology expertise to purchase and install new Mobile Data Computers (MDC's) for the Chula Vista Police Department. 8. Scope of Work and Schedule: A. Detailed Scope of Work: 1. Complete project kick-off objectives to include: a. Complete Winbourne/CVPD engagement contract, b. Kick-Off meeting with project stakeholders to document the following: i. General requirements and expectations for the upgrade, J. Identify project team members, iii. Establish rough project budget, and iv. Review project schedule/timing requirements. 2. Complete initiation and planning processes to contribute towards a detailed project schedule and budget to include: i. Review and document current network infrastructure for mobile wireless access and data access with CVPD CAD System and access to ARJIS, CJIS, CLETS and NCIC Databases. Determine if network analysis is required to either improve current infrastructure or research options for direct connection to ARJIS via CVPD leased data connection. Document final requirements and research solution. ii. Review current access authentication and document requirements for the desired methodology for advanced authentication in accessing secured databases and research solution. iii. Review and document requirements for replacement Panasonic Toughbook CF- 31 models to potentially include hardware capable of advanced authentication for data access and modems capable of communicating with Sprint 4G/LTE technology. Assist CVPD to complete RFP process for purchase or lease of replacement equipment. iv. Develop detailed project schedule and cost estimate based on procurement of new Panasonic Toughbooks, desired network infrastructure and desired authentication process. 3. Complete execution and implementation of upgraded system to include: a. Develop system design and installation requirements for upgrading or replacing data network to ARJIS. Execute installation and acceptance testing on test system prior to rollout throughout the fleet. b. Develop installation plan for the upgrade of the replacement Panasonic Toughbooks CF- 31 laptops. Page 17 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.UC for Mobile Data Computer Upgrade Project Managernm�entg 2014-05-20CEIgenda P cket mop\Winbournecontract.docx Page 542 c. Execute installation and acceptance testing on test system prior to rollout throughout the fleet. B. Date for Commencement of Consultant Services: (X)Same as Effective Date of Agreement ( ) Other: C. Dates or Time Limits for Delivery of Deliverables: Deliverable No. 1: Deliverable No. 2: Deliverable No. 3: D. Date for completion of all Consultant services: December 31, 2014 unless a mutually agreed upon extension is required. 9. Materials Required to be Supplied by City to Consultant: 10. Compensation: A. ( ) Single Fixed Fee Arrangement. For performance of all of the Defined Services by Consultant as herein required, City shall pay a single fixed fee in the amounts and at the times or milestones or for the Deliverables set forth below: Single Fixed Fee Amount:, payable as follows: Milestone or Event or Deliverable Amount or Percent of Fixed Fee O 1. Interim Monthly Advances. The City shall make interim monthly advances against the compensation due for each phase on a percentage of completion basis for each given phase such that, at the end of each phase only the compensation for that phase has been paid. Any payments made hereunder shall be considered as interest free loans that must be returned to the City if the Phase is not satisfactorily completed. If the Phase is satisfactorily completed, the City shall receive credit against the compensation due for that phase. The retention amount or percentage set forth in Paragraph 19 is to be applied to each interim payment such that, at the end of the phase, the full retention has been held back from the compensation due for that phase. Percentage of completion of a phase shall be assessed in the sole and unfettered discretion by the Contracts Administrator designated herein by the City, or such other person as the City Manager shall designate, but only upon such proof demanded by the City that has been provided, but in no event shall such interim advance payment be made unless the Consultant shall have represented in writing that Page 18 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 543 said percentage of completion of the phase has been performed by the Consultant. The practice of making interim monthly advances shall not convert this agreement to a time and materials basis of payment. B. O Phased Fixed Fee Arrangement. For the performance of each phase or portion of the Defined Services by Consultant as are separately identified below, City shall pay the fixed fee associated with each phase of Services, in the amounts and at the times or milestones or Deliverables set forth. Consultant shall not commence Services under any Phase, and shall not be entitled to the compensation for a Phase, unless City shall have issued a notice to proceed to Consultant as to said Phase. Phase Fee for Said Phase 1. $ 2. $ 3. $ O 1. Interim Monthly Advances. The City shall make interim monthly advances against the compensation due for each phase on a percentage of completion basis for each given phase such that, at the end of each phase only the compensation for that phase has been paid. Any payments made hereunder shall be considered as interest free loans that must be returned to the City if the Phase is not satisfactorily completed. If the Phase is satisfactorily completed, the City shall receive credit against the compensation due for that phase. The retention amount or percentage set forth in Paragraph 18 is to be applied to each interim payment such that, at the end of the phase, the full retention has been held back from the compensation due for that phase. Percentage of completion of a phase shall be assessed in the sole and unfettered discretion by the Contracts Administrator designated herein by the City, or such other person as the City Manager shall designate, but only upon such proof demanded by the City that has been provided, but in no event shall such interim advance payment be made unless the Consultant shall have represented in writing that said percentage of completion of the phase has been performed by the Consultant. The practice of making interim monthly advances shall not convert this agreement to a time and materials basis of payment. C. (X)Hourly Rate Arrangement For performance of the Defined Services by Consultant as herein required, City shall pay Consultant for the productive hours of time spent by Consultant in the performance of said Services, at the rates or amounts set forth in the Rate Schedule herein below according to the following terms and conditions: (1) O Not-to-Exceed Limitation on Time and Materials Arrangement Page 19 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.UC for Mobile Data Computer Upgrade Project Managernm�entg 2014-05-20CEIgenda P cket mop\Winbournecontract.docx Page 544 Notwithstanding the expenditure by Consultant of time and materials in excess of said Maximum Compensation amount, Consultant agrees that Consultant will perform all of the Defined Services herein required of Consultant for $ , including all Materials, and other"reimbursables" (Maximum Compensation). (2) (X)Limitation without Further Authorization on Time and Materials Arrangement At such time as Consultant shall have incurred time and materials not to exceed $84,000 (Authorization Limit), Consultant shall not be entitled to any additional compensation without further authorization issued in writing and approved by the City. Nothing herein shall preclude Consultant from providing additional Services at Consultant's own cost and expense. The agreed upon hourly rate for consulting services is $120 per hour. Consultant further agrees to pricing stipulations contained in the proposal (Attachment "A") titled "Mobile Data Computer Upgrade Project" dated December 9, 2014. O Hourly rates may increase by 6% for services rendered after [month], 20 , if delay in providing services is caused by City. 11. Materials Reimbursement Arrangement For the cost of out of pocket expenses incurred by Consultant in the performance of services herein required, City shall pay Consultant at the rates or amounts set forth below: (X)None, the compensation includes all costs. Cost or Rate O Reports, not to exceed $ $ ( ) Copies,not to exceed$ $ ( ) Travel, not to exceed $ $ ( ) Printing, not to exceed $ $ ( ) Postage,not to exceed$ $ O Delivery,not to exceed$ $ O Outside Services: $ O Other Actual Identifiable Direct Costs: $ not to exceed$ $ not to exceed$ $ 12. Contract Administrators: City: Edward Chew, Administrative Service Manager Consultant: Andrew G. Reece Page 20 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 545 13. Liquidated Damages Rate: O $ per day. O Other: 14. Statement of Economic Interests, Consultant Reporting Categories,per Conflict of Interest Code (Chula Vista Municipal Code chapter 2.02): (X)Not Applicable.Not an FPPC Filer. O FPPC Filer O Category No. 1. Investments, sources of income and business interests. O Category No. 2. Interests in real property. O Category No. 3. Investments, business positions, interests in real property, and sources of income subject to the regulatory, permit or licensing authority of the department administering this Agreement. O Category No. 4. Investments and business positions in business entities and sources of income that engage in land development, construction or the acquisition or sale of real property. O Category No. 5. Investments and business positions in business entities and sources of income that, within the past two years, have contracted with the City of Chula Vista or the City's Redevelopment Agency to provide services, supplies, materials, machinery or equipment. O Category No. 6. Investments and business positions in business entities and sources of income that, within the past two years, have contracted with the department administering this Agreement to provide services, supplies, materials, machinery or equipment. O List Consultant Associates interests in real property within 2 radial miles of Project Property, if any: Page 21 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 546 15. ( ) Consultant is Real Estate Broker and/or Salesman 16. Permitted Subconsultants: None unless approved by the City of Chula Vista. 17. Bill Processing: A. Consultant's Billing to be submitted for the following period of time: (X)Monthly ( ) Quarterly ( ) Other: B. Day of the Period for submission of Consultant's Billing: O First of the Month ( ) 15th Day of each Month (X)End of the Month ( ) Other: C. City's Account Number: 14258-6301 18. Security for Performance O Performance Bond, $ O Letter of Credit, $ O Other Security: Type: Amount: $ O Retention. If this space is checked, then notwithstanding other provisions to the contrary requiring the payment of compensation to the Consultant sooner, the City shall be entitled to retain, at their option, either the following"Retention Percentage" or"Retention Amount"until the City determines that the Retention Release Event, listed below,has occurred: ( ) Retention Percentage: ( ) Retention Amount: $ Retention Release Event: ( ) Completion of All Consultant Services ( ) Other: ( ) Other: The Retention Amount may be released on a monthly basis provided that Consultant has performed said monthly services to the sole satisfaction of the Assistant City Manager/Director of Development Services or his designee. Page 22 Two Party Agreement Between the City of Chula Vista and Winhourne Consulting.LLC for Mobile Data Computer Upgrade Project Managermen 5-20Cg � t t mop Winbournecontact.dox ne2014-0 Page 547 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0241, Item#: 5. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING CERTAIN ADDITIONAL SERVICES IN ACCORDANCE WITH ARTICLE I OF THE EXISTING AGREEMENT DATED NOVEMBER 9, 2010, APPROVED IN ACCORDANCE WITH COUNCIL RESOLUTION NO. 2010-263, BETWEEN THE CITY OF CHULA VISTA AND RICK ENGINEERING COMPANY IN THE AMOUNT OF $121 ,000 FOR PREPARING AND PERMITTING THE ENVIRONMENTAL MITIGATION FOR BONITA CANYON EMERGENCY REPAIR PROJECT (DR189) (This item was continued from the May 13, 2014 meeting.) RECOMMENDED ACTION Council adopt the resolution. SUMMARY On December 31 , 2012, the US Army Corps of Engineer (ACOE) granted the City of Chula Vista a Regional General Permit (RGP63) for the Bonita Canyon Emergency Repair project to address the impending failure of the gabion structure due to the onset of rains. On January 25, 2013, the repair work was completed by Cass Construction, Inc. As a condition of the RGP63, mitigation of the project impacts is negotiated after the emergency work has been done. The requested action will allow the City to prepare and permit the environmental mitigation for the emergency repair. 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 6 categorical exemption pursuant to Section 15306 [Information Collection] of the State CEQA Guidelines because the activity consists of basic data collection through regulatory agency negotiations and the preparation of drawings and environmental documentation for future project mitigation implementation related to the Bonita Canyon Repair project. The evaluation and documentation is part of a study leading to an action that the City of Chula Vista has not yet approved or adopted. Thus, no further environmental review is required at this time. Although environmental review is not required at this time, once the scope of potential actions are defined, environmental review will be required and the appropriate environmental determination will be made. BOARD/COMMISSION RECOMMENDATION Not applicable DISCUSSION On November 9, 2010, in accordance with Resolution 2010-263, City Council approved a contract agreement with Rick Engineering Company and Helix Environmental Planning (RH Team) that included capital improvement project DR189 "Bonita Canyon Repairs". Since the canyon has sensitive wetland areas, the work within the canyon was permitted by ACOE after review and consultation with the Resource Agencies Team. The Resource Agencies Team City of Chula Vista Page 1 of 3 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 548 File#: 14-0241, Item#: 5. includes Army Corps of Engineers (ACOE), Regional Water Quality Control Board (RWQCB), US Fish and Wildlife Service (USFWS), and California Department of Fish and Wildlife (CDFW). On June 5, 2012, the City and the RH Team met with the Resource Agencies Team and presented the originally proposed project which focused on repairing, reinforcing and stabilizing the existing gabion structure. The Resource Agencies Team rejected the concept of repairing the gabion and recommended a channel restoration project instead. In subsequent meetings with the Resource Agencies Team, City staff expressed their concerns with the timing and cost of the recommended restoration project and proposed an alternative design which was acceptable to the Resource Agencies Team. The modifications to the plans, specifications and environmental documents as well as the processing of the proposed project increased the level of effort and work required by the RH Team, therefore additional project work was awarded to the RH Team per Resolutions No. 2012-234, and 2012-04 (Attachment No.1). During the Fall of 2012, after the City experienced several significant storm events, staff became increasingly concerned about the urgency of the project, the current condition of Bonita Canyon, and the possibility that future rain events might destroy or further damage the gabion structure and release large amounts of silt downstream. Upon further evaluating these concerns and with the assistance of the RH Team, staff requested an emergency Regional General Permit No. 63 permit (RGP63) from the ACOE to place rip-rap on the downstream side of the gabion structure in order to reinforce the gabion structure and provide sediment containment. On December 31 , 2012, after further negotiations, the ACOE granted the City of Chula Vista a permit, RGP63, which is typically issued for "Repair and Protection Activities in Emergency Situations". The proposed project included reinforcing the gabion with '/2 ton rock/riprap that would permanently stabilize the existing gabion structure and fulfill the original purpose of the Bonita Canyon Repairs CIP. Staff informed the other Resource Agencies including RWQCB, USFWS, and CDFW of the action taken by the ACOE. Subsequently, in accordance with provisions in Section 1009 of the City Charter, on January 4, 2013, upon obtaining approval from the Resource Agencies Team, Chula Vista staff solicited three informal bids from contractors and retained Cass Construction, Inc. (Contractor License No. 298336) to perform the repair work. On March 27, 2013, Cass Construction, Inc. completed the repair work, and the potential threat of injury and property damage has been averted due to the combined efforts of RH Team, City staff and the Resource Agencies Team. Since the completion of the construction, the RH Team and Staff have been persistently contacting the Resource Agencies Team and requesting review and approval for the project mitigation. However, the negotiations with the ACOE have been prolonged due to federal budget issues and disagreement between the City and ACOE over the proposed mitigation in the Habitat Mitigation and Monitoring Plan (HMMP). Additional effort is required to approve this phase of the project. This Resolution will authorize City staff to augment the current contract with RH Team to assist in the continued negotiations with ACOE and the preparation of the construction documents for the mitigation. Since the RH Team is already familiar with the project conditions and was already under contract with the City for doing the original repair work, the RH Team is uniquely qualified to provide the City of Chula Vista Page 2 of 3 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 549 File#: 14-0241, Item#: 5. additional services; accordingly, staff recommends that City Council waive the standard competitive selection process as impractical under Chula Vista Municipal Code Section 2.56.070.B.3; and, on sole source basis augment the current contract with the RH Team for an additional $121 ,000 to continue negotiations and to produce the construction drawings and documentation for the environmental mitigation phase. RH Team's cost estimate to complete the environmental work for the RGP63 is dependent on ACOE making their final decisions on the required mitigation for this project. The amount in this resolution is based on staff and the RH Team's best estimate at this time. As of today, the City has compensated the RH Team $287,373 for their services: Once the ACOE issues their approval for the environmental mitigation, staff will proceed with Request for Proposals process and return to Council to award contracts for the construction and implementation of the environmental mitigation and biological monitoring for this project. 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 This project will support the City's Strategic Plan as it seeks to enhance the City's Strategic Goals of Healthy Community by controlling the erosion and creating safe environment within Bonita Canyon Channel. CURRENT YEAR FISCAL IMPACT Staff recommends funding the consultant services for processing and preparing the environmental mitigation documentations for Bonita Canyon emergency repair project from the remaining balance of $654,861 that was budgeted from the General Fund in CIP DR189. To date, the City has spent a total of $489,433 for the RH Team services and for construction of the repair from the General Fund in construction costs associated with CIP DR189. ONGOING FISCAL IMPACT After completion of the project, an annual on-going maintenance expenditure will be required. The amount of this expenditure will depend on mitigation negotiations with the Resource Agencies described earlier in this report. ATTACHMENTS 1 . Resolutions (No. 2013-095, 2012-234, 2012-041, 2010-263 , 2010-212) 2. RH Team Scope of Work City of Chula Vista Page 3 of 3 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 550 RESOLUTION NO. 2013-095 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING THE FINAL REPORT OF EXPENDITURES FOR BONITA CANYON EMERGENCY REPAIR PROJECT AND RATIFYING THE CONTRACT BETWEEN THE CITY OF CHULA VISTA AND CASS CONSTRUCTION, INC. FOR THE BONITA CANYON EMERGENCY REPAIR WORK (CIP DR189) AND THE ASSOCIATED EXPENDITURES WHEREAS, the City of Chula Vista's infrastructure includes natural and improved drainage systems that convey water away from property and ultimately out to the receiving waters of the Otay and Sweetwater Rivers and the San Diego Bay; and WHEREAS, staff noticed that the Bonita Canyon channel has erosion issues that need to be repaired to control the erosion in the channel; and WHEREAS, on July 23, 2010, Rick Engineering Company completed a drainage priority assessment and determined that the work in Bonita Canyon is the most critical and has the highest priority among all drainage erosion projects in the City; and WHEREAS, on August 17, 2010, in accordance with Resolution No. 2010-212, the City Council established a new capital improvement project for Bonita Canyon Repairs, project DR189; and WHEREAS, the City of Chula Vista amended the Fiscal Year 2010/2011 CIP Program approving funds to include the Bonita Canyon Repairs project; and WHEREAS, on November 9, 2010, in accordance with Resolution No. 2010-263, the City Council approved an agreement between the City of Chula Vista and the Rick Engineering Company for professional services for preparing plans and specifications for the Bonita Canyon Repair Project; and WHEREAS, on April 13, 2012, in accordance with Resolution No. 2012-041, the City Council appropriated $466,000 from the General Fund Reserve for Fiscal Year 2012 to the existing Capital Improvement Project DR189, for the construction of the Bonita Canyon repairs, environmental permitting fees, and associated consultant services, and approved certain additional services in accordance with Article I of the existing agreement between the City of Chula Vista and Rick Engineering Company in the amount of$38,000; and WHEREAS, City Council appropriated an additional $514,000 to DR189 for Bonita Canyon environmental mitigation in the Fiscal Year 2012/2013 Capital Improvement Budget; and 2014-05-20 Agenda Packet Page 551 Resolution No. 2013-095 Page No. 2 WHEREAS, while processing plans for repairing the gabion structure with the Resource Agencies, Staff applied for an emergency Regional General Permit No. 63 permit (RGP63) from the Army Corps of Engineers due the vulnerability of the current condition of the gabion structure and the threats of major storms; and WHEREAS, on December 31, 2012, the Army Corps of Engineers granted the City a RGP63 permit to reinforce the gabion structure; and WHEREAS, on January 4, 2013, upon obtaining City Manager's approval and upon soliciting three informal bids from contractors, staff retained Cass Construction, Inc. to perform Bonita Canyon Emergency Repair in accordance with provisions in Section 1009 of the City Charter; and WHEREAS, Cass Construction, Inc. completed the emergency repair work on March 27, 2013. As result of completing the emergency work, the potential threat of injury and property damage has been averted due to the combined efforts of the Rick Engineering Team, City Staff, and the Resource Agencies; and WHEREAS, the total cost of the repair work was $190,543; and WHEREAS, staff will return to City Council at a later date to select a contractor and enter into a contract for subsequent mitigation work. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby ratify the contract between the City and Cass Construction, Inc. to perform the Bonita Canyon emergency repair work and does ratify the associated expenses in the amount of $190,543. Presented by Approved as to form by Richard X kop s Llen . ogi ns Director of Pu is Works tto y 2014-05-20 Agenda Packet Page 552 Resolution No. 2013-095 Page No. 3 PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California, this 28th day of May 2013 by the following vote: AYES: Councilmembers: Bensoussan, Ramirez, Salas and Cox NAYS: Councilmembers: None ABSENT: Councilmembers: None ABSTAIN: Councilmembers: Aguilar i v Cheryl Cox, M or ATTEST: Donna R. Norris, CM , City Cleric STATE OF CALIFORNIA } COUNTY OF SAN DIEGO } CITY OF CHULA VISTA } I, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2013-095 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 28th day of May 2013. Executed this 28th day of May 2013. Donna R. Norris, CMC, City Clerk 2014-05-20 Agenda Packet Page 553 RESOLUTION NO. 2012-234 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING CERTAIN ADDITIONAL SERVICES IN ACCORDANCE WITH ARTICLE I OF THE EXISTING AGREEMENT DATED NOVEMBER 9, 2010, APPROVED IN ACCORDANCE WITH COUNCIL RESOLUTION NO. 2010-263, BETWEEN THE CITY OF CHULA VISTA AND RICK ENGINEERING COMPANY IN THE AMOUNT OF $100,000 FOR PREPARING AND PERMITTING LONG TERM REPAIR PROJECT FOR BONITA CANYON (DR-189) WHEREAS, the City of Chula Vista's infrastructure includes natural and improved drainage systems that convey water away from property and ultimately out to the receiving waters of the Otay and Sweetwater Rivers and the San Diego Bay; and WHEREAS, staff noticed that the Bonita Canyon channel has erosion issues that need to be repaired to control the erosion in the channel; and WHEREAS, on July 23, 2010, Rick Engineering Company completed a drainage priority assessment and determined that the work in Bonita Canyon is the most critical and has the highest priority among all drainage erosion projects in the City; and WHEREAS, on August 17, 2010, in accordance with Resolution No. 2010-212, the City Council established a new capital improvement project for Bonita Canyon Repairs, project DR189; and WHEREAS, the City of Chula Vista amended the Fiscal Year 2010/2011 CIP Program approving funds to include the Bonita Canyon Repairs project; and WHEREAS, on November 9, 2010, in accordance with Resolution No. 2010-263, the City Council approved an agreement between the City of Chula Vista and the Rick Engineering Company for professional services for preparing plans and specifications for the Bonita Canyon Repair Project; and WHEREAS, on April 13, 2012, in accordance with Resolution No. 2012-041, the City Council appropriated $466,000 from the General Fund Reserve for Fiscal Year 2012 to the existing Capital Improvement Project DR189, for construction of the Bonita Canyon repairs, environmental permitting fees, and associated consultant services, and approved certain additional services in accordance with Article I of the existing agreement between the City of Chula Vista and Rick Engineering Company in the amount of$38,000; and WHEREAS, funding requested by this action will be sufficient to construct the project; and 2014-05-20 Agenda Packet Page 554 Resolution No. 2012-234 Page No. 2 WHEREAS, the construction cannot occur, nor be initiated, without proper mitigation and monitoring; and WHEREAS, construction of the project in Fiscal Year 2012/2013 is necessary to avoid redoing the environmental permitting process at an additional expense and prevent further erosion; and WHEREAS, staff has been coordinating this project with the County of San Diego since the Bonita Canyon Channel flows downstream through the County of San Diego's Jurisdiction. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve certain additional services in accordance with Article I of the existing agreement dated November 9, 2010, approved in accordance with Council Resolution No. 2010- 363 between the City of Chula Vista and the Rick Engineering Company in the amount of $100,000 for preparing and permitting the long term repair project for Bonita Canyon (DR-l89). Presented by Approved as to form by ch . H ki 4im ins Director of Pubii Works 2014-05-20 Age nda Packet Page 555 Resolution No. 2012-234 Page No. 3 PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California, this 1 I th day of December 2012 by the following vote: AYES: Councilmembers: Aguilar, Bensoussan, Ramirez, Salas and Cox NAYS: Councilmembers: None ABSENT: Councilmembers- None Cheryl Cox, Mayor ATTEST: AL,oi� ohh�.So Donna R. Norris, CMC, City Clerk STATE OF CALIFORNIA } COUNTY OF SAN DIEGO } CITY OF CHULA VISTA } I, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2012-234 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 11th day of December 2012. Executed this 1 Ith day of December 2012. Donna R. Norris, CMC, City Clerk 2014-05-20 Agenda Packet Page 556 RESOLUTION NO. 2012-041 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $466,000 FROM THE GENERAL FUND RESERVE FOR FISCAL YEAR 2012 TO THE EXISTING CAPITAL IMPROVEMENT PROJECT DR189, FOR CONSTRUCTION OF BONITA CANYON REPAIRS, ENVIRONMENTAL PERMITTING FEES, AND ASSOCIATED CONSULTANT SERVICES, AND APPROVING CERTAIN ADDITIONAL SERVICES IN ACCORDANCE WITH ARTICLE I OF THE EXISTING AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND RICK ENGINEERING COMPANY IN THE AMOUNT OF $38,000 WHEREAS, the City of Chula Vista's infrastructure includes natural and improved drainage systems that convey water away from property and ultimately out to the receiving waters of the Otay and Sweetwater Rivers and the San Diego Bay; and WHEREAS, staff noticed that Bonita Canyon channel has erosion problems that need to be repaired to control the erosion in the channel; and WHEREAS, on July 23, 2010, Rick Engineering Company completed a drainage priority assessment and determined that the work in Bonita Canyon is the most critical and has the highest priority among all drainage erosion projects in the City; and WHEREAS, on August 17, 2010, per Resolution No. 2010-212, the City Council established a new capital improvement project for Bonita Canyon Repairs project DR189; and WHEREAS, City of Chula Vista amended the Fiscal Year 2010/2011 CIP Program approving funds to include Bonita Canyon Repairs project; and WHEREAS, on November 9, 2010, per Resolution 2010-263, the City Council approved an agreement between the City of Chula Vista and Rick Engineering Team for professional services for preparing plans and specifications for Bonita Canyon Repair Project; and WHEREAS, the design work and the environmental process are nearing completion; and WHEREAS, staff is requesting an appropriation in the amount of $466,000 to the existing project (DR189), which will allow staff to put the project out to bid and begin to secure all of the environmental permitting necessary; and WHEREAS, included in the total appropriation requested are funds necessary, in the amount of $38,000, to have the Rick Engineering Team perform additional tasks under the existing contract and to pay permit application fees; and 2014-05-20 Agenda Packet Page 557 Resolution No. 2012-041 Page 2 WHEREAS, though funding requested by this action will be sufficient to cover the construction of the project, the construction cannot occur, nor be initiated, without proper mitigation and monitoring; and WHEREAS, staff anticipates that the mitigation and monitoring will cost approximately $514,000; and WHEREAS, staff will include $514,000 from the General Fund Reserve in the proposed Fiscal Year 2012/2013 Capital Improvement Budget DR189 for the environmental mitigation and monitoring phase in order to implement the project; and WHEREAS, construction of the project in Fiscal Year 2012/2013 is necessary to avoid redoing the environmental permitting process at an additional expense and prevent further erosion; and WHEREAS, staff has been coordinating this project with the County of San Diego since Bonita Canyon Channel flows downstream through the County of San Diego Jurisdiction. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby appropriate $466,000 from the General Fund Reserve for Fiscal Year 2012 to the existing Capital Improvement Project DR189, for construction of Bonita Canyon repairs, environmental permitting fees, and associated consultant services, and approving certain additional services in accordance with Article I of the existing agreement between the City of Chula Vista and Rick Engineering Company in the amount of$38,000. Presented by Approved as to form by R Richard A. Hop ' s q 11 len R. gins \ Director of P is Works Atto y 2014-05-20 Agenda Packet Page 558 Resolution No. 2012-041 Page 3 PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California, this 13th day of March 2012 by the following vote: AYES: Councilmembers: Aguilar, Bensoussan, Castaneda, Ramirez and Cox NAYS: Councilmembers: None ABSENT: Councilmembers: None l � Cheryl Cox, M�)or ATTEST: f, Donna R. Norris, CMC, City Clerk STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) 1, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2012-041 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 13th day of March 2012. Executed this 13th day of March 2012. Donna R.Norris, CMC, City Clerk 2014-05-20 Agenda Packet Page 559 RESOLUTION NO. 2010-263 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY OF CHULA VISTA AND RICK ENGINEERING TEAM FOR PREPARING ENGINEERING DESIGN AND ENVIRONMENTAL REVIEW SERVICES FOR CAPITAL IMPROVEMENT PROJECT "BONITA CANYON REPAIRS" (DR 189) WHEREAS, the City of Chula Vista's infrastructure includes natural and improved drainage systems that convey water away from property and ultimately out to the receiving waters of the Otay and Sweetwater Rivers and the San Diego Bay; and WHEREAS, staff noticed that Bonita Canyon channel has erosion problems that need to be repaired to control the erosion in the channel; and WHEREAS, on July 23, 2010, Rick Engineering Company completed a drainage priority assessment and determined that the work in Bonita Canyon is the most critical and has the highest priority among all drainage erosion projects in the City; and WHEREAS, on August 17, 2010, per Resolution No. 2010-212, the City Council established a new capital improvement project for Bonita Canyon Repairs project; and WHEREAS, City of Chula Vista amended the Fiscal Year 2010/2011 CIP Program approving funds to include Bonita Canyon Repairs project; and WHEREAS, City Council authorized staff to negotiate a contract with Rick Engineering Company as the lead consultant and Helix Environmental Planning Inc. as a subconsultant (Rick Engineering Team); and WHEREAS, after a thorough negotiation, staff was successful in reaching an agreement with Rick Engineering Team to perform the work as described in Resolution No. 2010-212 for an amount of$144,800; and WHEREAS, staff has been coordinating this project with the County of San Diego since Bonita Canyon Channel flows downstream through the County of San Diego Jurisdiction; and WHEREAS, Consultant warrants and represents that it is experienced and staffed in a manner such that it can deliver the services required of Consultant to City in accordance with the time frames and the terms and conditions of this agreement. 2014-05-20 Agenda Packet Page 560 Resolution No. 2010-263 Page 2 NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve an agreement between the City of Chula Vista and Rick Engineering Team for preparing engineering design and environmental review services for Capital Improvement Project`Bonita Canyon Repairs" (DR 189). Presented by Approved as to form by Richard A. o ns Bart . Miesfeld Director of Public Works City Attorney PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California,this 9th day of November 2010 by the following vote: AYES: Councilmembers: Bensoussan, Castaneda, McCann, Ramirez and Cox NAYS: Councilmembers: None ABSENT: Councilmembers- None �L Cheryl Cox, Mk or ATTEST: Donna R. Norris, MC, City Clerk STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) I, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2010-263 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 9th day of November 2010. Executed this 9th day of November 2010. L4 /1,4 onna R. Norris, C , City Clerk 2014-05-20 Agenda Packet Page 561 RESOLUTION NO. 2010-212 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A NEW CAPITAL IMPROVEMENT PROJECT "BONITA CANYON REPAIRS" (DR-189), AMENDING THE FISCAL YEAR 2010/2011 CIP PROGRAM, APPROPRIATING FUNDS THEREFOR; AUTHORIZE THE DIRECTOR OF PUBLIC WORKS TO NEGOTIATE WITH THE CONSULTANT TEAM OF RICK ENGINEERING COMPANY AND HELIX ENVIRONMENTAL PLANNING INC.; AND IF NECESSARY, AUTHORIZE STAFF TO PREPARE AND SOLICIT REQUESTS FOR PROPOSALS FOR ENGINEERING DESIGN, ENVIRONMENTAL REVIEW AND GEOTECHNICAL SERVICES SO THE ENGINEERING DESIGN AND ENVIRONMENTAL DOCUMENT CAN BE COMPLETED BY SPRING 2011 WHEREAS, in 2004 the City of Chula Vista completed a Citywide Drainage Master Plan prepared by the consultant PBS&J; and WHEREAS, City staff presented the findings to the City Council at an infrastructure workshop on April 5, 2007; and WHEREAS, a list of drainage deficiencies that had been identified through the 2004 Drainage Master Plan regarding the citywide drainage priority list was prepared as part of comprehensive asset management approach that would ensure the best use of limited funding; and WHEREAS, City staff has been working to complete the work on those locations listed on the drainage priority list that is separated into the following five priority categories: Priority 1 Tier: Frequent flooding and/or high chance of personal injury or property damage. Priority 2 Tier: Occasional flooding with a chance of personal injury or property damage. Priority 3 Tier: Frequent nuisance flooding. Priority 4 Tier: Occasional nuisance flooding. Priority 5 Tier: Frequent or routine maintenance manages problem but a CIP project could eliminate the problem; and 2014-05-20 Agenda Packet Page 562 Resolution No. 2010-212 Page 2 WHEREAS, in Fiscal Year 200912010, City staff entered into an agreement with The Rick Engineering Company in order for this consultant to prepare an unbiased evaluation of Bonita Canyon and Long Canyon, each a Priority 1 Tier canyon; and WHEREAS, each canyon is located in eastern Chula Vista; and WHEREAS, Bonita Canyon is located north of Rancho Del Rey Parkway to the intersection of Bonita Road/Willow Street and the Long Canyon study area is located from the vicinity of Corral Canyon Road/East H Street to about the area of Canyon Drive/Country Vistas Drive; and WHEREAS, the consultant is recommending that the work at Bonita Canyon be completed first; and WHEREAS, in order to resolve the erosion issue at Bonita Canyon, it is necessary to establish a Capital Improvement Program project; and WHEREAS, in the drainage deficiency list presented to Council in April 2007, Bonita Canyon repairs were originally estimated at $3,900,000 with a recommendation that further analysis was needed in order to determine what would ultimately be needed; and WHEREAS, the work estimate today ranges from about $680,000 to $1,000,000 depending on the number of phases that work is completed in; and WHEREAS, if Council approves the funding, the design work and environmental review could begin relatively quickly so that pending construction funding, construction work could commence sooner; and WHEREAS, the majority of Bonita Canyon is designated Conservation Area pursuant to the City of Chula Vista's MSCP SubArea Plan; and WHEREAS, although more expensive initially, in the long run, completing the project in one phase becomes the most cost efficient solution and completes the needed work on Bonita Canyon the quickest; and WHEREAS, staff's recommendation is to appropriate $150,000 for design and environmental review on Bonita Canyon; and WHEREAS, the consultant team of Rick Engineering Company and Helix Environmental Planning, Inc. have unique knowledge of this project, due to the work performed on their recently completed Preliminary Assessment Report; and 2014-05-20 Agenda Packet Page 563 Resolution No. 2010-212 Page 3 WHEREAS, due to the urgency of the need for repairs to Bonita Canyon and the cost and time savings that can be achieved by retaining consultants with familiarity and expertise related to this project, staff is requesting that Council authorize negotiating terms with the consultant team of Rick Engineering Company and Helix Environmental Planning, Inc. to perform the design work and environmental review; and WHEREAS, staff will bring back as a future action to Council a report on funding options such as grant funding to fund the construction and mitigation phase of the project estimated at $530,000- NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby establish a new Capital Improvement Project "Bonita Canyon Repairs" (DR- 189), amend the Fiscal Year 2010/2011 CIP Program and appropriate $150,000 from unanticipated revenues to the General Fund Non-Departmental CIP budget into a new Capital Improvement Program project titled `Bonita Canyon Repairs" (DR-189) to fund the engineering design and environmental review only. BE IT FURTHER RESOLVED that the City Council of the City of Chula Vista does hereby authorize the Director of Public Works to negotiate with the consultant team of Rick Engineering Company and Helix Environmental Planning Inc. BE IT FURTHER RESOLVED that if the Director of Public Works is unsuccessful in negotiating a contract with the consultant team, authorize staff to prepare and solicit requests for proposals for engineering design, environmental review and geotechnical services so the engineering design and environmental document can be completed by Spring 2011. Presented by Approved as to form by Richard A. Hop BaJ C. MiesfelO,X Director of Public Works 9(ty Attorney,."l l 2014-05-20 Agenda Packet Page 564 Resolution No. 2010-212 Page 4 PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California,this 17th day of August 2010 by the following vote: AYES: Councilmembers: Bensoussan, Castaneda, McCann, Ramirez and Cox NAYS: Councilmembers: None ABSENT: Councilmembers: None k'0A/' Cheryl Cog Ma or ATTEST: Akx-4 9 XA4i� Donna R. Norris, CMC, City Clerk STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) CITY OF CHULA VISTA ) 1, Donna R. Norris, City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2010-212 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 17th day of August 2010. Executed this 17th day of August 2010. Donna R. Norris, CMC, City Clerk 2014-05-20 Agenda Packet Page 565 May 1, 2014 Mr. Roberto Yano, P.E. City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 SUBJECT: CITY OF CHULA VISTA: BONITA CANYON RESTORATION PROJECT (DESIGN & ENVIRONMENTAL TASKS) (J-16296D) Dear Mr. Yano: Rick Engineering Company is pleased to present this proposal to provide professional engineering services for the subject project. Specifically, this proposal is to provide engineering support for Wetland Restoration Plan Finalization and the preparation of construction documents for the Upland and Wetland Restoration Areas. Helix Environmental will be the environmental consultant to Rick Engineering Company for the environmental components of this project,but their scope and fee will be discussed in a separate, attached document(See Attachment `A'). The following summarizes the Rick Engineering Company services proposed under this contract. SCOPE OF WORK Task 1: Field Surveyin2 In coordination with the Biologist from HELIX Environmental, Rick Engineering Company will concurrently be in the field with the Biologist to identify (by stakes) the Streambed/Riparian Scrub Creation Area(See Attached; Figure 4). This is needed to determine the actual creation area to be graded. It is anticipated that over 320 cubic yards of excess material will be excavated. To prevent existing flows from travelling along the existing edge of the access road and to also minimize excess material from being hauled off of the project site, the goal will be to elevate and re-grade the access road. Field surveys will be needed of the existing access road and surrounding area for this proposed design. Task 2: Grading Plans and Estimate Prepare grading plans at 1"= 20 ft. of the Streambed/Riparian Scrub Creation Area and Elevated/Re-graded Access Road. Contours will be shown at 1-ft. intervals and spot elevations will be shown as necessary. 2014-05-20 Agenda Packet Page 566 Mr. Roberto Yano, P.E. May 1, 2014 Page 2 of 6 Also, prepare an Opinion of Probable Construction Costs for the proposed grading work. Task 3: Construction Storm Water Management Plan Prepare a Construction Storm Water Management Plan (Form 5504A) based on the requirements in of the City of Chula Vista Development Services Department. It is assumed that the construction activity will result in land disturbance of less than one acre, therefore the project is not subject to the Construction General Permit 2009-0009-DWQ and a Storm Water Pollution Prevention Plan(SWPPP)will not be required. If the construction activity is equal to or greater than one acre, a separate scope and fee can be provided for the preparation of a SWPPP. Provide coordination with the client to obtain information necessary for completion of CSWMP (i.e. owner information, site information, construction material information, etc.). The following item may be required, but is not included in the scope of work stated above. Additional authorization will be required for these services: • Preparation of a CSWMP Amendment,Weather Triggered Action Plan(WTAP), Sampling and Analysis Program (SAP), Storm Water Pollution Prevention Plan (SWPPP),Notice of Intent(NOI), Change of Information (COI), or Notice of Termination (NOT). Task 4: Environmental Support Provide Helix Environmental engineering support in the preparation and approval of the required Upland and Wetland Restoration Plans. Task 5: Meetings & Coordination • Attend up to two (2) field meetings. It is anticipated that one of the field meetings will be prior to the start of the project(w/HELIX). • Attend (2) office meetings with the City of Chula Vista regarding the project. • Provide up to 8 total hours of as-needed coordination with the City of Chula Vista. Task 6: Environmental Please see attached scope and fee from HELIX Environmental (See Attachment `A'). ESTIMATED FEE We will perform the above service for a time and materials,not-to-exceed fee of$44,272.00. Work not specifically described under the scope of work is excluded from this agreement. Additional services requested by the Client shall be performed on a time and materials basis and billed per our current schedule of hourly rates. 2014-05-20 Agenda Packet Page 567 Mr. Roberto Yano, P.E. May 1, 2014 Page 3 of 6 Printing, delivery,mileage, and other miscellaneous reimbursable expenses will be billed on a time and materials basis as accrued,up to the approved contract amount. For progress billing purposes, our fees break down as follows: Proiect Tasks: 1) Task 1: Field Surveying $ 5,130.00 2) Task 2: Grading Plans $ 6,180.00 3) Task 3: Construction Storm Water Management Plan $ 3,042.00 4) Task 4: Environmental Support $ 2,250.00 5) Task 5: Meetings & Coordination $ 5,310.00 6) Task 6: HELIX Environmental Tasks $21,500.00 7) Direct Expenses $ 850.00 Total: $44,272.00 Optional Proiect Tasks: The following Rick Engineering Company related tasks are dependent on the direction received from the U.S. Army Corps of Engineers and the City: A. Hydrologic& Hydraulic Modeling Prepare hydrologic and hydraulic modeling for up to 2,500 linear feet of the creek and up to 2 tributaries to identify existing floodplain limits, flow velocities and shear forces within the channel and overbank areas, for the 2-year, 5-year, 10-year, 25-year, and 100-year storm events. Analyze the same storm events for up to two proposed mitigation grading configurations including stream re-grading, and/or drop structures. B. Sediment Transport Modeling Perform a Site visit to collect existing n-values and up to 5 soil samples. Prepare a Sediment Transport modeling utilizing Fluvial-12 to assess the sediment transport through the existing channel as well as the anticipated impacts to short term and long term sediment transport within the system resulting from up to two proposed mitigation scenarios. 2014-05-20 Agenda Packet Page 568 Mr. Roberto Yano, P.E. May 1, 2014 Page 4 of 6 C. Riprap/Stabilization Design Prepare engineering design calculations for stream stabilization measures including bio- engineered solutions and/or riprap design. D. Hydraulic Report Prepare a preliminary hydraulic report summarizing the results of the two investigated mitigation scenarios. Prepare a final hydraulic report summarizing the design calculations and findings for the selected final design mitigation scenario. E. Additional Meetings & Coordination Attend four(4)meetings and provide additional coordination/support to the HELIX and the City. F. Additional Environmental Tasks HELIX has included the scope and fee for Optional Tasks in the attached document. (See Attachment `A'.) G. Additional Civil Design/Grading Plans lans If additional work is required downstream of the existing gabion structure, then additional civil design plans, grading plans and an opinion of probable costs will need to be prepared. H. Water Quality Applicability Letter Prepare a letter summarizing the projects compliance with the City of Chula Vista Storm Water Manual (2011) and supporting the determination that the project is not classified as a priority development project. Preparation of a Water Quality Technical Report is specifically excluded from this scope of work. I. Additional Field Survey Obtain additional field information for the additional project area as needed. This data will supplement the topographic contour files provided by the City. Fees for Optional Project Tasks: 1) Task A: Hydrologic & Hydraulic Modeling $ 9,150.00 2) Task B: Sediment Transport Modeling $10,910.00 3) Task C: Riprap/Stabilization Design $ 4,830.00 4) Task D: Hydraulic Report $10,700.00 5) Task E: Additional Meetings & Coordination/Support $ 7,500.00 2014-05-20 Agenda Packet Page 569 Mr. Roberto Yano, P.E. May 1, 2014 Page 5 of 6 6) Task F: Additional HELIX Environmental Tasks $15,000.00 7) Task G: Additional Grading Plans and Estimate $10.220.00 8) Task H: Water Quality Applicability Letter $ 1,500.00 9) Task I: Additional Field Surveying $ 3,465.00 10)Additional Direct Expenses $ 2,500.00 Total (Optional Tasks): $ 75,775.00 Fees and expenses will be billed monthly as the work progresses and the net amount shall be due within thirty (30) days from the date of receipt of the invoice in the Client's office. EXCLUSIONS: • Changes in proposed project grading after 1St submittal • Sediment Transport Modeling • Environmental permitting or processing beyond coordination • LID/HMP/WQTR • Photogrammetrical Services • Geotechnical • Structural Analysis/Calculations • Retaining Wall/Sound Wall Design • Traffic Design/Analysis • Landscape and Irrigation • Utilities • Right of Way Services • Bid/Construction Support and Services • As-Builts STANDARD PROVISIONS OF AGREEMENT: The enclosed Standard Provisions of Agreement are incorporated herein and made a part of this agreement. 2014-05-20 Agenda Packet Page 570 Mr. Roberto Yano, P.E. May 1, 2014 Page 6 of 6 CONTRACT EXECUTION: If notice is delayed for any reason beyond sixty (60) days, the parties understand that the terms and conditions contained herein are subject to revision. If you would like us to proceed on this work as outlined above, we ask that you please sign and return this agreement as our written authorization. If you have any questions regarding this agreement, please feel free to contact me. Thank you for requesting Rick Engineering Company to provide these services. Sincerely, RICK ENGINEERING COMPANY Edgar Camerino, P.E. R.C.E.No. 58844, Exp. 06/30/15 Associate Principal ec:files\16296D\contract\16296D.XXX.doc Attachments cc: Mr. Jamal Naji, City of Chula Vista Mr. Dennis Bowling, Rick Engineering Company Ms. Roberta Cronquist, Rick Engineering Company APPROVED: BY: DATE: PRINT NAME: 2014-05-20 Agenda Packet Page 571 RESOLUTION NO. 2014- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING CERTAIN ADDITIONAL SERVICES IN ACCORDANCE WITH ARTICLE I OF THE EXISTING AGREEMENT DATED NOVEMBER 9, 2010, APPROVED IN ACCORDANCE WITH COUNCIL RESOLUTION 2010-263, BETWEEN THE CITY OF CHULA VISTA AND RICK ENGINEERING COMPANY IN THE AMOUNT OF $121,000 FOR PREPARING AND PERMITTING THE ENVIRONMENTAL MITIGATION FOR BONITA CANYON EMERGENCY REPAIR PROJECT (DR 189) WHEREAS, on August 17, 2010, in accordance with Resolution No. 2010-212, the City Council established a new Capital Improvement Project for Bonita Canyon Repairs,project(DR- 189); and WHEREAS, on November 9, 2010, in accordance with Resolution 2010-263, the City Council approved an agreement between the City of Chula Vista and the Rick Engineering Company and Helix Environmental Planning ("RH Team") for professional services for preparing plans and specifications for the Bonita Canyon Repair Project ("Agreement with RH Team"); and WHEREAS, on March 13, 2012, in accordance with Resolution 2012-041, the City Council appropriated $504,000 from the General Fund Reserve for Fiscal Year 2012 to the existing Capital Improvement Project DR189, for the construction of the Bonita Canyon repairs, environmental permitting fees, and for approving certain additional consultant services in accordance with Article I of the Agreement with RH Team; and WHEREAS, on March 13, 2012, in accordance with Resolution 2012-041, the City Council appropriated an additional $514,000 to DR189 for Bonita Canyon environmental mitigation in the FY2012-13 Capital Improvement Budget; and WHEREAS, while processing plans for repairing the gabion structure with the Resource Agencies, Staff applied for an emergency Regional General Permit No. 63 permit (RGP63) from the Army Corps of Engineers due the vulnerability of the condition of the gabion structure and the threats of major storms; and WHEREAS, on December 31, 2012, the Army Corps of Engineers granted the City a RGP63 permit to reinforce the gabion structure; and WHEREAS, on January 4, 2013, upon obtaining City Manager's approval and upon soliciting three informal bids from contractors, staff retained Cass Construction, Inc. to perform Bonita Canyon Emergency Repair in accordance with provisions in Section 1009 of the City Charter; and 2014-05-20 Agenda Packet Page 572 Resolution No. Page 2 WHEREAS, Cass Construction, Inc. completed the emergency repair work on March 27, 2013. As result of completing the emergency work, the potential threat of injury and property damage has been averted due to the combined efforts of the RH Team, City Staff, and the Resource Agencies; and WHEREAS, since the completion of the construction, the RH Team and Staff have contacted the Resource Agencies on a regular basis to obtain approval of the mitigation phase, but negotiations with the ACOE have been prolonged due to federal budget issues and due to disagreement with ACOE over the City's proposed mitigation in the Habitat Mitigation and Monitoring Plan (HMMP); and WHEREAS, since the RH Team is familiar with the project conditions and is already under contract with the City for doing the original repair work, the RH Team is uniquely qualified to provide the required additional services; accordingly, staff recommends that City Council waive the standard competitive selection process as impractical and, on sole source basis augment the current contract with the RH Team, so they may continue negotiations with the ACOE and produce construction drawings and documentation for the environmental mitigation phase; and WHEREAS, once the Resource Agencies issue their approval for the environmental mitigation, staff will follow the Request for Proposals process and return to Council to award contracts for the construction and implementation of the environmental mitigation and biological monitoring for this project. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista, does hereby (1) waive the competitive selection process as impractical under Chula Vista Municipal Code section 2.56.070.B.3; and (2) on a sole source basis, and in accordance with Article I of the Agreement with RH Team, approve certain additional services in the amount of $121,000 including contingency and certain optional tasks to be authorized at Staff's discretion for the preparation of construction drawings and documentation for the environmental mitigation phase of the Bonita Canyon Emergency Project (DR189) and to continue negotiation with the Resource Agencies to obtain permits for the same. Presented by Approved as to form by Richard A. Hopkins Glen R. Googins Director of Public Works City Attorney 2014-05-20 Agenda Packet Page 573 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0225, Item#: 6. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE PERFORMING AND VISUAL ARTS GRANT TASK FORCE'S SELECTION OF THE FISCAL YEAR 2014 PERFORMING AND VISUAL ARTS GRANTS RECIPIENTS AND MONETARY GRANT AWARDS TOTALING $71 ,037 RECOMMENDED ACTION Council adopt the resolution. SUMMARY In 1997, the City Council approved a Sublease with Live Nation, Inc. (formerly Universal Concerts) that established a process whereby ticket sales proceeds at the Sleep Train (Formerly Coors/Cricket) Amphitheater would be paid to the City and utilized for a Performing and Visual Arts Fund. This fund is to be used for arts grants to the Chula Vista community for the purpose of promoting and stimulating the growth of performing and visual arts within the City of Chula Vista. This year, the Chula Vista Public Library received $72,761 from Live Nation for their 2013 Concert Series with no amount carried over from the previous year. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity, approving the Performing and Visual Arts Task Force's selection of grants recipients and monetary grant awards, for compliance with the California Environmental Quality Act (CEQA) and has determined that there is no possibility that the activity in question may have a significant effect on the environment; therefore, pursuant to Section 15061(b)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. BOARD/COMMISSION RECOMMENDATION The Task Force recommends that the City Council award arts funds to groups as outlined in this report. The Cultural Arts Commission endorsed the Task Force recommendations at their meeting on April14th, 2014. DISCUSSION Since the program's inception, the Library Department has administered the Performing and Visual Arts Fund grant application process. The Performing and Visual Arts Grant Application was announced through a press release, advertised on the City of Chula Vista and Library websites, with applications made available online. The period for submittal ran from early December to mid- February, with an application deadline of 5pm, February 14th, 2014. Twenty-six applications totaling $110,107 in requests were received by the application due date. Upon receipt and review, a copy of each application was distributed to members of the Task Force for their consideration. The Task Force met on April 8th at the Civic Center Library. The Task Force City of Chula Vista Page 1 of 4 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 574 File#: 14-0225, Item#: 6. members were: Jennifer Quijano, Constituent Services Manager, Mayor's Office, Chula Vista Darbi Peters, Guest Services Manager, Live Nation Keff Kover, Director of Visual and Performing Arts, Sweetwater Union High School District Dr. John Nelson, Assistant Superintendent, Chula Vista Elementary School District Christine Moore, Chula Vista Cultural Arts Commission Jason Paguio, Chula Vista Cultural Arts Commission Al Gore, Chula Vista Cultural Arts Commission Stephanie Loney, Principal Librarian, Chula Vista Public Library (non-voting) The twenty- six applications were reviewed and ranked by pre-established criteria. Five applications were not selected by the Task Force for various reasons as outlined briefly below - Camerena Elementary Garden Club Project was not arts focused Prime Motivation Project description lacked information San Diego Opera Outcome of organization uncertain Unlimited Jazz Dance Productions Project description lacked information Wolf Canyon Elementary Project request was for transportation/field trips The Task Force recommended awarding the following twenty-one applications - List of Grant Recommendations: • Bonita Vista High School's Club Blue $2,500 To purchase music, print programs and pay for competition fees in addition to hosting two major events locally. • Bonita Vista High School's Sound Unlimited $2,500 To support the 2014-2014 schedule of performances by Sound Unlimited in Chula Vista Elementary Schools, hospitals, senior centers, and community festivals. • Bonitafest Melodrama $2,500 To support the production of a musical melodrama, to run in conjunction with the Bonitafest, September 24-27, 2014. • California Ballet $2,500 To provide on-site dance programs in Chula Vista libraries and also onsite lessons at Eastlake High School and Bonita Vista High School. • CYT San Diego $3,000 To fund a year round season of free public preview performances with classic storybook themes at Chula Vista Library, the Day of the Child event, and a Chula Vista Elementary School. • Chula Vista Art Guild $1 ,500 To fund eight (8) art demonstrations and two (2) workshops in Chula Vista. • Chula Vista Ballet $3,000 To host a gala ballet performance in Chula Vista to include Coppelia excerpts restaged by Nikoloz Makhateli of the Kirov Ballet and guests artists from the Cerri Youth Ballet of Japan. • City of Chula Vista Harborfest $5,500 To fund the Community Zone at the annual Harborfest event which will include return performers and new performances from Band Review, Native American dancers, and Pacific Island dancers to expand cultural exposure. • Friends of Chula Vista Library $2,500 To provide a six week painting workshop as part of the Adult Summer Reading Program in the City of Chula Vista Page 2 of 4 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 575 File#: 14-0225, Item#: 6. Chula Vista Public Library. • Friends of Chula Vista Library $2,500 To fund a musical and cultural program that represents the diversity of Chula Vista. Four concerts will take place at the Chula Vista Public Library celebrating Black History Month, Asian Pacific Month, Hispanic Heritage Month, and Native American Month, as well as a jazz concert in the summer. • High Tech High, Chula Vista $1 ,500 To fund art supplies, marketing and printing for the High Tech High Mobile Art gallery. • High Tech High K-12, Chula Vista $5,000 To support the production of the second annual Dia De Los Muertos event in Chula Vista, to be produced in collaboration with Onstage Playhouse on November 1 , 2014. • La Jolla Playhouse $5,000 To fund the Performance Outreach Program (POP) in six Chula Vista Elementary School District locations. Students experience preshow workshops and see a live professional production. • Onstage Productions $3,000 To develop marketing materials and complex props and sets in Chula Vista's only live theater. • Parade Band Foundation $4,100 To fund the Cultural Arts Showcase at the Community Festival Main Stage during the Otay Ranch Town Center annual Parade Band Review and Community Festival. To include performances by professional performing groups. • San Diego Dance Theater $2,500 To partially fund a performance by the San Diego Dance Theater at the South Chula Vista Library, featuring the Tijuana dance company Grupo de Danza Minerva Tapia. • San Diego Youth Symphony and Orchestra $10,000 To support the Community Opus Project in the Chula Vista Elementary School District (strings, winds and brass). Opus will also continue with the Community Youth Orchestra, open to advanced elementary school musicians and music students from local middle and high schools. • Third Avenue Village Association $3,000 To fund the community event "Holiday in the Village" on Third Avenue, Chula Vista, during the 2014 holiday season. • Visual and Performing Arts Department, SUHSD $5,130 To support the purchase of art panels to be used in the annual District Art Show held at the South Chula Vista Library and also at school sites for Visual Art exhibitions, • Individual Artist - Betsy Cory $1 ,307 To fund a baroque musical performance in the Women's Club of Chula Vista entitled "A Musical Afternoon in Old Venice" that will feature four instrumentalists and a string bass. • Individual Artist - Carlos Gutierrez $2,500 To teach six monthly painting classes throughout the year on classical acrylic painting at all Chula Vista library branches. The above grant award recommendations were made by the Task Force with full consideration given to recommendations made at the City Council meeting on April 28th, 2009 that guidelines previously approved should be augmented with the following - City of Chula Vista Page 3 of 4 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 576 File#: 14-0225, Item#: 6. • Applicants use the correct application • Changes to criteria and how points are awarded • Expectation of itemized budgets • Clarification on the amount of funds that can be requested • Final reports to be completed and filed on time • Notice that failing to abide by any and all rules could result in funds being withdrawn and affect future applications by individuals or organizations The previous guidelines were approved by the Chula Vista City Council on December 14th, 1999 and entitled Criteria for the Allocation of the Performing Arts Fund. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found a conflict exists in that Council Member Salas has property holdings within 500 feet of the portion of Third Avenue where the "Holiday in the Village" event will take, which is to be funded by the portion of the grant being awarded to TAVA. 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. Awarding the Performing and Visual Arts Grants to the organizations and individuals listed above supports the Connected Community goal, as many of the projects are free and open to the general public. In addition, the Economic Vitality goal is supported as community events bring investment into the area where they are situated, and lastly, the Healthy Community goal is supported as dance and musical opportunities support physical and mental well-being. CURRENT YEAR FISCAL IMPACT There is no current fiscal impact associated with these grants. The recommended fiscal year 2014/2015 grant awards total $71,037. The fund carried no reserve and the amount received from Live Nation totaled $72,761. This leaves $1 ,724 to be carried over to fiscal year 2015/2016. ONGOING FISCAL IMPACT None ATTACHMENTS A. Criteria for the Allocation of the Performing Arts Fund as approved by City Council on December 14th, 1999. City of Chula Vista Page 4 of 4 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 577 ATTACHMENT A Criteria for the Allocation of the Performing Arts Fund as approved by City Council on December 14th, 1999. The Performing and Visual Arts Fund, established by the sublease between the City Council and Live Nation shall be annually re-granted through a formal application process. The following groups and individuals shall be eligible to apply for funds: • Chula Vista based tax-exempt, non-profit organizations • Chula Vista based educational organizations • Chula Vista based religious organizations • Performance groups associated with Chula Vista based educational institutions (i.e. the Music Machine) • The City of Chula Vista and its various departments and Boards and Commissions • Individuals who reside in Chula Vista For profit organizations, institutions, and businesses shall not be eligible for funds unless they partner with Chula Vista based organizations. Individual Chula Vista residents (especially students) shall be eligible to apply, in an effort to develop local talent. Per the agreement, applicants may only apply for funds to underwrite the cost of presentations. Funds shall not be awarded to establish an endowment or trust fund, for administrative costs, for capital projects, for rent of performance or office space, and/or for general operating expenses. 2014-05-20 Agenda Packet Page 578 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE PERFORMING AND VISUAL ARTS GRANT TASK FORCE'S SELECTION OF THE FISCAL YEAR 2014 PERFORMING AND VISUAL ARTS GRANTS RECIPIENTS AND MONETARY GRANT AWARDS TOTALING$71,037 WHEREAS, in 1997, the City Council approved a Sublease with Live Nation, Inc. (formerly Universal Concerts) that established a process whereby a portion of ticket sales proceeds at the Sleep Train (formerly Coors/Cricket) Amphitheater would be paid to the City and utilized for a Performing and Visual Arts Fund; and WHEREAS, the fund is to be used for arts grants to the Chula Vista community for the purpose of promoting and stimulating the growth of performing and cultural arts within the City; and WHEREAS, this year the Chula Vista Public Library received $71,037 from Live Nation for their 2013 Concert Series bringing the total available to the same amount, $71,037; and WHEREAS, as called for in the sublease, a Performing and Visual Arts Task Force was established and annually makes recommendations to the City Council regarding the arts grant awards; and WHEREAS, the Task Force is assisted by the Library Department, which formally conducts the grant application process; and WHEREAS, the Task Force has reviewed the Fiscal Year 2014-2015 applications and has made its recommendation that twenty-one grants should be awarded as outlined in the Council Agenda statement. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it approves the Performing and Visual Arts Task Force's selection of the Fiscal Year 2014 Performing and Visual Arts Grants recipients and monetary grant awards totaling $71,037, as presented to the City Council. Presented by Approved as to form by Betty Waznis Glen R. Googins Director of Library City Attorney 2014-05-20 Agenda Packet Page 579 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0278, Item#: 7. QUARTERLY FINANCIAL REPORT FOR THE QUARTER ENDING MARCH 31 , 2014 AND CONSIDERATION OF AMENDMENTS TO THE FISCAL YEAR 2013/2014 BUDGET A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA MAKING VARIOUS AMENDMENTS TO THE FISCAL YEAR 2013/2014 BUDGET TO ADJUST FOR VARIANCES AND APPROPRIATING FUNDS THEREFOR (4/5 VOTE REQUIRED) B. RESOLUTION OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AMENDING THE REDEVELOPMENT OBLIGATION RETIREMENT FUND BY TRANSFERRING $45,660 FROM THE PERSONNEL SERVICES CATEGORY TO THE OTHER EXPENSES CATEGORY (4/5 VOTE REQUIRED) RECOMMENDED ACTION Council/Agency accept the report. Council adopt resolution A and Agency adopt resolution B. SUMMARY The Finance Department prepares quarterly financial reports for the General Fund that reflect budget to actual comparisons, projected revenues and expenditures, and highlight major variances that may require additional action or changes. The quarterly financial reports are in compliance with Section 504 (f) of the City Charter, which requires that quarterly financial reports be filed by the Director of Finance through the City Manager. In preparing the quarterly financial projections, staff has identified various budget changes that are needed to better reflect actual revenues and expenditures or address changes in budgetary needs. For government entities, a budget creates a legal framework for spending during the fiscal year. After the budget is approved there are circumstances, which arise that could require adjustments to the approved budget. Council Policy 220-02 "Financial Reporting and Transfer Authority" was established in January of 1996 and allows for budget transfers to be completed. This report discusses budget adjustments that staff is recommending in the current year General Fund as well as various other funds. 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 City of Chula Vista Page 1 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 580 File#: 14-0278, Item#: 7. Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to CEQA. BOARD/COMMISSION RECOMMENDATION Not Applicable DISCUSSION The Finance Department prepares quarterly financial reports for the General Fund that reflect budget to actual comparisons, projected revenues and expenditures, and highlight major variances that may require additional action or changes. The quarterly financial reports are in compliance with Section 504 (f) of the City Charter, which requires that quarterly financial reports be filed by the Director of Finance through the City Manager. General Fund Summary Attachment A - Quarterly Financial Report provides the financial outlook for the General Fund for the current fiscal year and includes summary information for revenues and expenditures. The following table summarizes the projections based on expenditures and revenues through the third quarter of fiscal year 2013/14 for the City's General Fund. The amended budget column includes all Council approved changes to the fiscal year 2013/14 adopted budget through March 31, 2014 (the end of the third quarter). The projected column lists the estimated revenues and expenditures for June 30, 2014, the end of fiscal year 2013/14. The table also reflects the projected impact to the City's reserves. Reserves-July 1, 2013 (audited) $ 10.9 $ 10.9 Revenues &Transfers In $ 137.9 $ 140.0 Expenditures &Transfers Out (138.0) $ (137.8) Projected Surplus/Deficit $ (0.1) $ 2.2 Projected Fund Balance for June 30, 2014 $ 10.8 $ 13.1 Percentage of Operating Budget 8.5% 9.5% Notes: 1. The Amended Budget and projections reflected in this table do not include prior year appropriations for capital improvement projects and other encumbrances that were carried forward into the fiscal year 2013/14 budget. These expenditure impacts are already reflected in the estimated fund balance as of July 1, 2013 and are therefore not included in the above table. 2. The Percentage of Operating Budget percent reserve listed under the Amended Budget is based on the Council Adopted Budget of$127.8 million. As noted above, the General Fund is projected to end the current fiscal year with a surplus of $2.2 million; this is largely due to better than anticipated revenues. General Fund revenues are projected to exceed budget by approximately $2.2 million. This increase is mainly due to the recognition of Telephone Users' Tax (TUT) revenues. With the settlement of the class action lawsuit class City of Chula Vista Page 2 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 581 File#: 14-0278, Item#: 7. challenging the City's collection of TUT from wireless customers, the City will now recognize these revenues going forward. These revenues are also included in the City Manager's Proposed Budget for fiscal year 2014-15. Staff recommends placing the current year TUT revenues in reserves to mitigate potential shortfalls from possible reductions in TUT. General Fund expenditures are tracking close to budget - it is anticipated that the General Fund will end the fiscal year with approximately $200,000 in expenditure savings, which equates to 0.2% of the operating budget. Significant expenditure savings are projected in the Personnel Services category; however, staff is recommending the transfer of these savings to address equipment needs in Public Safety and other funding needs. The requests for appropriations for these changes are included in the agenda statement that accompanies this report. General Fund Revenues Overall, revenues are expected to exceed budgeted levels by a net $2.2 million. This increase is primarily due to the recognition of TUT revenues. Variances in projected revenue categories include the following changes: • A $3.3 million increase in Utility Users Tax - this category includes TUT revenues. As mentioned previously, as a result of the settlement of the class action lawsuit the City will now recognize TUT revenues related to wireless customers. • A decrease of $0.8 million in Revenue from Other Agencies that will not be realized in the Police Department as result of decreased participation in reimbursed task force activities and grant revenue shortfalls due to vacancies. The projected short-fall in Revenue from Other Agencies was discussed in the Second Quarter Financial Report. • A $0.7 million decrease in sales taxes due to lower than projected taxable sales activity within the City. • A net increase of $0.5 million in Property Tax revenue. The property tax projection is unchanged from the second quarter. • A $0.3 million decrease in the Transfers In revenues category due to lower than anticipated reimbursement from various city funds. Other revenue categories including Charges for Services, Licenses and Permits and Fines Forfeitures and Penalties revenues are projected to fall below budget as identified in the Second Quarter Financial Report. The balance of the City's revenue categories including Motor Vehicle License, Transient Occupancy Taxes and Other Revenues and Other Local Taxes are projected to slightly exceed the budget. However, the projections for these revenues have also been decreased in the third quarter. General Fund Expenditures City of Chula Vista Page 3 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 582 File#: 14-0278, Item#: 7. Based on the third quarter review, it is projected that the City's operating budget will be almost fully expended by the end of the current fiscal year. An estimated $0.2 million savings in the General Fund is projected as of the end of third quarter. This projection represents the cumulative net impact of the estimated savings and additional expenditures across all of the City's expenditure categories. The estimated savings are comprised of the following variances: Based on expenditure trends through the end of the third quarter, General Fund expenditures are projected to be under budget by an estimated $0.2 million. This estimated expenditure savings consists of the following: • Personnel Services - A projected $1 .6 million savings in Personnel Services due to vacant positions. The majority of these savings are in the Police Department ($1.5 million). The balance of the estimated savings consists of a projected combined $0.8 million dollar savings across various departments that are offset by $0.7 million in budgeted salary savings in Non- Departmental and a net $0.1 million projected deficit in the Fire Department due to constant minimum overtime expenses. • Transfers Out - A projected deficit of $1 .0 million in the Transfers Out category due to increased transfers out from the General Fund to various funds. The increased transfers include: • A $0.6 million transfer to the Technology Replacement Fund for the purchase of Police radio equipment that is necessary in order to keep pace with scheduled upgrades to the County regional communications system and to ensure inter-operability. • A $0.2 million transfer to the Residential Construction Tax Fund to fund required debt service obligations. RCT revenues are tracking lower than anticipated due to a slow- down in development activity. • A $0.1 million transfer to the Development Services Fund for City subsidized energy efficiency related permitting services. • Supplies and Services - A transfer from the Personnel Services expenditure category to the Supplies and Services expense category of the Police department of $0.3 million is included in the projection. This expenditure is needed to address IT related needs in the Police Department. • Capital - A $0.1 million in the Police Department Capital expenditure appropriation that is funded by a transfer from the Personnel Services expenditure category is also assumed in the projection. This transfer is needed for the purchase of body cameras in the Police Department. The requests for these appropriations are presented this report. The projections for the other major expenditure categories do not vary significantly from the budget. City of Chula Vista Page 4 of 13 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 583 File#: 14-0278, Item#: 7. Development Services Fund The Development Services Department Enterprise fund consists of Land Development, Development Planning, the DSF Front Counter and the Building Department. The Development Services Fund ended its first two fiscal years with revenues that fell short of expenditures. Every year since, revenues have exceeded expenditures. This is due in large part to increased building permits. Currently, revenues are not tracking where they had been for the past three years; and staff is projecting a deficit of approximately $500,000 in the Development Services Fund. However, Development Services is processing more entitlements then at any time in the Department's history and processing more plan checks then the last three years. Currently there are approximately 1,600 residential units in plan check that can potentially pull their building permits before the end of the fiscal year so that the fund will have adequate revenues to cover expenditures. However, as the City does not control the timing of permits, staff has based the projections on current trends. It is important to note that the nature of the work in the enterprise fund is beginning to change from one of processing planning documents to one of processing building and improvement plans. This change in activity may require modification to the existing composition of staff in Development Services Fund in order to remain responsive to the work being received. The table below compares the budgeted revenue and expenditures to the projected revenues and expenditures for June 30, 2014. As noted above, expenditures are currently on trend to exceed revenues. Staff will continue to monitor this projected shortfall and will make adjustments in an effort to mitigate any adverse impact to the Development Services Fund's reserves. Development Reserves - July 1, 2013 (audited) $ 147,475 $ 147,475 Revenues &Transfers In $ 7,247,193 $ 6,223,308 Expenditures &Transfers Out $ (7,237,537) $ (6,865,866) Projected Surplus/Deficit $ 9,656 $ (642,558) Projected Fund Balance for June 30, 2014 1 $ 157,131 $ (495,083) BUDGET AMENDMENTS General Fund Amendments Staff is recommending budget amendments in the following departments - Animal Care Facility, Public Works, Police, Non-Departmental, Recreation, City Attorney, and Fire departments. These amendments are as follows: Animal Care Facility (CVACF) - The Animal Care Facility is requesting an appropriation of$12,000 to the supplies and services category for the purchase of medical supplies. The medical supplies will be City of Chula Vista Page 5 of 13 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 584 File#: 14-0278, Item#: 7. used to expand vaccination services for the increased animal population at the Animal Care Facility. This appropriation will be funded from unanticipated donation revenues that have been received by the department. Public Works - The Public Works Department is requesting the following budget changes: • A $100,000 appropriation to the Non-CIP Project Expenditure category is recommended for the Public Works Department to address citywide facility maintenance and repair issues. This appropriation will be offset from projected savings within the Public Works' Personnel Services and Utility expenditure categories. Personnel Services has unanticipated salary savings due to vacancies. • An appropriation of $17,560 to the Supplies & Services category of the Construction Inspection Budget to pay for the repair and replacement of the bollards that were damaged due to an accident that took place on Third Avenue. The requested Supplies and Services appropriations will be offset by unanticipated revenue received from the responsible insurance company that have been realized in the Human Resources Department. • The Public Works Department has also received a $1 ,000 donation from the San Diego Chapter of the American Public Works Association and is requesting to appropriate these funds to the Personnel Services expenditure category to fund a pilot internship program within the department. Police - The Police Department is requesting a $1 ,125,000 transfer from the Personnel Services expenditure category to various expenditure categories within the Police Department and to the Technology Replacement Fund. The transfer is funded by projected Police Department personnel services savings. The proposed distribution of this transfer is as follows: • $600,000 will be transferred to the Technology Replacement Fund for the future purchase of Police radio equipment. The purchase of this equipment will allow the Police Department to begin the transition to the to the County's updated regional radio system, ensuring the Police Department's continued regional interoperability. • $100,000 will be transferred to the Capital expenditure category of the Police Department budget for the purchase of body worn camera equipment. Body worn cameras have been shown to significantly reduce the number of complaints against officers, reduce the number of use-of-force incidents and provide the public with the peace of mind that the Police Department is committed to ensuring high quality policing services. The Department will be purchasing approximately 100 body cameras for deployment in the Patrol division and contracting with Evidence.Com to provide cloud storage for all of the officer video. City of Chula Vista Page 6 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 585 File#: 14-0278, Item#: 7. • $425,000 will be transferred to the Supplies and Services expenditure category of the Police Department budget. $300,000 of this amount will be used to purchase contracted technical support services for the body worn camera equipment. The balance of the transferred funds will be used to address the following operational needs: o Increased costs in uniforms and leather gear to equip sworn employees due to recent officer hires and recruits placed in police academies, coupled with numerous assignment rotations due to Patrol staffing shortages. o The one-time training costs for new canines to replace two recently retired canines from service in the K9 unit. o Police Facility repairs that have included repairs to roll-up gates, proximity card repairs, and ADA (American Disability Act) compliance facility modifications. o Travel costs for International Association of Chiefs of Police (IACP), California Police Chiefs Association (CPCA) and Benchmark Cities Conference. Non-Departmental - The following budget changes are recommended in the Non-Departmental budget: • An appropriation of $0.3 million in the Transfers-Out expenditure category to address the following: o A $200,000 increase in the transfer to the Residential Construction Tax Fund (RCT) to address revenue short-falls in the RCT fund due to decreased construction activity. These additional funds will help ensure the RCT fund can meet its debt service obligations. o A $133,471 increase in the transfer to the Development Services Fund for higher than anticipated subsidized permitting activities related to the issuance of permits for of energy efficiency projects. o An $11 ,696 increase in the transfer to the Local Law Enforcement Block Grant (LLEBG) Fund augmenting the City's grant match needed to meet personnel expenses in the LLEBG fund. • An appropriation of $28,774 to the Services and Supplies expense category. The City contracts for sales tax audits that monitor the collection of sales tax from City businesses. Fees are paid to the firms contingent upon them finding businesses that have not reported or City of Chula Vista Page 7 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 586 File#: 14-0278, Item#: 7. have under reported their sales tax obligation to the City. These fees are paid based on a percentage of the finding. The City currently contracts with Hinderlighter de Lamas (HdL) and MuniServices in the past. The two firms have submitted invoices for contingent fees that are higher than projected for the budget. This request is for an appropriation to pay MuniServices ($21 ,174) and HdL ($7,600). This appropriation request of $28,774 is offset by the additional sales tax collected as a result of the two firm's audits. • An appropriation of $26,362 is requested to the Other Expenses category. The former Redevelopment Agency entered into a Reciprocal Grant of Easements and Declaration of Establishing Restrictions and Covenants agreement on 8-01-1988 (Resolution 936). The declaration created reciprocal rights and obligations between the City and certain parcels that were affected by the construction of the City-owned parking structure on Third Ave and F Streets. The agreement created easements for access to and from the parking structure, as well as a common area easement. In exchange for these easements the former Redevelopment Agency and now the Successor Agency (Agency) agreed to rebate possessory interest taxes payable to the County of San Diego for four parcels adjacent to the parking structure. The Agency has submitted this agreement to the State Department of Finance (DOF) as an enforceable obligation of the Agency. The DOF rejected the agreement as an enforceable obligation of the Agency based on language contained in the agreement. That language said in part that "the Agency or upon its deactivation, the City shall reimburse... or their successors in the amount of said payment". The General Fund is now obligated to reimburse the parcel owners possessory interest taxes in the amount of $26,362. This request for an appropriation of$26,362 will result in a net fiscal impact to the General Fund. • An appropriation of $3,344,130 in Utility Users Tax revenue category. As previously discussed, the City has reached a settlement in the class action lawsuit related to wireless Telephone Users' Tax. In a previous action, the City Council recognized and appropriated $8.0 million in TUT revenues realized in prior fiscal years. The appropriation of$3.3 million will recognize TUT revenues collected in the current fiscal year. Recreation - A transfer of $12,524 from Supplies and Services category and associated State Grant revenues of the same amount from the Recreation budget to the State Grant Fund is requested. The State Grant revenues were received by the Recreation Department to support the Mobile Recreation Program. However, these funds should have been recognized in the States Grant Fund. The requested transfer will ensure the accurate reflection of the State Grant funds within the City's financial system. The Recreation Department is also requesting a transfer of $20,000 from the Personnel Services Category to the Other Expenses Category to address a projected overage in credit card processing fees. These changes result in no net fiscal impact. City of Chula Vista Page 8 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 587 File#: 14-0278, Item#: 7. City Attorney - The City Attorney is requesting $20,824 transfer from the Personnel Services expenditure category to the Supplies and Services category to offset a projected overage for contracted attorney services. These changes result in no net fiscal impact. Fire - The Fire Department is requesting the following appropriations that are offset by unanticipated revenues: • A $21,738 appropriation to the Personnel Services expenditure category to offset reimbursed training overtime costs in the Fire Department training division. An additional $19,722 appropriation to the Training Division's Supplies and Services budget is also requested for training travel expenses. These appropriations are offset by unanticipated revenues from the California Fire Fighter Joint Apprenticeship Committee fund. • An $18,406 appropriation to the Supplies and Services budget for the purchase of ten I-pad Airs and related accessories. Currently, the Fire Department's Prevention Division uses Panasonic Toughbooks to perform data entry while in the field - such as signing off building permits in Permits Plus while at the construction site. These Toughbooks are almost ten years old and as a result, staff is encountering several issues ranging from inadequate memory to outdated software/hardware. The purchase of this equipment will allow the Fire Prevention Division to implement the Information Technology Services Department recommendation to replace and upgrade to current technology that is in place. This appropriation is offset by unanticipated development related revenues. • A $4,391 appropriation to the Capital expenditure category of the Fire Suppression Division for the installation of washer and dryer equipment at Fire Station 8. This appropriation is offset by unanticipated revenues earned. Amendments to Other Funds Staff is recommending budget amendments to the following other funds: Technology Replacement Fund - A $600,000 transfer from the General Fund for the future purchase of Police radio equipment. The purchase of this equipment will allow the Police Department to begin the transition to the to the County's updated regional radio system, ensuring the Police Department's continued regional interoperability. Staff will return at a later date to appropriate and award a contract for the purchase of this equipment. Residential Construction Tax Fund - A $200,000 increase in the transfer from the General Fund is needed to offset the projected revenue short-fall in the RCT fund due to decreased construction activity. These additional funds will help ensure the fund can meet its debt service obligations. City of Chula Vista Page 9 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 588 File#: 14-0278, Item#: 7. Development Services Fund - A $133,471 increase in the transfer from the General Fund for higher than anticipated subsidized permitting activities related to the issuance of permits for of energy efficiency projects. State Grants Fund - A $12,524 transfer of expenses and revenues from the General Fund to accurately reflect State Grant funds received for the Mobile Recreation Program. This transfer will ensure the accurate reflection of these funds within the City's financial system. Successor Agency - Staff is requesting a transfer in the amount of $45,660 from the Personnel Services budget to the Other Expenses budget of the Successor Agency. In February 2014, staff transferred out of the Successor Agency creating a budget savings in Personnel Services. The appropriation in Other Expenses will be used to reimburse City staff for work performed related to the Successor Agency. 2002 Certificates of Participation - Police Facility Project (Fund 450) - An appropriation is requested in the amount of $4,000,000 to the Transfers-Out category of Fund 450 Certificates of Participation - Police Facility Fund and make corresponding revenue changes related to the transfer-in for Fund 475 2014 Certificates of Participation - Police Facility Fund. The request is necessary to facilitate the closure of Fund 450 which accounted for activity related to the 2002 COPs. The new 2014 COPs will be accounted for in Fund 475. The City refinanced the 2002 COPs in March 2014 replacing them with the 2014 COPs. 2014 Certificates of Participation - Police Facility Fund (Fund 475) - An appropriation of $650,000 is requested to the Other Expenses category of Fund 475. The appropriation is necessary to account for the Cost of Issuance of the 2014 Certificates of Participation and the bond underwriter's discount on the bonds. DECISION-MAKER CONFLICT Resolution A Staff has reviewed the City Council member property holdings and has determined that Council member Salas has property holdings within 500 feet of the boundaries of the Third Avenue bollards repair/replacement site. Although this could create a conflict for the Councilmember, the decision contemplated by this action with respect to the Third Avenue bollard repair/replacement solely concerns the repair, replacement or restoration of existing amenities/fixtures and, as such, the financial effect of the decision on real property is presumed not to be material, pursuant to California Code of Regulations Title 2, sections 18704.2(b)(2) and 18705.2. With respect to the remaining decisions contemplated by this action, each decision either: (i) does not involve real property within 500 feet of any City Council member properties; or (ii) is not site- City of Chula Vista Page 10 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 589 File#: 14-0278, Item#: 7. specific and, consequently, the 500-foot rule found in California Code of Regulations section 18704.2 (a)(1), is not applicable. 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. Consequently, these decisions do not present conflicts under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Resolution B 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 Successor Agency to the Redevelopment Agency of the City of Chula Vista 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 communicating the City's projected financial position for the current fiscal year in an open and transparent manner. This transparency supports City Initiative 1.3.1. - "Foster public trust through an open and ethical government." CURRENT YEAR FISCAL IMPACT There is no fiscal impact resulting from accepting the Quarterly Financial Report. Approval of the resolution amending the fiscal year 2013/14 budget will result in the following appropriations. The resulting fiscal impacts to various funds are also listed in the following table: Summary of Budget Appropriations and Amendments by Department and/or Fund General Fund City Attorney Transfer from Personnel Services to Supplies &Services $ - $ - $ - Human Resources 3rd Ave. Collision Repairs Revenue $ - $ 17,560 $ (17,560) Appropriation of TUT Revenues $ - $ 3,344,130 $ (3,344,130) Transfer to Development Services Fund $ 133,471 $ - $ 133,471 Transfer to LLEBG Fund $ 11,696 $ - $ 11,696 Non-Departmental Transfer to RCT Fund $ 200,000 $ - $ 200,000 Funding for rebate of possessory interest taxes payable $ 26,362 $ - $ 26,362 Sales Tax consultant services $ 28,774 $ 28,774 $ - City of Chula Vista Page 11 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 590 File#: 14-0278, Item#: 7. Animal Care Facility Appropriation of donation for medical supplies $ 12,000 $ 12,000 $ - Police Transfer salary savings for equipment& operational needs $ - $ - $ - Fire Appropriations for Personnel Services, equipment, and building maintenance $ 64,257 $ 64,257 $ - 3rd Ave. Collision Repairs $ 17,560 $ - $ 17,560 Public Works APWA donation and Hourly Public Works Wages $ 1,000 $ 1,000 $ - Transfer from Personnel Services to address City building maintenance $ - $ - $ - Recreation transfer from Personnel Recreation Services to Other Expenses $ - $ - $ - Transfer Mobile Recreation to State Grant Fund $ (12,524) $ (12,524) $ - TOTAL GENERAL FUN $ 482,596 $ 3,455,197 $ (2,972,601) Other Funds LLEBG Transfer In from General Fund $ - $ 11,696 $ (11,696) State Grants Fund Transfer Mobile Recreation to State Grant Fund $ 12,524 $ 12,524 $ - Redv Obligation Transfer salary savings to staff time Retirement Fund reimbursement $ - $ - $ - Technology Transfer In from General Fund - Police Replacement Department $ - $ 600,000 $ (600,000) Development Services Fund Transfer In from General Fund $ - $ 133,471 $ (133,471) 2002 COP Police Transfer fund balance from Fund 450 to Facility Project Fund 475 $ 4,000,000 $ - $ 4,000,000 2014 Refunding COP Transfer fund balance from Fund 450 to Fund 475 $ - $ 4,000,000 $ (4,000,000) 2014 Refunding CO 2014 Refunding COP issuance costs $ 650,000 $ - $ 650,000 RCT Fund ITransfer In from General Fund $ - $ 200,000 $ (200,000) TOTAL OTHER FUND $ 4,662,524 $ 4,957,691 $ (295,167) TOTAL BUDGET AMENDMENT $ 5,145,120 $ 8,412,888 $ (3,267,768) Approval of the resolution results in no net fiscal impact to the following funds - Successor Agency to the Redevelopment Agency Fund and the State Grants Fund. Projected impacts to the remaining funds are as follows: • The changes in the General Fund will result in a positive impact of approximately $2,972,601, this change largely reflects the recognition of TUT revenues. City of Chula Vista Page 12 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 591 File#: 14-0278, Item#: 7. • The transfer to the Local Law Enforcement Block Grant Fund will result in a positive impact of approximately $11,696. • The transfer to the Technology Replacement Fund will result in a positive impact of approximately $600,000. • The transfer to the Development Services Fund will result in a positive impact of approximately $133,471. • The appropriation of $4,000,000 for the Transfer-Out in the 2002 Certificates of Participation - Police Facility Project Fund will be made from the available balance of this fund and is needed to facilitate the close out of this Fund. • The appropriations to the 2014 Certificates of Participation - Police Facility Fund result in a positive net fiscal impact of$3,350,000. • The transfer to the Residential Construction Tax Fund will result in a positive impact of approximately $200,000. ONGOING FISCAL IMPACT There are no ongoing fiscal impacts resulting from the budget amendments described above. ATTACHMENT: Third Quarter Financial Report City of Chula Vista Page 13 of 13 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 592 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA MAKING VARIOUS AMENDMENTS TO THE FISCAL YEAR 2013/14 BUDGET TO ADJUST FOR VARIANCES AND APPROPRIATING FUNDS THEREFOR (4/5 VOTE REQUIRED) WHEREAS, the City Charter states that an any meeting after the adoption of the budget, the City Council may amend or supplement the budget by a motion adopted by the affirmative votes of at least four members; and WHEREAS, staff has completed the budget review for the quarter ending March 31, 2014 and is recommending a number of budget amendments; and WHEREAS, staff is recommending approximately $0.5 million in new appropriations to various departments in the General Fund that will be offset by $3.5 million in revenues resulting in a positive net fiscal impact of$3.0 million to the General Fund; and WHEREAS, an appropriation of$12,524 in the State Grants Fund is needed to transfer the revenues and expenditures associated with the Mobile Recreation program; and WHEREAS, the transfer of$4,000,000 from the 2002 COP Police Facility Project Fund to the 2014 Refunding COP Fund will allow for the transfer of the remaining fund balance of the 2002 COP Police Facility Project Fund, which will be closed; and WHEREAS, the appropriation of $650,000 is needed to address the cost of issuance in the 2014 Refunding COP Fund; and WHEREAS, the transfers to the Local Law Enforcement Block Grant Program ($11,696), Technology Replacement Fund ($600,000), Residential Construction/Conversion Fund ($200,000), and Development Services Fund ($133,471) from the General Fund result in a positive impact to these funds. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it does hereby amend the fiscal year 2013/14 budget and approves the following appropriations: 2014-05-20 Agenda Packet Page 593 :PERSONNEL :SUPPLIES& OTHER CAPITAL �TRANSFERS� TOTAL TOTAL NET DEPARTMENT/FUND �SERVICES �SERVICES EXPENSES:: CAPITAL (NON-CIP) OUT UTILITIES EXPENSE REVENUE IMPACT GENERAL FUND: City Attorney :$ (20,824): $ 20,824 $ $ $ $ $ $ $ $ Human Resources 17,560:$ (17,560) Non-Departmental $ 28,774 $ 26,362 $ $ $ 345,167:$ $ 400,303:$3,372,904 $(2,972,601) Animal Care Facility $ 12,000 $ - $ - $ $ :$ $ 12,000:$ 12,000 $ Police $(1,125,000): $ 425,000 $ $100,000 $ $ 600,000 $ $ $ - $ Fire $ 21,738: $ 38,128 $ :$ 4,391 $ $ - ;$ $ 64,257:$ 64,257: $ Public Works :$ (59,000): $ 17,560 $ $ 100,000 $ :$ (40,000): $ 18,560:$ 1,000 $ 17,560 Recreation $ (20,000); $ (12,524) $ 20,000:$ $ $ $ $ (12,524);$ (12,524):$ TOTALGENERAL FUND $(1,203,086); $ 529,762 $ 46,362;$104,391 $ 100,000 $ 945,167:$ (40,000); $ 482,596:$3,455,197;$(2,972,601) OTHER FUNDS: Local Law Enf Block Grant Prog. $ - $ - $ - $ - $ - $ - $ - $ - $ 11,696 $ (11,696) State Grants Fund $ - $ 12,524 $ - $ - $ - $ - $ - $ 12,524;$ 12,524: $Technology Replacement $ $ $ :$ $ $ $ $ $ 600,000: $ (600,000) Development Services Fund $ - $ - $ - :$ - $ - $ - $ - $ - $ 133,471: $ (133,471) 2002 COP Police Facility Proj $4,000,000:$ : $4,000,000:$ $4,000,000 2014 Refunding COP $ $ $650,000:$ $ $ $ $ 650,000;$4,000,000: $(3,350,000) Resident.Construct/Conver Fnd: $ $ - $ - ;$ $ $ :$ $ - :$ 200,000; $ (200,000) TOTALOTHERFUNDS $ $ 12,524 $650,000 $ $ $4,000,000;$ $4,662,524;$4,957,691: $ (295,167) TOTAL BUDGET AMENDMENTS : $(1,203,086): $ 542,286 $696,362:$104,391 $ 100,000 $4,945,167:$ (40,000): $5,145,120:$8,412,888: $(3,267,768) Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Director of Finance/Treasurer City Attorney 2014-05-20 Agenda Packet Page 594 RESOLUTION NO. RESOLUTION OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AMENDING THE REDEVELOPMENT OBLIGATION RETIREMENT FUND BY TRANSFERRING $45,660 FROM THE PERSONNEL SERVICES CATEGORY TO THE OTHER EXPENSES CATEGORY(4/5 VOTE REQUIRED) WHEREAS, in February 2014, staff transferred out of the Successor Agency creating a budget savings in Personnel Services; and WHEREAS, Staff is requesting a transfer in the amount of$45,660 from the Personnel Services budget to the Other Expenses budget of the Redevelopment Obligation Retirement Fund; WHEREAS, the transfer of appropriations to the Other Expenses budget will be used to reimburse City staff for work performed on behalf of the Redevelopment Obligation Retirement Fund; NOW, THEREFORE, BE IT RESOLVED by the Successor Agency to the Redevelopment Agency of the City of Chula Vista, that it amends the Redevelopment Obligation Retirement Fund by transferring $45,660 from the Personnel Services expenditure category to the Other Expenses category. Presented by Approved as to form by Maria Kachadoorian Glen R. Googins Finance Director/City Treasurer City Attorney 2014-05-20 Agenda Packet Page 595 Quarterly Financial Report Third Quarter Ending March 31, 2014 Prepared April 2014 CnY of CHULA VISTA OVERVIEW the rate going as low as 5.7 percent by the fourth quarter This financial report summarizes the City's General 2016. Fund financial position for fiscal year 2014 through The San Diego Forecast - The USD Burnham-Moores March 31, 2014 and projecting out to June 30, 2014. Center for Real Estate's Index of Leading Economic The purpose of this report is to provide the City Indicators for San Diego County fell 0.2 percent in Council, Management and the citizens of Chula Vista December after a moderate gain of 0.4 percent in an update on the City's fiscal status based on the most November. Sharp increases in building permits and the recent financial information. outlook for the national economy outweighed big drops ECONOMIC UPDATE in initial claims for unemployment insurance and help wanted advertising to push the USD Index to a gain in The National Forecast - In the March 2014 report, November. Weaker results in the former two Senior Economist David Shulman of the UCLA components led to a decline in December, the second in Anderson Forecast writes, "We can visualize the three months. economy creating between 200,000-250,000 jobs a month with the unemployment rate dropping to 5.4 percent by late 2016 ... total payroll employment will Despite the USD Index falling for two of the last three surpass the prior 2007 peak, but the economy will months, the outlook for the local economy remains remain well below its pre-Great Recession growth positive. Economists usually look for three consecutive path." Shulman also expects an uptick in inflation, with changes in a leading index in the opposite direction as a the core consumer price index increasing from 1.8 signal of a turning point in the economy, and that hasn't percent in 2013 to 2.5 percent in 2016. As inflation happened yet. The local economy ended 2013 with a rises, Shulman anticipates that wages will rise as well. gain of more than 23,000 jobs, which was down from He also projects that the Federal Reserve will all but 2012 but still the second best year for job growth since end the Quantitative Easing Program by September. 2012. The forecast for 2014 is for another 25,000 jobs This program was intended to lower interest rates and to be added in San Diego County, which would be spur economic growth. enough to push the local unemployment rate down to under six percent. Continued solid growth is expected in The California Forecast2 - In the California forecast, construction, leisure and hospitality, and heath care. Senior Economist Jerry Nickelsburg examines the impacts the ongoing drought and dry weather are San Diego Index of Leading Economic Indicators having on the California economy. According to San Diego County, 2009 -2013 Nickelsburg, while the drought has negatively affected California's economy, particularly in some agricultural 135 areas, "Overall the state is not likely to be greatly impacted. But given our fragile recovery from the 130 Great Recession, and the potential for this drought to drive industrial and agricultural structural change 125 towards an adaptation to a more arid environment, a prudent incorporation of the drought impact would be to 120 lower the forecast employment growth rates for the next few years by about 0.2 percent. The latest 115 forecast for California calls for total employment growth (payroll, farm and self-employed) of 1.8 percent in 110 2014, 2.2 percent in 2015 and 2.1 percent in 2016." Real personal income growth is forecast to be 3.1 105 percent in 2014, followed by 3.8 percent and 3.7 percent in 2015 and 2016. The unemployment rates for 100 the three forecast years are expected to be 7.8 0 0 0 N N m m m percent, 6.9 percent and 6.0 percent, respectively, with ° Q z Q 3Source: University of San Diego School of Business 'Source: UCLA Anderson Forecast, April 2014 Administration, USD Index of Leading Economic 2Source: UCLA Anderson Forecast, April 2014 Indicators, January 2014; retrieved from URL: httr):Hhome.sandiecio.edu/—actin/usdlei/index.htmi 2014-05-20 Agenda Packet Page 596 Quarterly Financial Report Third Quarter Ending March 31, 2014 Page of c Ty OF CH&VISTA GENERAL FUND SUMMARY recommends placing the current year TUT revenues in reserves to mitigate potential shortfalls from possible General Fund Reserves - The General Fund Reserve reductions in TUT. General Fund expenditures are policy was established to ensure that the City's tracking close to budget — it is anticipated that the finances are managed in a manner which will: General Fund will end the fiscal year with approximately 1. Continue to provide for the delivery of quality $0.2 million in expenditure savings. Significant services expenditure savings are projected in the Personnel 2. Maintain and enhance service delivery as the Services category; however, staff is recommending the community grows in accordance with the General transfer of these savings to address equipment needs in Plan Public Safety and other funding needs. The requests for 3. Minimize or eliminate the need to raise taxes and appropriations for these changes are included in the fees because of temporary revenue shortfalls agenda statement that accompanies this report. 4. Establish the reserves necessary to meet known and unknown future obligations and ability to Revenues respond to unexpected opportunities. The following table compares revenues in the fiscal year The following table reflects the audited General Fund 2013-14 amended budget to the third quarter revenue reserves as of June 30, 2013 as well as the projected projections for discretionary and departmental program General Fund reserves for June 30, 2014. revenues. The projections indicate the variances in discretionary revenues when compared to budget. Amended 6/30/14 Overall, revenues are expected to exceed budgeted Budget Projection levels by a net $2.2 million. This increase is primarily e millions millions due to the recognition of TUT revenues. Variances in Reserves-July 1,2013(audited) $10.9 $10.9 projected revenue categories include the following Revenues&Transfers In $137.9 $140.0 changes: Expenditures&Transfers Out ($138.0) ($137.8) . A $3.3 million increase in Utility Users Tax — this Projected Surplus/Deficit ($0.1) $2.2 category includes TUT revenues. As mentioned Projected Fund Balance for June previously, as a result of the settlement of the class 30,2014 $10.8 $13.1 action lawsuit the City will now recognize TUT Perecenta e of Operating Budget 8.5%1 9.5%1 revenues related to wireless customers. • A decrease of $0.8 million in Revenue from Other Notes: Agencies that will not be realized in the Police Department as result of decreased participation in 1. The Amended Budget and projections reflected in this table do p p p not include prior year appropriations for capital improvement reimbursed task force activities and grant revenue projects and other encumbrances that were carried forward into shortfalls due to vacancies. The projected short-fall the fiscal year 2013/14 budget. These expenditure impacts are in Revenue from Other Agencies was discussed In already reflected in the estimated fund balance as of July 1, 2013 and are therefore not included in the above table. the Second Quarter Financial Report. 2. The Percentage of Operating Budget percent reserve listed • A $0.7 million decrease in sales taxes due to lower under the Amended Budget is based on the Council Adopted than projected taxable sales activity within the City. Budget of$127.8 million. • A net increase of $0.5 million in Property Tax As noted above, the General Fund is projected to end revenue. The property tax projection is unchanged the current fiscal year with a surplus of$2.2 million; this from the second quarter. is largely due to better than anticipated revenues. • A $0.3 million decrease in the Transfers In revenues General Fund revenues are projected to exceed category due to lower than anticipated budget by approximately $2.2 million. This increase is reimbursement from various city funds. mainly due to the recognition of Telephone Users' Tax Other revenue categories including Charges for (TUT) revenues. With the settlement of the class Services, Licenses and Permits, and Fines Forfeitures action lawsuit class challenging the City's collection of and Penalties revenues are projected to fall below TUT from wireless customers, the City will now budget as identified in the Second Quarter Financial recognize these revenues going forward. These Report. The balance of the City's revenue categories revenues are also included in the City Manager's including Motor Vehicle License, Transient Occupancy Proposed Budget for fiscal year 2014-15. Staff 2014-05-20 Agenda Packet Page 597 Quarterly Financial Report Third Quarter Ending March 31, 2014 Page of CnY OF Taxes and Other Revenues, and Other Local Taxes Sales Tax are projected to slightly exceed the budget. However, the projections for these revenues have also been $3s.o decreased in the third quarter. $30.0 267 28.6 629.2 General Fund Revenues $25.0 z3.7 $20.0 cled Q3 o Am I MW B.dg cl $15.0 31 14 6/30/14 Variance $10.0 Property Taxes $ 26,602,376 $ 27,115,497 $ 513,121 $5.0 Sales Tax $ 22,579,885 $ 21,918,771 $ (661,114) $0.0 Sales Tax In Lieu $ 7,274,800 $ 7,277,350 $ 2,550 FY10 Actual FY11 Actual FY12 Actual FY13 Actual FY 14 Projected K/lotor Vehicle License $ 16,764,521 $ 16,773,755 $ 9,234 Other Revenue $ 13,147,861 $ 13,217,916 $ 70,055 Transfers In $ 10,223,999 $ 9,893,639 $ (330,360) Property Taxes - The City of Chula Vista receives Franchise $ 8,719,199 $ 8,754,463 $ 35,264 property tax revenue based upon a share of the 1.0% levy on the assessed value of all real property. Property Charges for Services $ 7,612,879 $ 7,606,474 $ (6,405) tax is the City's second largest revenue source, Revenue from Other Agencies $ 3,871,488 $ 3,076,690 $ (794,798) representing 20.3% of General Fund revenues In the Utility Users Tax $ 11,852,834 $ 15,196,964 $ 3,344,130 fiscal year 2013/14 adopted budget. Transient Occupancy Taxes $ 2,365,005 $ 2,468,950 $ 103,945 Property tax projections reflect a net increase of $0.7 Use of Money&Property $ 2,289,640 $ 2,299,652 $ 10,012 million when compared to budget. Projected Property tax Other Local Taxes $ 1,335,889 $ 1,355,889 $ 20,000 revenues have been increased to reflect the impact of a Licenses and Permits $ 1,309,447 $ 1,293,571 $ (15,876) 3.4% increase in city-wide assessed property valuations. Fines,Forfeitures,Penalties $ 1,110,800 $ 973,269 $ (137,531) Property tax revenue growth was assumed at 2% in the adopted fiscal year 2013/14 budget based on the initial Real Property Transfer Tax $ 800,482 $ 800,482 $ - County Assessor's estimate for assessed value growth. Total General Fund $137,861,105 $140,023,332 $ 2,162,227 The following chart represents actual property tax Sales Tax (Sales Tax and Sales Tax in lieu) - Sales revenues since fiscal year 2008/09 and the projection for tax is projected to be the City's largest revenue source, fiscal year 2013/14. representing 23.2% of General Fund revenues in the Property Tax fiscal year 2013/14 amended budget. Sales tax is improving modestly as HdL Companies, the City's $35.0 sales tax consultant, reported data for the third quarter of calendar year 2013. They report that the change in $30.0 $257 $27.1 sales tax receipts between third quarter calendar year $25.0 $24.7 $24.5 2013 and third quarter calendar year 2012 increased $20.0 by 3.5% Statewide, by 4.29% in San Diego County and 2.6% in Chula Vista. $15.0 $10.0 Although sales tax revenues are improving, projections $5.0 for sales tax and sales tax in-lieu for the current fiscal year indicate that sales tax is tracking below budgeted $0.0 levels. The projected sales revenues for fiscal year FY10 Actual FY11 Actual FY12 Actual FY13 Actual FY14 Projected 2013/14 are estimated to be $0.7 million below budget due to lower than expected taxable sales activity. Note: 1. FY13 Property Tax actuals include a one-time payment related The following chart represents actual sales tax the elimination of the City's Redevelopment Agency. collections since fiscal year 2009/10 and the projection for fiscal year 2013/14. 2014-05-20 Agenda Packet Page 598 Quarterly Financial Report Third Quarter Ending March 31, 2014 Page 4 of CnY OF CHULA VISTA Motor Vehicle License Fee (VLF) - With the State Projections for Franchise Fee revenues have been Budget Act of 2004, the allocation of VLF revenues to updated to reflect increased actual prior fiscal year cities and counties was substantially changed. Since Franchise fee revenues. 2005/06 the majority of VLF revenues for each city grew essentially in proportion to the growth in the The following chart represents actual franchise fee change in gross assessed valuation. Due to the new revenues since fiscal year 2009/10 and the projection for formula by the State, 96% of the City's VLF revenues fiscal year 2013/14. Fiscal year actual 2012-13 revenues fluctuated with changes in assessed values in the City. reflect previously accrued Franchise Fee revenues that were realized by the City. The other 4% of VLF revenues received by the City were based on a per capita formula but has since been Franchise Fees shifted per SB89. Provisions in SB89 shifted hundreds of millions of Vehicle License Fee revenues to fund the $12.0 state law enforcement grants. Statewide, SB89 took $96 $130 million of city general revenue and shifted it to $10.0 $85 $83 $84 $$8 save state law enforcement grant programs. This $8.0 change applied to the 4% of VLF revenues that were based on a per capita formula. The City of Chula Vista $6.0 lost approximately $700,000 annually due to the State take away. $4.0 $2.0 VLF revenue projections were increased by $0.3 million over the budgeted level to reflect the impact of $0.0 the 3.4% increase in city-wide assessed valuation FY10 Actual FY11 Actual FY12 Actual FY13 Actual FY14 y Projected projected for fiscal year 2013-14. This projection remains unchanged for the third quarter. The following Note: chart represents actual VLF revenues since fiscal year 1. FY13 Franchise Fees actuals include a one-time adjustment. 2009/10 and the projection for fiscal year 2013/14. Transient Occupancy Tax (TOT) - The City receives 10% of hotel and motel room rates for stays less than 30 Motor Vehicle License Fee days. The recent trend for TOT revenues has been positive, reflecting modest yearly growth since fiscal year $20.0 $177 $16'9 2012. However, the updated projections indicate that $17.5 6..3�3�3 $16.8 TOT revenue growth is leveling off and that the actual $15.0 TOT revenues for fiscal year 2013/14 will be the same as fiscal year 2012/13 TOT revenues. The following $1z.s chart represents actual TOT revenues since fiscal year $10.0 2009/10 and the projection for fiscal year 2013/14. $7.s $5.0 Transient Occupancy Tax (TOT) $2.5 - $3.0 $0.0 $2.5 $2.5 FY10 Actual FY11 Actual FY12 Actual FY13 Actual FY14 Projected $2.5 $2.0 $2.1 $2.0 c Franchise Fees - Franchise fee revenues are 2 $1.5 generated from public utility sources such as San $1.0 Diego Gas & Electric (2% on gas and 1.25% on electricity), trash collection franchises (9.05% fee), and $0.5 cable franchises (5% fee) conducting business within $0.0 City limits. The Utilities collect the franchise fee from FY10 Actual FY11 Actual FY12 Actual FY13 Actual FY 14 Chula Vista customers and remit these revenues to the Projected City. 2014-05-20 Agenda Packet Page 599 Quarterly Financial Report Third Quarter Ending March 31, 2014 Page of CnY OF Utility Users Tax (UUT) - The City adopted its Utility 70% of the General Fund budget after 75% of the fiscal Users Tax (UUT) in 1970. The City of Chula Vista year has elapsed. imposes a UUT on the use of telecom at the rate of 5% of gross receipts. The UUT on natural gas services is Based on the third quarter review, it is projected that the $0.00919 per therm and $0.00250 per kilowatt on City budget will be almost fully expended by the end of electricity services, which equates to approximately a the current fiscal year. An estimated $0.2 million is 1% tax. projected in savings in the General Fund as of the end of the third quarter. This projection represents the On February 18, 2014, the City Council approved an cumulative net impact of the estimated savings and appropriation of one-time TUT revenues of$8.0 million. overages across all of the City's expenditure categories. In compliance with the settlement agreement, these The estimated savings are largely attributable to the revenues were transferred to the TUT Common Fund. following: Projections for UUT revenues have been further revised to recognize TUT revenues from wireless A projected $1.6 million savings in Personnel customers collected in the current fiscal year. The City Services due to vacant positions. The majority of will now recognize these revenues as a result of the these savings are in the Police Department ($1.5 settlement of the class action lawsuit. These revenues million). The balance of the estimated savings have also been included in the City Manager's consists of a projected combined $0.8 million dollar Proposed Budget for Fiscal Year 2015. savings across various departments that are offset by $0.7 million in budgeted salary savings in Non- The following chart reflects actual UUT revenue since Departmental and a net $0.1 million projected deficit fiscal year 2009/10. Fiscal year 2013/14 is projected to in the Fire Department due to constant minimum reflect the recognition of the TUT revenues related to overtime expenses. wireless customers.. This increase includes the appropriation of one-time revenues of$8.0 million. Additional expenditures of $1.0 million are recommended in the Transfers Out category due to address the following: Utility Users Tax (UUT) o A $0.6 million transfer to the Technology $16.0 $15.2 Replacement Fund for the purchase of Police $14.0 radio equipment that is necessary in order to $12.0 keep pace with scheduled upgrades to the x$10.0 County regional communications system and to $8.0 ensure inter-operability. $6.0 $4.4 o A $0.2 million transfer to the Residential $4.0 Construction Tax Fund to fund required debt $2.0 service obligations. RCT revenues are tracking $0.0 lower than anticipated due to a slow-down in FY10 Actual FM Actual FY12 Actual FY13 Actual FY14 Projected development activity. Note: o A $0.1 million transfer to the Development 1. FY14 Utility Users Tax recognizes revenues received in fiscal year 2011,2012,and 2013. Services Fund for City subsidized energy efficiency related permitting services. Expenditures Additional expenditures of $0.3 million are recommended in the Supplies and Services expense The General Fund's Amended Budget reflects the category. This expenditure is needed to address IT Council adopted budget of $127.8 million, mid-year related needs in the Police Department. appropriations of $10.2 million approved by City Council, and $4.1 million of prior year encumbrances Additional expenditures are also recommended in that were carried over into the current fiscal year. The the Capital expense category. $0.1 million is following table reflects the General Fund amended needed for the purchase of body cameras in the budget and actual expenditures by department as of Police Department. March 31, 2014. In total, Departments have expended 2014-05-20 Agenda Packet Page 600 Report Third_Z*1Ar4_ Quarterly Financial Quarter Ending March 31, 2014 ',•- • of CnY OF The requests for these appropriations are included in General Fund Expenditure Projections by Department the staff report accompanying this report. for June 30, 2014 The projections for the other major expenditure Amended categories do not vary significantly from the budget. Budget as of • Projected Department 3/31/14 6/30/14 AVaria General Fund Expenditures as of 3/31/2014 City Council $ 1,244,068 $ 1,244,068 $ Boards&Commissions $ 10,076 $ 10,076 $ City Gerk $ 921,649 $ 809,074 $ (112,575) City Attorney $ 2,543,533 $ 2,479,064 $ (64,469) City Council $ 1,244,068 $ 824,964 66% Administration $ 2,698,038 $ 2,673,366 $ (24,672) Information Tech Srvcs $ 2,964,734 $ 2,860,358 $ (104,376) Boards&Commissions $ 10,076 $ 4,751 47% Human Resources $ 2,105,911 $ 2,062,884 $ (43,027) City Gerk $ 921,649 : $ 514,604 56% Finance $ 3,630,782 $ 3,567,389 $ (63,393) City Attorney $ 2,543,533 $ 1,768,598 70% Non-Departmental $ 18,632,205 $ 19,750,511 $ 1,118,306 Administration $ 2,698,038 : $ 1,778,566 I, 66% Animal Care Facility $ 2,613,126 $ 2,569,561 $ (43,565) Information Tech Srvcs $ 2,964,734 : $ 2,003,707 68% pev Services(GF) $ 2,368,617 $ 2,303,159 $ (65,458) Human Resources I $ 2,105,911 I $ 1,474,560 70% Fblice $ 45,409,276 $ 44,995,176 $ (414,100) Finance I $ 3,630,782 I $ 2,554,430 70% Fire $ 24,395,114 $ 24,566,695 $ 171,581 Non-Departmental I $ 18,632,205 I $ 14,269,755 77% Public Works $ 25,216,219 $ 25,004,680 $ (211,539) General Services $ 2,613,126 $ 1,844,615 71% Recreation $ 3,947,323 $ 3,669,861 $ (277,462) Dev Services(GF) $ 2,368,617 $ 1,631,596 69% Library $ 3,414,107 $ 3,340,330 $ (73,777) Police $ 45,409,276 $ 31,340,061 j', 69% Total Expenditures $142,114,777 $141,906,251 $ (208,526) Fire $ 24,395,114 : $ 17,522,002 I, 72% Public Works $ 25,216,219 : $ 16,911,136 67% Recreation $ 3,947,323 : $ 2,494,151 I', 63% Library $ 3,414,107 $ 2,331,354 68% 1'rotal Expenditures $ 142,114,777 : $ 99,268,850 70% 2014-05-20 Agenda Packet Page 601 Quarterly Financial Report Third Quarter Ending March 31, 2014 Page of CnY OF Budget Transfers The following table reflects the administrative budget transfers that have been approved through the third quarter. Summary of General Fund Budget Transfers �- W. Supplies and Services to Other Jul-13 Transfer for refund of overpayment Human Resources $ 34 Expenses Sep-13 Transfer for folding machine Finance $ 2,875 Supplies and Services to Capital Supplies and Services to Personnel Sep-13 Transfer to reallocate budget City Council $ 720 Services Personnel Services to Supplies and Sep-13 Aquatics security alrm repairs Recreation $ 2,700 Services Personnel Services to Supplies and Sep-13 Transfer for intern reimbursement City Council $ 2,260 Services Other Expenses to Supplies and Oct-13 Transfer for refund Human Resources $ 50 Services Oct-13 Transfer sm dog ortho surg frag set Animal Care Facility $ 15,000 Supplies and Services to Capital Oct-13 Transfer for Capital Lease/Copiers Various $ 14,773 Supplies and Services to Capital Oct-13 Transfer for Capital Lease/Copiers Public Works $ 5,171 Supplies and Services to Capital Oct-13 Transfer for Capital Lease/Copiers Finance $ 10,999 Supplies and Services to Capital Nov-13 Transfer for Capital Lease/Copiers Human Resources $ 8,920 Supplies and Services to Capital Supplies and Services to Other Dec-13 Transfer to pay State Mobilehome Park Fee Development Services $ 35 Expenses Personnel Services to Supplies and Dec-13 Transfer from comp purchase for Accela Development Services $ 8,000 Services Supplies and Services to Other Jan-14 Transfer for Credit Card Transaction fees Animal Care Facility $ 2,000 Expenses Other Expenses to Personnel Jan-14 Transfer for Credit Card Transaction Fees Non-Departmental $ 8,656 Services Personnel Services to Supplies and Feb-14 Advrtsng from salary svngs Administration $ 5,000 Services Feb-14 Transfer for Copier Lease City Clerk $ 8,950 Supplies and Services to Capital Feb-14 Transfer for Copier Lease Public Works $ 9,548 Supplies and Services to Capital Supplies and Services to Other Feb-14 Transfer for refund of overpayment Human Resources $ 150 Expenses Feb-14 Grind Box for St Asphalt Zipr Public Works $ 13,200 Supplies and Services to Capital Personnel Services to Supplies and Mar-14 Transfer to purchase furniture City Attorney $ 3,508 Services Supplies and Services to Other Mar-14 Damage to City Prop Adjustment Public Works $ 5,000 Expenses Personnel Services to Supplies and Mar-14 For add cost Corp Yard Foundation Public Works $ 8,000 Services 2014-05-20 Agenda Packet Page 602 Report Third_Z*1Ar4_ Quarterly Financial Quarter Ending March 31, 2014 '.•- : of CnY OF CHULA VISTA Mid-Year Budget Amendments $10,109,973 resulting in a net impact of $126,126. The Mid-year appropriations approved through March 31, City Council approved the following budget amendments 2014 totaled $10,236,099 with offsetting revenues of during through the first quarter: Summary of General Fund Budget Amendments m e L2Z I N M. 07/09/2013 Police EB Memorial Grant $ - $ (6,057) $ (6,057) 07/09/2013 Non-Departmental EB Memorial Grant $ - $ 6,057 $ 6,057 07/23/2013 Non-Departmental Solar Financing Project $ - $ 50,930 $ 50,930 07/23/2013 Public Works Solar Financing Project $ - $ (44,450) $ (44,450) 07/23/2013 Recreation Solar Financing Project $ - $ (6,480) $ (6,480) 08/06/2013 Library Book Donation $ 1,500 $ 1,500 $ - 08/06/2013 Various Salary Adjustment Mid. Mgrs/Prof. $ - $ 448,908 $ 448,908 08/06/2013 Non-Departmental Salary Adjustment Mid. Mgrs/Prof. $ - $ (448,907) $ (448,907) 08/13/2013 Non-Departmental Harbortest 2013 $ 50,000 $ 50,000 $ - 08/13/2013 Police SDLECC Support Admin Fee $ 5,005 $ - $ (5,005) 09/10/2013 Various Salary Adjustment CVEA/WCE $ - $ 553,629 $ 553,629 09/10/2013 Non-Departmental Salary Adjustment CVEA/WCE $ - $ (553,629) $ (553,629) Apporpriations Transfer for Autopulse 10/01/2013 Fire Purchase $ - $ - $ - 10/15/2013 Library Target Grant for Literacy $ 2,000 $ 2,000 $ - Public Safety Analyst (PSA)to Sr. PSA 10/15/2013 Police Reclass $ 850 $ - $ (850) 10/15/2013 Non-Departmental Lease for 610 Bay Blvd. $ 8,000 $ 8,000 $ - 11/05/2013 Various 1st Quarter Budget Adjustments $ 495,541 $ 495,541 $ - 11/05/2013 Various Citywide Critical Needs $ 523,000 $ 523,000 $ - 11/19/2013 Fire ALS Paramedic Training Cost $ - $ 127,637 $ 127,637 11/19/2013 Non-Departmental Business Cluster Analysis $ 128,000 $ - $ (128,000) 11/19/2013 Administration Business Cluster Analysis $ - $ 128,000 $ 128,000 11/19/2013 Public Works SAFE Funds Appropriation Street Signs $ - $ 55,000 $ 55,000 Fleet Maintenance Charges for Equip. 12/10/2013 Public Works/Various Mech. & Inventory Spec. $ - $ 58,136 $ 58,136 Consulting Svcs. For Polling and Public 12/10/2013 Non-Departmental Outreach $ 106,800 $ 106,800 $ - Apporpriation of 02/11/2014 Library donated/sponsorship/Grant Funds $ 22,181 $ 22,181 $ - 02/18/2014 Non-Departmental TUT Settlement Appropriation $ 8,017,453 $ 8,017,453 $ - 02/18/2014 City Law Office Manager $ 38,750 $ 38,750 $ - 02/18/2014 lVarious 2nd Quarter Budget Admustments $ 710,893 $ 602,100 $ (108,793) TOTAL BUDGET ADJUSTMENTS1 $ 10,109,973 1 $ 10,236,099 1 $ 126,126 2014-05-20 Agenda Packet Page 603 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0266, Item#: 8. CONSIDERATION OF ACCEPTING THE 2014 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT FUNDS RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $52,296 FROM THE BUREAU OF JUSTICE ASSISTANCE FOR THE 2014 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT RECOMMENDED ACTION Council conduct the public hearing and adopt the resolution. SUMMARY The Police Department has recently received notice of the 2014 Edward Byrne Memorial Justice Assistance Grant award in the amount of $52,296 from the Bureau of Justice Assistance. These funds were allocated to the Police Department based on city population and Part 1 violent crime statistics. 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 Proposed to streamline justice funding and grant administration, the Edward Byrne Memorial Justice Assistance Grant (JAG) Program allows states, tribes, and local governments to support a broad range of activities to prevent and control crime based on their local needs and conditions. Federal funds from the Edward Byrne Memorial JAG Program must be used to supplement existing funds for program activities and cannot replace, or supplant, nonfederal funds that have been appropriated for the same purpose. The unit of local government must provide an assurance that the application or any future amendment was made public and an opportunity to comment was provided to citizens and the neighborhood or community organizations to the extent of applicable law. Local match is not required with the JAG Program. The Police Department received notice on April 24, 2014, of an Edward Byrne Memorial JAG award in the amount of $52,296 from the Bureau of Justice Assistance. These funds were allocated to the Police Department based on city population and Part 1 violent crime statistics. Part 1 violent crimes City of Chula Vista Page 1 of 3 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 604 File#: 14-0266, Item#: 8. include murder and non-negligent manslaughters, forcible rape, robbery, and aggravated assaults as reported by the FBI. Acceptance and appropriation of these funds requires a public hearing per stipulations of the Justice Assistance Grant. The Police Department recommends using the JAG funds for the personnel costs of a Police Community Relations Specialist. The Community Relations Unit was disbanded in the Police Department during previous budget cuts. The Police Community Relations Specialist was reinstated through 2009 American Reinvestment and Recovery Act (ARRA) funds, covering a two-year period of July 2009 to June 2011 . When ARRA funds were depleted, JAG funds were used to retain this position. The Police Department is recommending to continue using JAG funds for Police Community Relations Specialist personnel costs during fiscal year 2014/2015. The Police Community Relations Specialist provides a vital link between the community and the Police Department by attending community meetings, coordinating events which involve the community, providing Crime Prevention through Environmental Design assessments for homeowners and businesses, coordinating the annual Citizens Police Academy and the Teen Police Academy, and responds to general inquiries and questions to the Police Department. This position plays an invaluable role serving as the Department's community liaison. 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 the Justice Assistance Grant support the goal of Strong and Secure Neighborhoods by providing a vital link between the community and the Police Department. CURRENT YEAR FISCAL IMPACT Approval of this resolution will result in the acceptance of $52,296 for the 2014 Edward Byrne Memorial Justice Assistance Grant from the Bureau of Justice Assistance. Because the personnel costs of the Police Community Relations Specialist will be incurred next fiscal year, there is no current year fiscal impact. ONGOING FISCAL IMPACT The annual personnel cost of the Police Community Relations Specialist is approximately $89,000. Funds received by JAG will partially offset the annual personnel costs. The remaining costs will be covered by the General Fund. Appropriations for this grant and the General Fund match will be included in the fiscal year 2014/2015 proposed budget. The current proposal provides one year funding for the position outlined in this report. The Department will seek additional funding in subsequent fiscal years. If no additional funding is obtained, then the position may be eliminated. City of Chula Vista Page 2 of 3 Printed on 5/15/2014 2014-05-20 Agenda Packet powered by Le9age 605 File#: 14-0266, Item#: 8. City of Chula Vista Page 3 of 3 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 606 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $52,296 FROM THE BUREAU OF JUSTICE ASSISTANCE FOR THE 2014 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT WHEREAS, the Police Department received notice from the Bureau of Justice Assistance of the 2014 Edward Byrne Memorial Justice Assistance Grant award in the amount of$52,296; and WHEREAS, the grant funding from the Bureau of Justice Assistance for the 2014 Edward Byrne Memorial Justice Assistance Grant will be used for the personnel costs of one Police Community Relations Specialist; and WHEREAS, the Police Community Relations Specialist provides a vital link between the community and the Police Department; and WHEREAS, a public hearing was conducted to seek input regarding the grant appropriations. NOW, THEREFORE, BE IT RESOLVED with the above findings incorporated herein, the City Council of the City of Chula Vista does hereby accept $52,296 from the Bureau of Justice Assistance for the 2014 Edward Byrne Memorial Justice Assistance Grant. Presented by: Approved as to form by: David Bejarano Glen R. Googins Police Chief City Attorney 2014-05-20 Agenda Packet Page 607 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0316, Item#: 9. CONSIDERATION OF ADOPTION OF ORDINANCES AMENDING TITLE 19 (REGULATING PLANNING AND ZONING) AND CHAPTER 9.13 (REGULATING LICENSING AND OPERATIONAL STANDARDS) OF THE CHULA VISTA MUNICIPAL CODE CONCERNING SEXUALLY ORIENTED BUSINESSES RECOMMENDED ACTION Council open the public hearing and continue to a date to be specified. City of Chula Vista Page 1 of 1 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 608 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0306, Item#: 10. PRESENTATION OF THE CITY MANAGER'S PROPOSED BUDGET FOR FISCAL YEAR 2014-15 RECOMMENDED ACTION Council/Agency/Authority hear the presentation and provide comments. City of Chula Vista Page 1 of 1 Printed on 5/15/2014 istar 2014-05-20 Agenda Packet powered by Leg age 609 City of Chula Vista OF CHU�LAVISTA Staff Report File#: 14-0313, Item#: 11. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9 (a) City of Chula Vista v. Bay & E, Inc., et al., San Diego Superior Court, Case No. 37-2013-00055103- CU-MC-CTL. City of Chula Vista Page 1 of 1 Printed on 5/15/2014 2014-05-20 Agenda Packet Page 610 City of Chula Vista CTY CHUILAVISTA Staff Report File#: 14-0315, Item#: 12. 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 5/15/2014 2014-05-20 Agenda Packet powered by Leg age 611