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Home My WebLink AboutAgenda Packet 2017_11_21November 21, 2017City Council Agenda PRESENTATION OF A PROCLAMATION TO EASTLAKE CHURCH IN RECOGNITION OF ITS COMMUNITY SERVICE DURING A “SERVE WEEKEND” IN THE CITY OF CHULA VISTA 17-0512B.17-0512 PRESENTATION OF A PROCLAMATION TO LESLIE AND MAX BRANSCOMB FOR THEIR OUTSTANDING CONTRIBUTIONS TO THE CITY OF CHULA VISTA 17-0513C.17-0513 CONSENT CALENDAR (Items 1 - 9) The Council will enact the Consent Calendar staff recommendations by one motion, without discussion, unless a Councilmember, a member of the public, or staff requests that an item be removed for discussion. If you wish to speak on one of these items, please fill out a “Request to Speak” form (available in the lobby) and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed immediately following the Consent Calendar. WRITTEN COMMUNICATION Memorandum from Councilmember Padilla requesting an excused absence from the November 7, 2017 council meeting. 17-05051.17-0505 Council excuse the absence. Staff Recommendation: APPROVAL OF MINUTES of August 15 and 22, and September 7, 2017. 17-04982.17-0498 Council approve the minutes. Staff Recommendation: ORDINANCE OF THE CITY OF CHULA VISTA DECREASING THE ESTABLISHED SPEED LIMIT ON QUINTARD STREET BETWEEN ORANGE AVENUE AND THIRD AVENUE AND BETWEEN FIRST AVENUE AND HILLTOP DRIVE FROM 30 MILES PER HOUR TO 25 MILES PER HOUR, AND AMENDING SCHEDULE X OF THE REGISTER MAINTAINED IN THE OFFICE OF THE CITY ENGINEER TO REFLECT THE REVISED SPEED LIMITS (FIRST READING) 17-04203.17-0420 Engineering Department Department: The Project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act State Guidelines. Environmental Notice: Council place the ordinance on first reading. Staff Recommendation: Page 2 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 2 November 21, 2017City Council Agenda RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE 2017 CITY OF CHULA VISTA STANDARD SPECIAL PROVISIONS AND OTHER REFERENCE DOCUMENTS GOVERNING ENGINEERING AND CONSTRUCTION STANDARDS, AND AUTHORIZING THE CITY ENGINEER OR DESIGNEE TO ADOPT AND APPROVE ON BEHALF OF THE CITY FUTURE EDITIONS OF AND AMENDMENTS TO THE STANDARD SPECIAL PROVISIONS AND REFERENCE DOCUMENTS GOVERNING ENGINEERING AND CONSTRUCTION STANDARDS 17-01064.17-0106 Engineering Department Department: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Notice: Council adopt the resolution. Staff Recommendation: A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY AND KITCHELL CEM, INC. TO PROVIDE ON-CALL CONSTRUCTION MANAGEMENT CONSULTING SERVICES B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY AND O’CONNER CONSTRUCTION MANAGEMENT, INC TO PROVIDE ON-CALL CONSTRUCTION MANAGEMENT CONSULTING SERVICES 17-04285.17-0428 Engineering Department Department: The Project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act State Guidelines. Environmental Notice: Council adopt the resolutions. Staff Recommendation: Page 3 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 3 November 21, 2017City Council Agenda RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR CITYWIDE TREE MAINTENANCE SERVICES TO WEST COAST ARBORISTS, INC. IN AN AMOUNT NOT TO EXCEED $950,000 FOR THE UP TO FIVE-YEAR TERM OF THE CONTRACT AND APPROPRIATING $45,000 IN FISCAL YEAR 2017-18 FROM THE GAS TAX FUND TO THE URBAN FORESTRY MAINTENANCE BUDGET (4/5 VOTE REQUIRED) 17-04446.17-0444 Public Works Department Department: The Project qualifies for a Categorical Exemption pursuant to the California Environmental Quality Act State Guidelines Section 15304 Class 4 (Minor Alterations to Land) and/or Section 15301 Class 1 (Existing Facilities). Environmental Notice: Council adopt the resolution. Staff Recommendation: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING A BUDGET TRANSFER OF $30,000 IN THE STATE GRANT FUND TO PURCHASE A VAN FOR USE IN THE SOUTH BAY AND EAST COUNTY USED OIL PAYMENT PROGRAM (4/5 VOTE REQUIRED) 17-04747.17-0474 Economic Development Department Department: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Notice: Council adopt the resolution. Staff Recommendation: INVESTMENT REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2017 17-04958.17-0495 Finance Department Department: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Notice: Council accept the report. Staff Recommendation: Page 4 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 4 November 21, 2017City Council Agenda RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $38,617 FROM THE U.S. DEPARTMENT OF HOMELAND SECURITY, AUTHORIZING THE POLICE DEPARTMENT TO PURCHASE RADIO DISPATCH CONSOLE EQUIPMENT FROM MOTOROLA SOLUTIONS, INC. BASED ON THE COUNTY OF SAN DIEGO’S CONTRACT NUMBER 553982 PRICING AND TERMS, AND APPROPRIATING SAID FUNDS TO THE FEDERAL GRANTS FUNDS FOR THE URBAN AREA SECURITY INITIATIVE (4/5 VOTE REQUIRED) 17-04879.17-0487 Police Department Department: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Notice: Council adopt the resolution. Staff Recommendation: ITEMS REMOVED FROM THE CONSENT CALENDAR PUBLIC COMMENTS Persons speaking during Public Comments may address the Council on any subject matter within the Council’s jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Council from discussing or taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff. Comments are limited to three minutes. Page 5 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 5 November 21, 2017City Council Agenda 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. A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ISSUANCE OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY’S LEASE REVENUE BONDS, SERIES 2017A [NEW CLEAN RENEWABLE ENERGY BONDS (FEDERALLY TAXABLE) AND LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT)]; AND AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT WITH RESPECT TO THE OFFERING AND SALE OF THE BONDS AND THE EXECUTION OF DOCUMENTS AND THE TAKING OF RELATED ACTIONS NECESSARY TO ISSUE SUCH BONDS B. RESOLUTION OF THE BOARD OF DIRECTORS OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF THE AUTHORITY’S LEASE REVENUE BONDS SERIES 2017A [NEW CLEAN RENEWABLE ENERGY BONDS (FEDERALLY TAXABLE) AND LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT)] AND AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT WITH RESPECT TO THE OFFERING AND SALE OF THE BONDS AND THE EXECUTION OF DOCUMENTS AND THE TAKING OF RELATED ACTIONS NECESSARY TO ISSUE SUCH BONDS 17-049610.17-0496 Finance Department Department: The Project qualifies for a Class 3 Categorical Exemption pursuant to Section 15303 (New Construction or Conversion of Small Structures) of the California Environmental Quality Act State Guidelines. Environmental Notice: Council conduct the public hearing and adopt resolution A. Municipal Financing Authority adopt resolution B. Staff Recommendation: Page 6 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 6 November 21, 2017City Council Agenda RESOLUTION OF THE CITY COUNCIL OF THE CITY OF C HULA VISTA ESTABLISHING UTILITY UNDER- GROUNDING DISTRICT #141 ON F STREET FROM BAY BOULEVARD TO BROADWAY, AND DISTRICT #142 ON F STREET FROM BROADWAY TO FOURTH AVENUE AND AUTHORIZING THE EXPENDITURE OF UTILITY ALLOCATION FUNDS TO SUBSIDIZE PRIVATE SERVICE LATERAL CONVERSIONS 17-048111.17-0481 Engineering Department Department: The Project qualifies for a Class 1 Categorical Exemption pursuant to the California Environmental Quality Act State Guidelines Section 15303 Class 3 (New Construction or Conversion of Small Structures) and/or 15301 Class 1 (Existing Facilities). Environmental Notice: Council conduct the public hearing and adopt the resolution. Staff Recommendation: CITY MANAGER’S REPORTS MAYOR’S REPORTS COUNCILMEMBERS’ COMMENTS CITY ATTORNEY'S REPORTS CLOSED SESSION Announcements of actions taken in Closed Session shall be made available by noon on Wednesday following the Council Meeting at the City Attorney’s office in accordance with the Ralph M. Brown Act (Government Code 54957.7). CONFERENCE WITH LABOR NEGOTIATORS PURSUANT TO GOVERNMENT CODE SECTION 54957.6 Agency designated representatives: Glen Googins, Maria Kachadoorian, Kelley Bacon, Simon Silva, Gary Halbert, Courtney Chase, David Bilby Employee organization: Association of Chula Vista Employees (ACE) 17-050712.17-0507 Page 7 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 7 November 21, 2017City Council Agenda CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2): One (1) Case 17-050813.17-0508 CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Initiation of litigation pursuant to Government Code Section 54956.9(d)(4): Three (3) Case(s) 17-050914.17-0509 ADJOURNMENT to the Regular City Council Meeting on December 5, 2017, at 5:00 p.m., in the Council Chambers. Materials provided to the City Council related to any open-session item on this agenda are available for public review at the City Clerk’s Office, located in City Hall at 276 Fourth Avenue, Building A, during normal business hours. In compliance with the AMERICANS WITH DISABILITIES ACT The City of Chula Vista requests individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service, contact the City Clerk’s Office at (619) 691-5041(California Relay Service is available for the hearing impaired by dialing 711) at least forty-eight hours in advance of the meeting. Most Chula Vista City Council meetings, including public comments, are video recorded and aired live on AT&T U-verse channel 99 (throughout the County), on Cox Cable channel 24 (only in Chula Vista), and online at www.chulavistaca.gov. Recorded meetings are also aired on Wednesdays at 7 p.m. (both channels) and are archived on the City's website. Sign up at www.chulavistaca.gov to receive email notifications when City Council agendas are published online. Page 8 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 8 November 21, 2017City Council Agenda NOTICE OF REVIEW AND PENDING APPROVAL OF FINAL MAP(S) In accordance with California Government Code Section 66458(d), notice is hereby given that the City Engineer has reviewed and, immediately following this City Council meeting of November 21, 2017, will approve the following final map: Chula Vista Tract No. 16-0006, Portion of Otay Ranch Village 2 South, 206 Lots on 43.795 Acres. Specifically, the City Engineer has caused the map(s) to be examined and has made the following findings: (1) The map substantially conform to the approved tentative map, and any approved alterations thereof and any conditions of approval imposed with said tentative map. (2) The map complies with the provisions of the Subdivision Map Act and any local ordinances applicable at the time of approval of the tentative map. (3) The map is technically correct. Said map will be finalized and recorded, unless an interested party files a valid appeal of the City Engineer’s action to City Council no later than 2:00 p.m., 10 calendar days from the date of this City Council meeting. A valid appeal must identify the improper/incorrect finding and the basis for such conclusion. If you have any questions about the map approval findings or need additional information about the map or your appeal rights, please feel free to contact Boushra Salem at (619) 409-5483. Page 9 City of Chula Vista Printed on 11/16/2017 2017-11-21 Agenda Packet Page 9 City of Chula Vista Staff Report File#:17-0499, Item#: A. OATHS OF OFFICE Citizens’ Oversight Committee: Oscar Romo Human Relations Commission: Audrey Bordeaux Susan Lake Petrina Branch Paola Martinez-Montes Jeremy Culuko Ricardo Medina William Felix Ahmad Zadah Robert Godinez Bernard Gonzales City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 10 City of Chula Vista Staff Report File#:17-0512, Item#: B. PRESENTATION OF A PROCLAMATION TO EASTLAKE CHURCH IN RECOGNITION OF ITS COMMUNITY SERVICE DURING A “SERVE WEEKEND” IN THE CITY OF CHULA VISTA City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 11 City of Chula Vista Staff Report File#:17-0513, Item#: C. PRESENTATION OF A PROCLAMATION TO LESLIE AND MAX BRANSCOMB FOR THEIR OUTSTANDING CONTRIBUTIONS TO THE CITY OF CHULA VISTA City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 12 City of Chula Vista Staff Report File#:17-0505, Item#: 1. WRITTEN COMMUNICATION Memorandum from Councilmember Padilla requesting an excused absence from the November 7, 2017 council meeting. RECOMMENDED ACTION Council excuse the absence. City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 13 2017-11-21 Agenda Packet Page 14 City of Chula Vista Staff Report File#:17-0498, Item#: 2. APPROVAL OF MINUTES of August 15 and 22, and September 7, 2017. RECOMMENDED ACTION Council approve the minutes. City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 15 City of Chula Vista Meeting Minutes - Draft 5:00 PM Council Chambers 276 4th Avenue, Building A Chula Vista, CA 91910 Tuesday, August 15, 2017 SPECIAL MEETING OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY MEETING JOINTLY WITH THE CITY COUNCIL OF THE CITY OF CHULA VISTA CALL TO ORDER A regular meeting of the City Council and a special meeting of the Successor Agency to the Redevelopment Agency of the City of Chula Vista were called to order at 5:03 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: Present:Councilmember Aguilar, Councilmember Diaz, Deputy Mayor McCann and Mayor Casillas Salas Absent:Councilmember Padilla Also Present: City Manager Halbert, City Attorney Googins, Acting City Clerk Bigelow, and Records Manager Turner PLEDGE OF ALLEGIANCE TO THE FLAG AND MOMENT OF SILENCE Deputy Mayor McCann led the Pledge of Allegiance. SPECIAL ORDERS OF THE DAY A.17-0356 OATH OF OFFICE Theresa Acerro, Mobilehome Rent Review Commission Acting City Clerk Bigelow administered the Oath of Office to Commissioner Acerro, and Councilmember Aguilar presented her with the certificate of appointment. B.17-0282 EMPLOYEE SERVICE RECOGNITION HONORING STAFF WITH MILESTONE SERVICE ANNIVERSARIES City Manager Halbert recognized employees with milestone service anniversaries. C.17-0328 PRESENTATION BY THE GOVERNMENT FINANCE OFFICERS ASSOCIATION OF THE CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING AWARD FOR FISCAL YEAR ENDING JUNE 30, 2016 TO FINANCE DIRECTOR DAVID BILBY Director of Finance Bilby accepted the award on behalf of the Finance Department. Page 1City of Chula Vista 2017-11-21 Agenda Packet Page 16 August 15, 2017City Council Meeting Minutes - Draft D.17-0350 INTRODUCTION OF CHULA VISTA’S SISTER CITY, ODAWARA, JAPAN’S AMBASSADORS: CHISATO TAKAHASHI, MINA HANAWA, NOZOMI SETO AND MAKI ANZAI, PARTICIPANTS IN THE ANNUAL INTERNATIONAL FRIENDSHIP COMMISSION’S EXCHANGE PROGRAM; AND A PRESENTATION BY THE CHULA VISTA AMBASSADORS: RAYMOND LEOPOLD RODRIGUEZ, ALEC IVAN CONTRERAS, NEKAYLA DE JESUS TORRALBA AND MATHEW NOEL FERNANDEZ REGARDING THEIR EXPERIENCE IN ODAWARA Chula Vista and Odawara ambassadors gave a presentation on their experience in the exchange program. CONSENT CALENDAR (Items 1 - 4) Item 4 was removed from the Consent Calendar at the request of Councilmember Diaz. 1.17-0364 APPROVAL OF MINUTES of June 27, 2017. Recommended Action: Council approve the minutes. 2.17-0355 ORDINANCE NO. 3409 OF THE CITY OF CHULA VISTA AMENDING CHULA VISTA MUNICIPAL CODE SECTION 8.22.030 TO CLARIFY THAT SMOKING IS PROHIBITED IN ALL CITY PARKS (SECOND READING AND ADOPTION) Recommended Action: Council adopt the ordinance. 3.17-0333 A. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING CHAPTER 3.45 OF THE CHULA VISTA MUNICIPAL CODE (MASTER FEE SCHEDULE) (FIRST READING) B. RESOLUTION NO. 2017-157 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CERTAIN SECTIONS OF CHAPTER 1 (GENERAL) OF THE CITY’S MASTER FEE SCHEDULE AND REPEALING CITY COUNCIL POLICIES 200-01 (SPECIFIC CATEGORIES OF DEVELOPMENT PROJECT ASSISTANCE OR FEE SUBSIDIES), 267-05 (WAIVER OF FEES FOR COMMUNITY SERVICE ORGANIZATIONS), AND 861-04 (GREEN FEES AT CHULA VISTA MUNICIPAL GOLF COURSE) Recommended Action: Council place the ordinance on first reading and adopt the resolution. Item 4 was removed from the Consent Calendar. Page 2City of Chula Vista 2017-11-21 Agenda Packet Page 17 August 15, 2017City Council Meeting Minutes - Draft Approval of the Consent Calendar A motion was made by Deputy Mayor McCann, seconded by Councilmember Diaz, to approve staff's recommendations on the above Consent Calendar items, headings read, text waived. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann and Casillas Salas4 - No:0 Abstain:0 ITEMS REMOVED FROM THE CONSENT CALENDAR 4.17-0338 CONSIDERATION OF ADOPTING THE TRAFFIC SIGNAL COMMUNICATIONS MASTER PLAN RESOLUTION NO. 2017-173 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE CITY’S TRAFFIC SIGNAL COMMUNICATIONS MASTER PLAN At the request of Councilmember Diaz, there was consensus of the Council to continue Item 4 to the meeting of September 12, 2017. PUBLIC COMMENTS Theresa Acerro, Chula Vista resident, spoke in support of criminal enforcement of illegal marijuana dispensaries and expressed concern regarding the content of the initiatives submitted to the City Clerk. Councilmember Aguilar requested staff provide a memo on the proposed measures that had been submitted. Sandy Sato, Chula Vista resident, spoke in support of addressing illegal marijuana activities. City Attorney Googins provided information how illegal marijuana operations were being addressed. Ginger Saco, Chula Vista resident, requested the City join Imperial Beach in a lawsuit over sewage spills in Tijuana that have affected water and air quality in the South Bay. ACTION ITEMS 5.17-0339 CONSIDERATION OF SELECTING A COMPLIANCE TRACK (1 OR 2) FOR THE NEW TRASH AMENDMENT ORDER ISSUED BY THE SAN DIEGO REGIONAL WATER QUALITY CONTROL BOARD AND NOTIFYING THEM OF THE SELECTION RESOLUTION NO. 2017-158 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO NOTIFY THE SAN DIEGO REGIONAL WATER QUALITY CONTROL BOARD OF THE TRACK SELECTED TO COMPLY WITH TRASH AMENDMENT INVESTIGATIVE ORDER NO. R9-2017-0077 Director of Engineering Valle and Principal Civil Engineer Salem gave a presentation on the item. Page 3City of Chula Vista 2017-11-21 Agenda Packet Page 18 August 15, 2017City Council Meeting Minutes - Draft A motion was made by Deputy Mayor McCann, seconded by Councilmember Diaz, to select Track 2 and to adopt Resolution No. 2017-158, heading read, text waived. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann and Casillas Salas4 - No:0 Abstain:0 6.17-0154 CONSIDERATION OF SUPPORTING SENATE BILL 54, THE CALIFORNIA VALUES ACT RESOLUTION NO. 2017-171 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA SUPPORTING SENATE BILL 54, THE CALIFORNIA VALUES ACT Mayor Casillas Salas announced that Item 6 would be continued to the meeting of September 12, 2017. CITY MANAGER’S REPORTS City Manager Halbert reported on upcoming agenda items and announced that Enterprise IoT Insights had named Chula Vista one of the three top smart cities in North America. MAYOR’S REPORTS 7.17-0258 RESOLUTION NO. 2017-159 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE 2017/2018 LEGISLATIVE PROGRAM Recommended Action: Council adopt the resolution. Councilmember Diaz expressed concern regarding the item titled "Maintain the employee’s ‘burden of proof’ related to all presumptive illnesses," under the Public Employer/Employee Relations section. A motion was made by Deputy Mayor McCann, seconded by Mayor Casillas Salas, to adopt Resolution No. 2017-159, as amended to strike the item under the Public Employer/Employee Relations section titled "Maintain the employee’s ‘burden of proof’ related to all presumptive illnesses." The heading was read, text waived. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann and Casillas Salas4 - No:0 Abstain:0 8.17-0363 Ratification of appointment of the following: Anna Cabral, Housing Advisory Commission Edgar Hopida, Charter Review Commission Alexandra Mares, International Friendship Commission Tina Matthias, Sustainability Commission . Page 4City of Chula Vista 2017-11-21 Agenda Packet Page 19 August 15, 2017City Council Meeting Minutes - Draft A motion was made by Deputy Mayor McCann, seconded by Councilmember Aguilar, that the above appointments be ratified. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann and Casillas Salas4 - No:0 Abstain:0 Mayor Casillas Salas announced the following recent events: Chula Vista Challenge Triathlon and the closure of the U.S. Women's amateur championship golf tournament. She congratulated Chula Vista Police Captain Alexis Lopez for receiving the Al Edgar award, Sergeant Jason Wilder for receiving the Phase 2 (Intermediate) Honor Graduate and Physical Training Award, and Officer Pricilla Graton for receiving the Olivia Castellanos Spirit Award. Mayor Casillas Salas announced the upcoming HarborFest at Bayside Park. COUNCILMEMBERS’ COMMENTS Councilmember Diaz spoke regarding a recent fire incident. Deputy Mayor McCann thanked the International Friendship Commission for its work with the City's sister city and its ambassadors. 9.17-0362 COUNCILMEMBER AGUILAR: CONSIDERATION OF THE FORMATION OF AN AD-HOC SUBCOMMITTEE WITH COUNCILMEMBERS AGUILAR AND PADILLA FOR THE 2017 STARLIGHT PARADE A motion was made by Councilmember Aguilar, seconded by Deputy Mayor McCann, to form an ad-hoc subcommittee with Councilmembers Aguilar and Padilla for the 2017 Starlight Parade. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann and Casillas Salas4 - No:0 Abstain:0 Mayor Casillas Salas recessed the meeting at 6:33 p.m. The Council reconvened in Closed Session at 6:41 p.m., with all members present except Councilmember Padilla. CLOSED SESSION Pursuant to Resolution No. 13706 and Council Policy No. 346-03, Official Minutes and records of action taken during Closed Sessions are maintained by the City Attorney. 10.17-0353 CONFERENCE WITH LABOR NEGOTIATORS PURSUANT TO GOVERNMENT CODE SECTION 54957.6 Agency designated representatives: Glen Googins, Maria Kachadoorian, Kelley Bacon, Simon Silva, Gary Halbert, Courtney Chase, David Bilby Employee organization: Association of Chula Vista Employees (ACE) No reportable action.ACTION: Page 5City of Chula Vista 2017-11-21 Agenda Packet Page 20 August 15, 2017City Council Meeting Minutes - Draft 11.17-0278 CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2): Case(s): One (1) No reportable action.ACTION: 12.17-0337 A. CITY COUNCIL AND SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY: CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9 (d)(1) Names of cases: 1) San Diego County Office of Education, et. al., v. San Diego County, et. al., San Diego Superior Court, Case No 37-2017-00019775-CU-WM-CTL; 2) The Affordable Housing Coalition of San Diego County v. Tracy Sandoval, et. al., Sacramento Superior Court, Case No. 34-2012- 80001158- CU-WM-GDS; 3) City of Chula Vista, et.al. v. Tracy Sandoval, et. al., Sacramento Superior Court, Case No. 34-2014- 80001723-CU-WM-GDS B. CITY COUNCIL AND SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY: CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION -- Initiation of litigation pursuant to Government Code Section 54956.9(d)(4): Case(s): One (1) Items 12A, 1 through 3: No reportable action. Item 12B: Reportable action pending attempts to resolve the dispute. ACTION: 13.17-0292 CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9 (d)(1) Name of cases: A. Rudolph Diaz v. City of Chula Vista, et al., San Diego Superior Court, Case No. 37-2014-00016795-CU-OE-CTL; B. John Hess v. Dave Hanneman, et al., United States District Court, Case No. 14-cv-02271-CAB-JMA; Page 6City of Chula Vista 2017-11-21 Agenda Packet Page 21 August 15, 2017City Council Meeting Minutes - Draft C. City of Chula Vista v. Lexington Insurance Co., United States District Court, Case No. 16-cv-01105-BTM-BGS D. Douglas Kalbaugh v. City of Chula Vista, Worker’s Compensation Appeals Board, Case No.s ADJ10459548, ADJ10573765, ADJ10573882 and ADJ10573858 Item 13A: No reportable action. Item 13B: Reportable action pending finalization of terms. Item 13C: No reportable action. Item 13D: Reportable action pending finalization of terms. ACTION: ADJOURNMENT At 8:18 p.m., Mayor Casillas Salas adjourned the meeting to the Special City Council Meeting on August 22, 2017, at 4:00 p.m. in the Executive Conference Room; and thence to the Regular City Council Workshop on September 7, 2017, at 6:00 p.m., in the Council Chambers. ___________________________________ Kerry K. Bigelow, MMC, Acting City Clerk Page 7City of Chula Vista 2017-11-21 Agenda Packet Page 22 City of Chula Vista Meeting Minutes - Draft 4:00 PM City Hall - Executive Conference Room 276 4th Avenue, Building A Chula Vista, CA 91910 Tuesday, August 22, 2017 SPECIAL MEETING OF THE CITY COUNCIL CALL TO ORDER A special meeting of the City Council of the City of Chula Vista was called to order at 4:04 p.m. in the Executive Conference Room, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: Present:Councilmember Aguilar, Councilmember Diaz, Deputy Mayor McCann, Councilmember Padilla and Mayor Casillas Salas Also Present: City Attorney Googins, Acting City Clerk Bigelow, and Deputy City Clerk Larrarte ACTION ITEMS 1.17-0365 INTERVIEWS AND CONSIDERATION OF APPOINTMENT TO THE CULTURAL ARTS COMMISSION (ARTS PROFESSIONAL SEAT) On August 8, 2017, the following individuals received two or more nominations to be interviewed for the vacant seat on the Cultural Arts Commission: Omar Firestone, Abel Herrera, Rachel Morineau, Christianne Penunuri, Michael Tactay, and Beatrice Zamora. The Council discussed questions that would be asked of each candidate for the Cultural Arts Commission interviews. Acting City Clerk Bigelow provided information on the item and reported that no members of the public had requested to speak regarding the item. The Council conducted interviews for the Cultural Arts Commission. There were no members of the public who wished to speak following the interviews. A motion was made by Mayor Casillas Salas, seconded by Deputy Mayor McCann, to appoint Christianne Penunuri to the Cultural Arts Commission. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann, Padilla and Casillas Salas5 - No:0 Abstain:0 Mayor Casillas Salas recessed the meeting at 5:20 p.m. The Council reconvened at 5:25 p.m., with all members present. Page 1City of Chula Vista 2017-11-21 Agenda Packet Page 23 August 22, 2017City Council Meeting Minutes - Draft 2.17-0367 INTERVIEWS AND CONSIDERATION OF APPOINTMENT TO THE CIVIL SERVICE COMMISSION The Civil Service Commission nominated the following individuals to be interviewed by the City Council and considered for appointment to the vacant seat on the Civil Service Commission: Julio Estrada, Cory Fish, and Alberto Leos. The Council discussed questions that would be asked of each candidate for the Civil Service Commission interviews. Acting City Clerk Bigelow provided information on the item. There were no members of the public who requested to speak regarding the item. The Council conducted interviews for the Civil Service Commission. There were no members of the public who wished to speak following the interviews. A motion was made by Mayor Casillas Salas, seconded by Deputy Mayor McCann, to appoint Cory Fish to the Civil Service Commission. The motion carried by the following vote: ACTION: Yes:Aguilar, Diaz, McCann, Padilla and Casillas Salas5 - No:0 Abstain:0 Mayor Casillas Salas announced that the Council would convene in closed session to discuss the items listed below. Mayor Casillas Salas recessed the meeting at 6:05 p.m. The Council reconvened in Closed Session at 6:12 p.m., with all members present. CLOSED SESSION Pursuant to Resolution No. 13706 and Council Policy No. 346-03, Official Minutes and records of action taken during Closed Sessions are maintained by the City Attorney. 3.17-0377 PUBLIC EMPLOYEE APPOINTMENT PURSUANT TO GOVERNMENT CODE SECTION 54957(b): Title: City Clerk No reportable action.ACTION: 4.17-0376 CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9 (d)(1) Name of case: Darrell Roberts, et al. v. City of Chula Vista, United States District Court, Case No. 16cv1955MMA(DHB) No reportable action.ACTION: Page 2City of Chula Vista 2017-11-21 Agenda Packet Page 24 August 22, 2017City Council Meeting Minutes - Draft ADJOURNMENT At 6:32 p.m., Mayor Casillas Salas adjourned the meeting to the Special City Council Workshop on September 7, 2017, at 6:00 p.m., in the Council Chambers, and thence to the Regular City Council Meeting on September 12, 2017, at 5:00 p.m., in the Council Chambers. ___________________________________ Kerry K. Bigelow, MMC, Acting City Clerk Page 3City of Chula Vista 2017-11-21 Agenda Packet Page 25 City of Chula Vista Meeting Minutes - Draft 6:00 PM Council Chambers 276 4th Avenue, Building A Chula Vista, CA 91910 Thursday, September 7, 2017 CITY COUNCIL WORKSHOP Special Meetings of the City Council and the Charter Review Commission of the City of Chula Vista CALL TO ORDER Special meetings of the City Council and the Charter Review Commission of the City of Chula Vista were called to order at 6:02 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL - City Council: Present:Councilmember Diaz, Deputy Mayor McCann, Councilmember Padilla and Mayor Casillas Salas Absent:Councilmember Aguilar Councilmember Padilla arrived at 6:10 p.m. ROLL CALL - Charter Review Commission: Present: Commissioners Felber, O'Donnell, Ross, and Chair Rhamy Absent: Commissioner De La Rosa Also Present: City Manager Halbert, City Attorney Googins, and Acting City Clerk Bigelow PLEDGE OF ALLEGIANCE TO THE FLAG AND MOMENT OF SILENCE Charter Review Commission Chair Rhamy led the Pledge of Allegiance. WORKSHOP 17-0317 PRESENTATION AND DISCUSSION OF THE CHARTER REVIEW COMMISSION’S PROPOSED WORKPLAN FOR 2017 - 2018, INCLUDING CONSIDERATION OF POTENTIAL CHARTER AMENDMENTS Mayor Casillas Salas and City Attorney Googins introduced the item. Charter Review Commission (CRC) Chair Rhamy provided an overview of the CRC's agenda of items that would be presented during the workshop: 1) Draft amendments to the Charter; 2) Proposed future work plan regarding summary review and staff priorities; 3) Proposed amendments from the Commission and public; 4) Other Charter changes as desired by Council; and 5) Future communication between Council and the CRC. Page 1City of Chula Vista 2017-11-21 Agenda Packet Page 26 September 7, 2017City Council Meeting Minutes - Draft The Council and CRC discussed the draft amendments to the Charter prepared by the CRC. There was consensus of a majority of the Council to request the Charter Review Commission further investigate and prepare for Council consideration, in time for the 2018 election, potential Charter amendments related to City Council term limits, including the ability of the Council to appoint an individual who had previously served as a Councilmember to a limited term, and to provide a recommendation whether or not the amendments should affect seated Councilmembers. CRC Chair Rhamy presented information on potential Charter amendments related to the City Attorney position. There was consensus of a majority of the Council to further consider revising the salary determination of the elected City Attorney, whether or not the position should remain elected or be appointed, and increasing the term limit to four terms. There was consensus of the Council that any limitations on term limits be applied to all elected positions (Mayor, Member of the Council, and City Attorney). There was consensus of the Council to request the CRC provide information on potential Charter amendments related to citizenship status and residency requirements for board and commission members. Mayor Casillas Salas spoke in support of the CRC providing the Council with a periodic report on the Commission's work. ADJOURNMENT At 7:56 p.m., Mayor Casillas Salas adjourned the meeting to the Regular City Council Meeting on September 12, 2017, at 5:00 p.m., in the Council Chambers. _______________________________ Kerry K. Bigelow, MMC, Acting City Clerk Page 2City of Chula Vista 2017-11-21 Agenda Packet Page 27 City of Chula Vista Staff Report File#:17-0420, Item#: 3. ORDINANCE OF THE CITY OF CHULA VISTA DECREASING THE ESTABLISHED SPEED LIMIT ON QUINTARD STREET BETWEEN ORANGE AVENUE AND THIRD AVENUE AND BETWEEN FIRST AVENUE AND HILLTOP DRIVE FROM 30 MILES PER HOUR TO 25 MILES PER HOUR, AND AMENDING SCHEDULE X OF THE REGISTER MAINTAINED IN THE OFFICE OF THE CITY ENGINEER TO REFLECT THE REVISED SPEED LIMITS (FIRST READING) RECOMMENDED ACTION Council place the ordinance on first reading. SUMMARY Staff completed a review of the road conditions and roadside characteristics on two street segments along Quintard Street in order to determine the speed limit in accordance with the California Vehicle Code (CVC). Based on the results of this investigation, staff determined that the speed limit on Quintard Street between Orange Avenue and Third Avenue and between First Avenue and Hilltop Drive should be revised to the prima facie speed limit of 25 mph (see Attachment 1, Location Plat). ENVIRONMENTAL REVIEW Environmental Notice The Project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act State Guidelines. Environmental Determination The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines. Thus, no further environmental review is required. BOARD/COMMISSION RECOMMENDATION The Safety Commission, at their meeting on September 6, 2017, unanimously concurred with staff’s recommendations to declare a 25 mph prima facie speed limit on Quintard Street between Orange Avenue and Third Avenue and between First Avenue and Hilltop Drive. DISCUSSION Background: City of Chula Vista Printed on 11/16/2017Page 1 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 28 File#:17-0420, Item#: 3. The CVC establishes the prima facie speed limit for all streets in the State. The prima facie speed limit applicable to Qunitard Street is 25 miles per hour (mph). An Engineering and Traffic Survey (E&TS) is required to change the prima facie speed limits. The CVC requires that local agencies review local speed limits every five to ten years to determine if the existing street segment speed limits require updating. Currently, the existing posted speed limit on Quintard Street is as follows: 30 mph between Orange Avenue and Third Avenue 30 mph between First Avenue and Hilltop Drive CONCLUSION: Based on the existing road conditions, roadside characteristics and CVC, staff has determined that the speed limits on segments of Quintard Street need to be reduced. Sections 515 and 240 of the CVC define, a two-lane road, as a “residence or business” district as determined by the number of residences and businesses fronting the street. These two segments of Quintard Street qualify as “residence and business” district and, by statue per CVC Section 22352, also qualify for a 25 mph prima facie speed limit. City staff recommends the City Council declare the proposed prima facie speed limits along Quintard Street as follows: ·between Orange Avenue and Third Avenue, 25 mph prima facie speed limit ·between First Avenue and Hilltop Drive, 25 mph prima facie speed limit DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council members and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(11), for purposes of the Political Reform Act (Cal. Gov’t Code §87100,et seq.). Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The goal of this action item is to support the Strong and Secure Neighborhood strategy identified in the City's Strategic Plan by providing safer roadways. City of Chula Vista Printed on 11/16/2017Page 2 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 29 File#:17-0420, Item#: 3. CURRENT YEAR FISCAL IMPACT The proposed speed limit modification would require the replacement and posting of new speed limit signs and marking of new pavement speed limit legends. The cost to install these improvements is approximately $2,000. The required work will be funded by TransNet funds associated with Capital Improvement Project, TF-332, Signing and Striping Program. Sufficient TransNet funding is available to cover program costs associated with TF-332. ONGOING FISCAL IMPACT The improvements will require only routine City maintenance. Attachments: 1. Location Map - Existing and Proposed Speed Limits 2. AAA Publication “Effective Speed Zoning Why and How” - Dated 2012 Staff Contact: Muna Cuthbert, Senior Civil Engineer City of Chula Vista Printed on 11/16/2017Page 3 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 30 ORDINANCE NO. _________ ORDINANCE OF THE CITY OF CHULA VISTA DECREASING THE ESTABLISHED SPEED LIMIT ON QUINTARD STREET BETWEEN ORANGE AVENUE AND THIRD AVENUE AND BETWEEN FIRST AVENUE AND HILLTOP DRIVE FROM 30 MILES PER HOUR TO 25 MILES PER HOUR, AND AMENDING SCHEDULE X OF THE REGISTER MAINTAINED IN THE OFFICE OF THE CITY ENGINEER TO REFLECT THE REVISED SPEED LIMITS (FIRST READING) WHEREAS, staff completed a review of the road conditions and roadside characteristics for two street segments along Quintard Street in order to determine the speed limit in accordance with the California Vehicle Code (CVC). These segments are as follows: Quintard Street between Orange Avenue and Third Avenue Quintard Street between First Avenue and Hilltop Drive; and WHEREAS, the CVC establishes the prima facie speed limit for all streets in the State. The prima facie speed limit applicable to Qunitard Street is 25 miles per hour (mph). An Engineering and Traffic Survey (E&TS) is required to change the prima facie speed limits; and WHEREAS, the CVC requires that local agencies review local speed limits every five to ten years to determine if the existing street segment speed limits require updating; and WHEREAS, currently, the existing posted speed limit on Quintard Street is as follows: 30 mph between Orange Avenue and Third Avenue 30 mph between First Avenue and Hilltop Drive; and WHEREAS, based on the road conditions, roadside characteristics and CVC, staff has determined that the speed limits on segments of Quintard Street need to be reduced; and WHEREAS, Sections 515 and 240 of the CVC define, a two-lane road, as a “residence or business” district as determined by the number of residences and businesses fronting the street; and WHEREAS, these two segments of Quintard Street qualify as “residence and business” district and, by statue per CVC Section 22352, also qualify for a 25 mph prima facie speed limit; and WHEREAS, on September 6, 2017, the City of Chula Vista Safety Commission concurred with staff’s recommendation; and WHEREAS, this recommendation and other information in the City Engineer’s report has been fully considered by the City Council. 2017-11-21 Agenda Packet Page 31 Ordinance No. ____ Page 2 NOW, THEREFORE, the City Council of the City of Chula Vista does hereby ordain as follows: I. DECLARE SPEED LIMIT AND AMEND SCHEDULE X That the speed limit on Quintard Street be declared and Schedule X of the register maintained in the office of the City Engineer be amended to reflect the revised speed limit as follows: 10.48.020 Schedule X – Established Speed Limits in Certain Zones – Designated Quintard Street between Orange Avenue and Third Avenue - 25 mph prima facie speed limit Quintard Street between First Avenue and Hilltop Drive - 25 mph prima facie speed limit II. EFFECTIVE DATE This ordinance shall take effect and be in full force on the thirtieth day from and after its final adoption. Presented by Approved as to form by ______________________________________________________ William S. Valle Glen R. Googins Director of Engineering and City Attorney Capital Projects/City Engineer 2017-11-21 Agenda Packet Page 32 LOCATION MAP AND EXISTING SPEED LIMITS QUINTARD STREET 30 MPH - EXISTING 25 MPH - PROPOSED QUINTARD STREET 30 MPH - EXISTING 25 MPH - PROPOSED QUINTARD STREET 30 MPH - EXISTING 2017-11-21 Agenda Packet Page 33 2017-11-21 Agenda Packet Page 34 2017-11-21 Agenda Packet Page 35 2017-11-21 Agenda Packet Page 36 2017-11-21 Agenda Packet Page 37 2017-11-21 Agenda Packet Page 38 2017-11-21 Agenda Packet Page 39 2017-11-21 Agenda Packet Page 40 2017-11-21 Agenda Packet Page 41 2017-11-21 Agenda Packet Page 42 2017-11-21 Agenda Packet Page 43 2017-11-21 Agenda Packet Page 44 2017-11-21 Agenda Packet Page 45 2017-11-21 Agenda Packet Page 46 City of Chula Vista Staff Report File#:17-0106, Item#: 4. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE 2017 CITY OF CHULA VISTA STANDARD SPECIAL PROVISIONS AND OTHER REFERENCE DOCUMENTS GOVERNING ENGINEERING AND CONSTRUCTION STANDARDS, AND AUTHORIZING THE CITY ENGINEER OR DESIGNEE TO ADOPT AND APPROVE ON BEHALF OF THE CITY FUTURE EDITIONS OF AND AMENDMENTS TO THE STANDARD SPECIAL PROVISIONS AND REFERENCE DOCUMENTS GOVERNING ENGINEERING AND CONSTRUCTION STANDARDS RECOMMENDED ACTION Council adopt the resolution. SUMMARY City staff has prepared revisions to the City of Chula Vista Standard Special Provisions. The Special Provisions amend the Standard Specifications for Public Works Construction (“Greenbook”) for projects within the City’s jurisdiction. City staff has also revised the Chula Vista Public Works Design and Construction Standards, 2002 Edition, to reflect changes in standard engineering practices and current planning policies affecting public works and subdivision design. Said revised standards have been renamed the “City of Chula Vista Department of Engineering and Capital Projects Design and Construction Standards, 2017”. ENVIRONMENTAL REVIEW Environmental Notice The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Determination The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because 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 required. BOARD/COMMISSION RECOMMENDATION Not applicable. City of Chula Vista Printed on 11/16/2017Page 1 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 47 File#:17-0106, Item#: 4. DISCUSSION Chula Vista Standard Special Provisions The Standard Specifications for Public Works Construction, also known as the “Greenbook”, provides general specifications used in Public Works construction projects. Most local agencies use the “Greenbook” to provide contractors with more uniformity when competitively bidding projects. It is standard practice for cities to implement changes to the “Greenbook” that address the design and construction requirements for projects within the City’s jurisdiction. The proposed City of Chula Vista Standard Special Provisions, dated November 2017, have been revised to include the City’s changes to “Part I, General Provisions” as well as to “Part 2, Construction Materials”. This will eliminate the need to reproduce these amendments to the Special Provision items in our CIP contracts. Revisions have also been made to reference the edition of the Greenbook currently adopted by the City. Any mention of a specific year’s edition is now omitted. This will eliminate the continual need to update the City’s Special Provisions merely to reference a newly adopted edition of the Greenbook. Public Works Design and Construction Standards The proposed 2017 Design and Construction Standards revises the July 2015 edition and is recommended for approval. This document provides design guidelines and/or specifications for the design and construction of public facilities (e.g. streets, drainage systems, sewer systems, street lights, traffic signals). These revisions to the Standard Drawings and Specifications are recommended in order to strengthen our design standards (i.e. construction details, types of construction materials, construction methods, and alternate products). Examples of the changes to the Design and Construction Standards are: revision of the document title to reflect the stewardship of these standards being that of the Department of Engineering and Capital Projects; renumbering of the standard drawings to allow for the combining of Design and Construction drawings into “groups” by type of work (e.g. “Grading”, “Drainage”, “Sewer”); all drawings redrafted to provide a uniform appearance throughout; and the addition of new trench repair requirements for streets under moratorium. Adoption of Current Engineering and Construction References In order to ensure that the City is utilizing the latest applicable state standards, staff recommends that the current editions of the following references be adopted: 1. 2015 California Department of Transportation Standard Plans (“Caltrans Standard Plans”) 2. 2015 California Department of Transportation Standard Specifications (“Caltrans Standard Specifications”), and 3. 2014 California Manual on Traffic Control Devices (“MUTCD”), Revision 2 Authorization of City Engineer or Designee As with Resolution 2016-003, which authorized the City Engineer to approve future updates to the City of Chula Vista BMP Design Manual, this Council action will authorize the City Engineer orCity of Chula Vista Printed on 11/16/2017Page 2 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 48 File#:17-0106, Item#: 4. City of Chula Vista BMP Design Manual, this Council action will authorize the City Engineer or designee to adopt new editions and approve amendments to the reference documents below on behalf of the City: 1. City of Chula Vista Subdivision Manual (on a form prescribed or approved by the City Attorney) 2. Standard Specifications for Public Works Construction (“Greenbook”) 3. San Diego Regional Supplement to Standard Specifications for Public Works Construction 4. San Diego Regional Standard Drawings 5. City of Chula Vista Standard Special Provisions (on a form prescribed or approved by the City Attorney) 6. Chula Vista Department of Engineering and Capital Projects Design and Construction Standard Drawings 7. Caltrans Standard Plans 8. Caltrans Standard Specifications 9. MUTCD 10.Other reference documents governing engineering and construction standards 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 Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Staff is not independently aware, and has not been informed by any Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The adoption of the Chula Vista Standard Special Provisions - dated November 2017, the Chula Vista Department of Engineering and Capital Projects Design and Construction Standards, 2017 Edition, the California Department of Transportation Standard Plans, 2015 Edition, and the 2015 California Department of Transportation Standard Specifications supports Operational Excellence as it allows the City to take advantage of the latest achievements in construction materials and construction methods developed specifically to our region. CURRENT YEAR FISCAL IMPACT The adoption of these updated documents will have a minimal fiscal impact to the General Fund for purchasing and printing costs estimated at $500. These costs are included in the FY2017-2018 Engineering and Capital Projects Department’s budget. ONGOING FISCAL IMPACT There are no ongoing fiscal impacts associated with adoption of these updated documents. City of Chula Vista Printed on 11/16/2017Page 3 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 49 File#:17-0106, Item#: 4. ATTACHMENTS 1. 2017 City of Chula Vista Standard Special Provisions 2. 2017 City of Chula Vista Design and Construction Standards Staff Contact: Alan Reyes, Associate Civil Engineer Department of Engineering and Capital Projects City of Chula Vista Printed on 11/16/2017Page 4 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 50 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE 2017 CITY OF CHULA VISTA STANDARD SPECIAL PROVISIONS AND OTHER REFERENCE DOCUMENTS GOVERNING ENGINEERING AND CONSTRUCTION STANDARDS, AND AUTHORIZING THE CITY ENGINEER OR DESIGNEE TO ADOPT AND APPROVE ON BEHALF OF THE CITY FUTURE EDITIONS OF AND AMENDMENTS TO THE STANDARD SPECIAL PROVISIONS AND REFERENCE DOCUMENTS GOVERNING ENGINEERING AND CONSTRUCTION STANDARDS WHEREAS, Engineering staff has prepared revisions to the 2015 City of Chula Vista Standard Special Provisions, which include with the design and construction requirements set by the Standard Specifications for Public Works Construction (“Greenbook”) and amendments for projects within the City’s jurisdiction; and WHEREAS, Engineering staff has prepared revisions to the Chula Vista Public Works Design and Construction Standards, 2002 Edition, to reflect changes in standard engineering practices and current planning policies affecting public works and subdivision design by incorporating changes recommended by the Departments of Public Works, Engineering and Capital Projects, Building and Park Construction, and Planning and Building; and WHEREAS, in order to ensure that the City is utilizing the latest applicable state standards, staff recommends that the current editions of the following references be adopted: 1. 2015 California Department of Transportation Standard Plans (“Caltrans Standard Plans”) 2. 2015 California Department of Transportation Standard Specifications (“Caltrans Standard Specifications”) 3. 2014 California Manual on Traffic Control Devices (“MUTCD”), Revision 2 WHEREAS, in order to facilitate and expedite the adoption and approval of future editions and amendments to reference documents governing engineering and construction standards, staff recommends authorizing the City Engineer or designee to adopt and approve on behalf of the City future editions and amendments to the references listed below: 1. City of Chula Vista Subdivision Manual (on a form prescribed or approved by the City Attorney) 2. Standard Specifications for Public Works Construction (“Greenbook”) 3. San Diego Regional Supplement to Standard Specifications for Public Works Construction 4. San Diego Regional Standard Drawings 5. Chula Vista Standard Special Provisions (on a form prescribed or approved by the City Attorney) 2017-11-21 Agenda Packet Page 51 6. Chula Vista Department of Engineering and Capital Projects Design and Construction Standard Drawings 7. Caltrans Standard Plans 8. Caltrans Standard Specifications 9. MUTCD 10. Other reference documents governing engineering and construction standards NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista that it adopts the following: 1. 2017 City of Chula Vista Standard Special Provisions 2. 2017 Chula Vista Department of Engineering and Capital Projects Design and Construction Standards 3. 2015 California Department of Transportation Standard Plans 4. 2015 California Department of Transportation Standard Specifications 5. 2014 California Manual on Traffic Control Devices, Revision 2 BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that it authorizes the City Engineer or designee to adopt and approve on behalf of the City future editions and amendments to the following: 1. City of Chula Vista Subdivision Manual (on a form prescribed or approved by the City Attorney) 2. Standard Specifications for Public Works Construction, 2012 (“Greenbook”) 3. San Diego Regional Supplement to Standard Specifications for Public Works Construction 4. San Diego Regional Standard Drawings 5. City of Chula Vista Standard Special Provisions (on a form prescribed or approved by the City Attorney) 6. Chula Vista Department of Engineering and Capital Projects Design and Construction Standard Drawings 7. California Department of Transportation Standard Plans 8. California Department of Transportation Standard Specifications 9. California Manual on Uniform Traffic Control Devices10. Other reference documents governing engineering and construction standards Presented by Approved as to form by William S. Valle Glen R. Googins Director of Engineering and Capital Projects/ City Attorney City Engineer 2017-11-21 Agenda Packet Page 52 CITY OF CHULA VISTA STANDARD SPECIAL PROVISIONS NOVEMBER 2017 For use with the Standard Specifications for Public Works Construction, “Greenbook” 2015 Edition, and all current supplements thereto and 2012 San Diego Regional Supplement To the 2012 Edition of the “Greenbook” Standard Specifications for Publics Works Construction, and all current supplements thereto _____________________________________________ City Engineer _____________________________________________ Date 2017-11-21 Agenda Packet Page 53 i CITY OF CHULA VISTA STANDARD SPECIAL PROVISIONS November 2017 TABLE OF CONTENTS PART 1 GENERAL PROVISIONS..........................................................................................................1 SECTION 1 – TERMS, DEFINITIONS, ABBREVIATIONS, UNITS OF MEASURE, AND SYMBOLS.........................................................................................................................1 1-2 TERMS AND DEFINITIONS...............................................................................................................1 SECTION 2 - SCOPE AND CONTROL OF WORK..............................................................................2 2-1 AWARD AND EXECUTION OF THE CONTRACT.......................................................................2 2-1.2 Return of Bidder's Guaranty:.............................................................................................2 2-1.3 Non-Collusion Provision:.....................................................................................................2 2-1.4 No Waiver:............................................................................................................................3 2-1.5 Requests for Information (RFI):.........................................................................................3 2-1.6 Severability:..........................................................................................................................3 2-1.7 Cumulative Remedies:.........................................................................................................3 2-3 SUBCONTRACTS...............................................................................................................................3 2-3.4 Subcontract Requirments: ..................................................................................................3 2-5 PLANS AND SPECIFICATIONS......................................................................................................3 2-5.3 Submittals..............................................................................................................................................4 2-5.3.1 General...............................................................................................................................................4 2-9 SURVEYING. ......................................................................................................................................4 2-9.2 Construction Surveying/Staking.........................................................................................4 2-9.3 Private Engineers. ................................................................................................................4 2-10 AUTHORITY OF THE BOARD AND THE ENGINEER. ............................................................5 SECTION 3 - CHANGES IN WORK.......................................................................................................5 3-2 WORK INITIATED BY THE AGENCY. .......................................................................................5 3-3 EXTRA WORK..................................................................................................................................6 3-3.2 Payment................................................................................................................................6 3-3.2.3 Markup..............................................................................................................................................6 3-3.2.3.1 Work by Contractor.......................................................................................................................6 3-3.2.3.2 Work by Subcontractor. .............................................................................................................6 3-5 DISPUTED WORK. ..........................................................................................................................6 3-5.1 Administrative Claims Requirements and Procedures..................................................6 3-6 DISPUTE RESOLUTION.................................................................................................................6 SECTION 4 – CONTROL OF MATERIALS..........................................................................................7 4-1 MATERIALS AND WORKMANSHIP...............................................................................................7 4-1.3 Inspection Requirements....................................................................................................7 4-1.3.2 Inspection by the Agency................................................................................................................7 4-1.4 Test of Materials..................................................................................................................7 4-1.4.1 Testing - Private Contracts and Permittee....................................................................................8 2017-11-21 Agenda Packet Page 54 ii SECTION 6 - PROSECUTION, PROGRESS, AND ACCEPTANCE OF THE WORK....................8 6-6 DELAYS AND EXTENSIONS OF TIME...........................................................................................8 6-6.5 Contract Time Extension and Schedule Analysis.............................................................8 6-8 COMPLETION, ACCEPTANCE, AND WARRANTY.....................................................................8 6-8.3 Warranty..............................................................................................................................8 6-9 LIQUIDATED DAMAGES. .................................................................................................................9 SECTION 7 - RESPONSIBILITIES OF THE CONTRACTOR.........................................................10 7-3 LIABILITY INSURANCE................................................................................................................10 7-4 WORKER'S COMPENSATION INSURANCE. ..........................................................................12 7-5 PERMITS. ........................................................................................................................................12 7-13 LAWS TO BE OBSERVED..............................................................................................................13 7-13.1 Taxes.................................................................................................................................13 7-13.2 Contractors' License.......................................................................................................13 7-13.3 City Business License......................................................................................................13 7-15 RECORD RETENTION AND AVAILABILITY............................................................................13 SECTION 9 – MEASUREMENT AND PAYMENT.............................................................................14 9-1 MEASUREMENT OF QUANTITIES FOR UNIT PRICE WORK................................................14 9-1.1 General. .............................................................................................................................14 PART 2 CONSTRUCTION MATERIALS............................................................................................15 SECTION 207 - PIPE...............................................................................................................................15 207-2 Reinforced Concrete Pipe.................................................................................................................15 207-2.1 General.............................................................................................................................15 207-11 Corrugated Metal Pipe and Pipe Arches (Steel). .........................................................................15 207-11.1 General..........................................................................................................................15 207-13 CORRUGATED ALUMINUM PIPE AND PIPE ARCHES......................................................16 207-13.1 General..........................................................................................................................16 Add the following: .........................................................................................................................16 SECTION 302 – ROADWAY SURFACING .........................................................................................16 302-5 ASPHALT CONCRETE PAVEMENT..........................................................................................16 302-5.5 Distribution and Spreading...........................................................................................16 302-5.6 Rolling. ............................................................................................................................17 302-5.6.2 Density and Smoothness..............................................................................................................17 302-5.8 Manholes (and other structures)...................................................................................18 SECTION 303-CONCRETE AND MASONRY CONSTRUCTION...................................................18 303-1 CONCRETE STRUCTURES..........................................................................................................18 303-1.7 Placing Reinforcement..................................................................................................18 303-1.7.1 General.........................................................................................................................................18 303-5 CONCRETE CURBS, WALKS, GUTTER, CROSS GUTTERS, ALLEY INTERSECTIONS, ACCESS RAMPS, AND DRIVEWAYS. ....................................................................................19 303-5.1 Requirements...................................................................................................................19 303-5.1.1 General..........................................................................................................................................19 303-5.5 Finishing..........................................................................................................................20 2017-11-21 Agenda Packet Page 55 iii 303-5.5.3 Walk.............................................................................................................................................19 SECTION 306- UNDERGROUND CONDUIT CONSTRUCTION....................................................19 306-1 OPEN TRENCH OPERATIONS....................................................................................................19 306-1.1 Trench Excavation. ........................................................................................................19 306-1.1.1 General.........................................................................................................................................19 306-1.2 Installation of Pipe. .........................................................................................................19 306-1.2.1 Bedding........................................................................................................................................19 306-1.2.1.1 General.....................................................................................................................................19 306-1.2.2 Pipe Laying..................................................................................................................................20 306-1.2.3 Field Jointing of Clay Pipe.........................................................................................................20 306-1.2.12 Maximum Allowable Deflection for Plastic Pipe & Fittings..................................................21 306-1.4 Testing Pipelines...............................................................................................................21 306-1.4.7 Balling of Sewers, ......................................................................................................................21 SECTION 307 - STREET LIGHTING AND TRAFFIC SIGNAL SYSTEM.....................................21 307-1 GENERAL.........................................................................................................................................21 307-1.2 Regulations and Codes...................................................................................................21 307-8 FOUNDATIONS, FOUNDATION CAPS AND SLABS. ..............................................................21 307-8.2 Foundations. ...................................................................................................................21 307-10 STANDARDS, PEDESTALS AND MAST ARMS......................................................................22 307-10.1 General. .......................................................................................................................22 307-10.1.1 Prestressed Concrete Standards..............................................................................................22 307-14 SERVICES. ...................................................................................................................................24 307-14.2 Services on Utility Owned Poles..................................................................................24 SECTION 400 - ALTERNATIVE ROCK PRODUCTS, ASPHALT CONCRETE, PORTLAND CEMENT CONCRETE AND UNTREATED BASE MATERIAL........................25 400-2 UNTREATED BASE MATERIALS................................................................................................25 400-2.1 General............................................................................................................................25 400-2.1.1 Requirements .............................................................................................................................25 2017-11-21 Agenda Packet Page 56 1 PART 1 GENERAL PROVISIONS SECTION 1 – TERMS, DEFINITIONS, ABBREVIATIONS, UNITS OF MEASURE, AND SYMBOLS Part 1, 2,and 3 shall conform to Part 1, 2,and 3 of the Standard Specifications for Public Works Construction (The “Greenbook”), current edition, and all current supplements thereto including without limitation the San Diego Regional Supplement thereto, current edition, as approved and adopted by the San Diego Regional Standards Committee except for the following changes, substitutions, and/or additions. 1-2TERMS AND DEFINITIONS. ADD or SUBSTITUTE for: Agency - the City of Chula Vista, State of California Agreement - See Contract Board -the City Council of the City of Chula Vista City –see Agency Engineer - the City Engineer of the City of Chula Vista, acting directly or through properly authorized agents, acting within the scope of the particular duties delegated to them. Laboratory -The designated laboratory authorized by the Engineer to test materials and work involved in the Contract. Notice -Shall be deemed to have been given if served personally on the Contractor or his/her authorized agent, or mailed to the Contractor postage prepaid. Contract Documents – The Contract, Addenda, Notice to Contractors, Affidavit to Accompany Bid Proposal, Contractor’s accepted Bid, Contractor’s post-bid documentation submitted prior to award of the Contract, Bonds, permits from jurisdictional regulatory agencies, Special Provisions, City of Chula Vista Standard Special Provisions (current edition), Standard Special Provisions, Plans, Standard Plans, Standard Specifications, Reference Specifications, Change Orders, Field Orders, Supplemental Agreements, and City standard drawings and reference documents. City of Chula Vista Standard Special Provisions -Standard Special Provisions prepared and approved by the City Engineer for use with the Standard Specifications, current edition. Project – See Work 2017-11-21 Agenda Packet Page 57 2 Standard Special Provisions -"San Diego Regional Supplement" to the"Standard Specifications for Public Works Construction", current edition, as approved and adopted by the San Diego County Regional Standards Committee. Standard Specifications -"Standard Specifications for Public Works Construction" (The “Greenbook”), current edition, and all current supplements thereto. Standard Plans -San Diego Area Regional Standard Drawings, current editions,and all current supplements thereto, Chula Vista Construction Standards, current editionsand all current supplements thereto, details for standard structures, devices or instructions referred to on the plans or in specifications by title or number. State Standard Specifications –Portion of the State Standard Specifications, State of California, Department of Transportation, current edition and all current supplements thereto State Standard Plans – Portion of the State Standard Plans, State of California, Department of Transportation, current edition and all current supplements thereto . SECTION 2 - SCOPE AND CONTROL OF WORK 2-1 AWARD AND EXECUTION OF THE CONTRACT. DELETE in its entirety and SUBSTITUTE with the following: The award of the Contract will be to the lowest responsible bidder whose proposal complies with all requirements describedin the bid documents and Contract Documents. If made at all, the award will be made within one hundred and twenty (120) days after the opening of bids. All bids will be compared on the basis of the Engineer's estimate of quantities of work to be done. The Contract shall be signed by the successful bidder, and returned together with the Contract bonds, within ten (10) working days after the bidder has received notice that the Contract has been awarded. No proposal shall be considered binding upon the City until the execution of the Contract. Failure to execute a Contract and file acceptable bonds as provided herein within ten (10) working days after the bidder has received notice that the Contract has been awarded, shall be just cause for the annulment of the award and the forfeiture of the bidder’s proposal guaranty. ADD: 2-1.2 Return of Bidder's Guaranty: Within ten (10) working days after the award of the Contract, the City will return the cash or checks accompanying the proposals which are not to be considered in making the award. All other proposal guaranty will be held until the Contract has been finally executed, after which the cash or checks will be returned. Bid bonds will be returned upon request. 2-1.3 Non-Collusion Provision: The Contractor to whom this Contract is to be awarded shall file a sworn Non-Collusion affidavit executed by, or on behalf of, the person, firm, association, or corporation to whom the Contract is awarded. This affidavit shall be executed and sworn to by the successful bidder before such persons as are authorized by the 2017-11-21 Agenda Packet Page 58 3 laws of the State of California to administer oaths, on the form included in the Contract Documents. The original of such sworn statement shall be filed with the City Clerk. 2-1.4 No Waiver. The failure of the City to insist, in any one or more instances, upon the performance of any provision of the ContractDocuments, orto exercise any right in the Contract, shall not be construed as a waiver or relinquishment of such provisions or rights. Any waiver of any breach of this Contract shall not be held to be a waiver of any other or subsequent breach. Any waiver issued by the City of any provision of the Contract Documents shall only be effective if issued in writing by the Cityand shall be specific and shall apply only to the particular matter concerned and not to other similar or dissimilar matters. 2-1.5 Requests for Information (RFI). If the work to be done is not sufficiently detailed or explained in the Contract Documents, the Contractor shall submit in writing a request-for-information (RFI) to the Engineer for further explanation. RFIs related to the Work shall be addressed to the Engineer for the Engineer’s decision pursuant to section 2-10, “AUTHORITY OF THE BOARD AND THE ENGINEER.” 2-1.6 Severability. If any term, provision, or portion of any term or provision of the Contract Documentsis declared invalid or unenforceable by any court of lawful jurisdiction, then the remaining terms and provisions or portions of terms or provisions will not be affected thereby and will remain in full force and effect. 2-1.7 Cumulative Remedies. The duties and obligations imposed by the Contract Documents and the rights and remedies available to the parties thereto, and, in particular but without limitation, the warranties, guarantees, and obligations imposed upon the Contractor by theContract Documents and all of the rights and remedies available to City thereunder, are in addition to, and are not to be construed in any way as a limitation of any rights and remedies imposed or available by laws, regulations, or codes, by special warranty or guarantee or by other provisions of the Contract Documents. 2-3 SUBCONTRACTS. ADD the following sub-section 2-3.4 Subcontract Requirements. Contractor shall require that all subcontracts for the Project incorporate the Contract Documents to the extent of the work to be performed under that subcontract. Contractor shall require that all subcontracts for the Project require each subcontractor, with respect to the work to be performed under that subcontract, to defend, indemnify, protect, and hold harmless the Indemnified Parties (as defined below) in the same manner and to the same extent that Contractor is required to defend, indemnify, protect, and hold harmless the Indemnified Parties under the Contract. Contractor shall require that all subcontracts for the Project require each subcontractor, with respect to the work to be performed under that subcontract, to procure and maintain insurance in the same manner and to the same extent that Contractor is required to procure and maintain insurance under the Contract, including but not limited to designating the City, its officers, officials, employees, and volunteers as additional insureds. Contractor shall require that all subcontractors for the Project beappropriately licensed for the duration of the work performed under the subcontract. In the event that a subcontractor is not properly licensed, Contractor shall immediately cease payment to that subcontractor and Contractor shall return to the City any payment made to that subcontractor for work performed during the period for which the subcontractor was not licensed. 2017-11-21 Agenda Packet Page 59 4 Contractor shall require each subcontractor for the Project to enter into subcontract agreements with the same material terms as those contained herein for all subcontracts of every tier. Contractor is fully responsible for the acts and omissions of all subcontractors of every tier, and for all persons and entities either directly or indirectly employed for the Project in the same manner and to the same extent that Contractor is responsible for the acts and omissions of persons directly employed by it or under its control under the Contract. Where the Contract Documents require that a particular product be installed or applied by an applicator approved by the manufacturer, Contractor shall ensure that the subcontractor employed for such work is approved by that manufacturer. In any dispute between the Contractor and the Subcontractor the City shall not be made a party to any judicial or administrative proceeding to resolve the dispute. 2-5 PLANS AND SPECIFICATIONS. 2-5.3 Submittals. 2-5.3.1 General. ADD: In no event shall the Citybe obligated to return asubmittal withintwenty (20)working days where, in the City’ssole discretion, Contractor hasunnecessarily delayed delivery of a submittal, delivered an excessive number of submittals, or delivered submittals containing excessive errors or other deficiencies. Further, in no event shall the City be obligated to return a submittal within twenty (20) working days where, in the City’s sole discretion,changed conditions or circumstances have arisen that affect or are connected with a particular submittal. 2-9 SURVEYING. 2-9.2 Survey Service. DELETE entire section & SUBSTITUTE with the following: Except for private contracts, the City of Chula Vista Surveying Group shall provide one set of construction staking. The Project shall be staked by City of Chula Vista Land Survey Section as requested by the Contractor. Staking requests shall be in writing and presented to the Project inspector at least 4 working days in advance. It is the Contractor’s responsibility to install and maintain the traffic control devices as well as such additional traffic control devices as may be required to ensure safe movement of construction staking staff through and around the work area, and to preserve construction stakes and marks. Any additional staking or re-staking shall be performed by the City at the Contractor’s expense. 2-9.3 Private Engineers. ADD: 2017-11-21 Agenda Packet Page 60 5 For work done under private contracts, (i.e. permits and land development), the Contractor shall provide surveying services under the following conditions: a) All provisions of Section 8771(b) of the Professional Land Surveyors’ Act (Business and Professions Code) shall be adhered to. b) Contractor shall retain the services of a Land Surveyor or Civil Engineer licensed to practice land surveying in the State of California to perform all work under this section. c) All existing surveying monuments in and around the work area shall be clearly identified prior to the beginning of construction. A list of the monuments identified must be made available to the City for verification. Monuments may exist which are not shown on the plans. The contractor must make every effort to preserve existing surveying monuments. Where this is not possible, or where any monuments are destroyed by the contractors negligence, they must be replaced by the Land Surveyor or Civil Engineer and a Record of Survey in conformance with the Land Surveyor's Act filed in the office of the San Diego County Recorder. A Corner Record may be filed at the discretion of the City Surveying Group. A copy of the record of Survey or Corner Record must be made available to the City Surveying Group for review, correction and approval prior to being sent for recording. 2-10 AUTHORITY OF THE BOARD AND THE ENGINEER. ADD: Whenever the Contractor varies the period during which work is carried on each day, Contractor shall give due notice to the Engineer, so that proper inspection may be provided. The Contractor shall pay a fee established by the City for inspection services, required outside of regular working hours, and on Saturdays, Sundays, and holidays recognized by the City. Any work done in the absence of the Engineer will be subject to rejection. SECTION 3 - CHANGES IN WORK 3-2 CHANGES INITIATED BY THE AGENCY. DELETE the Section in its entirety and SUBSTITUTE with the following: The City agrees to make payment for line item work under the Contract solely at the Contract Unit Price and solely for line item units actually performed and approved by the Cityand other applicable agencies with jurisdiction. The City shall have the option of increasing or decreasing the unit quantity for all bid items in the proposal by any amount without a change in the Contract Unit Price. There will be no adjustment in compensation as permitted in Section 3-2 of the Standard Specificationsor otherwise, unless explicitly agreed to by means of executed Change Order between City and Contractor. Nothing in this section shall be construed to limit City’s right to increase or decrease any quantities of work in the Contract as allowed by the Standard Specifications or pertinent law. 2017-11-21 Agenda Packet Page 61 6 3-3 EXTRA WORK. 3-3.2 Payment. 3-3.2.3 Markup. 3-3.2.3.1 Work by Contractor. ADD: Markup percentages to be added to the cost of extra work performed by contractor are as follows: 1) Labor 10% 2) Material 5% 3) Equipment 5% 4) Bonds Premiums 1% 3-3.2.3.2 Work by Subcontractor. ADD: A markup of 5% on the first $5,000 and 2 1/2% on work added in excess of $5,000 of the subcontracted portion of the extra work. 3-5 DISPUTED WORK. ADD: 3-5.1 Administrative Claims Requirements and Procedures. No suit shall be brought arising out of this Contract, against the City, unless a claim has first been presented in writing and filed with the City of Chula Vista and acted upon by the City of Chula Vista in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may be 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 the City in the implementation of same. Upon request by City, Contractor shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Contract. 3-6 DISPUTE RESOLUTION. Contractor acknowledges and agrees that the provisions of California Public Contract Code section 9204 are incorporated into this Contract as though fully set forth herein. The claim resolution processes herein shall not relieve Contractor of complying with all obligations to present claims in strict accordance with the Chula Vista Municipal Code and the California Government Code. Contractor may present a claim, as defined in Section 9204 of the California Public Contract Code, in strict accordance with that section. Contractor shall furnish such reasonable and necessary documentation to support the claim and to permit the Director of Public Works or City Engineer, in their sole discretion, to make a determination regarding the claim. Upon satisfactory receipt of a complete claim, including reasonable and necessary documentation to support the claim, the Director of Public Works or City Engineer shall conduct a reasonable review of the claim and, within a period not to exceed forty five (45) days, shall provide Contractor with a written statement identifying what portion of the claim is disputed and what portion is undisputed. Upon receipt of a claim, the 2017-11-21 Agenda Packet Page 62 7 Director of Public Works or City Engineerand Contractor may, by mutual agreement, extend the time period for the Director of Public Works or City Engineerto review and provide a written statement in response to the claim. After the Director of Public Works or City Engineer issues their written statement, any payment due on an undisputed portion of the claim shall be processed and made within sixty (60) days thereafter. If Contractor disputes the written statement provided in response to its claim, or if the Director of Public Works or City Engineerfail to respond to a claim within the time prescribed, Contractor may make a demand, in writing and sent by registered mail or certified mail, return receipt requested, for an informal conference to meet and confer for settlement of the issues in dispute. Upon satisfactory receipt of a sufficient and complete written demand from Contractor, the Director of Public Works or City Engineer shall schedule an informal conference to meet and confer within thirty (30) days of actual receipt of the written demand for the purpose of settlement of the disputed portion of the claim. Within ten (10) business days following the conclusion of the meet and confer conference, if the claim or any portion of the claim remains in dispute, the Director of Public Works or City Engineer shall provide the Contractor with a written statement identifying the portion of the claim that remains in dispute and the portion that is undisputed. After the Director of Public Works or City Engineer issues their written statement, any payment due on an undisputed portion of the claim shall be processed and made within sixty (60) days. Any disputed portion of the claim, as identified by the Contractor in writing, shall be submitted to nonbinding mediation in accordance with Section 9204 of the California Public Contract Code, unless the parties mutually agree, in writing, to waive, submission of the claim to nonbinding mediation. The City and Contractor shall share the associated mediation costs equally. The City and Contractor shall each pay their respective costs for attorneys’ fees and/or expert fees in connection with the mediation. If mediation is waived or unsuccessful, the parts of the claim remaining in dispute shall be subject to applicable procedures outside this section. Failure by the Director of Public Works or City Engineer to respond to a claim within the time requirements of section 9204 of the California Public Contract Code shall result in the claim being deemed rejected in its entirety. A claim that is denied by reason of the failure of the Director of Public Works or City Engineer to have responded to a claim, or thefailure to otherwise meet the time requirements of section 9204 of the California Public Contract Code, shall not constitute an adverse finding with regard to the merits of the claim or the responsibility or qualifications of the Contractor. Contractor may present a claim on behalf of a subcontractor or lower tier subcontractor only as allowed by and in strict accordance with Section 9204 of the California Public Contract Code. SECTION 4 – CONTROL OF MATERIALS 4-1 MATERIALS AND WORKMANSHIP. 4-1.3 Inspection Requirements. 4-1.3.2 Inspection by the Agency. ADD: For private contracts, all costs of inspection at the source, including salaries and mileage costs, shall be paid by the Permittee. 4-1.4 Test of Materials. 2017-11-21 Agenda Packet Page 63 8 ADD: 4-1.4.1 Testing - Private Contracts and Permittee When required by the Engineer, tests shall be made to determine compliance with the plans and specifications. The tests shall be performed by a laboratory approved by the Engineer and the number of tests shall be determined by the Engineer. The costs of these tests shall be borne by the Contractor. SECTION 6 – PROSECUTION, PROGRESS, AND ACCEPTANCE OF THE WORK 6-6 DELAYS AND EXTENSIONS OF TIME. 6-6.5 Contract Time Extension and Schedule Analysis. A claim for extension in Contract time will not be granted unless the Contractor can demonstrate through a Critical Path Method (CPM) analysis of the Schedule’s critical path(s) that the increases in the time to perform or complete the Work, or specified part of the Work, beyond the corresponding Contract time arise from unforeseeable causes beyond the control and without the fault or negligence of Contractor, and that such causes in fact affected the performance or completion of the Work, or specified part of the Work in question, beyond the corresponding Contract time, despite the Contractor's reasonable and diligent actions to protect against those effects. 6-8 COMPLETION, ACCEPTANCE, AND WARRANTY 6-8.3 Warranty. DELETE in its entirety and SUBSTITUTE with the following: 1. Contractor shall warranty and repair all defective materials and workmanship for a period of one (1) year. The warranty period shall commence on the date the Project was accepted by City. The warranty period for specific items covered under any manufacturer or supplier warranty shall commence on the date they are placed into service at the direction of or as approved by the Engineer in writing. In addition, Contractor shall warranty the Work against all latent and patent defects for a period of 10 years. 2. Contractor shall assign to City, in writing, all warranties, express or implied, from any subcontractors, manufacturers, or suppliers, of any tier, for materials furnished for the Project or Workperformed, and such warrantiesshall be delivered to the Engineer prior to the acceptance of the Contractor’s performance of the Contract. 3. Contractor shall replace or repair defective materials and workmanship in a mannersatisfactory to the Engineer after notice to do so from the Engineer and within the time specified in the notice. If Contractorfailsto make such replacements or repairs within the time specified in the notice, the City may perform the replacement or repairs at Contractor’s expense. If Contractorfails toreimburse the City for the actual costs, Contractor’s Surety shall be liable for such cost. 4. Contractor shall involve the manufacturer in the installation and startup as needed to secure any extended warranty required. 5. Nothing herein is intended to limit any manufacturer’s warranty whichprovides the City with greater warranty rights than set forth in this section or the Contract Documents. 6. These specifications are not intended to constitute a period of limitationsor waiver of any other rights or remedies City may have regarding Contractor’sother obligations under the Contract Documents or applicable law. 2017-11-21 Agenda Packet Page 64 9 7. The warranty shall include all components. The form of the warrantyshall be subject to the approval of the Engineer in his/her sole discretion. 8. Contractor shall respond and initiate corrective action in accordance with OSHA andwithin24 hours of the notice of the nonconforming Work that poses an imminent threat to person or property. 9. If within one (1) year (or a longer applicable warranty period) after the date for commencement of warranties under the Contract Documents, any item of the Work is determined to be defective by Engineer, in his/her sole discretion, Contractor shall promptly correct the defective items of the Work. 6-9 LIQUIDATED DAMAGES Contractor’s failure to complete the Work within the time allowed will result in damages being sustained by City. Such damages are, and will continue to be, impracticable and extremely difficult to determine. For each consecutive calendar day in excess of the time specified for completion of the Work plus additional days duly authorized and approved in writing by the Engineer, Contractor shall pay City, or have withheld monies due it, the sums described below: Contract Value Liquidated Damage Daily Amount Less than $100,000 $250 $100,000 or greater $1,000 Execution of the Contract shall constitute agreement by City and Contractor that the liquidated damage amount specified in the table aboveis the minimum value of the costs and actual damage caused by the failure of Contractor to complete the Work within the allotted time. Such sum is liquidated damages and shall not be construed as a penalty, and may be deducted from payments due the Contractor if such delay occurs. 2017-11-21 Agenda Packet Page 65 10 SECTION 7 - RESPONSIBILITIES OF THE CONTRACTOR 7-3 LIABILITY INSURANCE. DELETE Section in its entirety and SUBSTITUTE with the following: Contractor shall procure and maintain for the duration of the Contract, and for 10 years thereafter, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the Work by the Contractor, or his agents, representatives, employees, material suppliers, or subcontractors of every tier. MINIMUM SCOPE AND LIMIT OF INSURANCE Coverage shall be at least as broad as: 1.Commercial General Liability (CGL): Insurance Services Office Form CG 00 01, including products and completed operations, with limits of no less than $1,000,000 per occurrence for bodily injury, personal injury, and property damage. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this Project/location or the general aggregate limit shall be twice (2x) the required occurrence limit. 2.Automobile Liability: Insurance Services Office Form Number CA 0001 covering Code 1 (any auto), with limits no less than $1,000,000 per accident for bodily injury and property damage. 3.Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employers’ Liability insurance with a limit of no less than $1,000,000 per accident forbodily injury or disease. 4.Builder’s Risk (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project and no coinsurance penalty provisions. 5.Surety Bonds as described below. 6.Professional Liability (if Design/Build), with limits no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. 7.Contractors’ Pollution Legal Liability and/or Asbestos Legal Liability and/or Errors and Omissions (if Project involves environmental hazards) with limits no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. If Contractor maintains higher limits than the minimums shown above, the Cityrequires and shall be entitled to coverage for the higher limits maintained. 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 Contractor shall cause the insurer to reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or the Contractor shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. Other Insurance Provisions The insurance policies are to contain, or be endorsed to contain, the following provisions: 2017-11-21 Agenda Packet Page 66 11 1.The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL and automobile liability policies with respect to liability arising out of with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations and automobiles owned, leased, hired, or borrowed by or on behalf of the Contractor. General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance (at least as broad as ISO Form CG 20 10, 11 85 or both CG 20 10 and CG 23 37 forms if later revisions used). The Endorsement must not exclude Products / Completed Operations. 2. For any claims related to this Project, the Contractor’s insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Contractor’s insurance and shall not contribute with it. 3. Each insurance policy required by this clause shall provide that coverage shall not be canceled, except with notice to the City. Builder’s Risk (Course of Construction) Insurance Contractor may submit evidence of Builder’s Risk insurance in the form of Course of Construction coverage. Such coverage shall name the City as a loss payee as their interest may appear. If the Project does not involve new or major reconstruction, at the option of the City, an Installation Floater may be acceptable. For such projects, a Property Installation Floater shall be obtained that provides for the improvement, remodel, modification, alteration, conversion or adjustment to existing buildings, structures, processes, machinery and equipment. The Property Installation Floater shall provide property damage coverage for any building, structure, machinery or equipment damaged, impaired, broken, or destroyed during the performance of the Work, including during transit, installation, and testing at the City’s site. Claims Made Policies If any coverage required is written on a claims-made coverage form: 1. The retroactive date must be shown, and this date must be before the execution date of the Contract or the beginning of contract work. 2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of contract work. 3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start of work date, the Contractor must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work. 4. A copy of the claims reporting requirements must be submitted to the City for review. 5. If the services involve lead-based paint or asbestos identification/remediation, the Contractors Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification/remediation, the Contractors Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold. Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best rating of no less than A: VII, unless otherwise acceptable to the City. 2017-11-21 Agenda Packet Page 67 12 Waiver of Subrogation Contractor hereby agrees to waive rights of subrogation which any insurer of Contractor may acquire from Contractor by virtue of the payment of any loss. Contractor agrees to obtain any endorsement that may be necessaryto effect this waiver of subrogation. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the Cityfor all work performed by the Contractor, its employees, agents and subcontractors. Verification of Coverage Contractor shall furnish the Citywith original certificates and amendatory endorsements, or copies of the applicable insurance language, effecting coverage required by this Contract. All certificates and endorsements are to be received and approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Contractor’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time. Subcontractors Contractor shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein. Surety Bonds Contractor shall provide the following Surety Bonds: 1. Bid bond 2. Performance bond 3. Payment bond 4. Maintenance bond The Payment Bond and the Performance Bond shall be in a sum equal to the Contract price. If the Performance Bond provides for a one-year warranty a separate Maintenance Bond is not necessary. If the warranty period specified in the contract is for longer than one year a Maintenance Bond equal to 10% of the contract price is required. Bonds shall be duly executed by a responsible corporate surety, authorized to issue such bonds in the State of California and secured through an authorized agent with an office in California. Special Risks or Circumstances City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other circumstances. 7-4 WORKER'S COMPENSATION INSURANCE. DELETE Section in its entirety. 7-5 PERMITS ADD: Except as specified elsewhere in the Contract Documents, compliance with the provisions of Section 7- 5, shall be considered as included in the various contract items of work to which such regulations are applicable and no additional compensation shall be made to Contractor therefor. Further, the enforcement of any requirements of the permits required for the performance of the Work shall not be the basis for any additional compensation to Contractor. 2017-11-21 Agenda Packet Page 68 13 7-13 LAWS TO BE OBSERVED. ADD: 7-13.1 Taxes. All applicable State or Federal taxes shall be considered as included in the amount paid for the various items of work. The Contractor shall be responsible for payment of such taxes to the proper governmental authority. The Contractor shall keep fully informed and comply with all existing Federal and State laws and all Municipal Ordinances and Regulations of the City which in any manner affect those engaged or employed in the work, or the material used in the work, or which in any way affect the conduct of the work, and all such orders and decrees of bodies or tribunals having any jurisdiction or authority over the same. City of Chula Vista Resolution 3077 requires that all underground work be completed prior to the street being surfaced. 7-13.2 Contractors’ License. Contractors and all subcontractors shall be licensed in accordance with the provisions of Chapter 9 of Division III of the Business and Professions Code, State of California. 7-13.3 City Business License. The Contractor and subcontractors shall procure and maintain a valid City of Chula Vista Business License. ADD the following Section: 7-15 RECORD RETENTION AND AVAILABILITY. 1. The Contractor shall allow access by the City, the federal grantor agency, the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers and records of the Contractor pertinent to that specific Contract. 2. The Contractor shall retain all required records for three years after final payments are made and all other pending matters are closed. ADD the following Section: 7-16 DUTY TO DEFEND, INDEMNIFY, PROTECT, AND HOLD HARMLESS. 7-16.1 To the maximum extent permitted by law, Contractor shall defend, indemnify, protect, and hold harmless the City and its officials, officers, employees, agents, and volunteers (each an “Indemnified Party”, collectively the “Indemnified Parties”) from and against any and all claims, demands, actions, causes of action, suits, legal actions, legal proceedings, administrative proceedings, costs, expenses, liabilities, losses, judgments, injuries, and damages of any kind or nature whatsoever, in law or equity, to property or persons, including wrongful death (collectively, “Claims”or “Damages”), in any manner arising out of, resulting from, or connected with, either directly or indirectly, any act, omission, negligence, or willful misconduct of Contractor or any of its officials, officers, employees, agents, volunteers, consultants, sureties, subcontractors, or suppliers (individually a “Contractor Party”, collectively the “Contractor Parties”) concerning, regarding, or related to: (1) the failure to perform the Work; (2) the failure to comply with any obligation under the Contract Documents; (3) the performance, condition, or existence of the Work or improvements for the Project; (4) the maintenance of the Project until final acceptance by City and other agencies with jurisdiction; 2017-11-21 Agenda Packet Page 69 14 or (5) any violation of any Federal, state, or local law, regulation, or code, except for those Claims arising from the established active negligence, sole negligence, or willful misconduct of an Indemnified Party. 7-16.2 To the maximum extent permitted by law, Contractor’s defense obligations under section 7-16 include but are not limited immediately accepting all tenders for defense and defending all Indemnified Parties from and against any Claims concerning, regarding, or related to: (1) the failure to performthe Work; (2) the failure to comply with any obligation under the Contract Documents; (3) the performance, condition, or existence of the Work or improvements for the Project; (4) the maintenance of the Project until final acceptance by City and other agencies with jurisdiction; or (5) any violation of any Federal, state, or local law, regulation, or code. City reserves the right to either (a) approve any and all attorneys that Contractor selects, hires, or otherwise engages to defend any Indemnified Party, or (b) in the City’s sole discretion, conduct the defense of any Indemnified Party, in which case Contractor agrees to reimburse City for all attorneys’ fees and litigation costs incurred for such defense. 7-16.3 To the maximum extent permitted by law, Contractor’s obligations under section 7-16 include, without limitation, any and all Claims and Damages caused or alleged to be caused by the negligent acts or omissions of any City Party which may be in combination with the acts or omissions of any Contractor Party or any third party. 7-16.4 Contractor’s obligations under section 7-16 include but are not limited to any and all Claims between Contractor and any other Contractor Party if an Indemnified Party is made a party or participant to any such Claims. 7-16.5 Contractor’s obligations under section 7-16 shall not be restricted to or limited in any way by insurance proceeds, if any, received by an Indemnified Party. 7-16.6 Contractor’s obligations under section 7-16 shall not be limited by any restriction on the amount or type of damages, compensation, or benefits payable by or for the Contractor or any Contractor Party under workers' or workmen's compensation acts, disability benefit acts, or other employee benefit acts. 7-16.7 Contractor’s obligations under section 7-16 shall require it to pay all related expenses and costs incurred by any Indemnified Party enforcing the indemnity, defense, or hold harmless provisions of section7- 16. 7-16.8 Contractor’s obligations under section 7-16 shall survive the termination, expiration, and completion of the Contract. 2017-11-21 Agenda Packet Page 70 15 SECTION 9 – MEASUREMENT AND PAYMENT 9-1 MEASUREMENT OF QUANTITIES FOR UNIT PRICE WORK. 9-1.1 General. ADD: The estimate of the quantities of work to be done and materials to be furnished are approximate only, being given as a basis for the comparison of bids, and the City of Chula Vista does not expressly or by implication agree that the actual amount of work will correspond therewith, but reserves the right to increase or decrease the amount of any class or portion of the Work or to omit portions of the Work that may be deemed necessary or expedient by the Engineer. 2017-11-21 Agenda Packet Page 71 16 PART 2 CONSTRUCTION MATERIALS The following supplement the Standard Specifications and supersede any conflicting requirements, (“conflicting requirements” means those which cannot operate byfact or law within the Contract Documents or for which both requirements cannot be physically produced). Otherwise, the following only supplement the Standard Specifications. If any of the following sections or part of the following sections below contradict or are not in conformance with any current California law, code, or regulation at the time of bidding, the Contractor will assume that the current California law, code, or regulation supersede that particular item unless it is specifically called out to modify or supersede the current law, code, or regulation. When there are two (2) or more specifications for the same item or work, the Contractor shall base its bid on the more expensive item or work specified. SECTION 207 - PIPE 207-2 Reinforced Concrete Pipe. 207-2.1 General. Add the following: Unless otherwise specified, the "D" load rating of all concrete pipe used within the street right of way shall be equal to a "D" loading of at least 1500. 207-11 Corrugated Metal Pipe and Pipe Arches (Steel). 207-11.1 General. Add the following: All corrugated steel pipe shall be coated and paved per Sections 207-11.5.2, Coatings, and 207- 11.5.4, Paving. The gauge of sheets, unless otherwise specified, shall conform to the following: Pipe Diameter Gauge No. 8" to 21" inclusive 16 24" to 30" inclusive 14 36" to 54" inclusive 12 60" to 72" inclusive 10 78" to 96" inclusive 8 207-13 CORRUGATED ALUMINUM PIPE AND PIPE ARCHES. 207-13.1 General. Add the following: 2017-11-21 Agenda Packet Page 72 17 The gauge of sheets, unless otherwise specified, shall conform to the following: Pipe Diameter Gauge No. 8" to 21" inclusive 16 24" to 30" inclusive 14 36" to 54" inclusive 12 60" to 72" inclusive 10 78" to 96" inclusive 8 SECTION 302 – ROADWAY SURFACING 302-5 ASPHALT CONCRETE PAVEMENT. 302-5.5 Distribution and Spreading. Revise the sixth paragraph to read as follows: The depositing, distributing, and spreading of the asphalt concrete shall be accomplished in a single, continuous operation by means of a self-propelled mechanical spreading and finishing machine designed especially for that purpose. The machine shall be equipped with a screed capable of being accurately regulated and adjusted to distribute a layer of the material to a definite predetermined thickness. The screed shall be able to extend from 8 to 18 feet per the manufacturers recommendations. The screed shall be equipped with a 2-foot wide cut-off shoe to allow the paver to operate between 8 feet and 18 feet wide. Hydraulic wing extensions are not considered to be a screed. All screed extensions shall be similar to a Blaw- Knox Omni screed that when extended shall consist of all screed components (screed plate, strike off plates, heater and vibrator). The Engineer shall select joint locations and pavement widths based upon the capabilities of the specified screed. When paving is of a size or in a location that use of a self-propelled machine is impractical the Engineer may waive the self-propelled requirements. The type of machine (make and model) shall be submitted to the Engineer one week prior to commencement of paving operations. The Engineer shall be given the opportunity to inspect the paving machine prior to commencement of paving operations. The manufacturer's operation manual for the machine shall be made available for review upon request of the Engineer. Asphalt paving equipment shallbe equipped with automatic screed controls, a sensing device or devices and a ski device. The minimum length of the ski device shall be 30 feet. The ski device shall be a rigid one- piece unit and the entire length shall be used in activating the sensor or sensors. When placing asphalt to the lines and grades established by the Engineer, the automatic screed controls shall control the longitudinal grade and transverse slope of the screed. Grade and slope references shall be furnished, installed and maintained by the Contractor. When placing the initial mat of asphalt concrete on existing pavement, the end of the screed nearest the centerline shall be controlled by a sensor activated by a ski device not less than 30 feet long. The end of the screed farthest from the centerline shall be controlled by a sensor activated by a similar apparatus or by an automatic transverse slope device set to reproduce the cross slope designated by the Engineer. 2017-11-21 Agenda Packet Page 73 18 When paving contiguously with previously placed mats, the end of the screed adjacent to the previously placed mat shall be controlled by a sensor that responds to the grade of the previously placed mat and will reproduce the grade in the new mat within 0.01 ft. tolerance. The end of the screed farthest from the previously placed mat shall be controlled in the same manner as when placing the initial mat. Should the automatic screed controls fail to operate properly during any day’s work, the Contractor may use manual control of the spreading equipment for the remainder of that day, however, the equipment shall be corrected or replaced with automatically controlled equipment conforming to the requirements in this section before starting another day’s work. At the discretion of the Engineer, in locations where the use of automatic screed controls with ski device is impractical or inaccessible, automatic screed controls will not be used. Where the pavement slopes towards a concrete gutter, asphaltic concrete shall be placed such that the pavement surface is a minimum of 3/8" above the lip of gutter elevation. Where the pavement slopes away from a concrete gutter, asphaltic concrete shall be placed such that the pavement surface is flush with the lip of gutter elevation unless otherwise directed by the Engineer. 302-5.6 Rolling. 302-5.6.2 Density and Smoothness. Revise 2nd paragraph to read as follows: The compaction after rolling shall be between 92 and 96 percent of the maximum theoretical specific gravity as determined by ASTM D 2041. Asphalt concrete density is to be measured through the use of a nuclear density gauge, or core tests. Test locations shall be determined by random sampling techniques per California Test 375, Part C. At least one density measurement shall be taken from each 50 tons or part thereof or for each 150 lineal feet of paving lane for each mix type placed each day. Acceptability of in-place density shall be based upon the average of at least three tests. For new pavement with a total asphaltic concrete thickness of 1-1/2 inches or more, the Engineer may require removal and replacement at Contractor’s expense when the average value of the density tests is greater or less than specified in paragraph 203-6.3.3. For evaluation of “out-of-spec” pavement materials, only cores shall be used to determine in-place density, unless otherwise approved by the Engineer. At least three cores shall be taken from the area suspected to be “out-of-spec”, with at least one core taken for each 50 tons or 150 lineal feet of paving lane placed. The average ofthe core densities shall be used for acceptance or rejection, unless the results identify obviously defective or isolated suspicious areas. The average core density shall meet the requirements of paragraph 203-6.3.3. An individual core density of less than 90 percent shall constitute a suspicious area. The limits of isolated defective areas shall be further delineated with nuclear density gauge readings calibrated to the core data and said defective areas removed and replaced. 302-5.8 Manholes (and other structures). Delete first and third paragraphs and add the following: Manhole and Valve Box Covers Unless otherwise specified, the paving contractor will be required to adjust all manhole, valve boxes, cleanout, and monument covers. 2017-11-21 Agenda Packet Page 74 19 Prior to paving, all covers shall be tied-off by the contractor in a manner that will permit determination of their exact locations after paving. All covers shall be set 1/8” to ¼” higher than the finish grade. The subgrade, base and pavement shall be neatly removed a distance of 12 inches from the edge of the cover. All spoils shall be removed from the site. All backfill shall be with Crushed Aggregate Base (per Section 200-2.2), compacted to 95% relative density (per Section 211). The street section shall be replaced per Section 306-1.1.5 except a minimum of 4” of asphalt concrete will be required. Asphalt concrete shall be placed and compacted in a minimum of two layers; a base course and a surface course a minimum of 1 ½ inches thick. Pre-cast concrete grade rings are required when the cover is to be adjusted 3” or more. Where manholes have been previously adjusted with steel or fiberglass rings and further adjustment is needed, the steel or fiberglass ring(s) will be removed (and delivered to the City) and replaced with pre-cast concrete grade rings. Concrete placed to secure the cover shall be a 3250-psi mix, placed a minimum 6” thick. Concrete shall be placed to allow a minimum of 3” of asphalt concrete pavement adjacent to the cover frame and to 1” below the existing asphalt pavement at the pavement removal limits. Concrete shall be graded and mixed to allow the mixture to fill the space between the cover frame and the pre-cast manhole components; “dry packing” will not be allowed. SECTION 303-CONCRETE AND MASONRY CONSTRUCTION 303-1 CONCRETE STRUCTURES. 303-1.7 Placing Reinforcement. 303-1.7.1 General. Add the following paragraph: Reinforcing steel lists shall be submitted to the Engineer for approval when requested. Such approval is intended as additional precaution against errors and shall not be construed as relieving the Contractor of full responsibility for the accuracy of the lists. 303-5 CONCRETE CURBS, WALKS, GUTTER, CROSS GUTTERS, ALLEY INTERSECTIONS, ACCESS RAMPS, AND DRIVEWAYS. 303-5.1 Requirements. 303-5.1.1 General. Add the following paragraph: When the plans provide for the reconstruction of a portion of an existing sidewalk, the existing section shall be cut to a minimum depth of 1-1/2 inches with an abrasive type saw at the first scoring line at or beyond the planned joint and the entire section shall be removed. The new work shall join the old work at this line. 2017-11-21 Agenda Packet Page 75 20 The Engineer shall determine limits for the removal and reconstruction of curb, gutters, sidewalks, driveways, sidewalk ramps, and pavement. Concrete coloring for sidewalks and driveways shall not be used without written permission from the Engineer. 303-5.5 Finishing. 303-5.5.3 Walk. Add the following paragraph: When placing the tops to concrete drainage and sewer structures within the surface of the sidewalk, the tops to concrete drainage and sewer structures shall be monolithic for the full width of the curb, gutter and sidewalk. The top of the structure shall be imprinted with a Storm Drain Stencil per CVCS-24. When placing the tops of concrete drainage and sewer structures within parkways, if the distance between the edge of the structure and the sidewalk is less than 18”, then the tops to said structures shall be constructed to the full width of the parkway. SECTION 306- UNDERGROUND CONDUIT CONSTRUCTION 306-1 OPEN TRENCH OPERATIONS. 306-1.1 Trench Excavation. 306-1.1.1 General. Delete third paragraph and replace with the following: The Contractor shall furnish, install, and operate such pumps, well points or other devices as may be necessary to remove any sub-surface water, seepage, storm water, or sewage that may be encountered during the construction. The trenches and other excavations shall be kept free from water while concrete or pipe is being installed. Water shall be disposed of in accordance with all Federal, State, or local agency requirements and in such a manner as to cause no injury to public or private property, nor be a menace to public health. 306-1.2 Installation of Pipe. 306-1.2.1 Bedding. 306-1.2.1.1 General. Delete fifth paragraph and add the following: Except where otherwise specified, all non-reinforced and reinforced concrete pipe and all asbestos cement pipe shall be installed using the standard installation. Standard installations for reinforced concrete pipe shall consist of trench and pipe bedding as shown on Regional Standard Drawing No. D-60 except that the one- inch graded crushed aggregate rock shall extend up to the upper half (spring line) of the pipe. The remainder of the bedding material shall be sand, gravel, crushed aggregate, native free draining granular material having a sand equivalent of not less than 30 or having a coefficient of permeability greater than 1.4 inches/hour, or other material approved by the Engineer. Except where otherwise specified, all corrugated metal pipe and all plastic pipe 18 inches inside diameter and greater shall be installed using the standard installation. Standard installation for corrugated metal pipe and plastic pipe 18 inches inside diameter and greater shall consist of trench and pipe bedding as shown on 2017-11-21 Agenda Packet Page 76 21 Regional Standard Drawing No. D-60 except that the one-inch graded crushed aggregate rock shall extend up to the upper half (spring line) of the pipe. The remainder of the bedding material shall be sand. Except where otherwise specified, all clay pipe shall be installed using "Type B rock to spring line" installation that shall consist of trench and pipe bedding as shown on Regional Standard Drawing No. S-4. The remainder of the bedding material shall be as specified above for non-reinforced and reinforced concrete pipe and asbestos cement pipe. Except where otherwise specified, all plastic pipe with an inside diameter of less than 18 inches shall be installed using a rock envelope installation which shall consist of trench and pipe bedding as shown on Regional Standard Drawing No. S-4, Type C. 306-1.2.2 Pipe Laying. Add the following paragraph: In order to insure a true line and grade, grade stakes shall be set every 25 feet. Sewer pipe shall be laid through the manhole unless otherwise directed by the Engineer. When sewer pipe is to be carried continuously through the manhole, the top portion of the pipe shall be removed after all other work is completed. 306-1.2.3 Field Jointing of Clay Pipe Delete first sentence and replace with the following: Unless otherwise indicated on the plans, all joints for sewers constructed of clay pipe shall be type "G" joints as contained in sub-section (b) of this section. The Contractor may submit for approval any other type of joint that he believes is equal or superior to those specified. Said alternate shall be submitted in writing at least fifteen (15) days in advance of the start of the work. The City Engineer shall be the sole judge as to whether any material submitted for approval is equal or superior to those specified. No unspecified material shall be used until approved by the City Engineer. Add sub-section (d) as follows: d) No sewer shall be broken into except in the presence of the Engineer. The connection shall be made with a standard vitrified clay saddle constructed with lugs to prevent protrusion through the pipe. The hole in the sewer shall be made midway between joints. It shall be made with extreme care starting with as small a hole as possible and carefully enlarged so as to provide a hole approximately 1/4" larger than the outside diameter of the saddle. The saddle shall be mortared in place, filling the annular space between saddle and pipe wall with mortar composed of 1 part Portland cement to 2 parts of clean well-graded sand. The inside shall be wiped to provide a smooth joining of the saddle to the pipe wall. No additional pipe may be joined to the saddle until the contractor receives approval of the saddle connection from the Engineer. After the saddle has been mortared in place and approved by the Engineer, at least 6 strands of No. 10 galvanized wire shall be loosely wound around the pipe, 3 strands on each side of the saddle, 2 of which shall 2017-11-21 Agenda Packet Page 77 22 pass over the saddle. A ring of Class "A" concrete at least 4 inches thick and 18 inches in length shall then be constructed entirely around the pipe at the location of the saddle. 306-1.2.12 Maximum Allowable Deflection for Plastic Pipe & Fittings. Add the following paragraph: This section is also applicable to all plastic pipe and inserted liner whereby the annular space between the outer wall of the liner and inner wall of existing pipe being lined is pressure grouted. 306-1.4 Testing Pipelines. Add the following new sub-section 306-1.4.7 Balling of Sewers, After completion of the sanitary sewer system, including televising sewer mains and the surfacing of the street, an approved type sewer ball equal to the diameter of the pipe shall be sent through the sewer from the uppermost structure to the lowermost structure. The contractor shall, at his own expense, furnish all materials for carrying out the operation and removing any obstructions that prevent the ball from traveling through the pipe. SECTION 307 - STREET LIGHTING AND TRAFFIC SIGNAL SYSTEM 307-1 GENERAL. Add the following sub-Section 307-1.2 Regulations and Codes. Before commencing work, the contractor shall contact the San Diego Gas & Electric Company for any requirements regarding their distribution and transmission construction methods. Work shall conform to the "SDG&E" Service guide. 307-8 FOUNDATIONS, FOUNDATION CAPS AND SLABS. 307-8.2 Foundations. Add the following paragraph Foundations shall be installed not less than 3 feet from driveway curb opening or fire hydrants. 307-10 STANDARDS, PEDESTALS AND MAST ARMS. 307-10.1 General. Add the following sub-section: 307-10.1.1 Prestressed Concrete Standards. 1) General. 2017-11-21 Agenda Packet Page 78 23 Prestressed concrete standard shall be fabricated in a manner consistent with generally accepted systems of prestressing. The standards shall be designed on the basis for wind loads of 15 pounds per square foot using a shape factor of 0.80 for all cylindrical members. A maximum tensile stress of 300 PSI will be permitted in the pole for wind loading. Standard shall consist of a prestressed centrifugally spun, tapered concrete shaft octagonal in cross-section, a galvanized steel or aluminum luminaire bracket or mast arm, anchor rods, and associated appurtenances as shown or specified. 2) Construction Material A. CEMENT - Cement shall conform to Standard Specifications for Type III Portland Cement ASTM, Designation C-150, and shall be fresh when used.B.AGGREGATE-Aggregate shall be marble with a high compressive strength. It shall be uniformly graded from 1/4" to #150 mesh sieve and shall be free and clean from foreign material.The proportion will be determined by submitting spun samples for approval by the Engineer. No dyes or artificial coloring will be acceptable. C. WATER - Water shall be taken from a supply distributed for domestic purposes. D. MIXING - Mixing shall be done in a mixer to achieve uniform distribution and mixing of the materials and each batch shall be mixed not less than three (3) minutes. No larger batch shall be mixed than that which can be used within thirty (30) minutes. The quantity of water used shall be limited to the smallest amount that will give concrete of such a consistency that it can readily be forced into the mold, and shall not exceed six (6) gallons to each sack of cement. Strength of concrete shall be 5000 PSI. Tests may be called for. E. STEEL REINFORCING-All prestressing steel used shall consist of high tensile, stress relieved, wire strand conforming to latest revised ASTM Standard A416 or other approved standards. Additional mild steel reinforcing shall consist of deformed steel bars conforming to ASTM Standard A617-76. Base plates and anchor lugs shall conform to ASTM Standard A36. All poles shall be spirally reinforced as required to maintain spacing and provide for bursting stressed due to prestressing. Poles shall be reinforced with four (4) or more stranded cables, the number and size of cables being dependent upon the type of standard used. Deformed bars a minimum of 30 inches long shall be welded to the base plate. The stranded cables shall be pretensioned a maximum of 70% of their ultimate strength before casting, depending upon the type of standard used. Stud bolts at least 12 inches long extending 2 inches above standard and bonded to cables shall be provided for top mounting arms. F. BONDING OF HARDWARE -All reinforcing steel, cables, deformed bars, base plates, anchor lugs, and stud bolts shall be bonded together. Mast arms shall be positively bonded to stud bolts and/or reinforcing steel and cables. 3) MANUFACTURING: 2017-11-21 Agenda Packet Page 79 24 All standards shall be cast in rigid molds true to design. The steel reinforcement shall be securely anchored to the top and bottom of mold plates. Steel tension strands shall be placed to have a 3/4" minimum concrete coverage at all points. Concrete shall be placed in mold as rapidly as possible after mixing. When filled, mold shall be placed on spinning machine in a horizontal position and rotated at a gradually increased speed until maximum rotation is attained. Time and speed of rotation shall be sufficient to produce a dense concrete. Excess water and laitance forced to the center of the mass shall be drained in a suitable manner. A central opening or duct, minimum diameter of 1", shall be formed throughout the length of the pole or as shown on drawings and shall be free from sharp projections or edges of a character which might injure the wire or cable. The base shall be cored to dimensions shown on the standard drawings and access into base shall be provided by door opening as detailed on drawings. 4) CURING: The standard shall be moist steam cured until the concrete has attained a set sufficiently hard to prevent its deformation or slipping of cable strands. Steam curing shall be controlled so there will be no deformation of the pole center core. Upon removal of the standard from the mold, it shall be protected from the direct action of sun and wind for a period of forty-eight (48) hours. If not steam cured, it shall be kept wet by continuous spraying with water or be covered with heavy burlap or other suitable material that is kept saturated with water during the curing period of seventy-two (72) hours. An additional period of fifteen (15) days shall be allowed for curing in air before standards are delivered for installation. 5) FINISHING: After the standards have been sufficiently cured, the entire outside surface of the standards shall be sandblasted to remove cement laitance and develop the surface texture, care being taken that the true lines of the standards are maintained. The standards when finished shall be without cracks or crazing and shall have a uniform surface and texture throughout the entire length. The finished standard shall be coated with an anti-graffiti coating. The coating shall be the Repello-Protective Surface System as manufactured by the L.M. Schofield Company or an approved equal. Three coats of the anti-graffiti coating shall be applied to the light standard. 6) LUMINAIRE BRACKET: Standards shall be furnished with a bracket or pole mounting conforming to design and dimensions shown on plan. A minimum of 5 inches straight portion shall be provided to mount a 2-inch slipfitter type luminaire. The interior shall be free of sharp edges or projections. Steel arms shall be made of pipe conforming to ASTM Designation A120-47. Aluminum arms shall be made of 6-63-T6 aluminum pipe. Steel brackets shall be hot dipped galvanized. Aluminum brackets shall be furnished with no finish. 7) POLE TOP: The pole top shall be cast from #214 aluminum alloy. The cover shall be secured to the pole top or bracket by a minimum of two screws. 8) ANCHOR RODS: 2017-11-21 Agenda Packet Page 80 25 Four anchor rods 3/4” or 1” nominal diameter by 36"x4" shall be furnished. The lower end of the rod shall be formed to produce an ell (L) bend. The upper end shall be threaded a minimum of 6" and fitted with two hex nuts per rod. Rod and nuts shall be hot dipped galvanized to ASTM Designation A153-49. 9) MISCELLANEOUS: All miscellaneous hardware shall be cadmium coated, hot dipped galvanized, or of stainless steel. 10) DESIGN DRAWINGS, SAMPLES, AND GUARANTEE: The supplier, upon request, shall submit for the approval of the Engineer prior to fabrication, drawings of the standards proposed to be furnished. Such drawings shall be accompanied by design criteria and detailed specifications of materials proposed to be incorporated into the standards. The drawings shall also include details concerning the method of prestressing and fastening of steel to provide the proper residual compressive force in the concrete. The supplier shall also submit as a part of the required drawings the design of the concrete mix proposed to be used. Prior to approval, the Engineer may require the supplier to deliver to the City a standard for test and evaluation. The supplier shall provide facilities for the Engineer to select samples of any of the materials proposed to be used and shall also provide facilities for the inspection of all molds, materials, manufacturing and assembly of the standards. The supplier shall guarantee the City for a period of five (5) years from the date of acceptance, the standards against defective workmanship and materials which would cause cracking and/or spalling or any other defects requiring maintenance of the pole finish or replacement of the pole. When notified by the Engineer, the supplier or his sureties shall promptly replace or repair the defective standard or standards in a manner satisfactory to the Engineer. If the supplier or his sureties fail to promptly make the replacement or repair, the City may perform the work and the supplier and his sureties shall be liable for the cost of all such work. Failure of the supplier or his sureties to comply with the terms of this section may disqualify the supplier for any future City work. 307-14 SERVICES. 307-14.2 Services on Utility Owned Poles. Amended to read: Where the service point is a utility-owned pole, the Contractor shall furnish conduit and all other necessary material to complete the installation of the service riser. If the Contractor is required by the plans or special provisions to install the service riser and equipment on a utility-owned pole, the position of the riser and equipment will be determined by the utility. The contractor shall make arrangements with the San Diego Gas & Electric Company and shall pay all fees necessary to complete the connection of the service point. Metering installation will be furnished by San Diego Gas & Electric Company. Full compensation for furnishing and installing service poles, service equipment, conduit, and conductors (including equipment, conduit, and conductors placed on utility-owned poles, and the additional conductor where the service utility requires 3-wire, 120/240-volt service into the meter socket for a 120-volt load), and 2017-11-21 Agenda Packet Page 81 26 for any service connection fees, shall be considered as included in the contract item of electrical work involved and no additional compensation will be allowed therefor." Upon request by the Contractor, the Engineer will arrange for furnishing electrical energy. Energy used prior to final acceptance will be charged to the Contractor, except that the cost of energy used for public benefit, when such operation is ordered by the Engineer, will be at the expense of the City. SECTION 400 - ALTERNATIVE ROCK PRODUCTS, ASPHALT CONCRETE, PORTLAND CEMENT CONCRETE AND UNTREATED BASE MATERIAL 400-2 UNTREATED BASE MATERIALS. 400-2.1 General. 400-2.1.1 Requirements Revise section to read: When base material without further qualification is specified the contractor shall supply Crushed Aggregate Base. \\Pw2000\home\SilvesterE\2012 GB\CV Special Provisions-2012 rev Dec 2014(bfs).doc 2017-11-21 Agenda Packet Page 82 2017-11-21 Agenda Packet Page 83 2017-11-21 Agenda Packet Page 84 2017-11-21 Agenda Packet Page 85 2017-11-21 Agenda Packet Page 86 2017-11-21 Agenda Packet Page 87 2017-11-21 Agenda Packet Page 88 2017-11-21 Agenda Packet Page 89 2017-11-21 Agenda Packet Page 90 2017-11-21 Agenda Packet Page 91 2017-11-21 Agenda Packet Page 92 2017-11-21 Agenda Packet Page 93 2017-11-21 Agenda Packet Page 94 2017-11-21 Agenda Packet Page 95 2017-11-21 Agenda Packet Page 96 2017-11-21 Agenda Packet Page 97 2017-11-21 Agenda Packet Page 98 2017-11-21 Agenda Packet Page 99 2017-11-21 Agenda Packet Page 100 2017-11-21 Agenda Packet Page 101 2017-11-21 Agenda Packet Page 102 2017-11-21 Agenda Packet Page 103 2017-11-21 Agenda Packet Page 104 2017-11-21 Agenda Packet Page 105 2017-11-21 Agenda Packet Page 106 2017-11-21 Agenda Packet Page 107 2017-11-21 Agenda Packet Page 108 2017-11-21 Agenda Packet Page 109 2017-11-21 Agenda Packet Page 110 2017-11-21 Agenda Packet Page 111 2017-11-21 Agenda Packet Page 112 2017-11-21 Agenda Packet Page 113 2017-11-21 Agenda Packet Page 114 2017-11-21 Agenda Packet Page 115 2017-11-21 Agenda Packet Page 116 2017-11-21 Agenda Packet Page 117 2017-11-21 Agenda Packet Page 118 2017-11-21 Agenda Packet Page 119 2017-11-21 Agenda Packet Page 120 2017-11-21 Agenda Packet Page 121 2017-11-21 Agenda Packet Page 122 2017-11-21 Agenda Packet Page 123 2017-11-21 Agenda Packet Page 124 2017-11-21 Agenda Packet Page 125 2017-11-21 Agenda Packet Page 126 2017-11-21 Agenda Packet Page 127 2017-11-21 Agenda Packet Page 128 2017-11-21 Agenda Packet Page 129 2017-11-21 Agenda Packet Page 130 2017-11-21 Agenda Packet Page 131 2017-11-21 Agenda Packet Page 132 2017-11-21 Agenda Packet Page 133 2017-11-21 Agenda Packet Page 134 2017-11-21 Agenda Packet Page 135 2017-11-21 Agenda Packet Page 136 2017-11-21 Agenda Packet Page 137 2017-11-21 Agenda Packet Page 138 2017-11-21 Agenda Packet Page 139 2017-11-21 Agenda Packet Page 140 2017-11-21 Agenda Packet Page 141 2017-11-21 Agenda Packet Page 142 2017-11-21 Agenda Packet Page 143 2017-11-21 Agenda Packet Page 144 2017-11-21 Agenda Packet Page 145 2017-11-21 Agenda Packet Page 146 2017-11-21 Agenda Packet Page 147 2017-11-21 Agenda Packet Page 148 2017-11-21 Agenda Packet Page 149 2017-11-21 Agenda Packet Page 150 2017-11-21 Agenda Packet Page 151 2017-11-21 Agenda Packet Page 152 2017-11-21 Agenda Packet Page 153 2017-11-21 Agenda Packet Page 154 2017-11-21 Agenda Packet Page 155 2017-11-21 Agenda Packet Page 156 2017-11-21 Agenda Packet Page 157 2017-11-21 Agenda Packet Page 158 2017-11-21 Agenda Packet Page 159 2017-11-21 Agenda Packet Page 160 2017-11-21 Agenda Packet Page 161 2017-11-21 Agenda Packet Page 162 2017-11-21 Agenda Packet Page 163 2017-11-21 Agenda Packet Page 164 2017-11-21 Agenda Packet Page 165 2017-11-21 Agenda Packet Page 166 2017-11-21 Agenda Packet Page 167 2017-11-21 Agenda Packet Page 168 2017-11-21 Agenda Packet Page 169 2017-11-21 Agenda Packet Page 170 2017-11-21 Agenda Packet Page 171 2017-11-21 Agenda Packet Page 172 2017-11-21 Agenda Packet Page 173 2017-11-21 Agenda Packet Page 174 2017-11-21 Agenda Packet Page 175 2017-11-21 Agenda Packet Page 176 2017-11-21 Agenda Packet Page 177 2017-11-21 Agenda Packet Page 178 2017-11-21 Agenda Packet Page 179 2017-11-21 Agenda Packet Page 180 2017-11-21 Agenda Packet Page 181 2017-11-21 Agenda Packet Page 182 2017-11-21 Agenda Packet Page 183 2017-11-21 Agenda Packet Page 184 2017-11-21 Agenda Packet Page 185 2017-11-21 Agenda Packet Page 186 2017-11-21 Agenda Packet Page 187 2017-11-21 Agenda Packet Page 188 2017-11-21 Agenda Packet Page 189 2017-11-21 Agenda Packet Page 190 2017-11-21 Agenda Packet Page 191 2017-11-21 Agenda Packet Page 192 2017-11-21 Agenda Packet Page 193 2017-11-21 Agenda Packet Page 194 2017-11-21 Agenda Packet Page 195 2017-11-21 Agenda Packet Page 196 2017-11-21 Agenda Packet Page 197 2017-11-21 Agenda Packet Page 198 2017-11-21 Agenda Packet Page 199 2017-11-21 Agenda Packet Page 200 2017-11-21 Agenda Packet Page 201 2017-11-21 Agenda Packet Page 202 2017-11-21 Agenda Packet Page 203 2017-11-21 Agenda Packet Page 204 2017-11-21 Agenda Packet Page 205 2017-11-21 Agenda Packet Page 206 2017-11-21 Agenda Packet Page 207 2017-11-21 Agenda Packet Page 208 2017-11-21 Agenda Packet Page 209 2017-11-21 Agenda Packet Page 210 City of Chula Vista Staff Report File#:17-0428, Item#: 5. A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY AND KITCHELL CEM, INC. TO PROVIDE ON-CALL CONSTRUCTION MANAGEMENT CONSULTING SERVICES B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY AND O’CONNER CONSTRUCTION MANAGEMENT, INC TO PROVIDE ON-CALL CONSTRUCTION MANAGEMENT CONSULTING SERVICES RECOMMENDED ACTION Council adopt the resolutions. SUMMARY The Department of Engineering and Capital Projects has identified the need to enlist qualified consultants periodically to assist with the construction management activities on fire station reconstruction, facility renovations, parks and recreation facility renovations and other design-build construction contracts. These on-call consultant services would augment city staff and provide timely, as needed, construction management services for Capital Improvement Projects (CIP) using design-build contracts. ENVIRONMENTAL REVIEW Environmental Notice The Project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act State Guidelines. Environmental Determination The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 1 Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines. Thus, no further environmental review is required. BOARD/COMMISSION RECOMMENDATION Not Applicable DISCUSSION BACKGROUND The Department of Engineering and Capital Projects staff manages the construction and renovation City of Chula Vista Printed on 11/16/2017Page 1 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 211 File#:17-0428, Item#: 5. The Department of Engineering and Capital Projects staff manages the construction and renovation of City facilities, fire stations and parks & recreation facilities for the City of Chula Vista. These projects often use design-build contracts. It is critical that the construction management of these types of projects be performed in a timely manner so that project delivery is not delayed. City staff anticipates the need to secure the assistance of construction management consultant teams experienced in design-build contracts on an as-needed basis for the following reasons: 1. In a typical fiscal year, the Engineering and Capital Projects Department is responsible for about $21 million of CIP projects. Due to an increase in funding associated with Measure P, the current fiscal year’s CIP exceeds $90 million. 2. The reconstruction of fire station #5 and #9 are scheduled within the next three years. 3. Staff anticipates that the increased pace of CIP projects will continue for the next few years. Some of the large CIP projects include various disciplines such as fire station construction, facility renovations, and parks & recreation facility renovations and construction. 4. The City made commitments to deliver infrastructure improvements for infrastructure throughout Chula Vista that will take significant effort to plan, fund, and construct. 5. Consultants will be able to assist with construction management when workload exceeds existing staffing levels. The use of outside consultants to provide technical assistance for the short-term needs is a more efficient way to handle the additional workload staff anticipates. SCOPE OF WORK Typical services that the City may require during the construction phase of design-build projects will involve construction management tasks such as: - Design Build Project Team selection and procurement support - Proposal Review - Design Build Project Team coordination - Project scheduling, budgeting and cost estimating - Review of submittals from the Design Build Project Team - Inspection, monitoring and documentation of project team work plans - Create and maintain the document-control filing system for the Project - Construction activities oversight and plan compliance - Verify compliance with labor laws The proposed contracts include/require the following: A. Project management and oversight of the design phase of design-build projects. B. General construction management services for projects before, during, and after construction operations. The number and scope of such projects will vary from year to year. C. Personnel that are experienced in all areas of project management, construction City of Chula Vista Printed on 11/16/2017Page 2 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 212 File#:17-0428, Item#: 5. management, inspection and engineering, and possess knowledge of City codes, procedures and regulations are required to satisfy the Consultant contract. D. Use of software and methodology that is approved by the City. E. Provide the City all original field notes, data, reports, records, photos etc. of field and office tasks. Further, the Consultant shall maintain copies of all records related to the project tasks performed for a period of five years. F. Billing forms and procedures acceptable to the City. CONSULTANT SELECTION PROCESS On August 4, 2017, the City of Chula Vista issued an Request for Qualifications (RFQ) for Professional Services for Construction Management of New Facilities, Facility Renovations, Fire Stations and Parks. Six consultant teams responded to the RFQ. In accordance with City ordinances and policies, the Director of Engineering and Capital Projects assigned staff to act as a selection committee to evaluate the proposals and prepare a list ranking the responding firms. The selection committee evaluated and ranked the proposals. The ranking was based on evaluation criteria that included the following: the consultant's experience, the capacity to perform the work, the quality of the management team, and their design-build construction management experience and approach. Four teams were selected for interviews in October 2017 listed in alphabetical order: 1. Cumming Construction Management, Inc. 2. Dudek 3. Kitchell CEM, Inc. 4. O’Conner Construction Management, Inc. Upon the conclusion of the consultant interviews and deliberations by the consultant selection committee, the committee selected Kitchell CEM, Inc. and O’Conner Construction Management, Inc. as the two top ranking teams. Fee schedules and contract details have been successfully negotiated with the teams (prime and the sub-consultants). Agreements are attached (Attachments 1 and 2). 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 Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, City of Chula Vista Printed on 11/16/2017Page 3 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 213 File#:17-0428, Item#: 5. et seq.). Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. Approving these consulting agreements supports the Operational Excellence goal as it augments City staff to provide quality construction management services during temporary increases without an increase in permanent staff. CURRENT YEAR FISCAL IMPACT All fees for Consultant's services will be paid from funds already allocated for CIP projects. Each Consultant team may work on several CIP projects of varying size and complexity. The two year contracts will be eligible for three one-year extensions upon mutual agreement. Should the need arise to contract for consultant services, the costs associated with delivering a project could increase as staff’s oversight would be required in addition to the consultant fees. ONGOING FISCAL IMPACT None ATTACHMENTS 1. Agreement between the City of Chula Vista and Kitchell CEM Inc. to provide Construction Management Services 2. Agreement between the City of Chula Vista and O’Conner Construction Management Inc. to provide Construction Management Services Staff Contact: Jonathan Salsman, Senior Civil Engineer City of Chula Vista Printed on 11/16/2017Page 4 of 4 powered by Legistar™2017-11-21 Agenda Packet Page 214 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY AND KITCHELL CEM, INC. TO PROVIDE ON-CALL CONSTRUCTION MANAGEMENT CONSULTING SERVICES WHEREAS, the City of Chula Vista has identified the need to enlist qualified consultants to assist City staff due to the current number and pace of projects and the proposed large infrastructure efforts associated with the recently voter approved Measure P in Chula Vista; and WHEREAS, on August 4, 2017, City issued a Request for Qualifications (RFQs) for Professional Services for the construction management of new facilities, facility renovation, fire stations and parks ; and WHEREAS, City received six (6) Statement of Qualifications (SOQs) from consultant teams interested in providing such services; and WHEREAS, after City completed its review of the proposals, four (4) teams were interviewed in October 2017; and WHEREAS, after the interview process for all four (4)teams, staff recommends Kitchell CEM, Inc. as one of two consultant teams to provide such services; and WHEREAS, the consultant selection process has been conducted in accordance with Section 2.56.110.C of the Chula Vista Municipal Code; and WHEREAS, City may procure work on zero up to several projects of varying size and complexity throughout the duration of the consultant agreement; and WHEREAS, the consultant agreement will be a two-year contract and will be eligible for three (3) one-year extensions upon mutual agreement of the parties; and WHEREAS, the combined total of all assigned projects per the consultant agreement will not exceed $1,000,000 annually and $2,000,000 in the aggregate. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it approves the Consultant Services Agreement between the City and Kitchell CEM, Inc., in the form presented, with such minor modifications as may be required or approved by the City Attorney, a copy of which shall be kept on file in the Office of the City Clerk and authorizes and directs the Mayor to execute same. 2017-11-21 Agenda Packet Page 215 Presented by Approved as to form by William S. Valle Glen R. Googins Director of Engineering & Capital Projects City Attorney 2017-11-21 Agenda Packet Page 216 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A CONSULTANT SERVICES AGREEMENT BETWEEN THE CITY AND O’CONNER CONSTRUCTION MANAGEMENT, INC. TO PROVIDE ON- CALL CONSTRUCTION MANAGEMENT CONSULTING SERVICES WHEREAS, the City of Chula Vista has identified the need to enlist qualified consultants to assist City staff due to the current number and pace of projects and the proposed large infrastructure efforts associated with the recently voter approved Measure P in Chula Vista; and WHEREAS, on August 4, 2017, City issued a Request for Qualifications (RFQs) for Professional Services for the construction management of new facilities, facility renovation, fire stations and parks ; and WHEREAS, City received six (6) Statement of Qualifications (SOQs) from consultant teams interested in providing such services; and WHEREAS, after City completed its review of the proposals, four (4) teams were interviewed in October 2017; and WHEREAS, after the interview process for all four (4) teams, staff recommends O’Conner Construction Management, Inc. as one of two consultant teams to provide such services; and WHEREAS, the consultant selection process has been conducted in accordance with Section 2.56.110.C of the Chula Vista Municipal Code; and WHEREAS, City may procure work on zero up to several projects of varying size and complexity throughout the duration of the consultant agreement; and WHEREAS, the consultant agreement will be a two-year contract and will be eligible for three (3) one-year extensions upon mutual agreement of the parties; and WHEREAS, the combined total of all assigned projects per the consultant agreement will not exceed $1,000,000 annually and $2,000,000 in the aggregate. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it approves the Consultant Services Agreement between the City and O’Conner Construction Management, Inc., in the form presented, with such minor modifications as may be required or approved by the City Attorney, a copy of which shall be kept on file in the Office of the City Clerk and authorizes and directs the Mayor to execute same. 2017-11-21 Agenda Packet Page 217 Presented by Approved as to form by William S. Valle Glen R. Googins Director of Engineering & Capital Projects City Attorney 2017-11-21 Agenda Packet Page 218 2017-11-21 Agenda PacketPage 219 2017-11-21 Agenda PacketPage 220 2017-11-21 Agenda PacketPage 221 2017-11-21 Agenda PacketPage 222 2017-11-21 Agenda PacketPage 223 2017-11-21 Agenda PacketPage 224 2017-11-21 Agenda PacketPage 225 2017-11-21 Agenda PacketPage 226 2017-11-21 Agenda PacketPage 227 2017-11-21 Agenda PacketPage 228 2017-11-21 Agenda PacketPage 229 2017-11-21 Agenda PacketPage 230 2017-11-21 Agenda PacketPage 231 2017-11-21 Agenda PacketPage 232 2017-11-21 Agenda PacketPage 233 2017-11-21 Agenda PacketPage 234 2017-11-21 Agenda PacketPage 235 2017-11-21 Agenda PacketPage 236 2017-11-21 Agenda PacketPage 237 2017-11-21 Agenda PacketPage 238 2017-11-21 Agenda Packet Page 239 2017-11-21 Agenda Packet Page 240 2017-11-21 Agenda Packet Page 241 2017-11-21 Agenda Packet Page 242 2017-11-21 Agenda Packet Page 243 2017-11-21 Agenda Packet Page 244 2017-11-21 Agenda Packet Page 245 2017-11-21 Agenda Packet Page 246 2017-11-21 Agenda Packet Page 247 2017-11-21 Agenda Packet Page 248 2017-11-21 Agenda Packet Page 249 2017-11-21 Agenda Packet Page 250 2017-11-21 Agenda Packet Page 251 2017-11-21 Agenda Packet Page 252 2017-11-21 Agenda Packet Page 253 2017-11-21 Agenda Packet Page 254 2017-11-21 Agenda Packet Page 255 2017-11-21 Agenda Packet Page 256 2017-11-21 Agenda Packet Page 257 2017-11-21 Agenda Packet Page 258 2017-11-21 Agenda Packet Page 259 2017-11-21 Agenda Packet Page 260 2017-11-21 Agenda Packet Page 261 2017-11-21 Agenda Packet Page 262 2017-11-21 Agenda Packet Page 263 2017-11-21 Agenda Packet Page 264 2017-11-21 Agenda Packet Page 265 2017-11-21 Agenda Packet Page 266 City of Chula Vista Staff Report File#:17-0444, Item#: 6. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR CITYWIDE TREE MAINTENANCE SERVICES TO WEST COAST ARBORISTS, INC. IN AN AMOUNT NOT TO EXCEED $950,000 FOR THE UP TO FIVE-YEAR TERM OF THE CONTRACT AND APPROPRIATING $45,000 IN FISCAL YEAR 2017-18 FROM THE GAS TAX FUND TO THE URBAN FORESTRY MAINTENANCE BUDGET (4/5 VOTE REQUIRED) RECOMMENDED ACTION Council adopt the resolution. SUMMARY OnNovember8,2017,theCityreceivedthreebidsforcitywidetreemaintenanceservices.Fundingforthe contract is included within the annual Public Works Department budgets for urban forest maintenance. Today’s action is to accept the bids, award the contract to West Coast Arborists, Inc., and authorize entering into a tree maintenance services contract with the contractor. ENVIRONMENTAL REVIEW Environmental Notice The Project qualifies for a Categorical Exemption pursuant to the California Environmental Quality Act State Guidelines Section 15304 Class 4 (Minor Alterations to Land) and/or Section 15301 Class 1 (Existing Facilities). Environmental Determination The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Categorical Exemption pursuant to State CEQA Guidelines Section 15304 Class 4 (Minor Alterations to Land) and/or Section 15301 Class 1 (Existing Facilities). Thus, no further environmental review is required. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION TheCityofChulaVista’spartialurbanforesttreeinventorycurrentlystandsatanestimated35,000trees. The City contracts with a single main professional tree care company, for economies-of-scale benefit, to provide full-range tree services in the safe and sustainable management of the City’s trees. TheCity’streemaintenanceservicescontractwithWestCoastArborists,Inc.endedonOctober31,2016. Public Works staff prepared specifications and advertised the services on October 20, 2017. On November 8, 2017 the Director of Public Works received and opened three (3) bids from Atlas City of Chula Vista Printed on 11/16/2017Page 1 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 267 File#:17-0444, Item#: 6. On November 8, 2017 the Director of Public Works received and opened three (3) bids from Atlas Environmental Services, Inc., California Tree Service, and West Coast Arborists, Inc. respectively. ThelowestqualifiedbidderrecommendedforawardisWestCoastArborists,Inc.basedontheunitprices quoted by the company. Staffrecommendsacceptingthecontractor’sbidandawardingthetreemaintenanceservicescontractto West Coast Arborists, Inc. Key provisions of the contract include but are not limited to: The contract term is initially from November 2017 to June 30, 2018. If contractor’s work performance is satisfactory, the parties may mutually agree in writing to extend the contract for four (4) additional one (1) year periods. The annual option year renewals would be effective from July 1 to June 30 - the City’s Fiscal Year. If the contractor’s work performance is not satisfactory, the City reserves the right to not renew the contract without penalty. Prices shall be firm through June 30, 2018. If the parties agree to extend the contract for the option years, acceptable price increases may be agreed to and such increases would be based on changes in the annual San Diego Area Consumer Price Index, in an amount not to exceed 5%. The contractor is required to pay prevailing wages to persons employed by them for the work performed under this contract and shall ensure compliance with all applicable state and local laws governing the payment of prevailing wages. DECISION-MAKER CONFLICT Staffhasreviewedthedecisioncontemplatedbythisactionandhasdeterminedthatitisnotsite-specific and,consequently,the500-footrulefoundinCaliforniaCodeofRegulationsTitle2,section18702.2(a)(11) isnotapplicabletothisdecisionforpurposesofdeterminingadisqualifyingrealproperty-relatedfinancial conflict of interest under the Political Reform Act (California Government Code § 87100, et seq.). Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong & Secure Neighborhoods, and a Connected Community. This action supports the goals of: (1) a Healthy Community, which includes safe and sustainable management of the City’s trees for public enjoyment of the myriad environmental benefits, ecosystem services, and socioeconomic benefitstreesprovide;and(2)SecureNeighborhoods:Thetreemaintenanceserviceswillhelppreserve and sustain the urban forest asset and prevent liability against the City. CURRENT YEAR FISCAL IMPACT Funding for the contract is included within the Fiscal Year 2017-18 Public Works budget. ONGOING FISCAL IMPACT The annual contract cost will be included in the annual Public Works budgets for Urban Forestry. ATTACHMENTS City of Chula Vista Printed on 11/16/2017Page 2 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 268 File#:17-0444, Item#: 6. 1. The RFB: BID B08 17/18 Tree Trimming Maintenance Service. 2. Copy of Bid Recap showing contractors’ quoted unit prices. Staff Contact: Sam Oludunfe, City Forester & Open Space Manager. City of Chula Vista Printed on 11/16/2017Page 3 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 269 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR CITYWIDE TREE MAINTENANCE SERVICES TO WEST COAST ARBORISTS, INC. IN AN AMOUNT NOT TO EXCEED $950,000 FOR THE UP TO FIVE- YEAR TERM OF THE CONTRACT AND APPROPRIATING $45,000 IN FISCAL YEAR 2017-18 FROM THE GAS TAX FUND TO THE URBAN FORESTRY MAINTENANCE BUDGET WHEREAS the City contracts with tree care contractors to provide tree maintenance services for its estimated 50,000 urban forest trees; and WHEREAS on October 20, 2017, City staff issued a Request for Bids for tree maintenance services; and WHEREAS the initial term for the tree maintenance services contract is from November 2017 through June 30, 2018 and, upon satisfactory work performance, the parties may mutually agree to extend the contract for up to four (4) additional one (1) year periods from July 1 to June 30; and WHEREAS on November 8, 2017 the Director of Public Works held a public bid opening and three (3) bids were received from Atlas Environmental Services, Inc., California Tree Service, and West Coast Arborists, Inc. for the tree maintenance services contract; and WHEREAS after compilation of the bids staff determined West Coast Arborists, Inc. to be the lowest responsible bidder based on quoted unit costs; and WHEREAS staff recommends that the City Council accept the bids and award the tree maintenance services contract to West Coast Arborists, Inc. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it accepts bids and awards the Citywide Tree Maintenance Services Contract, between the City and West Coast Arborists, Inc. in the form presented, with such minor modifications as may be required or approved by the City Attorney, a copy of which shall be kept on file in the Office of the City Clerk, and authorizes and directs the City Manager or his designee to execute same, and appropriates $45,000 from the Gas Tax Fund to the Urban Forestry Maintenance Budget. BE IT FURTHER RESOLVED by the City Council of the City of Chula Vista that it appropriates $45,000 in Fiscal Year 2017-18 from the Gas Tax Fund to the supplies and services category of the Urban Forestry Maintenance Budget. 2017-11-21 Agenda Packet Page 270 Resolution No. Page 2 Presented by Approved as to form by ______________________ ______________________ Richard A. Hopkins Glen R. Googins Director of Public Works City Attorney 2017-11-21 Agenda Packet Page 271 RFB B08-17/18 October 18, 2017 Page 1 NOTICE TO BIDDERS NOTICE IS HEREBY GIVEN, THAT SEALED BIDS ON A FORM OBTAINED FROM THE PURCHASING DIVISION VIA PLANETBIDS WILL BE RECEIVED UNTIL 2:00 P.M. ON WEDNESDAY THE 8TH DAY OF NOVEMBER 2017 AT WHICH TIME THE BIDS WILL BE PUBLICLY OPENED AND READ FOR FURNISHING THE CITY OF CHULA VISTA: TREE MAINTENANCE SERVICES ALL BIDDERS ARE HEREBY REFERRED TO THE BIDDING REQUIREMENTS AND CONDITIONS, BID GENERAL PROVISIONS, SPECIFICATIONS, MAPS, TREE INVENTORIES, AND TERMS AND CONDITIONS AS STATED IN THIS NOTICE TO BIDDERS. CONTACT THE PURCHASING DIVISION THROUGH PLANETBIDS WITH ANY QUESTIONS RELATED TO THIS REQUEST FOR BID. CITY OF CHULA VISTA PURCHASING DIVISION TELEPHONE (619) 585-5629 vdelacruz@chulavistaca.gov ALL BIDS MUST BE MAILED OR DELIVERED IN SEALED ENVELOPES PLAINLY MARKED WITH THE BID NAME, BID NUMBER AND TIME SET FOR OPENING AND CONTRACTOR NAME TO: PUBLIC WORKS URBAN FORESTRY DIVISION ATTENTION: SAM OLUDUNFE JOHN LIPPITT PUBLIC WORKS CENTER 1800 MAXWELL ROAD CHULA VISTA, CA 91911 BIDS RECEIVED AFTER THE TIME SET FOR OPENING WILL BE REJECTED. THE CITY RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS OR ANY PORTION OF ANY BID OR TO WAIVE ANY IRREGULARITIES OR INFORMALITIES IN THE BIDS OR IN THE BIDDING. A MANDATORY PRE-BID MEETING IS SCHEDULED FOR: FRIDAY, OCTOBER 27, 2017 10:00 A.M. TO 11:00 A.M. LOCATION: JOHN LIPPITT PUBLIC WORKS CENTER CONFERENCE ROOM C & D, 1800 MAXWELL ROAD, CHULA VISTA, CA 91911. ATTENDANCE AT THE MEETING SHALL BE AT BIDDER’S SOLE EXPENSE. BIDDERS NOT REPRESENTED AT THIS MEETING MAY NOT SUBMIT A BID. THE PURPOSE OF THE CONFERENCE IS TO REVIEW THE REQUIREMENTS, PASS OUT AN ITEMIZED TREE LIST, AND ANSWER QUESTIONS REGARDING THE BID DOCUMENTS. IT IS THE RESPONSIBILITY OF EACH BIDDER TO EXAMINE THE CITY TREES ON SITE AND BE ACQUAINTED WITH ALL TREE AND SITE CONDITIONS, DIFFICULTIES, RESTRICTIONS, AND LIMITATIONS PRIOR TO SUBMITTING A BID. 2017-11-21 Agenda Packet Page 272 RFB B08-17/18 October 18, 2017 Page 2 All bidders must be registered with current contact information on PlanetBids. Bidders must log in and download complete bid specifications from PlanetBids. Notification of addendums will be sent via PlanetBids. The City of Chula Vista is requesting bids from experienced contractors to provide Citywide Tree Trimming Maintenance Service. Prevailing wages apply to this Request for Bids (RFB). All contractors must be registered with the California Department of Industrial Relations (DIR) prior to submitting a bid to the City. Proof of DIR registration (registration number) must be submitted with your bid for verification purposes. BID REQUIREMENTS AND CONDITIONS It is assumed that the bidder has investigated and is satisfied as to the conditions to be encountered, as to the character, quality, and quantities of work to be performed. It is mutually agreed that submission of a bid shall be considered prima facie evidence that the bidder has made such examinations of the Contract Documents and the conditions to be encountered. The following documents must be completed and submitted with the bid: 1. Bid (Pages 4-5) 2. 10% Bidder’s Bond 3. List of Subcontractors (Page 8) 4. Addenda (if any) 5. Disclosure Statement (pages 21-22) Within ten (10) calendar days following award of contract, the successful bidder shall provide the following additional documents: 1. Commercial Liability, Property Damage, and Vehicular Insurance 2. Workers' Compensation Insurance Declaration 3. 100% Performance and Payment Bond No bid will be accepted from a contractor who has not been licensed in accordance with the provisions of Chapter 9, Division 3 of the Business and Professions Code and its implementing regulations. Contractors and their subcontractors are required by bid specifications to pay prevailing wage ("Prevailing Wage Rates") to persons employed by them for work under the Agreement in accordance with the provisions of Section 1773 of the Labor Code of the State of California regulating payment of prevailing wages for Public Works Contracts let by the City. No contractor or subcontractor may be listed on a bid proposal for a public works project unless registered with the DIR pursuant to Labor Code section 1725.5. No contractor or subcontractor may submit a bid for or be awarded a contract for public work on a public works project unless registered with the DIR pursuant to Labor Code section 1725.5. The Agreement is subject to compliance monitoring and enforcement by the DIR. BID SUBMITTAL Bidders shall submit two (2) unbound copies of the bid package and one USB Flash Drive in a sealed envelope marked with the bid name, bid due date, bid due time, company name. 2017-11-21 Agenda Packet Page 273 RFB B08-17/18 October 18, 2017 Page 3 Bid to be mailed or delivered to: PUBLIC WORKS URBAN FORESTRY UNIT ATTENTION: SAM OLUDUNFE JOHN LIPPITT PUBLIC WORKS CENTER 1800 MAXWELL ROAD CHULA VISTA, CA 91911 Bids must be returned no later than 2:00 P.M. (Pacific Standard Time) on November 8, 2017, at which time the bids will be publicly opened and read. Late proposals will not be considered. Email or fax not accepted. QUESTIONS All questions are to be submitted through PlanetBids no later than October 27, 2017 by 5:00 P.M. Responses to questions will be posted on PlanetBids no later than 5:00 P.M. October 31, 2017. An email will be sent by PlanetBids when the responses are ready for review. Addendum(s) must be signed, dated and returned with your bid package. ATTACHMENTS Attachment 1: Chula Vista Urban Forest Tree List Attachments 2-4: Maps of Grid Tree Trimming for 2017-2020 2017-11-21 Agenda Packet Page 274 RFB B08-17/18 October 18, 2017 Page 4 *Notes: Quantity = Estimated quantity per year of trimming. Quantities are estimates only and may vary from year to year based on operational exigencies and financial considerations. DSH = Diameter at Standard Height, synonymous with Diameter at Breast Height (DBH). *Definition of Broadleaf Trees: All trees other than those called out as specific bid items. ^Feather palms are pruned every year. Fan palms and date palms are pruned in alternate years. The fan palms on Broadway are pruned every year. Tree Pruning Services (Base Bid) Quantity Unit Tree Pruning Price ($) Eucalyptus Tree Pruning Small DSH ≤6”-12” 35 Each Medium DSH 13”-24” 73 Each Large DSH 25”-30” 35 Each Mature DSH ≥31” 23 Each *Broadleaf Tree Pruning 657 Each Pine & Conifer Tree Pruning 73 Each ^Palm Pruning – feather palms (e.g., queen palms, king palms, pindo palms) 1,000 Each Palm Pruning – fan palms (e.g., Mexican fan palms, Guadalupe palms, windmill palms) 900 Each Palm Pruning – date palms (e.g., Canary Island date palms, date palms) 450 Each GRAND TOTAL Tree/Stump/Root Removal Services – As Needed Unit Price ($) Tree removal – Broadleaf trees Palm trees Diameter inch Vertical foot Stump Removal Diameter inch Root Pruning Linear foot Bio-barrier installation (12” wide) Linear foot 2017-11-21 Agenda Packet Page 275 RFB B08-17/18 October 18, 2017 Page 5 *Disclosure: City has the right, but not the obligation, to authorize successful bidder to provide the above “Tree/Stump/Root Removal Services – As Needed” and/or “Emergency Calls (max. crew of 3) – As Needed” services (collectively, “As Needed Services”). Contractor acknowledges and agrees that City has no obligation to authorize the successful bidder to perform any “As Needed Services” as a result of an award of the Agreement. The City, represented by the Public Works Director, or designee, will determine what constitutes an “Emergency” or an “As-Needed” service in City’s sole discretion. Period of Coverage The successful bidder agrees to provide Tree Trimming Maintenance Services as specified and on an as-needed basis initially from November 2017 through June 30, 2018. The parties may mutually agree in writing to extend the Agreement for four (4) additional one (1) year periods. The annual and option year renewals will be effective from July 1 to June 30 – the City’s Fiscal Year. Unit Prices Unit Prices shall include all labor, traffic control, equipment, materials, insurance, permit and license fees, disposal costs, profit, overhead, supervision, transportation, applicable sales tax, and all other costs to complete all necessary work for that line item. Contract Prices Unless agreed to in writing, the Unit Prices quoted in the bid shall remain firm through June 30, 2020. If the parties agree to extend a contract awarded pursuant to this RFB for one or more option periods, the successful bidder may request a line item price increase for the option period if such request is based on either (1) Governmental or regulatory agency increases to the trade/industry; 2) Regional Consumer Price Index (CPI) increases to the trade/industry. The successful bidder must substantiate such request with documentation demonstrating the proposed increase at least sixty (60) days prior to the proposed effective date of the increase. Upon receipt, the City will review the request. Overall increases of greater than the annual CPI increases or 5% from prior year prices will not be considered. Payment Terms Terms: ________%_________Days Prompt payment discounts offered for less than fifteen (15) days will not be considered in evaluating bids for award. In the absence of terms, payment shall be Net Thirty (30) Days. Emergency Calls (max. crew of 3) – As Needed Unit Price ($) Emergency Calls/Services 7 AM-7 PM Hour Emergency Calls/Services 7 PM-7 AM Hour 2017-11-21 Agenda Packet Page 276 RFB B08-17/18 October 18, 2017 Page 6 Payment Method The City is changing its method of making payments. The preferred method is the use of a Credit Card. Is your company authorized to accept payment made with the cards below? American Express – Yes ____ No ____ MasterCard/VISA - Yes ____ No ___ Are there fees associated with accepting credit cards -__________________________________ Evaluation of Bids The Bid Evaluation Team led by the Public Works Director, or designee, will evaluate bids. All bidders should read the attached Bid General Provisions which are considered part of the Contract Documents and any contract awarded. The sum of the Tree Pruning Services (Base Bid) shall be used to compare all bids to determine the lowest responsive bid. The City reserves the right to reject any or all bids received. The City further reserves the right to waive any technicalities or minor irregularities in bids received. Green Waste Disposal Disposal costs will not be considered in evaluation of the bids. At the City’s sole discretion, the City may direct the successful bidder to dump green waste usable as mulch in the City’s landscape areas. Palm waste and other undesirable wastes shall be disposed of at contractor’s expense. Public Agency Participation Other public agencies (e.g. city, county, public corporation, political subdivision, school district, or water authority) may want to participate in any award as a result of this bid. The City shall incur no financial responsibility in connection with any purchase by another public agency. The public agency shall accept sole responsibility for placing orders and making payments to the successful bidder. This option will not be considered in bid evaluation. Please indicate whether this will be granted. Yes ________ No ________ Contractor’s License A D-49 Tree Service Contractor License is required. Licensed in accordance with the State of California providing for the registration of Contractors: License No.: ____________________________, License Expiration Date: _________________, Contractor's State License Classification: ____________________. 2017-11-21 Agenda Packet Page 277 RFB B08-17/18 October 18, 2017 Page 7 DIR Registration Number is required: DIR Registration #: ___________________________ Issue Date ________________________ Expiration Date___________________________ PUBLIC DISCLOSURE All bids submitted in response to this RFB become the property of the City and public records, and as such may be subject to public review. Under the California Public Records Act (California Government Code Section 6250 et seq.) records in the custody of a public entity generally have to be disclosed unless the information being sought falls into one or more of the exemptions to disclosure set out in Government Code Sections 6254 through 6255. A cover letter submitted with the bid should contain a paragraph that states whether or not bidder believes that its bid does or does not contain information that falls into one of the exemptions of Government Code Sections 6254 through 6255 and whether or not bidder considers such information to be confidential. In the absence of a declaration, the City may be obligated to disclose the bid to any party that requests it. Regardless of assertions of confidentiality, bid contents may still be disclosed if City, or a court with jurisdiction, determines that such bid is a public record requiring disclosure 2017-11-21 Agenda Packet Page 278 RFB B08-17/18 October 18, 2017 Page 8 LIST OF SUBCONTRACTORS* The successful bidder shall perform at least 51% of the contract work with his/her/its own organization. All bidders shall list the name and address and DIR registration number of each subcontractor Business License Number, address and phone number and DIR registration to whom the that bidder proposes to subcontract portions of the work. All contractors and subcontractors for the Project must obtain a business license from the City of Chula Vista before a notice to proceed may be issued. The City reserves the right to approve or disallow the use of any proposed subcontractors. Description (Type) of Portion Name & Address of Work Subcontracted 1) ________________________________ _______________________________ ___________________________________ ___________________________________ ___________________________________ 2) ________________________________ _______________________________ ___________________________________ ___________________________________ ___________________________________ 3) ________________________________ _______________________________ ___________________________________ ___________________________________ ___________________________________ 2017-11-21 Agenda Packet Page 279 RFB B08-17/18 October 18, 2017 Page 9 BID GENERAL PROVISIONS The Contract Documents shall govern any contract award for the Project. By submitting a bid, bidders acknowledge that they have carefully examined and understand the meaning, intent, and requirements of all Contract Documents, including but not limited to the Agreement attached hereto as Appendix “A”. The successful bidder will furnish the item(s) and complete the work within the time specified, and in strict conformity with the Contract Documents for the prices quoted in its bid. The successful bidder will enter into a written contract with the same material terms and conditions as the Agreement attached hereto and incorporated herein as Appendix “A”. Failure to execute a written contract with the same material terms and conditions as the Agreement in the time prescribed may result in the bidder’s forfeiture of its bid bond. All bidders shall have carefully investigated and become satisfied as to the trees and the physical locations of work for the Project, the conditions to be encountered in performing the work, and the character, quality, and quantities of work to be performed. 1. Prices All prices and notations must be in ink or typewritten. Mistakes may be crossed out and corrections typed or written with ink adjacent to the error; the person signing the bid must initial corrections in ink. Bids shall indicate the unit price extended to indicate the total price for each item bid. Any difference between the unit price correctly extended and the total price shown for all items bid shall be resolved in favor of the unit prices. 2. Bidder’s Security A bid deposit in an amount equal to at least 10% of the bid is required as a bid security by the City. The bid security may only be in cash, a cashier’s check, a certified check made payable to the City of Chula Vista, or a bidder’s bond. If the bid security is a bond, it shall be executed by a surety insurer authorized to issue surety bonds in the State of California. The bid security must be executed by the bidder and enclosed with the bid proposal in the sealed bid envelope. 3. Items Offered If the item offered has a trade name, brand and/or catalog number, such shall be stated in the bid. If the bidder proposes to furnish an item of a manufacturer or vendor other than that mentioned on the face hereof, bidder must specify maker, brand, quality, catalog number, or other trade designation. Unless such is noted on the bid form, it will be deemed that the item offered is that designated even though the bid may state or equal. 4. Brand Names Whenever reference to a specific brand name is made, it is intended to describe a component that has been determined to best meet operational, performance, or reliability standards of the City, thereby incorporating these standards by reference within the specifications. An equivalent (or equal) may be offered by the bidder, subject to evaluation and acceptance by the City. It is the bidder’s responsibility to provide, at bidder’s expense, samples, test data, or other documentation the City may require for fully evaluating and determining the acceptability of an offered substitute. The City reserves the sole right to reject a substituted 2017-11-21 Agenda Packet Page 280 RFB B08-17/18 October 18, 2017 Page 10 component that will not meet or exceed City standards. 5. Samples Samples may be required for bid evaluation and testing purposes. Bidders shall agree to provide samples within forty-eight (48) hours upon request and at no additional cost to the City. 6. Verify Quotations Bidders shall verify prices prior to bid submittal, as withdrawal or correction may not be permitted after the bid has been opened. 7. Firm Prices Prices on bid shall be firm prices not subject to escalation. In the event the specifications provide for escalation, the maximum limit shall be shown, or the bid shall not be considered. In the event of a decline in market price below a price bid, the City shall receive the benefit of such decline. 8. Modification or Withdrawal of Bids Bids may be modified or withdrawn by written or facsimile notice received prior to the exact hour and date specified for receipt of bids. A bid may also be withdrawn in person by a bidder, or authorized representative, prior to the exact hour and date set for receipt of bids. Telephone withdrawals are not permitted. 9. Late Bids, Modifications, or Withdrawals Bids, modifications of bids, or bid withdrawals received after the exact time and date specified for receipt will not be considered. 10. Mistake in Bid (a) If the bidder discovers a mistake in bid prior to the hour and date specified for receipt of bid, the bidder may correct the mistake by modifying or withdrawing the bid in accordance with paragraph 8 above. (b) If within seventy-two (72) hours of the bid closing and prior to the issuance of a purchase order or a contract, the apparent low and best bidder discovers a mistake in bid of a serious and significant nature which is unfavorable to bidder, bidder may request withdrawal of the bid if the result of the correction of the mistake makes another bidder lowest and best bidder. The mistake must be evident and provable. The right is reserved by the City to reject any and all requests for correction of mistakes in bids received after the hour and date of the bid closing. The decision of the Purchasing Agent is final as regards acceptance or rejection of requests for correction of bids. (c) A mistake in bid cannot be considered once a purchase order or contract is issued. 11. Signature All bids shall be signed and the title and firm name indicated. A bid by a corporation or other business entity shall be signed by an authorized officer, employee, or agent with his or her title. City may require appropriate evidence that person(s) executing the bid, or any contract awarded pursuant to this RFB, are duly authorized to do so on behalf of the executing party. 2017-11-21 Agenda Packet Page 281 RFB B08-17/18 October 18, 2017 Page 11 12. Alternative Proposals To be responsive to the bid, bidder must submit a proposal that meets all specific bid requirements. Once bidder has proposed a product which is responsive to the specification, bidder may include with the bid any additional proposals or alternative products that bidder believes can meet or exceed the City’s requirements and that may offer additional advantages, benefits, or cost savings. The City reserves the right to evaluate, and accept or reject, such alternatives as though they were part of the original specifications without advertising for further bids, when it is in the best interests of the City. Any awards so made will be based on operational and cost analysis considerations that would result in the optimum economic advantage to the City. 13. Confidential Information Any information deemed confidential or proprietary should be clearly identified by the bidder as such. It may then be protected and treated with confidentiality only to the extent permitted by law. Information or data submitted with a bid will not be returned. 14. Quality Unless otherwise required in the specifications, all goods furnished under any contract awarded pursuant to this RFB shall be new and unused. 15. Litigation Warranty The bidder, by bidding, warrants that bidder is not currently involved in litigation or arbitration concerning the materials or bidder’s performance concerning the same or similar material or service to be supplied pursuant to this contract of specification, and that no judgments or awards have been made against bidder on the basis of bidder’s performance in supplying or installing the same or similar material or service, unless such fact is disclosed to the City in the bid. Disclosure may not disqualify the bidder. The City reserves the right to evaluate bids on the basis of the facts surrounding such litigation or arbitration. 16. Royalties, Licenses and Patents Unless otherwise specified, the bidder shall pay all royalties, license, and patent fees. The bidder warrants that the materials to be supplied do not infringe any patent, trademark or copyright.. 17. Performance Standards Performance of work and acceptability of equipment or materials supplied pursuant to any contract or award shall be to the satisfaction of the City. 18. Warranties (a) All material, labor or equipment provided under the Agreement shall be warranted by the successful bidder and/or manufacturer for at least twelve (12) months after acceptance by City. Greater warranty protection will be accepted. (b) Bidder shall be considered primarily responsible to the City for all warranty service, parts, and labor applicable to the goods or equipment provided by bidder under this bid or award pursuant thereto, irrespective of whether bidder is an agent, broker, fabricator or manufacturer’s dealer. Bidder shall be responsible for ensuring that warranty work is performed at a local agency or facility convenient to City and that services, parts and labor are available and provided to meet City’s schedules and deadlines. Bidder may 2017-11-21 Agenda Packet Page 282 RFB B08-17/18 October 18, 2017 Page 12 establish a service contract with a local agency satisfactory to City to meet this obligation if bidder does not ordinarily provide warranty service. 19. Addenda The effect of all addenda to the bid documents shall be considered in the bid, and said addenda shall be made part of the bid documents and shall be returned with them. Before submitting a bid, each bidder shall ascertain whether or not any addenda have been issued, and failure to cover in this bid any such addenda issued may render the bid invalid and result in its rejection. 20. Taxes All applicable State or Federal taxes shall be considered as included in the amount paid for the various items of work. Except as provided herein, the successful bidder shall be responsible for payment of such taxes to the proper governmental authority under any award. 21. Conflict of Interest No City employee, elected official, appointed official, officer, or consultant, nor any immediate family member of any such employee, elected official, appointed official, officer, or consultant, may participate directly or indirectly in the procurement process pertaining to this bid if they: (a) Have a financial interest or other personal interest, whether direct or indirect, that is incompatible with the proper discharge of one’s official duties in the public interest or would in any way impair one’s independence, judgment, or action in the performance of one’s official duties. (b) Are negotiating for or have an arrangement concerning prospective employment with bidder. The bidder warrants to the best of his knowledge that the submission of the bid will not create such conflict of interest. In the event such a conflict occurs, the bidder is to report it immediately to the Purchasing Agent. For breach or violation of this warranty, the City shall have the right to annul any contract awarded pursuant to this RFB without liability at its discretion, and such bidder may be subject to damages and/or debarment or suspension. 22. Gratuities No bidder, nor any agent or representative of any bidder, shall offer or provide gratuities in the form of entertainment, gifts, or otherwise, to any officer or employee of the City with the intent of influencing an award of an agreement pursuant to this RFB or securing favorable treatment with respect to the performance of any contract awarded pursuant to this RFB. Any such actions shall constitute grounds for the City to rescind the right of bidder to proceed under any contract awarded pursuant to this RFB. 23. Award of Contract (a) Bids will be analyzed and award will be made to the lowest, responsive and responsible bidder whose bid conforms to the solicitation and whose bid is considered to be most advantageous to the City, price and other factors considered. Factors to be considered may include, but are not limited to: bidder’s past performance, line item cost, total unit cost, aggregate total cost, economic cost analysis, life cycle costs, warranty and quality, maintenance cost, durability, the operational requirements of the City, and any other factors which will result in the optimum economic benefit to the City. 2017-11-21 Agenda Packet Page 283 RFB B08-17/18 October 18, 2017 Page 13 (b) The City reserves the right to reject any item or items, to waive informalities, technical defects and minor irregularities in bids received; and to select the bid(s) deemed most advantageous to the City. The City will, however, consider bids submitted on an “all or nothing” basis if the bid is clearly designated as such. 24. Bid Results To obtain bid results, either (1) attend the bid opening, (2) email the Purchasing Division at the email address provided herein referencing the bid number and a bid tabulation will be emailed to you, or (3) visit the Purchasing Department no sooner than three (3) working days after bid opening to review bid tabulation. Due to time constraints, bid results cannot be given out over the phone. Unsuccessful bidders may file a bid protest with the Purchasing Agent. The Bidder’s protest must: 1. Be filed in writing not later than 5:00 p.m. on the fifth (5th) business day after the bid opening date; 2. Clearly identify the specific alleged irregularity or other basis for the protest; 3. Specify, in detail, the factual and legal grounds for the protest; and 4. Include all relevant supporting documentation with the protest at time of filing. If the protest does not meet all of the above requirements, the City may reject it without further review. If the protest is timely received and complies with all of the above requirements, the City will review the protest, any response from the challenged bidder, and any other information deemed relevant by the City in its sole discretion. The City will provide a written response to the protesting Bidder. The procedure and time limits set forth in this section are mandatory and are the sole and exclusive remedy in the event of a bid protest. Failure to comply with these procedures shall constitute a failure to exhaust administrative remedies and a waiver of any right to further pursue the bid protest, including filing a Government Code Claim or other legal proceedings. 25. Documentation Due to the time constraints that affect contract performance, all required documents, certificates of insurance and bonds shall be provided to the City within ten (10) calendar days following award, or date of request by City, whichever is later. Any failure to comply may result in bid being declared non-responsive and rejected, and at City’s option the bid bond may be attached for damages suffered. 26. Contractor’s Invoice For any contract awarded pursuant to this RFB, invoices shall be prepared and submitted in duplicate to address shown on the Purchase Order. Separate invoices are required for each Purchase Order. Invoices shall contain the following information: Purchase Order number, item number, description of supplies or services, sizes, unit of measure, quantity, unit price, and extended totals. 27. Inspection and Acceptance Inspection and acceptance of performance under any contract awarded pursuant to this RFB 2017-11-21 Agenda Packet Page 284 RFB B08-17/18 October 18, 2017 Page 14 will be at destination of the work unless specified otherwise, and will be made by the City department shown in the shipping address or other duly authorized representative of the City. Until delivery and acceptance, and after any rejection, risk of loss will be on the bidder unless loss results from negligence of the City. 28. Lost and Damaged Shipments Risk of loss or damage to items prior to the time of their receipt and acceptance by the City is upon the bidder. The City has no obligation to accept damaged shipments and reserves the right to return at the bidder’s expense damaged merchandise even though the damage was not apparent or discovered until after receipt of the items. 29. Late Shipments Bidder is responsible to notify the City department receiving the items and the Purchasing Agent of any late or delayed shipments. The City reserves the right to cancel all or any part of an order if the shipment is not made as promised. 30. Document Ownership (a) All technical documents and records originated or prepared under any contract awarded pursuant to this RFB, including papers, reports, charts, and computer programs, shall be delivered to and become the exclusive property of the City and may be copyrighted by the City. The successful bidder assigns all copyrights to City by undertaking this Agreement. (b) All inventions, discoveries, enhancements, changes, or improvements of computer programs developed pursuant to this Agreement shall be the property of the City, and all patents or copyrights shall be assigned to City, unless otherwise agreed. The successful bidder agrees that City may make modifications to computer software furnished by the successful bidder without infringing the successful bidder’s copyright or any license granted to City. 31. Advertisements, Product Endorsements City employees and agencies or organizations funded by the City of Chula Vista are prohibited from making endorsements, either implied or direct, of commercial products or services without written approval of the City Manager. No bidder may represent that the City of Chula Vista has endorsed their product or service without the Purchasing Agent’s prior written approval. 32. City Provisions to Prevail Any terms and conditions submitted by bidder with its bid shall not be acceptable to City unless expressly agreed to in writing by the City. The City reserves the right to reject bidder’s bid as non-responsive, to consider the bid without bidder’s standard terms and conditions, or to require bidder to delete reference to such as a condition of evaluation or award of the bid. If, after award of contract, the successful bidder shall provide materials or services accompanied by new or additional standard terms or conditions, they too shall be considered void and City may require deletion as a further condition of performance by the successful bidder. 33. Amendments and Modifications The Purchasing Agent may at any time, by written order, and without notice to the sureties, 2017-11-21 Agenda Packet Page 285 RFB B08-17/18 October 18, 2017 Page 15 make a modification to the Agreement or an amendment to the Purchase Order, within the general scope of the Agreement, in (1) quantity of materials or service, whether more or less; (2) drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for the City; (3) method of shipment or packing; and (4) place of delivery. If any such change causes an increase or decrease in the cost or the time required for the performance of the Agreement, an equitable adjustment may be made by written modification of the Agreement or amendment to the Purchase Order. Any claim by the successful bidder for adjustment under this clause must be asserted within 30 calendar days from the notification date. 34. Disputes Except as otherwise provided in these provisions, any dispute concerning a question of fact arising under this RFB or under any contract awarded pursuant to this RFB, which is not otherwise disposed of by contract, shall be decided by the Purchasing Agent who shall reduce this decision to writing and mail a copy to the bidder. The decision of the Purchasing Agent shall be final and conclusive. Pending final decision of a dispute, the successful bidder shall proceed diligently with the performance of any contract awarded pursuant to this RFB and in accordance with the Purchasing Agent’s decision. 35. Mediation Should an unresolved dispute arise out of any contract awarded pursuant to this RFB, any party may request that it be submitted to non-binding mediation. The parties may meet in mediation within thirty (30) days of a request. If the parties agree to mediation, the mediator shall be agreed to by the mediating parties; in the absence of an agreement, the parties shall each submit one name from mediators listed by the American Arbitration Association or other agreed-upon service. The mediator shall be selected by a Blindfold process. The parties shall be responsible for all of their respective costs of the mediation. 36. Licenses and permits All contractors and all subcontractors submitting bids pursuant to this RFB shall be licensed in accordance with the provisions of Chapter 9 of Division III of the Business and Professions Code, State of California. Chula Vista Municipal Code Section 5.02.020 requires all persons and entities doing business with the City to obtain a Business License. The successful bidder shall obtain all applicable permits and licenses required for the Project at the successful bidder’s sole expense, including but not limited to traffic control and access, and give all notices necessary and incidental to the due and lawful prosecution of Project. 37. Annual Appropriation of Funds Multi-year term supply and service contracts and leases are subject to annual appropriation of funds by the City Council. Payments made under term contracts and leases are considered items of current expense. Purchase Orders are funded when issued; therefore, they are current expense items and are not subject to any subsequent appropriation of funds. In the event sufficient funds are not appropriated for the payment of contract payments required to be paid in contract term for any contracts awarded pursuant to this RFB, and if no funds are legally available from other sources, any contract awarded pursuant to this RFB may be terminated at the end of the original term or renewal term and the City shall not be obligated to make further payments beyond the then current original or renewal term. The 2017-11-21 Agenda Packet Page 286 RFB B08-17/18 October 18, 2017 Page 16 City will provide notice of its inability to continue any contract awarded pursuant to this RFB at such time as the Purchasing Agent is aware of the non-appropriation of funds. However, failure to notify does not renew the term of any contract awarded pursuant to this RFB. The City has no monetary obligation in event of termination or reduction of a term contract since such contracts represent estimated quantities and is not funded as an agreement except to the extent of the Purchase Orders issued. 38. Extension When in the City’s best interest, any contract awarded pursuant to this RFB may be extended on a daily, month-to-month, or annual basis by mutual agreement of both parties. Services and/or materials received under an extension shall be in accordance with pricing, terms, and conditions, as described herein. 39. Venue Any contracts awarded pursuant to this RFB shall be governed by and interpreted according to the laws of the State of California, and venue for any proceeding shall be in the County of San Diego. 40. Insurance Required Prior to commencement of any work under a contract awarded pursuant to this RFB, the successful bidder shall be required to procure and maintain insurance on the terms set forth in the Agreement attached hereto as Appendix A. 41. Bonds Required Prior to commencement of any work under a contract awarded pursuant to this RFB, the successful bidder shall be required to procure a Performance Bond and Labor and Material Bond on the terms set forth in the Agreement attached hereto as Appendix A. 2017-11-21 Agenda Packet Page 287 RFB B08-17/18 October 18, 2017 Page 17 SPECIAL PROVISIONS - GENERAL Safety and Loss Prevention Program Contractor shall provide the City a copy of their Safety and Loss Prevention Program prior to commencement of work. Traffic Control and Access All traffic control shall be done in accordance with the latest revised edition of the Manual of Traffic Controls prepared by the California Department of Transportation. Traffic control plans are not required as a condition of this bid. However, Contractor shall comply with all state and local regulations regarding lane/street closures in performance of work. The City Forester shall act as liaison between Contractor and the Chula Vista Traffic Engineering Division. Contractor’s Local Representation and Physical Presence The Contractor is required, at no cost to the City, to maintain a local office within the County of San Diego and shall have competent representatives available during normal business hours. An office shall be a physical location staffed with Contractor employees capable of discussing matters pertaining to the Agreement and who can make authoritative decisions. A cell phone or mobile office is not an acceptable substitute for a physical location. The City may conduct a site inspection of the Contractor’s office. Public Notices The Contractor will provide printed notices of tree trimming dates, which Contractor shall distribute to affected residents at least forty-eight (48) hours in advance. Contractor shall distribute notices at no additional cost to the City. Measurement of and Changes to Quantities for Unit Price Work The estimate of the quantities of work to be done and materials to be furnished are approximate only, being given as a basis for the comparison of bids, and the City of Chula Vista does not expressly or by implication agree that the actual amount of work will correspond therewith, but reserves the right to increase or decrease the unit quantities by any amount, or to omit portions of the work that may be deemed necessary by the City with no adjustment in unit price. 2017-11-21 Agenda Packet Page 288 RFB B08-17/18 October 16, 2017 Page 18 SPECIAL PROVISIONS - TECHNICAL TRIMMING OF TREES Trimming shall include the removal of all dead, broken, and diseased branches and the removal of crossovers and suckers. Crowns shall be raised to eight (8) feet over sidewalks, eleven (11) feet over curbs, and fourteen (14) feet over traffic lanes on mature trees. Young trees shall have crowns raised according to specifications described under the broadleaf performance standards and in conformity with structural pruning principles. Final cuts shall be made without leaving a stub and in a manner that favors the earliest covering of the wound in callus growth. This requires that the wood area be as small as practicable, that the cut be reasonably flush with the shoulder ring area, and the cambium tissues at the edge of the cut be alive and healthy. All cuts shall be made cleanly with no ragged edges. All work completed shall be logged on forms provided. These logs shall be submitted to the City Forester, or designee, on a weekly basis no later than 1:00 p.m. on Friday of that workweek. The Contractor shall submit a work schedule for trees to be trimmed one (1) week in advance of actual trimming. City shall approve the work schedule proposed prior to commencing of work. The City Forester, or designee, reserves the right to establish a work schedule if, in the sole opinion of the City, Contractor fails to provide an efficient and systematic schedule. Work Crew Supervision At a minimum, the crew supervisors must be current International Society of Arboriculture (ISA) Certified Arborists. Their names, categories of credential, and certification numbers must be included in the bid document to be considered for this contract. Any change in the status of the "certified" individuals during the life of this contract must be reported to the City at the time of occurrence. All certification numbers will be verified through the ISA's office. Failure to have a certified arborist on site to set off crew at beginning of work and supervise crew during work operations shall result in termination of the contract. The contractor shall provide qualified supervision of each crew at all times while working under this contract. Each supervisor shall be authorized by the contractor to accept and act upon all directives issued by the City. Safety Standards 1. All equipment to be used and all work to be performed must be in full compliance with the most current revision of the American National Standards Institute (ANSI) Z133 (Safety Standards) and A300 (Tree Pruning Standards). 2. Blocking of public streets shall not be permitted unless prior arrangements have been made with the City’s Engineering Division and duly approved traffic control plans have been obtained. The Contractor is responsible to have vehicles moved during arboriculture work. 3. The contractor shall provide adequate barricades, flag person(s), signs and warning devices during the performance of the Contract to protect motorists and pedestrians. All placements of cones, signs, and barricades must conform to the American Traffic Safety Standards. Flashing lights mounted on a vehicle shall not be deemed as sufficient or adequate protection. 2017-11-21 Agenda Packet Page 289 RFB B08-17/18 October 16, 2017 Page 19 Tree Locations Trees to be pruned will be those designated by the City Forester. Lists of trees to be pruned will be attached to special project specifications. Debris and Chip Disposal Disposal of all logs, limbs, chips and debris generated by work described within this contract will be the responsibility of the contractor. All tree maintenance debris must be removed before the close of business each day; there must be no tree maintenance debris left on a work site overnight. All trimmings shall become the responsibility of the Contractor. Trimmings shall be legally disposed of at an authorized disposal site. Disposal site for trimmings shall be indicated on the Bid Form. Unit Prices quoted for services in this contract by contractor shall include all labor, traffic control, equipment, materials, insurance, permit and license fees, disposal costs, profit, overhead, supervision, transportation, and applicable sales tax. No other compensation will be allowed. At the City’s sole discretion, the City may direct the Contractor to a disposal site other than the Contractor’s proposed site. An adjustment shall be made to account for any difference in cost, taking into consideration any additional transportation expense. Tree Trimming - Performance Standards Low overhanging branches shall be maintained at a minimum height of 14 feet above street/roadway grade. Low branches overhanging sidewalks and parkways shall be maintained at a minimum height of eight (8) feet above grade. Ailing or stunted trees that fail to meet typical growth expectations shall be brought to the attention of the City Forester. All feather palms (e.g., queen palms) and fan palms (e.g., California fan palms) must be pruned between July 1st and September 30th. Pine trees must be trimmed between November 1st and March 31st. 1. Feather palms crowns shall not be raised above horizontal except to remove dead or dying fronds. All seedpods and flower bundles shall be removed whether alive or dead. All loose and semi-tight butt plates shall be removed up to the point where forcefully dislodging them could tear or otherwise damage trunk tissue. The City Forester shall settle any disagreement as to the specific angle. 2. Fan palms crowns shall not be raised above horizontal except to remove dead or dying fronds. All seedpods and flower bundles shall be removed whether alive or dead. The City Forester, or designee, shall determine acceptable height and angle of fronds. The City Forester shall settle any disagreement as to the specific angle. 3. Phoenix canariensis shall be slicked or skinned up to a symmetrical solid supporting ball of approximately 3½ feet in height and tapered at the base. The only exception to this standard shall be where loosely attached rotten frond bases require a shorter ball for safety from potential dislodgement. Except to remove dead or dying fronds, the crowns shall not be raised above horizontal. All seedpods and flower bundles shall be removed whether alive or dead. The City Forester shall settle any disagreement as to specific angle. 2017-11-21 Agenda Packet Page 290 RFB B08-17/18 October 16, 2017 Page 20 4. Phoenix dactylifera ball dimensions shall be proportionate to trunk thickness and tightness of frond spacing. Trunks shall not be skinned like Canariensis. Old frond bases shall be step cut to match existing pattern as balls are raised. Except to remove dead or dying fronds, the crowns shall not be raised above horizontal. All seedpods and flower bundles shall be removed whether alive or dead. The City Forester shall settle any disagreement as to specific angle. 5. Eucalyptus trees shall have their crowns reduced in height and in diameter. This shall be accomplished through drop-crotch pruning main leaders to laterals that are close to 1/3 of the diameter of the cut being made. Limbs shall be cut back to laterals that are at least 1/3 the size of the parent limb. Topping of trees is not permitted. 6. Pine trees with a single main trunk, such as Canary Island pines, shall not have their central leader reduced in height by any means. The top 1/3 of the tree shall be thinned to reduce weight and provide light and air penetration only. The lower 1/3 of the tree shall be thinned by removing small branches at the point of the attachment and shortening long overweight limbs to a lateral large enough to assume the terminal role. A pine tree which does not have a single main trunk, such as stone pines, may be reduced in height by drop-crotch or thinning cuts. Large lateral branches and scaffold limbs shall be reduced approximately 1/3 in length and thinned without stripping of secondary branches. 7. Broadleaf trees include all other trees not specifically named elsewhere. Mature trees shall have end weight reduced and crowns opened by means of thinning cuts to a lateral large enough to assume the terminal role. Young trees shall be structurally trimmed through suppression of upright laterals to favor a central leader which shall not be shortened or thinned as much as other portions of the tree. Crowns shall be raised up to the first permanent branch if the tree is large enough, or to a reasonably high temporary branch in balance with the overall size and appearance of the young tree. All stakes shall be removed and weak crotches with included bark shall be eliminated. The City Forester shall determine if the trimming of any and all trees meets the performance standards contained in these specifications. Should diseased trees be encountered in the performance of duties, equipment shall be adequately cleaned to prevent the spread of disease prior to continuation of work. STAFFING A minimum of one full time tree crew, consisting of no less than one lift truck and three employees, shall be dedicated to completing the trimming of each of the four main segments of the annual contract (i.e. broadleaf trees, pine trees, eucalyptus trees, and palm trees). If this proves to be an insufficient amount of equipment and personnel to complete the work within the time frame allowed, additional equipment and/or personnel must be committed in order to complete the work within the prescribed contract period. Additional equipment and/or personnel shall be provided at no additional cost to the City. 2017-11-21 Agenda Packet Page 291 RFB B08-17/18 October 16, 2017 Page 21 WORK CREWS Contractor’s work crews shall wear uniform work clothing (shirts, long pants, caps, jumpsuits, aprons, etc.) showing employee’s name and contractor’s logo, wear work shoes, carry personal identification, and drive vehicles with the company’s logo. OSHA and industrial safety standards shall be followed at all times. PUBLIC SAFETY AND CONVENIENCE; WORK COMPLETION Parking on the street may be eliminated if needed for trimming. Property owners shall be notified at least forty-eight (48) hours in advance. The Contractor shall obtain prior approval of parking restrictions from the City Engineer. Parking prohibition and driveway closures shall only be from 7 a.m. to 6 p.m., and shall not exceed three (3) consecutive days in length. Compensation for performing all the work necessary to comply with these public safety and convenience provisions is considered included in the contract unit price paid for the various kinds of trees and no additional compensation shall be made. Working Hours The Contractor will schedule work between the hours of 7:00 a.m. and 6:00 p.m. Monday through Friday, unless otherwise authorized by the City Forester. Loud equipment – for example, chain saws and wood/brush chippers – shall not be used in/around residential areas before 8:30 a.m. or after 6 p.m. on weekends. Damage to Property Any damage to property as a result of the Contractor's operations shall be the responsibility of the Contractor. Should the damage not be rectified within the time agreed upon or to the satisfaction of the City Forester, the City reserves the right to repair or replace that which was damaged, or assess the Contractor such costs as may be reasonable and related to damage caused by the Contractor, and deduct these costs from any payment due the Contractor. The Contractor shall inform the City Forester of any damage caused by the contractor's operation on the day such damage occurs. Starting and Completion Requirements The Contractor shall not be entitled to any damage claims against the City for hindrances or delays, from any cause whatsoever, in the progress of the work or any portion thereof. The time for completion of the work may be extended upon written request from the Contractor to the contract administrator, provided request is based on delays or suspensions that are not of the Contractor’s making; and such delays shall include, but not limited to, acts or neglects of the City or others performing additional work, or to fires, floods, abnormal weather conditions, epidemics or other acts of nature; or the request is based upon a significant change in the scope of the work which has been approved by the City, shall be the equivalent number of working days or lost hours or in proportion to the amount of extra work compared to the amount of the original contract. Request for extensions in completion dates shall be made within ten (10) workdays of occurrence. The Contractor shall, at the time of submitting a request for extension, also submit supporting documentation justifying the request. 2017-11-21 Agenda Packet Page 292 RFB B08-17/18 October 16, 2017 Page 22 Time lost due to delays caused by subcontractors, an inadequate work force, or failure of the contractor to properly supply or place orders for equipment or materials will not be justification for extensions of time. Discontinuance of Work In addition to other rights or remedies provided by the Agreement or at law, the City shall have the authority to suspend the work, wholly or in part, by written or email order for such period as the City may deem necessary due to unsuitable weather, due to conditions unfavorable to City events/functions, or due to failure on the part of the contractor to carry out orders given or to comply with any provisions of the contract documents. Any practice obviously hazardous, as determined by the City Forester or his representative, shall be immediately discontinued by the contractor upon receipt of either oral or written notice to discontinue such practice. Inspection of Work All work must be completed to the satisfaction of the City Forester or his representative, and any questions as to proper procedures or quality of workmanship will be resolved by same. TRAFFIC CONTROL The Contractor is responsible for obtaining all traffic control devices and conforming to the State of California Manual of Traffic Controls for Construction and Maintenance Work Zones and the City of Chula Vista Standards and Specifications. Full compensation for performing all the work necessary to comply with these provisions is considered included in the contract unit prices paid for various items of work; no additional compensation is allowed. OPEN SPACE TREES The Open Space Division may have an additional requirement for trees of various species. The majority of work is located in the Rancho del Rey, Sunbow, and Otay Ranch subdivisions within the City of Chula Vista. These trees would be separately scheduled for trimming with all work to be completed according to Open Space Division’s schedules. Unit prices shall remain firm for street-accessible Open Space trees. An indeterminate additional number of Open Space trees may be included in subsequent option year renewals. TREE INVENTORY AND WORK RECORDS MAINTENANCE The contractor shall document and provide records of work done, in an electronic or e-mail format determined by the City, at the time the contractor submits an invoice for work done. This report shall include the following information: date of work, location, and tree attributes (species, size, height, and condition of health). 2017-11-21 Agenda Packet Page 293 RFB B08-17/18 October 16, 2017 Page 23 ***DISCLOURE 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* identified in section 1 is a corporation or partnership, list the names of all individuals with an investment of $2,000 or more in the entity. ______________________________ _________________________________ ______________________________ _________________________________ 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. ____________________________ ____________________________________ ___________________________ ____________________________________ 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____ 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 2017-11-21 Agenda Packet Page 294 RFB B08-17/18 October 16, 2017 Page 24 contribution of more than $250 within the past twelve (12) months to an official of the City of Chula Vista? Yes______ No______ If yes, which official? ________________________________________________________________ 7. Has any person* identified in 1, 2, 3, or 4, above, or otherwise associated with this contract, project, or application, provided more than $460 (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? ________________________________________________________________ ________________________________________________________________ 8. 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 $500 or more to an official** of the City of Chula Vista in the past twelve (12) months? Yes______ No_____ If Yes, identify the official** and the nature of the income provided? ____________________________________________________________________________ Date: _______________ ___________________________________ Signature of Contractor/Applicant ____________________________________ Print or type name of Contractor/Applicant This Disclosure Statement must be completed at the time the project application, or contract, is submitted to City staff for processing, and updated within one week prior to consideration by the legislative body. * Person is defined as: any individual, firm, co-partnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality, district, or other political subdivision, or any other group or combination acting as a unit. ** Official includes, but is not limited to: Mayor, Council member, Planning Commissioner, Member of a board, commission, or committee of the City, and City employees or staff members. 2017-11-21 Agenda Packet Page 295 Description Quantity Unit of Measure Price Extended Price Eucalyptus Tree Pruning Small DSH ≤6”-12”35 Each 48.00$ 1,680.00$ 35.00$ Eucalyptus Tree Pruning Medium DSH 13"-24"73 Each 92.00$ 6,716.00$ 85.00$ Eucalyptus Tree Pruning Large DSH 25"-30"35 Each 180.00$6,300.00$ 150.00$ Eucalyptus Tree Pruning Mature DSH ≥31”23 Each 285.00$6,555.00$ 225.00$ Broadleaf Tree Pruning 657 Each 79.00$ 51,903.00$ 95.00$ Pine & Conifer Tree Pruning 73 Each 185.00$13,505.00$ 150.00$ Palm Pruning – feather palms (e.g., queen palms, king palms, pindo palms) 1000 Each 30.00$ 30,000.00$ 35.00$ Palm Pruning – fan palms (e.g., Mexican fan palms, Guadalupe palms, windmill palms)900 Each 43.00$ 38,700.00$ 55.00$ Palm Pruning – date palms (e.g., Canary Island date palms, date palms) 450 Each 185.00$83,250.00$ 135.00$ City of Chula Vista Bid Recap Sheet Tree Maintenance Services Contract Bid Number - RFB B08-17/18 Bid Opening Date - November 8, 2017 Bid Opening Time - 2:00 P.M. Total 238,609.00$ $ Atlas Environmental California Tree Service 2017-11-21 Agenda Packet Page 296 Extended Price Extended 1,225.00$ 72.00$ 2,520.00$ 6,205.00$ 72.00$ 5,256.00$ 5,250.00$ 198.00$ 6,930.00$ 5,175.00$ 308.00$ 7,084.00$ 62,415.00$ 72.00$ 47,304.00$ 10,950.00$ 138.00$ 10,074.00$ 35,000.00$ 28.00$ 28,000.00$ 49,500.00$ 37.00$ 33,300.00$ 60,750.00$ 95.00$ 42,750.00$ 236,470.00$ 183,218.00$ California Tree Service West Coast Arborists 2017-11-21 Agenda Packet Page 297 City of Chula Vista Staff Report File#:17-0474, Item#: 7. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING A BUDGET TRANSFER OF $30,000 IN THE STATE GRANT FUND TO PURCHASE A VAN FOR USE IN THE SOUTH BAY AND EAST COUNTY USED OIL PAYMENT PROGRAM (4/5 VOTE REQUIRED) RECOMMENDED ACTION Council adopt the resolution. SUMMARY The City of Chula Vista, Office of Sustainability currently oversees the South Bay and East County Used Oil Payment Program for CalRecycle. As the lead agency for this regional program (which includes National City, Imperial Beach, Coronado, Lemon Grove, La Mesa, El Cajon and Santee) Chula Vista provides the staff, program supplies and the vehicle to service the participating jurisdictions, paid for with CalRecycle grant funding. This is a budget adjustment within the Used Oil Payment Program grant fund to replace the Program’s 15-year old van. No General Fund money is required. ENVIRONMENTAL REVIEW Environmental Notice The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Determination The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because 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 required. BOARD/COMMISSION RECOMMENDATION Not Applicable DISCUSSION The City of Chula Vista, Office of Sustainability currently oversees the South Bay and East County Used Oil Payment Program for CalRecycle. As the lead agency for this regional program (which includes National City, Imperial Beach, Coronado, Lemon Grove, La Mesa, El Cajon and Santee) Chula Vista provides the staff, program supplies and the vehicle to service the participating jurisdictions, paid for with CalRecycle grant funding. City of Chula Vista Printed on 11/16/2017Page 1 of 2 powered by Legistar™2017-11-21 Agenda Packet Page 298 File#:17-0474, Item#: 7. The van (2002) currently dedicated to the program is 15 years old and needs to be replaced. Staff received email approval from the Grant Manager at CalRecycle to replace this vehicle with Used Oil Payment Program funds after the City’s budget was set for Fiscal Year 2018. Therefore, staff is seeking Council approval of a $30,000 budget adjustment within the State Grant Fund - Used Oil Payment Program (org code 273583) so the purchase may be made. The Office of Sustainability will work with the Fleet Manager to expedite the research and purchase of an appropriate alternative fuel van replacement. 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 Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Staff is not independently aware, and has not been informed by any Council Member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The Used Oil Payment Program Grant funds support the City’s Healthy Community goal by providing facilities to proper recycle used motor oil and oil filters for “Do-It-Yourself” oil changers; which protects the city waterways and natural resources, and promotes sustainability. CURRENT YEAR FISCAL IMPACT There is no impact to the General Fund for this budget adjustment. Staff is requesting a transfer from Supplies and Services ($22,000) and Other Expenses ($8,000) to the Capital Expenses category ($30,000) for the purchase of the van. These changes result in no net fiscal impact to the State Grants Fund. ONGOING FISCAL IMPACT There is no ongoing impact to the General Fund for this budget amendment. Future year’s vehicle maintenance will be paid for through the grant funds. ATTACHMENTS None Staff Contact: Lynn France, Manager, Office of Sustainability, Economic Development Department City of Chula Vista Printed on 11/16/2017Page 2 of 2 powered by Legistar™2017-11-21 Agenda Packet Page 299 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING A BUDGET TRANSFER OF $30,000 IN THE STATE GRANT FUND TO PURCHASE A VAN FOR USE IN THE SOUTH BAY AND EAST COUNTY USED OIL PAYMENT PROGRAM WHEREAS, The Economic Development Department’s Office of Sustainability oversees the South Bay and East County Used Oil Payment Program for CalRecycle (comprised of Chula Vista, National City, Imperial Beach, Coronado, Lemon Grove, La Mesa, El Cajon and Santee); and WHEREAS, the City of Chula Vista receives grant funds of approximately $170,000 annually, as the lead agency of the Used Oil Payment Program; and WHEREAS, as the lead agency, Chula Vista provides the staff, program supplies and the vehicle to service the participating jurisdictions, paid for through CalRecycle grant funding; and WHEREAS, Chula Vista received approval from CalRecycle to replace the 15 year old van with grant funds after the budget was set for Fiscal Year 2018; and WHEREAS, staff is seeking Council approval for a $30,000 net- zero impact budget adjustment within the State Grant Fund - Used Oil Payment Program (org key 273583) so the purchase may be made. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it authorizes the following budget transfers in the State Grant Fund - Used Oil Payment Program (org key 273583) for the purchase of a new van: Category Amount Supplies and Services ($22,000) Other Expenses ($ 8,000) Capital Expenses $30,000 Net Change - Presented by Approved as to form by Eric Crockett Glen R. Googins Director City Attorney 2017-11-21 Agenda Packet Page 300 City of Chula Vista Staff Report File#:17-0495, Item#: 8. INVESTMENT REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2017 RECOMMENDED ACTION Council accept the report. SUMMARY Transmitted herewith is the City’s investment report for the quarter ended September 30, 2017. To meet the reporting requirements set forth in the California Government Code Sections 53600 et seq. and the City of Chula Vista Investment Policy and Guidelines, a separate report was distributed to the City Council in October. ENVIRONMENTAL REVIEW The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” in accordance with Section 15378(b)(5) of the State CEQA Guidelines because it involves only acceptance of the Quarterly Investment Report; therefore it is an organizational or administrative activity of government that will not result in a direct or indirect 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. Environmental Notice The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. BOARD/COMMISSION RECOMMENDATION Not Applicable. DISCUSSION The total cash and investment portfolio held by the City as of September 30, 2017 was $231,967,400 and total cash and investments held by the trustees was $151,059,756. The cash and investments held by the City are composed of the following components: Managed Investment Portfolio ($151,148,881), State of CA Local Agency Investment Fund ($1,656,690), County of San Diego Pooled Investment Fund ($56,248,010), Cash/Time Deposits ($22,455,646), unrealized gain (-$317,345), and accrued interest on investment ($775,518). Cash and investments held by the City and the trustees continue to be invested in accordance with the Government Code and the Council Investment Policy as adopted by Resolution 2017-078 on May 23, 2017. During the quarter, six investments matured totaling $15,615,000 and one investment for $3,000,000 was sold prior to its maturity date. Nine purchases were made to replace those investments and City of Chula Vista Printed on 11/16/2017Page 1 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 301 File#:17-0495, Item#: 8. was sold prior to its maturity date. Nine purchases were made to replace those investments and invest idle cash. Purchased investments include: one asset-backed security issued by John Deere ($535,000); three certificates of deposit ($7,000,000); and five commercial paper ($13,500,000). Public Financial Management (PFM), the City's investment advisor, continues to monitor the portfolio and will make recommendations as financial and economic conditions warrant. There is no further activity to report on other than routine investments by the City's fiscal agents. The Federal Open Market Committee (FOMC) raised the federal funds rate twice this year and indicated in their September meeting that a third rate hike in 2017 is expected. Two-year Treasuries yielding 1.38% at the beginning of the quarter ended higher at the end of the quarter at 1.49%, which was an increase of 11 basis points for the quarter. This puts the two-year Treasury yield at its highest level since 2008. As of September 30, 2017, the Yield to Maturity at Cost on the Managed Investment Portfolio was 1.51%, which was an increase of five basis points from the previous quarter. At the end of this quarter, the weighted average maturity of the Managed Investment Portfolio was 1.57 years which is a decrease from 1.72 the previous quarter and is within the Council Policy. DECISION-MAKER CONFLICT Staff has determined that the action contemplated by this item is ministerial, secretarial, manual, or clerical in nature and, as such, does not require the City Council members to make or participate in making a governmental decision, pursuant to California Code of Regulations Title 2, section 18704(d) (1). Consequently, this item does not present a conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The investment portfolio supports the Operational Excellence goal as it seeks to maintain the safety and liquidity of the City’s cash while contributing investment earnings to the bottom line. CURRENT YEAR FISCAL IMPACT Considering the projected timing of cash receipts and disbursements and the structure of the Pooled Investment Portfolio, the City should be able to comfortably meet overall cash flow needs over the next six months. There is no direct fiscal impact by this action. ONGOING FISCAL IMPACT There is no ongoing fiscal impact by this action. ATTACHMENTS 1. Summary of Cash and Investments as of September 30, 2017 City of Chula Vista Printed on 11/16/2017Page 2 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 302 File#:17-0495, Item#: 8. 2. PFM Investment Report for the Quarter Ended September 30, 2017 Staff Contact: Lisa Partee, Fiscal Management Analyst, Finance Department David Bilby, Director of Finance/Treasurer, Finance Department City of Chula Vista Printed on 11/16/2017Page 3 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 303 % of Investment Type Par Value Market Value Book Value Portfolio Managed Investment Portfolio BNY Custodial Cash Account $583,120 $583,120 $583,120 0.15% U.S. Treasury Bond/Note 58,930,000 58,733,033 58,957,668 15.39% Federal Agency Collateralized Mtg Ob.1,021,292 1,020,677 1,031,519 0.27% Federal Agency Bond/Note 9,000,000 8,989,857 9,000,000 2.35% Corporate Note 43,001,000 43,451,423 43,581,871 11.38% Commercial Paper 16,500,000 16,381,491 16,342,618 4.27% Certificate of Deposit 16,000,000 16,015,388 15,999,514 4.18% Asset Back Security/Collateralized Mtg Ob. 5,651,668 5,638,305 5,652,571 1.48% Managed Investment Portfolio Subtotal 150,687,080 150,813,296 151,148,881 39.46% Pooled Investments State of CA Local Agency Investment Fund 1,656,690 1,655,103 1,656,690 0.43% County of San Diego Pooled Investment Fund 56,248,010 56,248,010 56,248,010 14.69% Pooled Investments Subtotal 57,904,700 57,903,113 57,904,700 15.12% Cash/Time Deposits 22,455,646 22,455,646 22,455,646 5.86% Unrealized Gain on Fair Market Value (317,345) (317,345) (317,345) -0.08% Accrued Interest 775,518 775,518 775,518 0.20% Total Cash & Investments Held by the City $231,505,599 $231,630,228 $231,967,400 60.56% Held by Bank Trustee/Fiduciary Funds (1) Investment Agreements 0 0 0 0.00% Mutual Funds 102,668,833 102,668,833 102,668,833 26.80% Cash with Fiscal Agents 0 0 0 0.00% Restricted Cash 793,521 793,521 793,521 0.21% U.S. Government 47,597,402 47,597,402 47,597,402 12.43% Total Held by Bank Trustee/Fiduciary Funds $151,059,756 $151,059,756 $151,059,756 39.44% Total Portfolio $382,565,355 $382,689,984 $383,027,156 100.00% Notes: 1. Reflects bond proceeds and tax levy revenues held by trustee in accordance with bond covenants. 2. Par value is the principal amount of the investment on maturity. 3. Market values contained herein are received from sources we believe are reliable, however we do not guarantee their accuracy. 4. LAIF market value on the PFM statement does not include the market value factor as included in the market value above. 5. Book value is par value of the security plus or minus any premium or discount and accrued interest included in purchase price. Summary of Cash and Investments as of September 30, 2017 City of Chula Vista 2017-11-21 Agenda Packet Page 304 City of Chula Vista Quarter Ended September 30, 2017 Security Type1 Market Value2 % of Portfolio Policy Limits U.S. Treasuries $58,733,033 28% 100% Federal Agencies $8,989,857 4% 100% Federal Agency CMOs $1,020,677 <1% 100% Municipal Obligations $0 0% 100% Commercial Paper $16,381,491 8% 25% Negotiable CDs $16,015,388 8% 30% Corporate Notes $43,451,423 21% 30% Asset-Backed Securities $5,638,305 3% 20% Money Market Fund $583,120 <1% 20% San Diego County Pool $56,248,010 27% 100% LAIF $1,656,690 1% $65 Million Totals $208,717,996 100% Par Value Amortized Cost 3Q17 Acrual Basis Earnings $560,824 Weighted Average Maturity (years)Fiscal Year 2017-18 Initial Earnings Forecast $2,200,333 Effective Duration (years)Fiscal Year 2017-18 Current Earnings Forecast $2,265,891 Yield to Maturity at Cost Variance to Initial Forecast $65,558 Yield to Maturity at Market Notes: 1. End of quarter trade-date market values of portfolio holdings, excluding accrued interest. Percentages may not add to 100% due to rounding. 2. Balances held in LAIF and the San Diego County Investment Pool are not managed by PFM Asset Management LLC. 4. The "Not Rated" category comprises asset-backed securities rated Aaa by Moody's. 5. Yields, weighted average maturity, and effective duration exclude balances not managed by PFM Asset Management LLC. 6. Accrual earnings forecast are calculated on an amortized cost, settle basis. Projected earnings for October 2017 through June 2018 were based on portfolio holdings as of September 30, 2017, $150.1 million par. Earnings for July 2017, August 2017, and September 2017 are based on actual accrual basis earnings. As current holdings mature, proceeds are assumed to be reinvested in a) a maturity that reblances the portfolio near its current duration, 1.46 as of September 30, 2017. b) at a yield based on assumed maturity and US Treasury curve, as of October 12, 2017. Projected earnings assume callable securities trading at a premium are called at their next call date and are subsequently reinested at the assumptions noted above. We cannot gaurantee earnings forecasts, which are subject to market fluctuations, changes in cash flows, and reinvestment rates. Past performace in not indicative of future results. 1.56% Summary of Portfolio Characteristics and Key Statistics Sector Distribution Credit Quality (S&P Ratings) Maturity Distribution Key Statistics5 Earnings6 $208,591,780 $208,844,596 1.57 1.45 1.51% 3. Citigroup, Goldman Sachs, and Morgan Stanley Corporate Notes rated BBB+ by S&P and rated A by Fitch. U.S. Treasuries 28% Federal Agencies 4% Federal Agency CMOs <1% Commercial Paper 8% Negotiable CDs 8% Corporate Notes 21% Asset-Backed Securities 3% Money Market Fund <1% San Diego County Pool 27% LAIF 1% AAA 3% AA 37% A 18% BBB3 2% A-1 (Short- term) 11% Money Market Fund <1% AAAf/S1 (San Diego County) 27% Not Rated4 1% Not Rated (LAIF) 1% 37% 13% 19%23% 5% <1% 0% 10% 20% 30% 40% 50% Under 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 YearsPercentage of Total Portfolio12017-11-21 Agenda Packet Page 305 QUARTERLY MARKET SUMMARY For the Quarter Ended September 30, 2017 Fixed Income Management SUMMARY •For the first time since 2007, all 45 national economies in the OECD (Organisation for Economic Co-operation and Development) are expanding. Against the backdrop of historically low interest rates, reasonably favorable economic data, and positive consumer, business and investor optimism, the U.S. economy is on track to grow at a modest pace in the range of 2% to 2.5% annually. •Although the current slow rate of inflation remains a conundrum, the Federal Reserve (Fed) is pursuing monetary policy normalization. At its September meeting, the Federal Open Market Committee (FOMC) announced a tapering of its balance sheet securities holdings to begin in October under the terms of the previously released normalization principles and plans. In addition, the updated “dot plot” projection indicated an expectation for one additional rate hike in 2017. •Slow progress on the policy front in Washington has somewhat tempered investors’ earlier exuberance, but markets retain an air of complacency. Numerous geopolitical risks loom, however, including mounting nuclear tensions with North Korea, trade issues related to NAFTA and China, border and immigration issues, ongoing conflicts with Russia, and the “Brexit” implementation in the UK. •U.S. equity markets marched to new heights with the S&P 500 rising 4.5% during the quarter. All three major U.S. indices booked record highs, with the telecommunications, information technology, and energy sectors in the lead. ECONOMIC SNAPSHOT •Second quarter gross domestic product (GDP) accelerated to an annualized growth rate of 3.1%, up from the prior quarter’s 1.4% pace. Consumer spending and business investment led the increase. Heavy Gulf Coast damage from recent hurricanes are expected to handicap near-term growth and create “noise” in upcoming economic data, but weather-related impacts are usually transitory. •The U.S. economy added less than 100,000 jobs per month (on average) in the third quarter, but the unemployment rate fell to 4.2%, the lowest rate since 2001. Jobless claims spiked following the hurricane disruption, but the uptick is expected to be temporary. In a positive sign, wage growth rose 2.9% year-over-year through September but may also have been distorted by the hurricanes. •Inflationary pressures remained subdued. The personal consumption expenditures price index, excluding food and energy, (core PCE), rose only 1.3% year-over-year in August, well short of the Fed’s 2% target—the explanation for which continues to elude Fed officials. Absent evidence that the weakness is permanent, however, the Fed’s outlook remains stable. •On the global front, growth in Europe has picked up, with unemployment in some countries at record lows, while inflation (outside the UK) remains very muted. INTEREST RATES •Shorter-term Treasury yields (five years and under) rose in the third quarter on the expectation of further monetary policy tightening. Long-term Treasury yields (10 years and longer) rose just a couple basis points. This continued the trend of modest flattening of the Treasury yield curve since the beginning of the year. •The two-year Treasury yield ended the quarter higher by 11 basis points (bps) (0.11%) to 1.49%—the highest level since 2008—while the 10-year Treasury yield rose only 2 bps (0.02%) over the quarter to close at 2.33%. •In the money market space, federal debt ceiling concerns resulted in a temporary inversion of the short-term yield curve. The higher risk associated with Treasuries maturing in early October and the expected date for the U.S. Treasury to run out of borrowing capacity translated into higher yields for those maturities. But, the yield curve quickly normalized after Congress passed an extension to the debt limit until December, along with a hurricane aid package and a temporary resolution to fund the government for three months. •In the short-term credit markets, yields on commercial paper and bank CDs rose in lockstep with expectations about future Fed rate hikes. SECTOR PERFORMANCE •U.S. Treasury index returns were positive for the third quarter. Flattening of the yield curve caused longer maturities to outperform shorter ones as the increase in short-term rates modestly detracted from returns for the quarter. •Federal agencies outperformed comparable-maturity Treasuries while the sector’s already-narrow yield spreads tightened even further on the back of limited supply and persistent investor demand. •Corporate yield spreads continued tightening, generating outperformance over comparable-maturity Treasuries for the quarter and even more so year-to-date. Strong earnings growth and balance sheets continue to provide a good foundation for the sector. Yield spreads are narrow, which limits their upside, but the incremental income on corporates is an important contributor to incremental return. •After three straight quarters of underperformance, the mortgage-backed securities (MBS) sector performed well in the third quarter, outperforming Treasuries and traditional agencies. •High quality asset-backed securities (ABS) also performed positively relative to Treasuries. Further spread compression in the ABS sector is likely to be limited, given that current level spreads sit at historically tight levels. •Short-term commercial paper and bank CDs continue to offer value relative to both short- and intermediate-term government securities. PFM Asset Management LLC 22017-11-21 Agenda Packet Page 306 QUARTERLY MARKET SUMMARY For the Quarter Ended September 30, 2017 Fixed Income Management Economic Snapshot Jun '17 Sep '16 Sep'17 4.2%4.4%4.9% Sep'17 -33,000 210,000 249,000 Sep'17 2.9%2.5%2.7% Aug'17 2.8%2.7%2.4% Labor Market Unemployment Rate Change In Nonfarm Payrolls Average Hourly Earnings (YoY) Personal Income (YoY) Initial Jobless Claims (week)10/7/17 243,000 250,000 247,000 Growth Real GDP (QoQ SAAR)2017Q2 3.1%1.2%2.2% GDP Personal Consumption (QoQ SAAR) 2017Q2 3.3%1.9%3.8% Retail Sales (YoY)Sep'17 4.4%3.0%3.1% ISM Manufacturing Survey (month)Sep'17 60.8 57.8 51.7 Existing Home Sales SAAR (month)Aug'17 5.35 mil. 5.51 mil. 5.47 mil. Inflation / Prices Personal Consumption Expenditures (YoY) Aug'17 1.4%1.4%1.4% Consumer Price Index (YoY)Sep'17 2.2%1.6%1.5% Consumer Price Index Core (YoY)Sep'17 1.7%1.7%2.2% Crude Oil Futures (WTI, per barrel) Sep 30 $51.67 $46.04 $48.24 Gold Futures (oz.)Sep 30 $1,282 $1,242 $1,313 Latest -150K 0 150K 300K 450K 4% 5% 6% Sep '14 Mar '15 Sep '15 Mar '16 Sep '16 Mar '17 Sep '17 Unemployment Rate (left) vs. Change in Nonfarm Payrolls (right) Change In Non-Farm Payrolls Unemployment Rate 0% 2% 4% 6% Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 Dec '16 Jun '17 Real GDP (QoQ) -1% 0% 1% 2% 3% Sep '14 Mar '15 Sep '15 Mar '16 Sep '16 Mar '17 Consumer Price Index CPI (YoY)Core CPI (YoY) 2 2 1 1 1. Data as of First Quarter 2017. 2. Data as of Second Quarter 2016. Note: YoY = year-over-year, QoQ = quarter over quarter, SAAR = seasonally adjusted annual rate, WTI = West Texas Intermediate crude oil. Source: Bloomberg. PFM Asset Management LLC 32017-11-21 Agenda Packet Page 307 QUARTERLY MARKET SUMMARY For the Quarter Ended September 30, 2017 Fixed Income Management Source: Bloomberg. Interest Rate Overview U.S. Treasury Note Yields U.S. Treasury Yield Curve U.S. Treasury Yields Yield Curves as of 9/30/17 0% 1% 2% 3% 4%3-mo1-yr2-yr3-yr5-yr7-yr10-yr30-yrYieldMaturity September 30, 2017 December 30, 2016 September 30, 2016 Maturity Sep '17 Jun '17 Change over Quarter Sep '16 Change over Year 3-month 1.05% 1.01% 0.04% 0.28% 0.77% 1-year 1.29% 1.23% 0.06% 0.59% 0.70% 2-year 1.49% 1.38% 0.11% 0.76% 0.73% 5-year 1.94% 1.89% 0.05% 1.15% 0.79% 10-year 2.33% 2.31% 0.02% 1.60% 0.73% 30-year 2.86% 2.84% 0.02% 2.32% 0.54% 0% 1% 2% 3% 4% 5%3-mo1-yr2-yr3-yr5-yr7-yr10-yr25-yr30-yrYieldMaturity U.S. Treasury Federal Agency Industrial Corporates, A Rated 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3/31/17 6/30/17 9/30/17Yield 2-Year 5-Year 10-Year PFM Asset Management LLC 42017-11-21 Agenda Packet Page 308 QUARTERLY MARKET SUMMARY For the Quarter Ended September 30, 2017 Fixed Income Management Source: BofA Merrill Lynch Indices. September 30, 2017 Duration Yield 3 Months 1 Year 3 Years 1-3 Year Indices U.S. Treasury 1.81 1.47% 0.24% 0.24% 0.76% Federal Agency 1.69 1.55% 0.28% 0.50% 0.91% U.S. Corporates, A-AAA rated 1.84 1.93% 0.56% 1.43% 1.61% Agency MBS (0 to 3 years)2.30 1.94% 0.36% 0.42% 1.32% Taxable Municipals 1.79 2.12% 1.02% 1.67% 2.13% 1-5 Year Indices U.S. Treasury 2.61 1.60% 0.29%(0.06%)1.20% Federal Agency 2.12 1.63% 0.32% 0.38% 1.21% U.S. Corporates, A-AAA rated 2.69 2.13% 0.69% 1.37% 2.18% Agency MBS (0 to 5 years)3.42 2.40% 0.58% 0.01% 1.83% Taxable Municipals 2.48 2.26% 0.88% 1.24% 2.59% Master Indices (Maturities 1 Year or Greater) U.S. Treasury 6.29 1.95% 0.39%(1.74%)2.19% Federal Agency 3.87 1.89% 0.51% 0.02% 1.97% U.S. Corporates, A-AAA rated 7.14 2.86% 1.18% 1.27% 3.83% Agency MBS (0 to 30 years)4.50 2.69% 0.92% 0.28% 2.41% Taxable Municipals 10.84 3.73% 2.52% 1.11% 5.90% As of 9/30/17 Returns for Periods ended 9/30/17 Returns for periods greater than one year are annualized. PFM Asset Management LLC BofA Merrill Lynch Index Returns 52017-11-21 Agenda Packet Page 309 QUARTERLY MARKET SUMMARY For the Quarter Ended September 30, 2017 Fixed Income Management DISCLOSURES PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. Investment advisory services are provided by PFM Asset Management LLC which is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The information contained is not an offer to purchase or sell any securities. Additional applicable regulatory information is available upon request. For more information regarding PFM’s services or entities, please visit www.pfm.com. The views expressed within this material constitute the perspective and judgment of PFM Asset Management LLC at the time of distribution and are subject to change. Information is obtained from sources generally believed to be reliable and available to the public; however, PFM Asset Management LLC cannot guarantee its accuracy, completeness, or suitability. This material is for general information purposes only and is not intended to provide specific advice or recommendation. The information contained in this report is not an offer to purchase or sell any securities. © 2017 PFM Asset Management LLC. Further distribution is not permitted without prior written consent. PFM Asset Management LLC 62017-11-21 Agenda Packet Page 310 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par U.S. Treasury Bond / Note US TREASURY NOTES DTD 07/31/2013 1.375% 07/31/2018 4,501,404.00 4,512,236.76 10,424.59 4,544,648.44 07/06/1507/02/15AaaAA+ 4,500,000.00 912828VQ0 1.05 US TREASURY NOTES DTD 10/31/2011 1.750% 10/31/2018 3,909,910.06 3,922,728.35 28,524.52 3,977,008.01 08/05/1508/04/15AaaAA+ 3,895,000.00 912828RP7 1.09 US TREASURY NOTES DTD 12/02/2013 1.250% 11/30/2018 7,961,913.03 7,981,701.95 33,501.54 7,994,314.46 07/06/1507/02/15AaaAA+ 7,975,000.00 912828A34 1.18 US TREASURY NOTES DTD 01/31/2012 1.250% 01/31/2019 997,852.00 997,942.83 2,105.98 994,023.44 02/23/1502/19/15AaaAA+ 1,000,000.00 912828SD3 1.41 US TREASURY NOTES DTD 06/02/2014 1.500% 05/31/2019 8,507,973.00 8,518,986.62 42,848.36 8,543,828.13 07/06/1507/02/15AaaAA+ 8,500,000.00 912828WL0 1.36 US TREASURY NOTES DTD 10/01/2012 1.000% 09/30/2019 2,045,801.70 2,053,246.49 56.73 2,039,348.83 04/27/1504/23/15AaaAA+ 2,065,000.00 912828TR1 1.29 US TREASURY NOTES DTD 10/01/2012 1.000% 09/30/2019 3,021,644.15 3,027,831.26 83.79 3,001,867.19 05/04/1505/01/15AaaAA+ 3,050,000.00 912828TR1 1.37 US TREASURY NOTES DTD 10/31/2014 1.500% 10/31/2019 1,500,000.00 1,496,827.43 9,415.76 1,493,496.09 06/29/1506/26/15AaaAA+ 1,500,000.00 912828F62 1.60 US TREASURY NOTES DTD 10/31/2014 1.500% 10/31/2019 8,500,000.00 8,500,352.41 53,355.98 8,500,664.06 07/06/1507/02/15AaaAA+ 8,500,000.00 912828F62 1.50 US TREASURY NOTES DTD 11/30/2012 1.000% 11/30/2019 2,968,359.00 2,970,944.79 10,081.97 2,940,468.75 05/28/1505/26/15AaaAA+ 3,000,000.00 912828UB4 1.46 US TREASURY NOTES DTD 12/01/2014 1.500% 11/30/2019 2,999,532.00 3,006,709.59 15,122.95 3,009,257.81 11/29/1611/29/16AaaAA+ 3,000,000.00 912828G61 1.39 US TREASURY NOTES DTD 02/28/2013 1.250% 02/29/2020 1,191,656.40 1,197,935.87 1,284.53 1,196,296.88 10/13/1510/08/15AaaAA+ 1,200,000.00 912828UQ1 1.32 US TREASURY NOTES DTD 02/28/2013 1.250% 02/29/2020 1,191,656.40 1,197,844.56 1,284.53 1,196,156.25 10/23/1510/23/15AaaAA+ 1,200,000.00 912828UQ1 1.33 US TREASURY NOTES DTD 02/28/2013 1.250% 02/29/2020 3,023,828.12 3,020,934.03 3,259.50 3,002,774.41 11/13/1511/13/15AaaAA+ 3,045,000.00 912828UQ1 1.59 72017-11-21 Agenda Packet Page 311 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par U.S. Treasury Bond / Note US TREASURY NOTES DTD 01/31/2016 1.375% 01/31/2021 2,968,242.00 3,014,848.92 6,949.73 3,020,507.81 06/10/1606/07/16AaaAA+ 3,000,000.00 912828N89 1.22 US TREASURY NOTES DTD 03/31/2016 1.250% 03/31/2021 3,443,261.50 3,502,217.92 120.19 3,503,007.81 06/10/1606/07/16AaaAA+ 3,500,000.00 912828Q37 1.23 218,420.65 58,733,033.36 58,923,289.78 1.32 58,957,668.37 58,930,000.00 Security Type Sub-Total Federal Agency Collateralized Mortgage Obligation FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 1,020,677.40 1,025,669.27 1,400.87 1,031,519.34 10/30/1510/07/15AaaAA+ 1,021,292.22 3136AQDQ0 1.08 1,400.87 1,020,677.40 1,025,669.27 1.08 1,031,519.34 1,021,292.22 Security Type Sub-Total Federal Agency Bond / Note FREDDIE MAC (EX-CALLABLE) BONDS DTD 12/26/2012 0.850% 12/26/2017 2,997,936.00 3,000,000.00 6,729.17 3,000,000.00 12/26/1212/26/12AaaAA+ 3,000,000.00 3134G32L3 0.85 FANNIE MAE (EX-CALLABLE) BONDS DTD 12/27/2012 0.900% 12/27/2017 2,997,531.00 3,000,000.00 7,050.00 3,000,000.00 12/27/1212/27/12AaaAA+ 3,000,000.00 3136G14X4 0.90 FREDDIE MAC (EX-CALLABLE) BONDS DTD 05/29/2013 1.000% 05/29/2018 2,994,390.00 3,000,000.00 10,166.67 3,000,000.00 05/29/1305/29/13AaaAA+ 3,000,000.00 3134G45W4 1.00 23,945.84 8,989,857.00 9,000,000.00 0.92 9,000,000.00 9,000,000.00 Security Type Sub-Total Corporate Note MORGAN STANLEY CORP NOTES DTD 12/05/2014 1.875% 01/05/2018 550,540.65 550,592.82 2,463.54 552,849.00 09/30/1609/30/16A3BBB+ 550,000.00 61761JVM8 1.46 BRANCH BANKING & TRUST NT (CALLABLE) DTD 11/21/2012 1.450% 01/12/2018 999,515.00 1,000,497.94 3,181.94 1,003,130.00 09/13/1609/08/16A2A- 1,000,000.00 05531FAM5 1.21 CITIGROUP INC CORP NOTES DTD 05/01/2013 1.750% 05/01/2018 500,148.50 500,473.33 3,645.83 501,275.00 09/30/1609/30/16Baa1BBB+ 500,000.00 172967GS4 1.59 BERKSHIRE HATHAWAY NOTES DTD 05/15/2013 1.300% 05/15/2018 424,184.43 424,721.63 2,087.22 423,763.25 07/27/1507/23/15Aa2AA 425,000.00 084664BW0 1.41 82017-11-21 Agenda Packet Page 312 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par Corporate Note BERKSHIRE HATHAWAY NOTES DTD 05/15/2013 1.300% 05/15/2018 1,343,417.03 1,346,076.30 6,610.36 1,346,336.50 07/15/1507/10/15Aa2AA 1,346,000.00 084664BW0 1.29 BANK OF AMERICA BANK NOTES DTD 06/05/2015 1.750% 06/05/2018 800,851.20 800,306.57 4,511.11 801,160.00 10/23/1510/20/15A1A+ 800,000.00 06050TMC3 1.69 CHEVRON CORP GLOBAL NOTES DTD 06/24/2013 1.718% 06/24/2018 1,501,243.50 1,505,540.52 6,943.58 1,523,610.00 04/27/1504/23/15Aa2AA- 1,500,000.00 166764AE0 1.21 GOLDMAN SACHS GROUP INC NOTES DTD 07/19/2013 2.900% 07/19/2018 504,566.50 505,479.31 2,900.00 512,255.00 09/30/1609/30/16A3BBB+ 500,000.00 38147MAA3 1.52 GOLDMAN SACHS GROUP INC NOTES DTD 07/19/2013 2.900% 07/19/2018 983,904.68 983,746.29 5,655.00 1,004,298.75 10/28/1510/28/15A3BBB+ 975,000.00 38147MAA3 1.77 CATERPILLAR FINANCIAL SERVICES CORP NOTE DTD 09/06/2013 2.450% 09/06/2018 2,468,264.75 2,468,996.34 4,168.40 2,477,954.50 04/21/1704/19/17A3A 2,450,000.00 14912L5T4 1.61 CITIGROUP INC CORP NOTES DTD 09/26/2013 2.500% 09/26/2018 981,485.70 980,602.44 338.54 991,233.75 10/28/1510/28/15Baa1BBB+ 975,000.00 172967HC8 1.91 US BANCORP NOTES (CALLABLE) DTD 11/07/2013 1.950% 11/15/2018 3,012,408.00 3,007,339.59 22,100.00 3,021,840.00 08/19/1508/17/15A1A+ 3,000,000.00 91159HHE3 1.72 BANK OF NY MELLN CORP (CALLABLE) NOTES DTD 11/18/2013 2.100% 01/15/2019 1,003,944.00 1,002,757.70 4,433.33 1,007,240.00 09/21/1509/18/15A1A 1,000,000.00 06406HCP2 1.87 IBM CORP NOTE DTD 02/12/2014 1.950% 02/12/2019 1,507,299.00 1,510,355.40 3,981.25 1,528,290.00 04/27/1504/23/15A1A+ 1,500,000.00 459200HT1 1.44 TOYOTA MOTOR CREDIT CORP DTD 02/19/2016 1.700% 02/19/2019 1,529,482.86 1,529,914.21 3,034.50 1,529,816.40 02/19/1602/16/16Aa3AA- 1,530,000.00 89236TCU7 1.70 CISCO SYSTEMS INC GLOBAL NOTES DTD 03/03/2014 2.125% 03/01/2019 1,511,323.50 1,502,479.92 2,656.25 1,506,270.00 06/29/1506/26/15A1AA- 1,500,000.00 17275RAR3 2.01 APPLE INC GLOBAL NOTES DTD 05/06/2014 2.100% 05/06/2019 1,511,874.00 1,504,863.81 12,687.50 1,511,475.00 06/29/1506/26/15Aa1AA+ 1,500,000.00 037833AQ3 1.89 92017-11-21 Agenda Packet Page 313 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par Corporate Note AMERCIAN EXPRESS CREDIT CORP NOTES DTD 08/15/2014 2.250% 08/15/2019 1,008,305.00 1,001,877.75 2,875.00 1,003,820.00 09/21/1509/18/15A2A- 1,000,000.00 0258M0DP1 2.15 AMERICAN HONDA FINANCE GLOBAL NOTES DTD 09/09/2014 2.250% 08/15/2019 1,511,902.50 1,511,732.06 4,312.50 1,514,325.00 04/28/1704/25/17A1A+ 1,500,000.00 02665WAH4 1.82 GENERAL ELECTRIC CAP CORP (CALLABLE) DTD 01/09/2015 2.200% 01/09/2020 1,513,375.50 1,521,071.67 7,516.67 1,533,555.00 06/01/1605/26/16A1AA- 1,500,000.00 36962G7M0 1.56 JPMORGAN CHASE & CO (CALLABLE) DTD 01/23/2015 2.250% 01/23/2020 1,005,384.00 996,315.45 4,250.00 993,230.00 09/21/1509/18/15A3A- 1,000,000.00 46625HKA7 2.41 JPMORGAN CHASE & CO (CALLABLE) DTD 01/23/2015 2.250% 01/23/2020 1,508,076.00 1,502,381.66 6,375.00 1,504,815.00 04/27/1504/23/15A3A- 1,500,000.00 46625HKA7 2.18 WELLS FARGO & CO CORP BONDS DTD 02/02/2015 2.150% 01/30/2020 1,002,710.00 998,913.65 3,643.06 998,000.00 09/21/1509/18/15A2A 1,000,000.00 94974BGF1 2.20 WELLS FARGO & CO CORP BONDS DTD 02/02/2015 2.150% 01/30/2020 1,504,065.00 1,500,027.96 5,464.58 1,500,045.00 03/27/1503/26/15A2A 1,500,000.00 94974BGF1 2.15 MICROSOFT CORP NOTE DTD 02/12/2015 1.850% 02/12/2020 2,009,096.00 2,004,810.58 5,036.11 2,006,200.00 01/17/1701/13/17AaaAAA 2,000,000.00 594918AY0 1.75 BOEING COMPANY CORP NOTES DTD 07/28/2009 4.875% 02/15/2020 1,607,301.00 1,607,422.08 9,343.75 1,634,145.00 02/23/1702/22/17A2A 1,500,000.00 097023AZ8 1.78 AMERICAN HONDA FINANCE CORP NOTES DTD 03/13/2015 2.150% 03/13/2020 1,507,102.50 1,503,064.95 1,612.50 1,506,045.00 03/27/1503/26/15A1A+ 1,500,000.00 02665WAU5 2.06 COMCAST CORP CORP NOTES DTD 08/19/2011 5.150% 04/30/2020 1,621,375.50 1,616,365.91 32,402.08 1,642,770.00 02/23/1702/22/17A3A- 1,500,000.00 63946BAD2 2.05 AMERICAN EXP CREDIT CORP NT (CALLABLE) DTD 05/26/2015 2.375% 05/26/2020 1,515,396.00 1,491,744.80 12,369.79 1,485,135.00 06/29/1506/26/15A2A- 1,500,000.00 0258M0DT3 2.59 BNY MELLON CORP NOTE (CALLABLE) DTD 08/17/2015 2.600% 08/17/2020 1,522,242.00 1,515,497.22 4,766.67 1,525,875.00 10/09/1510/08/15A1A 1,500,000.00 06406HDD8 2.22 AMERICAN HONDA FINANCE CB DTD 09/24/2015 2.450% 09/24/2020 1,012,870.00 1,003,495.39 476.39 1,005,680.00 10/09/1510/08/15A1A+ 1,000,000.00 02665WAZ4 2.33 102017-11-21 Agenda Packet Page 314 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par Corporate Note PEPSICO INC CORP NOTES (CALLABLE) DTD 10/14/2015 2.150% 10/14/2020 2,016,312.00 2,022,764.28 19,947.22 2,032,540.00 06/06/1606/01/16A1A+ 2,000,000.00 713448DC9 1.76 MORGAN STANLEY CORP NOTES DTD 04/21/2016 2.500% 04/21/2021 451,457.10 452,122.68 5,000.00 452,893.50 05/16/1605/11/16A3BBB+ 450,000.00 61746BEA0 2.36 216,789.67 43,451,423.40 43,374,352.21 1.84 43,581,870.65 43,001,000.00 Security Type Sub-Total Commercial Paper BNP PARIBAS NY BRANCH COMM PAPER DTD 05/23/2017 0.000% 02/16/2018 2,983,935.00 2,983,785.00 0.00 2,968,392.50 05/23/1705/23/17P-1A-1 3,000,000.00 09659CBG2 1.43 COOPERATIEVE RABOBANK U.A. COMM PAPER DTD 07/26/2017 0.000% 02/20/2018 2,983,656.00 2,984,025.00 0.00 2,976,487.50 07/26/1707/25/17P-1A-1 3,000,000.00 21687BBL4 1.36 CREDIT AGRICOLE CIB NY COMM PAPER DTD 07/11/2017 0.000% 03/01/2018 2,982,597.00 2,982,383.34 0.00 2,977,833.33 08/23/1708/23/17P-1A-1 3,000,000.00 22533UC19 1.41 JP MORGAN SECURITIES LLC COMM PAPER DTD 07/06/2017 0.000% 04/02/2018 1,488,630.00 1,488,714.99 0.00 1,486,310.00 08/23/1708/23/17P-1A-1 1,500,000.00 46640QD24 1.49 BANK OF TOKYO MITSUBISHI UFJ COMM PAPER DTD 08/22/2017 0.000% 05/10/2018 2,971,512.00 2,972,006.67 0.00 2,966,940.00 08/22/1708/22/17P-1A-1 3,000,000.00 06538CEA5 1.54 ING (US) FUNDING LLC COMM PAPER DTD 08/28/2017 0.000% 05/21/2018 2,971,161.00 2,970,806.67 0.00 2,966,654.17 08/29/1708/29/17P-1A-1 3,000,000.00 4497W1EM4 1.53 0.00 16,381,491.00 16,381,721.67 1.46 16,342,617.50 16,500,000.00 Security Type Sub-Total Certificate of Deposit CREDIT SUISSE NEW YORK CERT DEPOS DTD 04/17/2017 1.460% 11/21/2017 3,000,806.70 3,000,000.00 20,318.33 3,000,000.00 04/17/1704/13/17P-1A-1 3,000,000.00 22549VN90 1.46 UBS AG STAMFORD CT CERT DEPOS DTD 05/11/2017 1.550% 05/10/2018 2,999,848.68 3,000,597.42 18,470.83 3,000,683.93 08/30/1708/29/17P-1A-1 3,000,000.00 90275DGY0 1.51 112017-11-21 Agenda Packet Page 315 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA Dated Date/Coupon/Maturity CUSIP Rating Rating Date Date Cost at Cost Interest Cost Value Security Type/Description S&P Moody's Original YTM Accrued Amortized MarketTrade Settle Par Certificate of Deposit BANK OF MONTREAL CHICAGO CERT DEPOS DTD 02/09/2017 1.880% 02/07/2019 3,012,171.00 3,000,000.00 8,460.00 3,000,000.00 02/09/1702/08/17A1A+ 3,000,000.00 06427KRC3 1.90 SUMITOMO MITSUI BANK NY CD DTD 05/04/2017 2.050% 05/03/2019 3,005,610.00 3,000,000.00 25,112.50 3,000,000.00 05/04/1705/03/17A1A 3,000,000.00 86563YVN0 2.05 SKANDINAV ENSKILDA BANKEN NY CD DTD 08/04/2017 1.840% 08/02/2019 2,997,270.00 2,998,923.21 8,893.33 2,998,830.00 08/04/1708/03/17Aa3A+ 3,000,000.00 83050FXT3 1.85 BANK TOKYO MITSUBISHI UFJ LTD LT CD DTD 09/27/2017 2.070% 09/25/2019 999,682.00 1,000,000.00 230.00 1,000,000.00 09/27/1709/25/17A1A+ 1,000,000.00 06539RGM3 2.07 81,484.99 16,015,388.38 15,999,520.63 1.77 15,999,513.93 16,000,000.00 Security Type Sub-Total Asset-Backed Security / Collateralized Mortgage Obligation CARMAX ABS 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 840,576.14 841,470.85 452.54 841,456.27 10/26/1610/19/16AaaNR 841,501.88 14312QAB2 1.21 HONDA ABS 2016-1 A3 DTD 02/25/2016 1.220% 12/18/2019 733,511.39 735,111.34 323.88 735,061.64 02/25/1602/16/16NRAAA 735,166.10 43814NAC9 1.23 NISSAN ABS 2015-C A3 DTD 10/14/2015 1.370% 05/15/2020 858,816.47 859,943.64 523.64 859,890.52 10/14/1510/06/15AaaNR 860,000.00 65478AAD5 1.38 ALLY ABS 2016-3 A3 DTD 05/31/2016 1.440% 08/15/2020 529,355.36 529,965.76 339.20 529,948.54 05/31/1605/24/16AaaAAA 530,000.00 02007LAC6 1.44 BANK OF AMERICA ABS 2015-A2 A DTD 04/29/2015 1.360% 09/15/2020 999,534.40 1,000,822.99 604.44 1,001,328.12 10/28/1510/26/15NRAAA 1,000,000.00 05522RCU0 1.30 HONDA ABS 2016-4 A3 DTD 10/25/2016 1.210% 12/18/2020 1,141,863.98 1,149,945.02 502.49 1,149,925.37 10/25/1610/18/16NRAAA 1,150,000.00 43814RAC0 1.04 JOHN DEERE ABS 2017-B A3 DTD 07/15/2017 1.820% 10/15/2021 534,647.70 534,963.38 432.76 534,960.84 07/18/1707/11/17AaaNR 535,000.00 47788BAD6 1.82 3,178.95 5,638,305.44 5,652,222.98 1.30 5,652,571.30 5,651,667.98 Security Type Sub-Total 150,103,960.20 150,565,761.09 1.51 545,220.97 150,356,776.54 150,230,175.98 Managed Account Sub-Total 122017-11-21 Agenda Packet Page 316 For the Month Ending September 30, 2017Managed Account Detail of Securities Held CITY OF CHULA VISTA $150,103,960.20 $150,565,761.09 $545,220.97 $150,356,776.54 $150,230,175.98 1.51% $150,775,396.95 $545,220.97 Total Investments Accrued Interest Securities Sub-Total 132017-11-21 Agenda Packet Page 317 For the Month Ending July 31, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method BUY 07/18/17 JOHN DEERE ABS 2017-B A3 DTD 07/15/2017 1.820% 10/15/2021 47788BAD6 (534,960.84) 0.00 (534,960.84) 535,000.00 07/11/17 07/26/17 COOPERATIEVE RABOBANK U.A. COMM PAPER DTD 07/26/2017 0.000% 02/20/2018 21687BBL4 (2,976,487.50) 0.00 (2,976,487.50) 3,000,000.00 07/25/17 0.00 (3,511,448.34)(3,511,448.34) 3,535,000.00 Transaction Type Sub-Total INTEREST 07/25/17 FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 3136AQDQ0 0.00 2,877.41 2,877.41 1,233,020.24 07/01/17 07/03/17 MONEY MARKET FUND MONEY0002 0.00 76.17 76.17 0.00 07/03/17 07/05/17 MONEY MARKET FUND MONEY0002 0.00 101.13 101.13 0.00 07/05/17 07/05/17 MORGAN STANLEY CORP NOTES DTD 12/05/2014 1.875% 01/05/2018 61761JVM8 0.00 5,156.25 5,156.25 550,000.00 07/05/17 07/09/17 GENERAL ELECTRIC CAP CORP (CALLABLE) DTD 01/09/2015 2.200% 01/09/2020 36962G7M0 0.00 16,500.00 16,500.00 1,500,000.00 07/09/17 07/12/17 BRANCH BANKING & TRUST NT (CALLABLE) DTD 11/21/2012 1.450% 01/12/2018 05531FAM5 0.00 7,250.00 7,250.00 1,000,000.00 07/12/17 07/15/17 ALLY ABS 2016-3 A3 DTD 05/31/2016 1.440% 08/15/2020 02007LAC6 0.00 636.00 636.00 530,000.00 07/15/17 07/15/17 CARMX 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 14312QAB2 0.00 1,134.16 1,134.16 1,124,785.86 07/15/17 07/15/17 BANK OF NY MELLN CORP (CALLABLE) NOTES DTD 11/18/2013 2.100% 01/15/2019 06406HCP2 0.00 10,500.00 10,500.00 1,000,000.00 07/15/17 07/15/17 NISSAN ABS 2015-C A3 DTD 10/14/2015 1.370% 05/15/2020 65478AAD5 0.00 981.83 981.83 860,000.00 07/15/17 07/15/17 BANK OF AMER CREDIT CARD TR 2015-A2 DTD 04/29/2015 1.360% 09/15/2020 05522RCU0 0.00 1,133.33 1,133.33 1,000,000.00 07/15/17 07/18/17 HONDA ABS 2016-1 A3 DTD 02/25/2016 1.220% 12/18/2019 43814NAC9 0.00 762.50 762.50 750,000.00 07/18/17 142017-11-21 Agenda Packet Page 318 For the Month Ending July 31, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method INTEREST 07/18/17 HAROT 2016-4 A3 DTD 10/25/2016 1.210% 12/18/2020 43814RAC0 0.00 1,159.58 1,159.58 1,150,000.00 07/18/17 07/19/17 GOLDMAN SACHS GROUP INC NOTES DTD 07/19/2013 2.900% 07/19/2018 38147MAA3 0.00 7,250.00 7,250.00 500,000.00 07/19/17 07/19/17 GOLDMAN SACHS GROUP INC NOTES DTD 07/19/2013 2.900% 07/19/2018 38147MAA3 0.00 14,137.50 14,137.50 975,000.00 07/19/17 07/23/17 JPMORGAN CHASE & CO (CALLABLE) DTD 01/23/2015 2.250% 01/23/2020 46625HKA7 0.00 11,250.00 11,250.00 1,000,000.00 07/23/17 07/23/17 JPMORGAN CHASE & CO (CALLABLE) DTD 01/23/2015 2.250% 01/23/2020 46625HKA7 0.00 16,875.00 16,875.00 1,500,000.00 07/23/17 07/30/17 WELLS FARGO & CO CORP BONDS DTD 02/02/2015 2.150% 01/30/2020 94974BGF1 0.00 10,750.00 10,750.00 1,000,000.00 07/30/17 07/30/17 WELLS FARGO & CO CORP BONDS DTD 02/02/2015 2.150% 01/30/2020 94974BGF1 0.00 16,125.00 16,125.00 1,500,000.00 07/30/17 07/31/17 US TREASURY NOTES DTD 01/31/2012 1.250% 01/31/2019 912828SD3 0.00 6,250.00 6,250.00 1,000,000.00 07/31/17 07/31/17 US TREASURY NOTES DTD 01/31/2016 1.375% 01/31/2021 912828N89 0.00 20,625.00 20,625.00 3,000,000.00 07/31/17 07/31/17 US TREASURY NOTES DTD 07/31/2013 1.375% 07/31/2018 912828VQ0 0.00 30,937.50 30,937.50 4,500,000.00 07/31/17 182,468.36 182,468.36 0.00 25,672,806.10 Transaction Type Sub-Total MATURITY 07/25/17 BANK OF NOVA SCOTIA HOUSTON CERT DEPOS DTD 08/26/2016 1.350% 07/25/2017 06417GNH7 3,000,000.00 37,462.50 3,037,462.50 0.00 0.00 3,000,000.00 07/25/17 37,462.50 0.00 0.00 3,037,462.50 3,000,000.00 3,000,000.00 Transaction Type Sub-Total PAYDOWNS 07/25/17 FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 3136AQDQ0 65,922.82 0.00 65,922.82 (660.14) 0.00 65,922.82 07/01/17 07/15/17 CARMX 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 14312QAB2 96,538.42 0.00 96,538.42 5.23 0.00 96,538.42 07/15/17 152017-11-21 Agenda Packet Page 319 For the Month Ending July 31, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA - 14040100 Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method 0.00 0.00 (654.91) 162,461.24 162,461.24 162,461.24 Transaction Type Sub-Total (348,987.10) 219,930.86 (129,056.24) (654.91) 0.00 Managed Account Sub-Total Total Security Transactions ($654.91)($129,056.24)$219,930.86 ($348,987.10)$0.00 162017-11-21 Agenda Packet Page 320 For the Month Ending August 31, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method BUY 08/04/17 SKANDINAV ENSKILDA BANKEN NY CD DTD 08/04/2017 1.840% 08/02/2019 83050FXT3 (2,998,830.00) 0.00 (2,998,830.00) 3,000,000.00 08/03/17 08/22/17 BANK OF TOKYO MITSUBISHI UFJ COMM PAPER DTD 08/22/2017 0.000% 05/10/2018 06538CEA5 (2,966,940.00) 0.00 (2,966,940.00) 3,000,000.00 08/22/17 08/23/17 CREDIT AGRICOLE CIB NY COMM PAPER DTD 07/11/2017 0.000% 03/01/2018 22533UC19 (2,977,833.33) 0.00 (2,977,833.33) 3,000,000.00 08/23/17 08/23/17 JP MORGAN SECURITIES LLC COMM PAPER DTD 07/06/2017 0.000% 04/02/2018 46640QD24 (1,486,310.00) 0.00 (1,486,310.00) 1,500,000.00 08/23/17 08/29/17 ING (US) FUNDING LLC COMM PAPER DTD 08/28/2017 0.000% 05/21/2018 4497W1EM4 (2,966,654.17) 0.00 (2,966,654.17) 3,000,000.00 08/29/17 08/30/17 UBS AG STAMFORD CT CERT DEPOS DTD 05/11/2017 1.550% 05/10/2018 90275DGY0 (3,000,683.93)(14,337.50)(3,015,021.43) 3,000,000.00 08/29/17 (14,337.50) (16,411,588.93)(16,397,251.43) 16,500,000.00 Transaction Type Sub-Total INTEREST 08/25/17 FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 3136AQDQ0 0.00 1,701.23 1,701.23 1,167,097.42 08/01/17 08/02/17 MONEY MARKET FUND MONEY0002 0.00 177.94 177.94 0.00 08/02/17 08/03/17 MONEY MARKET FUND MONEY0002 0.00 120.69 120.69 0.00 08/03/17 08/07/17 BANK OF MONTREAL CHICAGO CERT DEPOS DTD 02/09/2017 1.880% 02/07/2019 06427KRC3 0.00 27,886.67 27,886.67 3,000,000.00 08/07/17 08/12/17 MICROSOFT CORP NOTE DTD 02/12/2015 1.850% 02/12/2020 594918AY0 0.00 18,500.00 18,500.00 2,000,000.00 08/12/17 08/12/17 IBM CORP NOTE DTD 02/12/2014 1.950% 02/12/2019 459200HT1 0.00 14,625.00 14,625.00 1,500,000.00 08/12/17 08/15/17 ALLY ABS 2016-3 A3 DTD 05/31/2016 1.440% 08/15/2020 02007LAC6 0.00 636.00 636.00 530,000.00 08/15/17 08/15/17 BANK OF AMERICA ABS 2015-A2 A DTD 04/29/2015 1.360% 09/15/2020 05522RCU0 0.00 1,133.33 1,133.33 1,000,000.00 08/15/17 172017-11-21 Agenda Packet Page 321 For the Month Ending August 31, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method INTEREST 08/15/17 NISSAN ABS 2015-C A3 DTD 10/14/2015 1.370% 05/15/2020 65478AAD5 0.00 981.83 981.83 860,000.00 08/15/17 08/15/17 CARMAX ABS 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 14312QAB2 0.00 1,036.82 1,036.82 1,028,247.44 08/15/17 08/15/17 BOEING COMPANY CORP NOTES DTD 07/28/2009 4.875% 02/15/2020 097023AZ8 0.00 36,562.50 36,562.50 1,500,000.00 08/15/17 08/15/17 AMERCIAN EXPRESS CREDIT CORP NOTES DTD 08/15/2014 2.250% 08/15/2019 0258M0DP1 0.00 11,250.00 11,250.00 1,000,000.00 08/15/17 08/15/17 AMERICAN HONDA FINANCE GLOBAL NOTES DTD 09/09/2014 2.250% 08/15/2019 02665WAH4 0.00 16,875.00 16,875.00 1,500,000.00 08/15/17 08/17/17 BNY MELLON CORP NOTE (CALLABLE) DTD 08/17/2015 2.600% 08/17/2020 06406HDD8 0.00 19,500.00 19,500.00 1,500,000.00 08/17/17 08/18/17 HONDA ABS 2016-1 A3 DTD 02/25/2016 1.220% 12/18/2019 43814NAC9 0.00 762.50 762.50 750,000.00 08/18/17 08/18/17 HONDA ABS 2016-4 A3 DTD 10/25/2016 1.210% 12/18/2020 43814RAC0 0.00 1,159.58 1,159.58 1,150,000.00 08/18/17 08/19/17 TOYOTA MOTOR CREDIT CORP DTD 02/19/2016 1.700% 02/19/2019 89236TCU7 0.00 13,005.00 13,005.00 1,530,000.00 08/19/17 08/31/17 US TREASURY NOTES DTD 02/28/2013 1.250% 02/29/2020 912828UQ1 0.00 7,500.00 7,500.00 1,200,000.00 08/31/17 08/31/17 US TREASURY NOTES DTD 02/28/2013 1.250% 02/29/2020 912828UQ1 0.00 19,031.25 19,031.25 3,045,000.00 08/31/17 08/31/17 US TREASURY NOTES DTD 02/28/2013 1.250% 02/29/2020 912828UQ1 0.00 7,500.00 7,500.00 1,200,000.00 08/31/17 199,945.34 199,945.34 0.00 25,460,344.86 Transaction Type Sub-Total MATURITY 08/21/17 TORONTO DOMINION BANK NY CERT DEPOS DTD 08/26/2016 1.380% 08/21/2017 89113WHS8 3,000,000.00 41,400.00 3,041,400.00 0.00 0.00 3,000,000.00 08/21/17 182017-11-21 Agenda Packet Page 322 For the Month Ending August 31, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method MATURITY 08/22/17 BANK TOKYO MITSUBISHI UFJ LTD COMM PAPER DTD 02/28/2017 0.000% 08/22/2017 06538BVN0 3,000,000.00 0.00 3,000,000.00 18,958.33 0.00 3,000,000.00 08/22/17 08/22/17 CREDIT AGRICOLE CIB NY COMM PAPER DTD 02/27/2017 0.000% 08/22/2017 22533TVN3 3,000,000.00 0.00 3,000,000.00 17,208.33 0.00 3,000,000.00 08/22/17 08/28/17 CANADIAN IMPERIAL BANK NY CD DTD 08/26/2016 1.390% 08/28/2017 13606AY36 3,000,000.00 42,510.83 3,042,510.83 0.00 0.00 3,000,000.00 08/28/17 83,910.83 0.00 36,166.66 12,083,910.83 12,000,000.00 12,000,000.00 Transaction Type Sub-Total PAYDOWNS 08/25/17 FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 3136AQDQ0 29,099.89 0.00 29,099.89 (291.40) 0.00 29,099.89 08/01/17 08/15/17 CARMAX ABS 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 14312QAB2 93,191.43 0.00 93,191.43 5.05 0.00 93,191.43 08/15/17 0.00 0.00 (286.35) 122,291.32 122,291.32 122,291.32 Transaction Type Sub-Total SELL 08/04/17 SKANDINAVISKA ENSKILDA BANKEN NY CD DTD 11/17/2015 1.480% 11/16/2017 83050FBG5 3,001,521.03 32,190.00 3,033,711.03 1,521.03 1,521.03 FIFO 3,000,000.00 08/03/17 32,190.00 1,521.03 1,521.03 3,033,711.03 3,001,521.03 3,000,000.00 Transaction Type Sub-Total (1,273,439.08) 301,708.67 (971,730.41) 37,401.34 1,521.03 Managed Account Sub-Total Total Security Transactions $37,401.34 ($971,730.41)$301,708.67 ($1,273,439.08)$1,521.03 192017-11-21 Agenda Packet Page 323 For the Month Ending September 30, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method BUY 09/27/17 BANK TOKYO MITSUBISHI UFJ LTD LT CD DTD 09/27/2017 2.070% 09/25/2019 06539RGM3 (1,000,000.00) 0.00 (1,000,000.00) 1,000,000.00 09/25/17 0.00 (1,000,000.00)(1,000,000.00) 1,000,000.00 Transaction Type Sub-Total INTEREST 09/01/17 MONEY MARKET FUND MONEY0002 0.00 121.47 121.47 0.00 09/01/17 09/01/17 CISCO SYSTEMS INC GLOBAL NOTES DTD 03/03/2014 2.125% 03/01/2019 17275RAR3 0.00 15,937.50 15,937.50 1,500,000.00 09/01/17 09/25/17 FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 3136AQDQ0 0.00 1,758.04 1,758.04 1,137,997.53 09/01/17 09/05/17 MONEY MARKET FUND MONEY0002 0.00 657.68 657.68 0.00 09/05/17 09/06/17 CATERPILLAR FINANCIAL SERVICES CORP NOTE DTD 09/06/2013 2.450% 09/06/2018 14912L5T4 0.00 30,012.50 30,012.50 2,450,000.00 09/06/17 09/13/17 AMERICAN HONDA FINANCE CORP NOTES DTD 03/13/2015 2.150% 03/13/2020 02665WAU5 0.00 16,125.00 16,125.00 1,500,000.00 09/13/17 09/15/17 BANK OF AMERICA ABS 2015-A2 A DTD 04/29/2015 1.360% 09/15/2020 05522RCU0 0.00 1,133.33 1,133.33 1,000,000.00 09/15/17 09/15/17 JOHN DEERE ABS 2017-B A3 DTD 07/15/2017 1.820% 10/15/2021 47788BAD6 0.00 1,541.69 1,541.69 535,000.00 09/15/17 09/15/17 CARMAX ABS 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 14312QAB2 0.00 942.85 942.85 935,056.01 09/15/17 09/15/17 ALLY ABS 2016-3 A3 DTD 05/31/2016 1.440% 08/15/2020 02007LAC6 0.00 636.00 636.00 530,000.00 09/15/17 09/15/17 NISSAN ABS 2015-C A3 DTD 10/14/2015 1.370% 05/15/2020 65478AAD5 0.00 981.83 981.83 860,000.00 09/15/17 09/18/17 HONDA ABS 2016-1 A3 DTD 02/25/2016 1.220% 12/18/2019 43814NAC9 0.00 762.50 762.50 750,000.00 09/18/17 09/18/17 HONDA ABS 2016-4 A3 DTD 10/25/2016 1.210% 12/18/2020 43814RAC0 0.00 1,159.58 1,159.58 1,150,000.00 09/18/17 09/21/17 FFCB NOTES DTD 09/21/2012 0.830% 09/21/2017 3133EAY28 0.00 2,552.25 2,552.25 615,000.00 09/21/17 202017-11-21 Agenda Packet Page 324 For the Month Ending September 30, 2017Managed Account Security Transactions & Interest CITY OF CHULA VISTA Transaction Type Trade CUSIPSecurity DescriptionSettle Par Proceeds Principal Accrued Interest Total Cost Realized G/L Realized G/L Sale Amort Cost Method INTEREST 09/24/17 AMERICAN HONDA FINANCE CB DTD 09/24/2015 2.450% 09/24/2020 02665WAZ4 0.00 12,250.00 12,250.00 1,000,000.00 09/24/17 09/26/17 CITIGROUP INC CORP NOTES DTD 09/26/2013 2.500% 09/26/2018 172967HC8 0.00 12,187.50 12,187.50 975,000.00 09/26/17 09/30/17 US TREASURY NOTES DTD 10/01/2012 1.000% 09/30/2019 912828TR1 0.00 10,325.00 10,325.00 2,065,000.00 09/30/17 09/30/17 US TREASURY NOTES DTD 03/31/2016 1.250% 03/31/2021 912828Q37 0.00 21,875.00 21,875.00 3,500,000.00 09/30/17 09/30/17 US TREASURY NOTES DTD 10/01/2012 1.000% 09/30/2019 912828TR1 0.00 15,250.00 15,250.00 3,050,000.00 09/30/17 146,209.72 146,209.72 0.00 23,553,053.54 Transaction Type Sub-Total MATURITY 09/21/17 FFCB NOTES DTD 09/21/2012 0.830% 09/21/2017 3133EAY28 615,000.00 0.00 615,000.00 0.00 0.00 615,000.00 09/21/17 0.00 0.00 0.00 615,000.00 615,000.00 615,000.00 Transaction Type Sub-Total PAYDOWNS 09/25/17 FANNIE MAE SERIES 2015-M13 ASQ2 DTD 10/01/2015 1.646% 09/01/2019 3136AQDQ0 116,705.31 0.00 116,705.31 (1,168.68) 0.00 116,705.31 09/01/17 09/15/17 CARMAX ABS 2016-4 A2 DTD 10/26/2016 1.210% 11/15/2019 14312QAB2 93,554.13 0.00 93,554.13 5.07 0.00 93,554.13 09/15/17 09/18/17 HONDA ABS 2016-1 A3 DTD 02/25/2016 1.220% 12/18/2019 43814NAC9 14,833.90 0.00 14,833.90 2.11 0.00 14,833.90 09/18/17 0.00 0.00 (1,161.50) 225,093.34 225,093.34 225,093.34 Transaction Type Sub-Total (159,906.66) 146,209.72 (13,696.94) (1,161.50) 0.00 Managed Account Sub-Total Total Security Transactions ($1,161.50)($13,696.94)$146,209.72 ($159,906.66)$0.00 212017-11-21 Agenda Packet Page 325 City of Chula Vista Staff Report File#:17-0487, Item#: 9. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $38,617 FROM THE U.S. DEPARTMENT OF HOMELAND SECURITY, AUTHORIZING THE POLICE DEPARTMENT TO PURCHASE RADIO DISPATCH CONSOLE EQUIPMENT FROM MOTOROLA SOLUTIONS, INC. BASED ON THE COUNTY OF SAN DIEGO’S CONTRACT NUMBER 553982 PRICING AND TERMS, AND APPROPRIATING SAID FUNDS TO THE FEDERAL GRANTS FUNDS FOR THE URBAN AREA SECURITY INITIATIVE (4/5 VOTE REQUIRED) RECOMMENDED ACTION Council adopt the resolution. SUMMARY The San Diego Office of Homeland Security, which administers the Urban Area Security Initiative (UASI), has notified the City of Chula Vista of fiscal year 2016 UASI funding. The Urban Area Security Initiative addresses the unique planning, organization, equipment, training, and exercise needs of high-threat, high-density urban areas. This funding will be used to purchase and replace police radio dispatch console equipment. ENVIRONMENTAL REVIEW Environmental Notice The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Environmental Determination The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because 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 required. BOARD/COMMISSION RECOMMENDATION Not Applicable DISCUSSION On September 12, 2017, City Council accepted $480,000 in UASI funds. With this action, the Department is requesting that City Council accept an additional $38,617 in funds for a total of $518,617 awarded to the City by the U.S. Department of Homeland Security. One of the core missions of the U.S. Department of Homeland Security is to enhance the ability of state, territory, local, and tribal governments to proven, protect against, mitigate, respond to, and recover from acts of terrorism and other disasters. As first responders to emergency incidents, the Police, Fire, and City of Chula Vista Printed on 11/16/2017Page 1 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 326 File#:17-0487, Item#: 9. of terrorism and other disasters. As first responders to emergency incidents, the Police, Fire, and Public Works Departments have benefited greatly from several Federal Homeland Security Grants. The fiscal year 2016 Urban Area Security Initiative (FY2016 UASI) provides funding for the continued development of readiness and operational response capacity of Police and Fire first responder personnel. UASI grant administrators from the California Governor’s Office of Emergency Services (Cal OES) have approved the expenditure plan for equipment, planning and training needs of the City. The spending plan was submitted in advance of funding approval in accordance with grant requirements. Grant funds are restricted as to how they can be spent and cannot supplant normal budgetary items for the City. The specific spending plan for these funds is as follows: Radio Dispatch Console System equipment upgrade The San Diego County Sheriff’s Department manages the San Diego County-Imperial County Regional Communications System (RCS) radio network that services the majority of public safety (Law Enforcement and Fire) and public service (transportation, schools) users in the region. In coordination with all agencies, RCS staff is in the planning stages to upgrade the regional public safety communications system. UASI funding in the amount of $518,617 has been identified for the City of Chula Vista Police Department to purchase P25 compatible radio dispatch console equipment. The County of San Diego conducted a competitive procurement for a new regional communications system and the contract was awarded to Motorola Solutions, Inc. The contract includes equipment and services to replace radio dispatch console systems. The Police Department is requesting to piggyback off the County’s contract #553982 with Motorola Solutions, Inc. to procure the equipment and services necessary to replace the department’s radio dispatch consoles. The collaboration with RCS staff and participating agencies has been instrumental in this major communications upgrade. The Police Department recommends the City Council of the City of Chula Vista, accept the $38,617 funding from the U.S. Department of Homeland Security, authorize the Police Department to purchase radio dispatch console equipment from Motorola Solutions, Inc. via the County of San Diego’s contract number 553982 and appropriate said funds to the capital category of the Federal Grants fund for the Urban Area Security Initiative (UASI). 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 Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.). Staff is not independently aware, and has not been informed by any [Insert appropriate Legislative Body name] 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 resolution City of Chula Vista Printed on 11/16/2017Page 2 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 327 File#:17-0487, Item#: 9. Community, Strong and Secure Neighborhoods and a Connected Community. This resolution supports the goal of Strong and Secure Neighborhoods by enhancing the readiness and operational response capacity of emergency first responder personnel. CURRENT YEAR FISCAL IMPACT Approval of this resolution will result in a one-time appropriation of $38,617 to the capital category of Federal Grants Fund. The funding from the U.S. Department of Homeland Security will completely offset these costs. Therefore, there is no net fiscal impact to the City. ONGOING FISCAL IMPACT There is no ongoing fiscal impact for accepting these grant funds. ATTACHMENTS 1. Contract Information Staff Contact: Maritza Vargas, Phil Collum City of Chula Vista Printed on 11/16/2017Page 3 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 328 TO ACCESS THE COUNTY’S RADIO COMMUNICATIONS SYSTEM REPLACEMENT CONTRACT WITH MOTOROLA SOLUTIONS, INC. PLEASE DO THE FOLLOWING: Go to this website: http://www.sandiegocounty.gov/content/sdc/purchasing/documentum-contract-search.html Enter Contract #:553982 Open the PDF file with “Document Name” Contract dated 6-27-16 Note: It will take a while to download because the contract is over 1000 pages. 2017-11-21 Agenda Packet Page 329 RESOLUTION NO. __________ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $38,617 FROM THE U.S. DEPARTMENT OF HOMELAND SECURITY, AUTHORIZING THE POLICE DEPARMENT TO PURCHASE RADIO DISPATCH CONSOLE EQUIPMENT FROM MOTOROLA SOLUTIONS, INC. BASED ON THE COUNTY OF SAN DIEGO’S CONTRACT NUMBER 553982 PRICING AND TERMS AND APPROPRIATING SAID FUNDS TO THE FEDERAL GRANTS FUND FOR THE URBAN AREA SECURITY INITIATIVE WHEREAS, the San Diego Office of Homeland Security, which administers the Urban Area Security Initiative (UASI), has notified the City of Chula Vista of fiscal year 2016 UASI funding; and WHEREAS, the Urban Area Security Initiative addresses the unique planning, organization, equipment, training, and exercise needs of high-threat, high-density urban areas; and WHEREAS, grant funds from the Urban Area Security Initiative are restricted as to how the funding can be spent and cannot supplant normal budgetary items for the City; and WHEREAS, the equipment funding includes P25 compatible radio dispatch consoles to upgrade the current dispatch consoles; and WHEREAS, City Council had originally accepted $480,000 awarded by the U.S. Department of Homeland Security; and WHEREAS, with this action, City Council accepts $38,617 in additional funds for a grand total award of $518,617; and WHEREAS, the County of San Diego conducted a competitive procurement for a new regional communications system and established contract number 553982 with Motorola Solutions, Inc. as a result of the competitive procurement; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it accepts $38,617 from the U.S. Department of Homeland Security, authorizes the Police Department to purchase radio dispatch console equipment from Motorola Solutions, Inc. based on the County of San Diego’s contract number 553982 pricing and terms, and appropriates said funds to the capital category of the federal grants fund for the Urban Area Security Initiative. 2017-11-21 Agenda Packet Page 330 Presented by Approved as to form by Roxana Kennedy Glen R. Googins Police Chief City Attorney 2017-11-21 Agenda Packet Page 331 City of Chula Vista Staff Report File#:17-0496, Item#: 10. A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ISSUANCE OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY’S LEASE REVENUE BONDS, SERIES 2017A [NEW CLEAN RENEWABLE ENERGY BONDS (FEDERALLY TAXABLE) AND LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT)]; AND AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT WITH RESPECT TO THE OFFERING AND SALE OF THE BONDS AND THE EXECUTION OF DOCUMENTS AND THE TAKING OF RELATED ACTIONS NECESSARY TO ISSUE SUCH BONDS B. RESOLUTION OF THE BOARD OF DIRECTORS OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF THE AUTHORITY’S LEASE REVENUE BONDS SERIES 2017A [NEW CLEAN RENEWABLE ENERGY BONDS (FEDERALLY TAXABLE) AND LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT)] AND AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT WITH RESPECT TO THE OFFERING AND SALE OF THE BONDS AND THE EXECUTION OF DOCUMENTS AND THE TAKING OF RELATED ACTIONS NECESSARY TO ISSUE SUCH BONDS RECOMMENDED ACTION Council conduct the public hearing and adopt resolution A. Municipal Financing Authority adopt resolution B. SUMMARY The City applied for and received an allocation from the IRS to issue New Clean Renewable Energy Bonds (CREBs) to finance the acquisition and installation of the solar photovoltaic installations (Equipment) at various facilities throughout the City. The Equipment is expected to generate 4.1 million KWh of energy. This action will approve the issuance of Bonds by the Chula Vista Municipal Financing Authority (“Authority”) to fund approximately $13 million of costs to acquire and install the Equipment. ENVIRONMENTAL REVIEW Environmental Notice The Project qualifies for a Class 3 Categorical Exemption pursuant to Section 15303 (New Construction or Conversion of Small Structures) of the California Environmental Quality Act State Guidelines. Environmental Determination The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 3 Categorical Exemption pursuant to Section 15303 (New Construction or Conversion of Small City of Chula Vista Printed on 11/16/2017Page 1 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 332 File#:17-0496, Item#: 10. 3 Categorical Exemption pursuant to Section 15303 (New Construction or Conversion of Small Structures) of the State CEQA Guidelines. Thus, no further environmental review is required. BOARD/COMMISSION RECOMMENDATION N/A DISCUSSION On September 26, 2017, the City Council approved an agreement with Johnson Controls to install solar photovoltaic panels at 12 sites throughout the City. The City applied for and received an allocation from the IRS to issue New Clean Renewable Energy Bonds (CREBs) to finance the acquisition and installation of the Equipment. The equipment and installation cost for each of the 12 sites is shown below. Site Size (kW) Production (kWh) Equipment Cost Police Station 817,609 $ 2,130,107 Civic Center 1,062,636 3,627,653 Main Library 577,505 1,825,467 Public Works Facility 588,466 1,833,740 South Library 282,920 873,112 Loma Verde Aquatic Center 180,620 523,215 Parkway Aquatic Center & Gymnasium 123,974 385,483 Montevalle Rec Center 175,787 587,077 Boys & Girls Club 99,057 330,101 Mount San Miguel Park 97,448 297,685 Animal Care 91,838 280,394 Salt Creek Recreation Center 70,610 207,025 Total 4,168,470 $12,901,059 *Production includes battery capacity CREBs Financing CREBs are issued as taxable bonds, and the City is eligible to receive an interest subsidy from the federal government (Subsidy), currently equal to a 2.64% interest rate. If the CREBs taxable interest rate is 4.30%, for example, the City’s net effective interest rate would be 1.66%. The scope of four of the sites was modified after the CREBs allocation was received, and there are approximately $1.1 million of equipment costs that are in excess of the CREBs allocation. The difference will be financed with a small series of traditional tax-exempt bonds. The required financing amount is estimated to total $13.3 million per the table below. CREBs Series Tax-Exempt Series Total Equipment Cost $11,772,482 $1,128,577 $12,901,059 Capitalized Interest 90,000 42,000 132,000 Costs of Issuance 207,518 59,423 266,941 Net Bond Issue $12,070,000 $1,230,000 $13,300,000 City of Chula Vista Printed on 11/16/2017Page 2 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 333 File#:17-0496, Item#: 10. CREBs Series Tax-Exempt Series Total Equipment Cost $11,772,482 $1,128,577 $12,901,059 Capitalized Interest 90,000 42,000 132,000 Costs of Issuance 207,518 59,423 266,941 Net Bond Issue $12,070,000 $1,230,000 $13,300,000 Energy Savings Certain assumptions were used to project energy savings resulting from installation of the Equipment, including a degradation in the efficiency of the Equipment by one-half percent by year, an average 4% increase in the cost of electricity, a separate calculated cost per Kwh of SDG&E electricity at each site based on an analysis prepared by Johnson Controls and related to specific power usage at each site and inflation in the operating and maintenance agreement with Johnson Controls at 3% annually. The Equipment is anticipated to be completely installed and operating within 12 months for most sites, and sooner for some sites. There will be some energy savings in FY 2018-19 to offset the first net debt service payment on the CREBs scheduled to occur in December 2018. These energy savings would also offset the first year up-front O&M costs, as well as the other up-front expenses not paid from the CREBs bond proceeds, such as the deposit to the costs of issuance. Comparison of Energy Savings with CREBs Financing Costs To determine that there are no expected net City costs to the financing, installation and operation of the Equipment, the following chart compares the projected energy savings from the new Equipment with the financing and other costs to operate the Equipment. The debt service will be paid in full after 30 years, but the equipment will continue to generate electricity and provide energy cost savings for up to 40 years, although the efficiency of the solar panels will continue to incrementally degrade over time. Further, replacement of the electrical current invertors and the batteries will likely be required at least once over the 40-year expected useful life. City of Chula Vista Printed on 11/16/2017Page 3 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 334 File#:17-0496, Item#: 10. City of Chula Vista Printed on 11/16/2017Page 4 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 335 File#:17-0496, Item#: 10. The Net Debt Service shown above is net of the Subsidy, and includes both the CREBs series of bonds and the tax-exempt series of bonds. The Subsidy is subject to sequestration by the federal government. Currently, the Subsidy is reduced by 6.6% of the original maximum subsidy provided for in the CREBs legislation, and that is the rate used in the analysis for the 30 years that the CREBs will be outstanding. The Subsidy reduction was as high as 7.9% of the maximum allowed subsidy in the first year of sequestration. Therefore, the Subsidy amount can change if sequestration changes. For example, recent proposed tax legislation by both the House of Representatives and the Senate could have the indirect effect of eliminating or reducing the Subsidy due to higher sequestration requirements. However, the Bonds contain a provision that if the reduction exceeds 25%, the City would have the ability to optionally redeem the Bonds in whole or in part on any date thereafter without a penalty. There should be sufficient contingent net energy savings to cover any sequestration impacts up to 25%, as well as any fluctuations in actual results compared to projected results based on energy City of Chula Vista Printed on 11/16/2017Page 5 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 336 File#:17-0496, Item#: 10. rates. Lease Revenue Bonds Staff is recommending financing the Equipment through the issuance of a series of federally taxable New Clean Renewable Energy Bonds by the Authority, with a second series of tax-exempt bonds for a small portion of the Equipment cost that cannot be financed with the CREBs. The City will lease property from the Authority, and the City’s lease payments will secure the Authority Bonds, as described further below. This financing structure is similar to the Lease Revenue Bonds and Certificates of Participation financings that the City has used for capital financing in the past. The City Council formed the Chula Vista Municipal Financing Authority in 2014 to assist in lease financing such as this financing. Based on current interest rates, the City’s Financial Advisor, Harrell & Company Advisors, is estimating an effective interest rate for the taxable CREBs maturing in 30 years of 4.3%, based on the City’s current bond ratings of AA- by Standard & Poor’s. Net of the 2.64% Subsidy, the effective financing cost is anticipated to be 1.66%. The tax-exempt series of bonds (referred to as “Series B Bonds”) will mature in 10 years, with an expected effective interest rate of 2%. Therefore, the total effective net borrowing costs are expected to be less than 1.8% The financing requires a lease of assets from the Authority to the City (Lease). The City’s lease payments to the Authority are used as a revenue stream to secure repayment of the Bonds. The leased assets recommended for securing the City’s lease payment (and thus the Bonds) will be the main Civic Center Library and Harvest Park. The resolutions authorize the City Manager and the Director of Finance to select alternative assets if there a legal issue or a rating agency issue with either of the designated assets. Final costs will be determined when the Bonds are sold, which is anticipated in early December. The closing and delivery of funds is expected to also occur in December. City staff selected Brandis Tallman LLC to serve as underwriter for this transaction, due to their experience with issuance of CREBs. Public Hearing The City Council must conduct a public hearing as a precondition to this issuance of the Bonds by the Authority and to designate the Lease as a facility financing contract under the Government Code. Approval of the financing will then require adoption of resolutions by the City Council and by the Authority Board after the public hearing. Because the Bonds are being sold through the Authority, the City, as the jurisdiction where the Equipment being financed will be located, is required to hold a public hearing before the Authority may approve a resolution authorizing the sale of the Bonds. After the public hearing, the City Council must find that there will be significant public benefit to the City from the issuance and sale of Bonds by the Authority for the purpose of financing the improvements. “Significant public benefit” includes a demonstrable savings in effective interest rate, bondCity of Chula Vista Printed on 11/16/2017Page 6 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 337 File#:17-0496, Item#: 10. “Significant public benefit” includes a demonstrable savings in effective interest rate, bond preparation, bond underwriting, or bond issuance costs. Combining the financing of the twelve separate CREBs-approved components into one financing by the Authority will reduce overall issuance costs through economies of scale, and the increased size of the financing (compared with separate smaller financings) will result in more interested investors, which can reduce the effective interest rate on the financing. Further, the use of Lease Revenue Bonds, rather than Certificates of Participation, will also broaden investor appeal and result in a lower effective interest rate. After the public hearing, in order to designate the Lease as a facility financing contract the City Council must find that the terms of the Lease are in the best interest of the City and that the funds for the lease payments due under the Lease are projected to be available from revenues that otherwise would have been used for purchase of electrical energy required by the City in the absence of the Equipment. The findings will be based on the projections in the table above showing the comparison of energy savings with the financing and operation costs. Authorization and Sale In order to authorize the issuance of the Bonds and provide for the lease payments to secure them, the City Council and the Authority Board have been presented with resolutions for their consideration. The resolutions approve the form of the following documents in connection with the financing: 1. Indenture between Authority and U.S. Bank (as Trustee); 2. Lease Agreement between the City and the Authority; 3. Site Lease between the City and the Authority; 4. Continuing Disclosure Agreement; 5. Assignment Agreement between the Authority and the Trustee; 6. Bond Purchase Agreement between the City, the Authority and Brandis Tallman LLC; and 7. Preliminary Official Statement The City and Authority resolutions also approve the distribution of the Preliminary Official Statement relating to the Bonds, and authorize the execution of the Bond Purchase Agreement by the Authorized Officers designated in the resolutions, as well as provide certain sale parameters. These parameters are: (1) the par amount of the CREBs cannot exceed $15 million and the par amount of the Series B Bonds cannot exceed $2 million, (2) true interest cost cannot exceed 6% (prior to the Subsidy) for the CREBs and 4% for the Series B Bonds (3) the underwriter’s discount cannot exceed 0.6% of the par amount of the Bonds. The Preliminary Official Statement was prepared by staff and the municipal advisor, with input from the City’s bond counsel and disclosure counsel. In accordance with the City’s bond disclosure policies, the City Council’s review of the description of the City and the City’s Financial Information contained in the Preliminary Official Statement is requested. Any changes requested by Council should be communicated to the Director of Finance prior to the printing of the Preliminary Official Statement in advance of the sale of the Bonds on or about November 29, 2017. Any changes requested by the City Council will be incorporated into the Preliminary Official Statement as appropriate prior to its distribution to prospective investors. The financing team assembled for this financing includes the following firms: City of Chula Vista Printed on 11/16/2017Page 7 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 338 File#:17-0496, Item#: 10. • Stradling, Yocca, Carlson & Rauth will act as the City’s Bond and Disclosure Counsel. • Harrell & Company Advisors will serve as the City’s Municipal Advisor. • Brandis Tallman LLC will serve as the City’s Investment Banker providing Underwriting Services. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council members and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(11), for purposes of the Political Reform Act (Cal. Gov’t Code §87100,et seq.). Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. LINK TO STRATEGIC GOALS The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The CREBs bond issuance augments Operational Excellence and Economic Vitality by enhancing the City’s efforts toward Smart Cities design and continuing its goals to be as energy efficient as possible. CURRENT YEAR FISCAL IMPACT The estimated costs of issuance associated with this financing for the underwriting, will be contingent the bonds and are payable from the bond proceeds. Total costs of issuance are estimated to be $267,000. There will be no net debt service due in Fiscal Year 2017-18. ONGOING FISCAL IMPACT The total annual net lease payments (net of the Subsidy) are expected to range from $340,000 in the early years, growing to $770,000 by Fiscal Year 2048-49. The lease payments are expected to be offset by energy savings. ATTACHMENTS 1. Indenture 2. Lease Agreement 3. Site Lease 4. Continuing Disclosure Agreement 5. Assignment Agreement 6. Bond Purchase Agreement 7. Preliminary Official Statement 8. Public Hearing Notice Staff Contact: David Bilby, MSBA CPFO, Director of Finance and Treasurer City of Chula Vista Printed on 11/16/2017Page 8 of 8 powered by Legistar™2017-11-21 Agenda Packet Page 339 INDENTURE by and among CHULA VISTA MUNICIPAL FINANCING AUTHORITY and CITY OF CHULA VISTA and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of December 1, 2017 Relating to $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) 2017-11-21 Agenda Packet Page 340 TABLE OF CONTENTS Page i ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions.....................................................................................................................2 Section 1.02 Equal Security.............................................................................................................12 ARTICLE II THE BONDS Section 2.01 Authorization of Bonds...............................................................................................12 Section 2.02 Terms of 2017 Bonds..................................................................................................12 Section 2.03 Form of 2017 Bonds ...................................................................................................14 Section 2.04 Transfer and Exchange of Bonds................................................................................14 Section 2.05 Registration Books......................................................................................................14 Section 2.06 Execution of Bonds.....................................................................................................14 Section 2.07 Authentication of Bonds.............................................................................................15 Section 2.08 Temporary Bonds........................................................................................................15 Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen...............................................................15 Section 2.10 Book-Entry Bonds ......................................................................................................15 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of 2017 Bonds..............................................................................................17 Section 3.02 Application of Proceeds of the 2017 Bonds................................................................17 Section 3.03 Costs of Issuance Fund ...............................................................................................17 Section 3.04 Conditions for the Issuance of Additional Bonds.......................................................18 Section 3.05 Procedure for the Issuance of Additional Bonds ........................................................19 Section 3.06 Additional Bonds........................................................................................................20 ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of 2017 Bonds ........................................................................................20 Section 4.02 Notice of Redemption.................................................................................................23 Section 4.03 Selection of Bonds for Redemption............................................................................24 Section 4.04 Partial Redemption of Bonds......................................................................................24 Section 4.05 Effect of Notice of Redemption..................................................................................24 2017-11-21 Agenda Packet Page 341 TABLE OF CONTENTS (continued) Page ii ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations........................................................................................24 Section 5.02 Flow of Funds.............................................................................................................25 Section 5.03 Application of Net Proceeds and Rental Interruption Insurance ................................26 Section 5.04 Title Insurance ............................................................................................................27 Section 5.05 Acquisition and Construction Fund............................................................................27 Section 5.06 Rebate Fund................................................................................................................28 Section 5.07 Investment of Moneys.................................................................................................28 ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements.....................................................................................29 Section 6.02 Compliance with Site Lease and Lease Agreement....................................................29 Section 6.03 Observance of Laws and Regulations.........................................................................30 Section 6.04 Other Liens..................................................................................................................30 Section 6.05 Prosecution and Defense of Suits ...............................................................................30 Section 6.06 Accounting Records and Statements...........................................................................30 Section 6.07 Recordation and Filing................................................................................................30 Section 6.08 Tax Covenants ............................................................................................................31 Section 6.09 Continuing Disclosure ................................................................................................31 Section 6.10 Further Assurances......................................................................................................31 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default........................................................................................................32 Section 7.02 Other Remedies of the Trustee....................................................................................32 Section 7.03 Non-Waiver.................................................................................................................32 Section 7.04 Remedies Not Exclusive.............................................................................................33 Section 7.05 No Liability by the Authority to the Owners..............................................................33 Section 7.06 No Liability by the City to the Owners.......................................................................33 Section 7.07 No Liability of the Trustee to the Owners..................................................................33 Section 7.08 Application of Amounts After Default.......................................................................33 Section 7.09 Trustee May Enforce Claims Without Possession of Bonds......................................34 Section 7.10 Limitation on Suits......................................................................................................34 2017-11-21 Agenda Packet Page 342 TABLE OF CONTENTS (continued) Page iii ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee.........................................................................................34 Section 8.02 Duties, Removal and Resignation of the Trustee........................................................35 Section 8.03 Compensation of the Trustee......................................................................................35 Section 8.04 Protection of the Trustee.............................................................................................36 ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted.................................................................38 Section 9.02 Effect of Supplemental Indenture...............................................................................39 Section 9.03 Endorsement of Bonds; Preparation of New Bonds...................................................40 Section 9.04 Amendment of Particular Bonds.................................................................................40 ARTICLE X DEFEASANCE Section 10.01 Discharge of Indenture................................................................................................40 Section 10.02 Bonds Deemed To Have Been Paid............................................................................41 Section 10.03 Payment of Bonds After Discharge of Indenture........................................................41 ARTICLE XI MISCELLANEOUS Section 11.01 Benefits of Indenture Limited to Parties.....................................................................41 Section 11.02 Successor Deemed Included in all References to Predecessor...................................41 Section 11.03 Execution of Documents by Owners ..........................................................................42 Section 11.04 Waiver of Personal Liability.......................................................................................42 Section 11.05 Destruction of Bonds..................................................................................................42 Section 11.06 Funds and Accounts....................................................................................................42 Section 11.07 Article and Section Headings Gender and References...............................................43 Section 11.08 Partial Invalidity..........................................................................................................43 Section 11.09 Disqualified Bonds......................................................................................................43 Section 11.10 Money Held for Particular Bonds...............................................................................43 Section 11.11 Payment on Non-Business Days.................................................................................44 Section 11.12 California Law............................................................................................................44 Section 11.13 Notices........................................................................................................................44 Section 11.14 Notice to Rating Agencies..........................................................................................44 2017-11-21 Agenda Packet Page 343 TABLE OF CONTENTS (continued) Page iv Section 11.15 Execution in Counterparts...........................................................................................44 Signatures ................................................................................................................................... S-1 EXHIBIT A FORM OF SERIES 2017A BOND...........................................................................A-1 EXHIBIT B FORM OF SERIES 2017B BOND...........................................................................B-1 EXHIBIT C DESCRIPTION OF PROJECT.................................................................................C-1 2017-11-21 Agenda Packet Page 344 INDENTURE THIS INDENTURE (this “Indenture”), executed and entered into as of December 1, 2017, is by and among the CHULA VISTA MUNICIPAL FINANCING AUTHORITY, a joint exercise of powers authority duly organized and existing under the laws of the State of California (the “Authority”), the CITY OF CHULA VISTA, a municipal corporation and a charter city duly organized and existing under the Constitution and laws of the State of California (the “City”) and U.S. Bank National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as Trustee (the “Trustee”); WITNESSETH: WHEREAS, the Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement dated as of June 11, 2013, by and between the City and the Housing Authority of the City of Chula Vista, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the California Government Code (the “Act”), and is authorized pursuant to the Act, particularly Article 4 thereof, to issue bonds to finance and refinance public capital improvements; WHEREAS, the City and the Authority desire to finance the costs of the acquisition, construction and installation of the Project (defined herein) which consists of certain capital improvements and equipment constituting public capital improvements within the meaning of the Act and located within the City; WHEREAS, in order to finance the Project, the City will lease certain real property and the improvements located thereon (the “Leased Property”) to the Authority pursuant to a Site Lease, dated as of the date hereof, and the City will sublease the Leased Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”); WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of bonds payable from the base rental payments (the “Base Rental Payments”) to be made by the City under the Lease Agreement; WHEREAS, all rights to receive the Base Rental Payments have been assigned irrevocably and without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof, by and between the Authority and the Trustee; WHEREAS, the Authority and the City desire to provide for the issuance by the Authority of the $_________ Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”) and its $____________ Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) ( the “Series 2017B Bonds and together with the Series 2017A Bonds, the “Bonds”) in order to finance the Project; WHEREAS, the 2017 Bonds will be payable equally and ratably from the Base Rental Payments and other amounts pledged hereunder; 2017-11-21 Agenda Packet Page 345 2 WHEREAS, the Authority and the City desire to provide for the issuance of additional bonds (the “Additional Bonds”) payable from the Base Rental Payments on a parity with the 2017 Bonds (the 2017 Bonds and any such Additional Bonds being collectively referred to as the “Bonds”); WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority and the City have authorized the execution and delivery of this Indenture; and WHEREAS, the Authority and the City have determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture has been in all respects duly authorized; NOW THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of the Bonds and of any bond, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Accountable Event of Loss of New Clean Renewable Energy Bond Status”means (a) any act or any failure to act on the part of the Authority or the City, which act or failure to act is a breach of a covenant or agreement of the Authority or the City contained in the Lease Agreement, this Indenture, the Taxable Bonds Tax Certificate or the Series 2017A Bonds and which act or failure to act causes the Series 2017A Bonds to lose their status, or fail to qualify, as New Clean Renewable Energy Bonds, or (b) the making by the Authority or the City of any representation contained in the Lease Agreement, this Indenture, the Taxable Bonds Tax Certificate or the Series 2017A Bonds, which representation was untrue when made and the untruth of which representation at such time causes the Series 2017A Bonds to lose their status, or fail to qualify, as New Clean Renewable Energy Bonds. “Acquisition and Construction Fund” means the fund by that name established pursuant to Section 5.05 hereof in which there shall be established a Series 2017A Bonds Account and a Series 2017B Bonds Account. “Act” means the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code. 2017-11-21 Agenda Packet Page 346 3 “Additional Bonds” means Bonds other than the 2017 Bonds issued hereunder in accordance with the provisions of Sections 3.04 and 3.05 hereof. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Allocation”means the allocations received by the City from the IRS authorizing the issuance thereby of federally taxable New Clean Renewable Energy Bonds pursuant to Section 54C of the Code. “Assignment Agreement” means the Assignment Agreement, dated as of the date hereof, by and between the Authority and the Trustee. “Authority” means the Chula Vista Municipal Financing Authority, a joint exercise of powers authority organized under the laws of the State of California, its successors and assigns. “Authorized Authority Representative” means the President, Vice President, Treasurer, Executive Director, Chief Financial Officer or Secretary of the Authority, or any other person authorized to act on behalf of the Authority under or with respect to this Indenture. “Authorized City Representative” means the City Manager, Assistant City Manager, Deputy City Manager and Director of Finance/Treasurer of the City or any other person authorized to act on behalf of the City with respect to the Lease or this Indenture. “Authorized Denominations” means $5,000 or any integral multiple thereof. “Base Rental Payment Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Base Rental Payments” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01 of the Lease Agreement. “Beneficial Owner” means, whenever used with respect to a Book-Entry Bond, the person whose name i s recorded as the beneficial owner of such Book-Entry Bond or a portion of such Book- Entry Bond by a Participant on the records of such Participant or such person’s subrogee. “Bonds” means the 2017 Bonds and any Additional Bonds issued hereunder. “Bond Year”means each twelve (12) month period extending from December 2 in one calendar year to December 1 of the succeeding calendar year, both dates inclusive; provided that the first Bond Year with respect to the Bonds shall commence on the Closing Date and end on December 1, 2018. “Book-Entry Bonds” means the Bonds of a Series registered in the name of the nominee of DTC, or any successor securities depository for such Series of Bonds, as the registered owner thereof pursuant to the terms and provisions of Section 2.10 hereof. “Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday, (b) a day on which banking institutions in the State of California, or in any state in which the Office of the 2017-11-21 Agenda Packet Page 347 4 Trustee is located, are required or authorized by law (including executive order) to close, or (c) a day on which the New York Stock Exchange is closed. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to a Series of Book-Entry Bonds. “City” means the City of Chula Vista, a municipal corporation and a charter city duly organized and existing under the Constitution and laws of the State of California. “Closing Date” means ___________, 2017 with respect to the 2017 Bonds and, with respect to each Series of Additional Bonds,the date of delivery of such Series. “Code” means the Internal Revenue Code of 1986, as amended and regulations promulgated thereunder, as the same may be amended from time to time, and any successor provisions of law. Reference to a particular section of the Code shall be deemed to be a reference to any successor to any such section. “Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of the date hereof, executed by the City and Willdan Financial Services, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Costs of Issuance” means all the costs of issuing and delivering the Bonds, including, but not limited to, all printing and document preparation expenses in connection with this Indenture, the Lease Agreement, the Site Lease, the Assignment Agreement, the Bonds and any preliminary official statement and final official statement pertaining to the Bonds, rating agency fees, CUSIP Service Bureau charges, market study fees, legal fees and expenses of counsel with the issuance and delivery of the Bonds, the initial fees and expenses of the Trustee and its counsel, the initial fees and expenses of any bond insurer, and other fees and expenses incurred in connection with the issuance and delivery of the Bonds, to the extent such fees and expenses are approved by the City. “Costs of Issuance Fund” means the fund by that name established in accordance with Section 3.03 hereof. “Determination of Loss of New Clean Renewable Energy Bond Status”means (a) a final determination by the IRS (after the City has exhausted all administrative appeal remedies) determining that an Accountable Event of Loss of New Clean Renewable Energy Bond Status has occurred, or (b) a non-appealable holding by a court of competent jurisdiction holding that an Accountable Event of Loss of New Clean Renewable Energy Bond Status has occurred. “Direct-Payment CREB”means a New Clean Renewable Energy Bond which has been designated as a “specified tax credit bond” pursuant to Section 6431(f) of the Code and for which the issuer thereof may receive Subsidy Payment from the United States Treasury on or about each interest payment date for such bond. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors as securities depository for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.10 hereof. “Extraordinary Event”means: 2017-11-21 Agenda Packet Page 348 5 (i) the occurrence of a Determination of Loss of New Clean Renewable Energy Bond Status, or (ii) (a) the occurrence of a material adverse change under Section 54C or 6431 of the Code, (b) the publication by the IRS or the United States Treasury of any guidance with respect to such sections; or (c) any other determination by the IRS or the United States Treasury, which determination is not the result of a failure of the City to satisfy certain requirements of this Indenture or the Lease, the result of which, as reasonably determined by the Authority (and which determination shall be conclusive), is to eliminate or reduce the Subsidy Payments or reduce the Subsidy Payments expected to be received with respect to the Series 2017A Bonds by 25% or more. “Federal Securities” means (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Treasury), and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully guaranteed by the United States of America. “Indenture” means this Indenture, as originally executed and as it may be amended or supplemented from time to time by any Supplemental Indenture. “Information Services” means Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (EMMA) website; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Interest Fund” means the fund by that name established in accordance with Section 5.02 hereof in which there shall be established a Series 2017A Bonds Account and a Series 2017B Bonds Account. “Interest Payment Date” means June 1 and December 1 of each year, commencing on June 1, 2018, in the case of the 2017 Bonds. “IRS” means the Internal Revenue Service. “Lease Agreement” means the Lease Agreement, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may be from time to time amended in accordance with the provisions thereof. “Leased Property” means the property leased pursuant to the Lease Agreement. 2017-11-21 Agenda Packet Page 349 6 “Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Net Proceeds Fund” means the fund by that name established in accordance with Section 5.03 hereof. “New Clean Renewable Energy Bonds”or “CREBs”means a “new clean renewable energy bond,” as defined in Section 54C of the Code. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. “Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority or the City and which written opinion is satisfactory to the Trustee. “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.09 hereof) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 10.01 hereof; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture. “Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books. “Participant” means any entity which is recognized as a participant by DTC in the book- entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Agreement. “Permitted Investments” means any of the following to the extent then permitted by the general laws of the State of California (provided that the Trustee shall be entitled to rely upon any investment directions from the City and Authority as conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State of California): 2017-11-21 Agenda Packet Page 350 7 (1) (a) Direct obligations (other than an obligation subject to—Variation in principal repayment) of the United States of America (“United States Treasury Obligations”), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated (collectively “United States Obligations”). These include, but are not necessarily limited to: -U.S. Treasury obligations All direct or fully guaranteed obligations -Farmers Home Administration Certificates of beneficial ownership -General Services Administration Participation certificates -U.S. Maritime Administration Guaranteed Title XI financing -Small Business Administration Guaranteed participation certificates Guaranteed pool certificates -Government National Mortgage Association (GNMA) GNMA-guaranteed mortgage-backed securities GNMA-guaranteed participation certificates -U.S. Department of Housing & Urban Development Local authority bonds -Washington Metropolitan Area Transit Authority Guaranteed transit bonds (2) Federal Housing Administration debentures. (3) The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America: -Federal Home Loan Mortgage Corporation (FHLMC) Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) Senior debt obligations -Farm Credit Banks (formerly: Federal Land Banks, Federal intermediate Credit Banks and Banks for Cooperatives) Consolidated systemwide bonds and notes -Federal Home Loan Banks (FHL Banks) Consolidated debt obligations -Federal National Mortgage Association (FNMA) Senior debt obligations 2017-11-21 Agenda Packet Page 351 8 Mortgage-backed securities (excluded are stripped mortgages securities which are purchased at prices exceeding their principal amounts) -Student Loan Marketing Association (SLMA) Senior debt obligations (excluded are securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date) -Financing Corporation (FICO) Debt obligations -Resolution Funding Corporation (REFCORP) Debt obligations (4) Unsecured certificates of deposit, time deposits, and bankers’ acceptances (having maturities of not more than 180 days) of any bank, including the Trustee and its affiliates, the short-term obligations of which are rated “A-1+” or better by S&P and “P-1” or better by Moody’s. (5) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks, including the Trustee and its affiliates, which have capital and surplus of at least $5 million. (6) Commercial paper (having original maturities of not more than 270 days) rated “A-1+” by S&P and “Prime-1” by Moody’s at the time of purchase. (7) Money market funds rated “AAm” or “AAm-G” or better by S&P and “Aa2” or better by Moody’s, including such funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that: (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered; (ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds; and (iii) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee. (8) State Obligations which are one of the following: (a) Direct general obligations of any state of the United States or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated “A2” by Moody’s and “A” by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated. (b) Direct, general short-term obligations of any state agency or subdivision described in (a) above and rated “A-1+” by S&P and “Prime-1” by Moody’s. (c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (a) above and rated “AA” or better by S&P and “Aa2” or better by Moody’s. (9) Local Agency Investment Fund of the State of California. 2017-11-21 Agenda Packet Page 352 9 (10) San Diego County Investment Pool. The Trustee shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments. “Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Fund” means the fund by that name established in accordance with Section 5.02 hereof in which there shall be established a Series 2017A Bonds Account and a Series 2017B Bonds Account. “Project” means the capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City as further described in Exhibit C hereto and any other capital improvements or equipment of the City designated in accordance with Section 2.04 of the Lease Agreement as set forth in a Written Certificate of the City. “Project Costs” means, with respect to any item or portion of the Project, the contract price paid or to be paid therefor upon acquisition, construction, procurement or improvement thereof, in accordance with a purchase order or contract therefor. Project Costs include, but are not limited to, the administrative, engineering, legal, financial and other costs incurred by the City and the Authority in connection with the acquisition, construction, procurement, remodeling or improvement of the Project, all applicable sales taxes and other charges resulting from such construction, procurement, remodeling or improvement of the Project and the costs associated with making rebate calculations required by the Code. Project Costs shall not include any costs of the City or the Authority to enforce remedies hereunder or under the Lease Agreement. “Rebate Fund” means the fund by that name established in accordance with Section 5.06 hereof. “Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate for a Series, as applicable. “Record Date” means the fifteenth day of the month next preceding an Interest Payment Date, whether or not such day is a Business Day. “Redemption Fund” means the fund by that name established in accordance with Section 5.02 hereof. “Redemption Price” means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto. “Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05 hereof. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. 2017-11-21 Agenda Packet Page 353 10 “Rental Period” means the period from the Closing Date through December 20, 2018 and, thereafter, the twelve-month period commencing on December 21 of each year and ending on the following December 20 during the term of the Lease Agreement. “Representation Letter” means the Letter of Representations from the Authority to DTC, or any successor securities depository for any Series of Book-Entry Bonds, in which the Authority makes certain representations with respect to issues of its securities for deposit by DTC or such successor depository. “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Securities Depositories” means The Depository Trust Company; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. “Series” means each series of the 2017 Bonds executed, authenticated and delivered on the Closing Date and identified pursuant to this Indenture and each series of Additional Bonds issued pursuant to a Supplemental Indenture. “Series 2017A Bonds” means the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable)issued hereunder. “Series 2017B Bonds” means the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt)issued hereunder. “Site Lease” means the Site Lease, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and of the Lease Agreement. “Specified Tax Credit Bond”means any of the qualified tax credit bonds listed in Section 6431(f)(3) of the Code, including New Clean Renewable Energy Bonds, for which the issuer thereof has made an irrevocable election to have Section 6431(f) of the Code apply. “Subsidy Payment”means, with respect to the Series 2017A Bonds, the cash subsidy payments payable from the United States Treasury under Section 6431 of the Code equal to 70% of the amount of interest that would be payable on such Interest Payment Date for the Series 2017A Bonds if such interest were determined at the Tax Credit Rate. “Supplemental Indenture” means any supplemental indenture amendatory of or supplemental to this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. 2017-11-21 Agenda Packet Page 354 11 “Tax Credit Rate”means the federal tax credit rate applicable to the Series 2017A Bonds set forth in Section 2.02 hereof, as published by the United States Treasury and determined in accordance with Section 54A(b)(3) of the Code. “Tax Certificates”means, collectively, the Tax-Exempt Bonds Tax Certificate and the Taxable Bonds Tax Certificate relating to the 2017 Bonds and any tax certificate executed with respect to a series of Additional Bonds. “Taxable Bonds Tax Certificate”means that certain Tax Certificate dated the Closing Date concerning certain matters pertaining to the use and investment of proceeds of the Series 2017A Bonds executed by the Authority and the City on the date of issuance thereof, including any and all exhibits attached thereto. “Tax-Exempt Bonds Tax Certificate”means that certain Tax Certificate dated the Closing Date concerning certain matters pertaining to the use and investment of proceeds of the Series 2017B Bonds, dated the date of issuance of the Series 2017B Bonds, executed by the Authority and the City, on the date of issuance thereof, including any and all exhibits attached thereto. “Treasury Rate” means, with respect to any redemption date for a particular Series 2017A Bond, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) (the “Statistical Release”) that has become publicly available at least two Business Days prior to the redemption date (excluding inflation-indexed securities) (or, if the Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the period from the redemption date to the maturity date of the Series 2017A Bonds to be redeemed; provided, however that if the period from the redemption date to the maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. “Trustee” means U.S. Bank National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, or any successor thereto as Trustee hereunder, appointed as provided herein. “2017 Bonds” means the Series 2017A Bonds and the Series 2017B Bonds issued hereunder. “United States Treasury” means the Department of the Treasury of the United States of America. “Written Certificate of the Authority” and “Written Request of the Authority” mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Authority Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. “Written Certificate of the City” and “Written Request of the City” mean, respectively, a written certificate or written request signed in the name of the City by an Authorized City Representative. Any such certificate or request may, but need, not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. 2017-11-21 Agenda Packet Page 355 12 Section 1.02 Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority or the City shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. ARTICLE II THE BONDS Section 2.01 Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture and applicable laws of the State of California for the purpose of financing the Project. The Bonds may consist of one or more Series of Bonds of varying denominations, dates, maturities, interest rates and other provisions, subject to the provisions and conditions contained herein. Section 2.02 Terms of 2017 Bonds. (a) The Series 2017A Bonds shall be designated the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable)” and the Series 2017B Bonds Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) shall be designated the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt)”. Each Series of Additional Bonds shall bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. (b) The Series 2017A Bonds shall be issued in fully registered form without coupons in Authorized Denominations. The Series 2017A Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $__________ shall mature on December 1 of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum as follows: Maturity Date (December 1) Principal Amount Interest Rate 2017-11-21 Agenda Packet Page 356 13 With respect to the Series 2017A Bonds, the Issuer expects to receive, on or about each Interest Payment Date, Subsidy Payments from the United States Treasury equal to the 70% of the amount of interest that would have been payable on such Interest Payment Date if such interest were determined at the applicable Tax Credit Rate set forth above. Prior to each such Interest Payment Date for the Series 2017A Bonds, the Authority will submit or cause to be submitted to the United States Treasury a Subsidy Request in accordance with applicable Federal regulations. Upon receipt of such Subsidy Payments, the Issuer shall deposit or cause to be deposited any such Subsidy Payments into the Series 2017A Interest Payment Sub-Account and applied towards the payment of interest on the Series 2017A Bonds. (c) The Series 2017B Bonds shall be issued in fully registered form without coupons in Authorized Denominations. The Series 2017B Bonds shall be dated as of the Closing Date, shall be issued in the aggregate principal amount of $__________ shall mature on December 1 of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum as follows: Maturity Date (December 1) Principal Amount Interest Rate (d) Interest on the 2017 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a 2017 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a 2017 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the dated date thereof, or (iii) interest on any 2017 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid in lawful money of the United States on each Interest Payment Date to the Persons in whose names the ownership of the 2017 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the 2017 Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; provided, however, that the Owner of $1,000,000 or more of Bonds may request payment by wire transfer to an account within the United States provided to the Trustee on or before the Record Date. 2017-11-21 Agenda Packet Page 357 14 (e) The principal and premium, if any, of the 2017 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. (f) The 2017 Bonds shall be subject to redemption as provided in Article IV. Section 2.03 Form of 2017 Bonds. The Series 2017A Bonds shall be in substantially the form set forth in Exhibit A hereto and the Series 2017B Bonds shall be in substantially the form set forth in Exhibit B hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. Section 2.04 Transfer and Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred upon the Registration Books by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series of other authorized denominations. The Trustee shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption. Section 2.05 Registration Books. The Trustee will keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the City; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as hereinbefore provided. Section 2.06 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the facsimile signature of an Authorized Officer of the Authority attested by the manual or facsimile signature of the Secretary of the Authority. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the Authority who shall have signed or attested any of the Bonds shall cease to be such officers of the Authority before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though those who signed and attested the same had continued to be such officers of the Authority, and also any Bonds may be signed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority. 2017-11-21 Agenda Packet Page 358 15 Section 2.07 Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.08 Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such authorized denominations as may be determined by the Authority, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds of a Series it will execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series, may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of such Series in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder. Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or in accordance with the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence and indemnity satisfactory to the Trustee shall be given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Authority may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture. Section 2.10 Book-Entry Bonds. (a) Prior to the issuance of a Series of Bonds, the Authority may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds and, in such event, the Bonds of such Series for each maturity shall be in the form of a separate single fully registered Bond (which may be typewritten). The 2017 Bonds shall initially be issued as Book-Entry Bonds. 2017-11-21 Agenda Packet Page 359 16 Except as provided in subsection (c) of this Section, the registered Owner of all of the Book-Entry Bonds shall be Cede & Co., as nominee of DTC. Notwithstanding anything to the contrary contained in this Indenture, payment of interest with respect to any Book-Entry Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same- day funds to the account of Cede & Co. on the Interest Payment Date at the address indicated on the Record Date for Cede & Co. in the Registration Books or as otherwise provided in the Representation Letter. (b) The Trustee and the Authority may treat DTC (or its nominee) as the sole and exclusive Owner of Book-Entry Bonds registered in its name for the purposes of payment of the principal, premium, if any, or interest with respect to Book-Entry Bonds, selecting Book-Entry Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, registering the transfer of Book-Entry Bonds, obtaining any consent or other action to be taken by Owners of Book-Entry Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority shall be affected by any notice to the contrary. Neither the Trustee nor the Authority shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in Book-Entry Bonds under or through DTC or any Participant, or any other person which is not shown on the Registration Books as being an Owner, with respect to the accuracy of any records maintained by DTC or any Participant, the payment by DTC or any Participant of any amount in respect of the principal, premium, if any, or interest with respect to Book-Entry Bonds, any notice which is permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of Book-Entry Bonds, or any consent given or other action taken by DTC as Owner of Book-Entry Bonds. The Trustee shall pay all principal, premium, if any and interest with respect to Book-Entry Bonds, only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the Authority’s obligations with respect to the principal, premium, if any, and interest with respect to the Book-Entry Bonds to the extent of the sum or sums so paid. Except under the conditions of subsection (c) of this Section, no person other than DTC shall receive an executed Book-Entry Bond for each separate stated maturity. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to record dates, the term “Cede & Co.” in this Indenture shall refer to such new nominee of DTC. (c) In the event (i) DTC, including any successor as securities depository for a Series of Bonds, determines not to continue to act as securities depository for such Series of Bonds, or (ii) the Authority determines that the incumbent securities depository shall no longer so act, and delivers a written certificate to the Trustee to that effect, then the Authority will discontinue the book-entry system with the incumbent securities depository for such Series of Bonds. If the Authority determines to replace the incumbent securities depository for such Series of Bonds with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate fully registered Bond of such Series for the aggregate outstanding principal amount of Bonds of such Series of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Authority, the Trustee and the successor securities depository for the Bonds of such Series as are not inconsistent with the terms of this Indenture. If the Authority fails to identify another qualified successor securities depository for such Series of Bonds to replace the incumbent securities depository, then the Bonds of such Series shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be 2017-11-21 Agenda Packet Page 360 17 registered in whatever name or names the incumbent securities depository for such Series of Bonds, or its nominee, shall designate. In such event the Authority shall execute, and deliver to the Trustee, a sufficient quantity of Bonds of such Series to carry out the transfers and exchanges provided in Sections 2.04, 2.08 and 2.09 hereof. All such Bonds of such Series shall be in fully registered form in Authorized Denominations. (d) Notwithstanding any other provision of this Indenture to the contrary, so long as any Book-Entry Bond is registered in the name of DTC, or its nominee, all payments with respect to the principal, premium, if any, and interest with respect to such Book-Entry Bond and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Representation Letter. (e) In connection with any notice or other communication to be provided to Owners of Book-Entry Bonds pursuant to this Indenture by the Authority, the City or the Trustee with respect to any consent or other action to be taken by Owners, the Authority, the City or the Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS Section 3.01 Issuance of 2017 Bonds. The Authority may, at any time, execute the 2017 Bonds for issuance hereunder and deliver the same to the Trustee. The Trustee shall authenticate the 2017 Bonds and deliver the 2017 Bonds to the original purchaser thereof upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor. Section 3.02 Application of Proceeds of the 2017 Bonds. On the Closing Date, the net proceeds of the sale of the 2017 Bonds received by the Trustee, $__________, shall be deposited by the Trustee as follows: (a) The Trustee shall deposit the amount of $___________ from proceeds of the Series 2017A Bonds and $_________ from proceeds of the Series 2017B Bonds in the Costs of Issuance Fund. (b) The Trustee shall deposit the amount of $___________ from proceeds of the Series 2017A Bonds in the Series 2017A Account of the Acquisition and Construction Fund and $_________ from proceeds of the Series 2017B Bonds in the Series 2017B Account of the Acquisition and Construction Fund. The Trustee may establish a temporary fund or account in its records to facilitate and record such deposits and transfer. Section 3.03 Costs of Issuance Fund. The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund.” On the Closing Date, there shall be deposited in the Costs of Issuance Fund the amount specified in Section 3.02(a) hereof. There shall be additionally deposited in the Cost of Issuance Fund the portion, if any, of the proceeds of the sale of any 2017-11-21 Agenda Packet Page 361 18 Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Authority stating (a) the Person to whom payment is to be made, (b) the amount to be paid, (c) the purpose for which the obligation was incurred, (d) that such payment is a proper charge against the Costs of Issuance Fund, and (e) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder. Each such Written Request of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On December 1, 2017, all amounts, if any, remaining in the Costs of Issuance Fund shall be withdrawn therefrom by the Trustee and transferred to the Interest Fund and the Costs of Issuance Fund shall be closed. Section 3.04 Conditions for the Issuance of Additional Bonds. The Authority may at any time issue one or more Series of Additional Bonds (in addition to the 2017 Bonds) payable from Base Rental Payments as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds: (a) The issuance of such Additional Bonds shall have been authorized under and pursuant hereto and shall have been provided for by a Supplemental Indenture which shall specify the following: (i) The application of the proceeds of the sale of such Additional Bonds; (ii) The principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds; (iii) The date, the maturity date or dates, the interest payment dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however, that (i) the serial Bonds of such Series of Additional Bonds shall be payable as to principal annually on December 1 of each year in which principal falls due, and any term Bonds of such Series of Additional Bonds shall have annual mandatory sinking fund redemptions on December 20, (ii) the Additional Bonds shall be payable as to interest semiannually on December 1 and June 1 of each year, commencing on the June 1 and December 1 specified in the Supplemental Indenture, (iii) all Additional Bonds of a Series of like maturity shall be identical in all respects, except as to number or denomination, and (iv) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates; (iv) The redemption premiums and terms, if any, for such Additional Bonds; (v) The form of such Additional Bonds; 2017-11-21 Agenda Packet Page 362 19 (vi) If a separate reserve account is to be maintained for such Series of Additional Bonds, the applicable reserve requirement and the amount, if any, to be deposited from the proceeds of sale of such Additional Bonds in a separate account to be held as separate security for such Series of Additional Bonds; (vii) Designate accounts in the Interest Fund, the Principal Fund, the Redemption Fund and the Rebate Fund (if any) to be applicable to such Additional Bonds; and (viii) Such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Site Lease required to be observed or performed by it; (c) The City shall be in compliance with all agreements, conditions, covenants and terms contained herein, in the Lease Agreement and in the Site Lease required to be observed or performed by it; and (d) The Site Lease shall have been amended, to the extent necessary, and the Lease Agreement shall have been amended so as to increase the Base Rental Payments payable by the City thereunder by an aggregate amount equal to the principal of and interest on such Additional Bonds, payable at such times and in such manner as may be necessary to provide for the payment of the principal of and interest on such Additional Bonds; provided, however, that no such amendment shall be made such that the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of such amendment, plus Additional Rental Payments, in any Rental Period shall be in excess of the annual fair rental value of the Leased Property after taking into account the use of the proceeds of any Additional Bonds issued in connection therewith (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City). Nothing contained herein shall limit the issuance of any bonds or other obligations payable from Base Rental Payments if, after the issuance and delivery of such certificates or other obligations, none of the Bonds theretofore issued hereunder will be Outstanding. Section 3.05 Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds in accordance with the Act, such Additional Bonds shall be executed by the Authority for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following: (a) Certified copies of the Supplemental Indenture authorizing the issuance of such Additional Bonds, the amendment to the Lease Agreement required by Section 3.04 hereof and the amendment to the Site Lease, if any, required by Section 3.04 hereof, together with satisfactory evidence that such amendment to the Lease Agreement and such amendment to the Site Lease, if any, have been duly recorded; (b) A Written Request of the Authority as to the delivery of such Additional Bonds; 2017-11-21 Agenda Packet Page 363 20 (c) An opinion of Bond Counsel substantially to the effect that (i) the Indenture (including all Supplemental Indentures), the Lease Agreement (including the amendment thereto required by Section 3.04 hereof) and the Site Lease (including any amendment thereto required by Section 3.04 hereof) have been duly authorized, executed and delivered by, and constitute the valid and binding obligations of, the Authority and the City, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California), (ii) such Additional Bonds constitute valid and binding special obligations of the Authority payable solely from Base Rental Payments and other amounts pledged hereunder as provided herein and are enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State of California), and (iii) the issuance of such Additional Bonds, in and of itself, will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any tax-exempt Bonds Outstanding prior to the issuance of such Additional Bonds; (d) a Written Certificate of the Authority that the requirements of Section 3.04 hereof have been met; (e) a Written Certificate of the City that the requirements of Section 3.04 hereof and Sections 5.01 and 5.02 of the Lease Agreement have been met, and a Written Certificate of the City as to the fair rental value of the Leased Property, after giving effect to the execution and delivery of the Additional Bonds, and to the use of proceeds received therefrom; and (f) Such further documents as are required by the provisions hereof or by the provisions of the Supplemental Indenture authorizing the issuance of such Additional Bonds. Section 3.06 Additional Bonds. So long as any of the Bonds remain Outstanding, the Authority shall not issue any Additional Bonds or obligations payable from the Base Rental Payments, except pursuant to Sections 3.04 and 3.05 hereof. ARTICLE IV REDEMPTION OF BONDS Section 4.01 Redemption of 2017 Bonds. (a) Extraordinary Redemption. The 2017 Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds received with respect to all or a portion of the Leased Property, deposited by the Trustee in the Redemption Fund pursuant to Sections 5.03 and 5.04 hereof, at a Redemption Price equal to the principal amount of the 2017 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. 2017-11-21 Agenda Packet Page 364 21 (b) Optional Redemption. (i) The Series 2017A Bonds maturing on and after December 1, 20__ are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 20__, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. (ii) The Series 2017B Bonds maturing on and after December 1, 20__ are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 20__, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. (c) Special Optional Redemption. Upon the occurrence of an Extraordinary Event, the Series 2017A Bonds shall be subject to redemption, at the option of the Authority, prior to their maturity date, in whole or in part, on any date designated by the Authority prior to December 1, 20__, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. (d) Mandatory Sinking Fund Redemption. (i) The Series 2017A Bonds maturing on December 1, 20__ are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each December 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Term Bonds Maturing December 1, 20__ Date (December 1)Principal Amount _____________ (1)Maturity The Series 2017B Bonds maturing on December 1, 20__ are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each June 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Term Bonds Maturing December 1, 20__ Date (December 1)Principal Amount _____________ 2017-11-21 Agenda Packet Page 365 22 (1)Final Maturity (ii) At the option of the Authority, to be exercised by delivery of a written certificate to the Trustee at any time not later than sixty (60) days prior to the date of any scheduled mandatory sinking fund redemption pursuant to this Section 4.01, the Authority may (A) deliver to the Trustee for cancellation Bonds or portions thereof (in Authorized Denominations) of the applicable maturity in any aggregate principal amount desired by the Authority or (B) specify a principal amount of such Bonds or portions thereof (in Authorized Denominations) of the applicable maturity which prior to said date have been purchased or redeemed (otherwise than pursuant to this Section 4.01(d)) and cancelled by the Trustee at the request of the Authority and not theretofore applied as a credit against any scheduled mandatory sinking fund redemption payment required under this Section 4.01(d). Each such Bond or portion thereof so delivered or previously redeemed shall be credited by the Trustee at 100% of the principal amount thereof against the obligation of the Authority on the scheduled mandatory redemption date or dates for such Bonds of the applicable maturity specified by the Authority in such written certificate; provided that any Bonds purchased with moneys in the Principal Payment Accounts shall be credited first against the next scheduled mandatory sinking fund payment date of the applicable maturity. The excess funds, if any, resulting from the Authority paying a price less than par for such Bonds shall be transferred to Interest Accounts. In the event the Authority shall avail itself of the provisions of clause (A) of the first sentence of this paragraph, the certificate required by the first sentence of this paragraph shall be accompanied by the Bonds or portions thereof to be cancelled. As used in this Indenture mandatory sinking fund redemption date includes a Term Bond Maturity Date. (iii) Amounts on deposit in the Principal Payment Accounts which were deposited as a result of a prepayment under the Lease Agreement shall be held or expended in accordance with subsection (b) of this Section 4.01. (e) Extraordinary Mandatory Redemption. The Series 2017A Bonds are subject to extraordinary mandatory redemption, in whole or in part, within 90 days following the third anniversary of the Closing Date of the Series 2017A Bonds, or 90 days following the date of termination of any period of time negotiated with the IRS that extends the date by which the proceeds of the sale of the Series 2017A Bonds must be expended, as evidenced in writing from the IRS, in authorized denominations, at a redemption price equal to the principal amount of the Series 2017A Bonds called for redemption, in an amount equal to the unexpended proceeds of the sale of the Series 2017A Bonds held by the Authority, but only to the extent that the Authority fails to expend all of the proceeds of the Series 2017A Bonds for certain qualified purposes as required by Section 54A(d)(2)(B)(i) of the Code within three years of issuance thereof. (f) Rescheduling of Mandatory Sinking Fund Redemptions Following Each Redemption. Whenever Bonds subject to mandatory sinking fund redemption pursuant to subsection (d) of this Section 4.01 are redeemed pursuant to subsections (a), (b) or (c) of this Section 4.01, the following adjustments shall be made to the mandatory sinking fund redemptions of such Bonds of subsection (d) of this Section 4.01, effective as of the date of the related redemption: The total amount of all sinking fund redemptions of such Bonds shall be reduced by the aggregate principal amount of Bonds so redeemed, to be allocated among the applicable maturities and sinking fund 2017-11-21 Agenda Packet Page 366 23 requirements in accordance with the redeemed principal amounts, all in accordance with directions to be delivered to the Trustee pursuant to subsection (g) of this Section 4.01. (g) Redemption Instructions. The Authority shall cause to be prepared and delivered to the Trustee no later than 10 Business Days before the date on which notice of each redemption of Bonds hereunder is required to be mailed by the Trustee (other than an extraordinary redemption pursuant to Section 4.01(a) or a mandatory sinking fund redemption pursuant to Section 4.01(d) hereof) a Written Certificate containing redemption instructions with respect to such redemption which shall set forth (i) the principal amount of Bonds of each maturity to be redeemed pursuant to the terms of this Indenture, (ii) the information necessary to make the adjustments to the mandatory sinking fund payments required by subsection (f) of this Section 4.01 by identifying which maturity of Bonds, and which mandatory sinking fund payment within such maturity, will be reduced as a result of the mandatory redemption and the amount of any such reduction, and (iii) a Certificate which takes into account such redemption, its related effect on scheduled Base Rental Payments under the Lease Agreement and stating that the remaining Base Rental Payments will be sufficient to pay the principal of and interest on the remaining Outstanding Bonds. Section 4.02 Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and to the Securities Depositories and to one or more Information Services, at least 30 but not more than 60 days prior to the date fixed for redemption; provided, however, so long as all the Bonds of a Series are Book-Entry Bonds, such notice shall be provided to DTC and its nominee in the manner provided by DTC in its procedures. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, the Bond numbers and the maturity or maturities (except in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Such notice of redemption may also state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds. Neither the failure to receive any notice so mailed or given, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. For any Bonds subject to optional redemption, the notice may state that such optional redemption shall be conditioned upon the receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys sufficient to pay the principal of, premium if any, and interest on the Bonds to be redeemed and upon other conditions set forth therein and that, if such money shall not have been so received and such other conditions shall not have been satisfied, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds. If any condition stated in the redemption notice for an optional redemption shall not have been satisfied on or prior to the redemption date: (i) the redemption notice shall be of no force and effect, (ii) the Authority shall not be required to redeem such Bonds, (iii) the redemption shall not be made, and (iv) the Trustee shall within a reasonable time thereafter, give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled. None of the Authority, the City or the Trustee shall have any liability to the Owners or any other party related to or arising from a cancellation of an optional redemption. 2017-11-21 Agenda Packet Page 367 24 Section 4.03 Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any redemption of Bonds of a Series pursuant to Section 4.01(b),(c) and (e), among maturities of Bonds of such Series as directed in a Written Certificate of the Authority, (b) with respect to any redemption pursuant to Section 4.01(a) hereof and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed. Section 4.04 Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in authorized denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered. Section 4.05 Effect of Notice of Redemption. Notice having been given in accordance with Section 4.02, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date. If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been sent as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed. ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS Section 5.01 Pledge; Special Obligations. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds and investment earnings) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund are hereby pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act. Said pledge shall constitute a first lien on such assets. 2017-11-21 Agenda Packet Page 368 25 All obligations of the Authority under this Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor hereunder; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other amounts pledged therefor hereunder. Neither the faith and credit nor any taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. Section 5.02 Flow of Funds. (a) The Trustee shall establish and maintain separate funds designated the “Base Rental Payment Fund,” the “Interest Fund,” the “Principal Fund” and the “Redemption Fund” and within each of such funds shall establish a Series 2017A Account and a Series 2017B Account. If Additional Bonds are issued, the Trustee shall establish accounts within each fund for each Series of Additional Bonds. All Base Rental Payments shall be paid directly by the City to the Trustee, and if received by the Authority at any time shall be transferred by the Authority with the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee shall be deposited by the Trustee in the Base Rental Payment Fund. All Subsidy Payments received by the Trustee shall be deposited in the Series 2017B Account of the Interest Fund. (b) The Trustee shall transfer the amounts on deposit in the Base Rental Payment Fund, at the times and in the manner hereinafter provided, to the following respective funds: (1) Interest Fund. On the Business Day immediately preceding each Interest Payment Date, the Trustee shall transfer from the Base Rental Payment Fund to the Interest Fund and each Account therein, the amount, if any, necessary to cause the amount on deposit in each Account to be equal to the interest due on the Series of Bonds for which such Account was created on such Interest Payment Date. Moneys in each Account of the Interest Fund shall be used by the Trustee to pay interest due on the Series of Bonds for which such Account was created on each Interest Payment Date. (2) Principal Fund. On the Business Day immediately preceding each December 1, commencing December 1, 2018, the Trustee shall transfer from the Base Rental Payment Fund to the Principal Fund and each Account therein, the amount, if any, necessary to cause the amount on deposit in each Account to be equal to the principal amount due on such December 1 on the Series of Bonds for which such Account was created either as a result of the maturity thereof or mandatory sinking fund redemption payments required to be made with respect thereto. Moneys in each Account of the Principal Fund shall be used by the Trustee for the purpose of paying the principal due on the Series of Bonds for which such Account was created at their maturity dates or upon earlier mandatory sinking fund redemption. (3) Redemption Fund. The Trustee, on the redemption date specified in the Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment is paid to the Trustee pursuant to the Lease Agreement, shall deposit in the Account or Accounts of the Redemption Fund that amount of moneys representing the portion of the Base Rental Payments designated as prepaid Base Rental Payments to be applied to the redemption of one or more Series of the Bonds. Additionally, the Trustee shall deposit in each Account of the Redemption Fund any amounts required to be deposited therein pursuant to Section 5.03 or Section 5.04 hereof. 2017-11-21 Agenda Packet Page 369 26 Moneys in the Redemption Fund shall be used by the Trustee for the purpose of paying the principal of and interest and premium, if any, on 2017 Bonds redeemed pursuant to the provisions of of Section 4.01 hereof, other than Section 4.01(d), and Additional Bonds redeemed pursuant to the provisions of the Supplemental Indenture, other than a mandatory sinking fund redemption, pursuant to which such Additional Bonds are issued. Section 5.03 Application of Net Proceeds and Rental Interruption Insurance. If the Leased Property or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Property or the affected portion thereof in accordance with the provisions hereof. The Net Proceeds, including the proceeds of any self-insurance, received on account of any damage or destruction of the Leased Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in the “Net Proceeds Fund” which the Trustee shall establish upon receipt of any Net Proceeds and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Leased Property or the affected portion thereof upon receipt of a Written Request of the City, together with invoices therefor. Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement. Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Leased Property or the portions of the Leased Property which were damaged or destroyed. If the City does intend to replace or repair the Leased Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the special account. In the event of any damage to or destruction of the Leased Property caused by one of the perils covered by the insurance required by Section 5.01(c) of the Lease Agreement which would result in an abatement of rental payments or any portion thereof pursuant to Section 3.06 thereof, then the City shall direct the Trustee, in writing, to apply the Net Proceeds, together with other legally available funds that the City elects to contribute, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Leased Property; provided, however, that the City shall not be required to repair or replace any portion of the Leased Property pursuant to this Section 5.03 if such Net Proceeds, together with any other amounts held under this Indenture and any other legally available funds made available by the City at its election, are sufficient to redeem (i) all of the Outstanding Bonds, or (ii) a portion of the Outstanding Bonds under Section 4.01(a) such that, as set forth in a Written Certificate of the City, the resulting Base Rental Payments in any Rental Period following such partial redemption are sufficient to pay in such Rental Period the principal of and interest on all Bonds to remain Outstanding immediately after such partial redemption. If the City is not required to repair or replace the Leased Property, or the affected portion thereof, pursuant to the foregoing and elects to effect a redemption of Outstanding Bonds, in a Written Certificate of the City it shall state the amount to be applied to redeem Outstanding Bonds and the redemption date and such amount shall be transferred to the Redemption Fund. If the City is not required to replace or repair the Leased Property, or the affected portion thereof, or to use such amounts to redeem Bonds, in each case as set forth in this Section 5.03, then such proceeds, or the portion thereof remaining 2017-11-21 Agenda Packet Page 370 27 after the application pursuant to the foregoing, shall be paid to the City to be used for any lawful purpose, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Leased Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Leased Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds. Proceeds of rental interruption insurance shall be deposited to the Base Rental Payment Fund and be applied to the payment of the principal and interest due on the Bonds to the extent of any abatement of Base Rental Payments pursuant to the Lease Agreement, and otherwise as directed in writing by the City. The proceeds of any award in eminent domain received in respect of the Leased Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to subsection (a) of Section 4.01 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. Section 5.04 Title Insurance. Net Proceeds of any policy of title insurance received by the Trustee in respect of the Leased Property shall be applied and disbursed by the Trustee as follows: (a) if the City determines that the title defect giving rise to such Net Proceeds has not substantially interfered with its use and occupancy of the Leased Property and will not result in an abatement of Rental Payments payable by the City under the Lease Agreement, upon written direction of the City such proceeds shall be remitted to the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such Net Proceeds has substantially interfered with its use and occupancy of the Leased Property and will result in an abatement of Rental Payments payable by the City under the Lease Agreement, then upon written direction of the City the Trustee shall deposit such proceeds in the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in subsection (a) of Section 4.01 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. Section 5.05 Acquisition and Construction Fund. The Trustee shall establish and maintain a separate fund designated the “Acquisition and Construction Fund” and shall establish a Series 2017A Account and a Series 2017B Account therein. On the Closing Date there shall be deposited in each Account of the Acquisition and Construction Fund the amounts specified in Section 3.02(b) hereof. The moneys in the Acquisition and Construction Fund shall be used and withdrawn by the Trustee from time to time to pay the Project Costs; provided, however, all amounts in the Series 2017A Account shall be expended before any amounts are disbursed from the Series 2017B Account. Funds shall be disbursed in accordance with the foregoing upon submission of a Written Request of the City stating (i) the payee to whom payment is to be made, (ii) the amount to be paid and the Account within the Acquisition and Construction Fund from which it is to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment constitutes a proper charge against the Acquisition and Construction Fund, and (v) that such amounts have not been the 2017-11-21 Agenda Packet Page 371 28 subject of a prior disbursement from the Acquisition and Construction Fund, in each case together with a statement or invoice for each amount requested thereunder. The Trustee shall rely conclusively on such Written Request of the City and shall have no duty to investigate or verify any statements made therein. Upon the later of the third anniversary of the Closing Date of the Series 2017A Bonds, or the date of termination of any period of time negotiated with the IRS that extends the date by which the proceeds of the sale of the Series 2017A Bonds must be expended, as evidenced in writing from the IRS, all amounts in the Series 2017A Bonds Account of the Acquisition and Construction Fund shall be transferred to the Redemption Fund and be applied to the redemption of Series 2017A Bonds pursuant to Section 4.01(e) hereof. Upon the filing of a Written Certificate of the City stating that the Project has been completed and all costs relating to the Project have been paid, the Trustee shall transfer the amount, if any, remaining in the Acquisition and Construction Fund to the Base Rental Payment Fund to be used for the purposes thereof and the Acquisition and Construction Fund shall be closed. Section 5.06 Rebate Fund. (a) The Trustee shall establish and maintain a special fund designated the “Rebate Fund” and shall establish a Series 2017A Account and a Series 2017B Account therein. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificates, as specified in a Written Request of the Authority. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of a Series the Bonds pursuant to Article X hereof or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund for such Series shall be governed exclusively by this Section and by the Tax Certificate for such Series (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to enforce compliance by the Authority with the terms of the Tax Certificates. The Trustee may conclusively rely upon the Authority’s determinations, calculations and certifications required by the Tax Certificates. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Authority’s calculations. (b) Any funds remaining in the Account of the Rebate Fund for a Series of Bonds after payment in full of all of the Bonds of such Series and after payment of any amounts described in this Section, shall be withdrawn by the Trustee and remitted to the Authority. Section 5.07 Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture and held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in writing by the Authority. Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture. Absent timely written direction from the Authority, the Trustee shall hold any funds held by it in Permitted Investments of the type described in paragraph (7) of such definition. 2017-11-21 Agenda Packet Page 372 29 All interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture shall be retained in such fund or account. Permitted Investments acquired as an investment of moneys in any fund established under this Indenture shall be credited to such fund. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued by the Trustee at the fair market value thereof, such valuation to be performed not less frequently than semiannually on or before each April 15 and October 15. In determining fair market value, the Trustee may use and rely conclusively on any generally recognized securities pricing service available to it (including brokers and dealers in securities). The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Authority, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Trustee may make any investments hereunder through the bond or investment department or trust investment department of the entity acting as Trustee hereunder, or those of such entity’s parent or any affiliate, and such entity, or its parent or affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The Trustee, or any of its affiliates, may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder and such entity, or its affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services. The Authority and the City acknowledge that, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority and the City the right to receive brokerage confirmations of security transactions as they occur, at no additional cost, the Authority and the City specifically waive receipt of such confirmations to the extent permitted by law. ARTICLE VI COVENANTS Section 6.01 Compliance with Agreements. The Trustee will not authenticate or deliver any Bonds in any manner other than in accordance with the provisions hereof, and the Authority and the City will not suffer or permit any default by them to occur hereunder, but will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms hereof required to be complied with, kept, observed and performed by them. Section 6.02 Compliance with Site Lease and Lease Agreement. The Authority and the City will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Site Lease and the Lease Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee, will enforce the Site Lease and the Lease Agreement against the other party thereto in accordance with their respective terms. 2017-11-21 Agenda Packet Page 373 30 Section 6.03 Observance of Laws and Regulations. The Authority, the City and the Trustee will faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State of California, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired. Section 6.04 Other Liens. The City will keep the Leased Property and all parts thereof free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and, except as to Permitted Encumbrances, other liens of whatever nature or character, other than as expressly permitted by the Lease Agreement, and free from any claim or liability which materially impairs the City in conducting its business or utilizing the Leased Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may, but is in no event obligated to, defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee shall not in any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its liability hereunder and to perform such agreements and covenants. So long as any Bonds are Outstanding, none of the Trustee, the Authority or the City shall create or suffer to be created any pledge of or lien the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof. The Authority, the City and the Trustee shall not encumber the Leased Property other than in accordance with the Site Lease, the Lease Agreement, the Indenture and the Assignment Agreement. Section 6.05 Prosecution and Defense of Suits. The City will promptly, upon request of the T rustee (which request the Trustee is not required to make), take such action from time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Leased Property or any part thereof, whether now existing or hereafter developing, will prosecute all actions, suits or other proceedings as may be appropriate for such purpose and will indemnify and save the Trustee harmless from all cost, damage, expense or loss, including attorneys’ fees and expenses, which it or the Owners may incur by reason of any such cloud, defect, action, suit or other proceeding. Section 6.06 Accounting Records and Statements. The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions made by the Trustee relating to the receipt, deposit and disbursement of the Base Rental Payments, and such accounting records shall be available for inspection by the Authority and the City at reasonable hours and under reasonable conditions upon reasonable prior notice. Section 6.07 Recordation and Filing. The City will record, or cause to be recorded, with the San Diego County Recorder, the Lease Agreement, the Site Lease and the Assignment Agreement, or memoranda thereof. 2017-11-21 Agenda Packet Page 374 31 Section 6.08 Tax Covenants. (a) Neither the Authority nor the City will take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on any tax-exempt Bonds under Section 103 of the Code, or would cause the Series 2017A Bonds not to be New Clean Renewable Energy Bonds under Section 54C of the Code or Specified Tax Credit Bonds under Section 6431(f)(3) of the Code. Without limiting the generality of the foregoing, the Authority and the City will comply with the requirements of the Tax Certificates, which are incorporated herein as if fully set forth herein. This covenant as it applies to a Series of Bonds shall survive payment in full or defeasance of such Series of the Bonds. (b) In the event that at any time the Authority is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Authority shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (c) Notwithstanding any provisions of this Section, if the Authority shall provide to the Trustee an Opinion of Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required (i) to maintain the exclusion from federal income tax of interest on any Bonds issued as tax-exempt Bonds under Section 103 of the Code, or (ii) in order for the Series 2017A Bonds to be New Clean Renewable Energy Bonds under Section 54C of the Code and Specified Tax Credit Bonds under Section 6431(f)(3) of the Code, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and the Tax Certificates, and the covenants hereunder shall be deemed to be modified to that extent. Section 6.09 Continuing Disclosure. The City will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not constitute an event of default hereunder; provided, however, that the Trustee may (and, at the written direction of any Participating Underwriter or the holders of at least 25% of the aggregate principal amount of Outstanding 2017 Bonds, and upon being indemnified to its reasonable satisfaction therefor, shall) or any holder or Beneficial Owner of the 2017 Bonds may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. Section 6.10 Further Assurances. Whenever and so often as requested to do so by the Trustee, the Authority and the City will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon it hereby or by the Assignment Agreement, the Site Lease or the Lease Agreement. 2017-11-21 Agenda Packet Page 375 32 ARTICLE VII DEFAULT AND LIMITATIONS OF LIABILITY Section 7.01 Action on Default. If an event of default (within the meaning of Article VI of the Lease Agreement) shall happen, then such event of default shall constitute an event of default hereunder. The Trustee shall give notice, as assignee of the Authority, of an event of default under the Lease Agreement to the City. In each and every case during the continuance of an event of default, the Trustee may, and upon being indemnified to its reasonable satisfaction therefor, shall, upon notice in writing to the City and the Authority, exercise any of the remedies granted to the Authority under the Lease Agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof. Section 7.02 Other Remedies of the Trustee. Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right: (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or the City or any member, director, officer or employee thereof, and to compel the Authority or the City or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or (c) by suit in equity upon the happening of any event of default hereunder to require the Authority and the City to account as the trustee of an express trust. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected. Section 7.03 Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often the Trustee shall deem expedient. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then subject to any adverse determination, the 2017-11-21 Agenda Packet Page 376 33 Trustee, such Owner, the Authority and the City shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.04 Remedies Not Exclusive. Subject to the provisions of Section 7.01 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 7.05 No Liability by the Authority to the Owners. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Owners with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of the other agreements and covenants required to be performed by it contained in the Lease Agreement or herein, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.06 No Liability by the City to the Owners. Except for the payment when due of the Base Rental Payments and the performance of the other agreements and covenants required to be performed by it contained in the Lease Agreement, the Site Lease or herein, the City shall not have any obligation or liability to the Owners with respect to the Trust Indenture or the preparation, execution, delivery or transfer of the Bonds or the disbursement of the Base Rental Payments by the Trustee to the Owners, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein. Section 7.07 No Liability of the Trustee to the Owners. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owners with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the Authority or the City of the other agreements and covenants required to be performed by them contained in the Lease Agreement, the Site Lease or herein. Section 7.08 Application of Amounts After Default. All payments received by the Trustee with respect to the rental of the Leased Property after a default by the City pursuant to Article VI of the Lease Agreement (including, without limitation, any proceeds received in connection with the sale, assignment or sublease of the Authority’s right, title and interest in the Site Lease), and all damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under Article VI of the Lease Agreement, shall be deposited into the Base Rental Payment Fund and as soon as practicable thereafter applied, together with all other funds held hereunder (except funds in the Rebate Fund) in the following order of priority: (a) to the payment of all amounts due the Trustee under Article VIII hereof; (b) to the payment of all amounts then due for interest on the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable; and 2017-11-21 Agenda Packet Page 377 34 (c) to the payment of all amounts then due for principal of the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal of such Bonds due and payable. Section 7.09 Trustee May Enforce Claims Without Possession of Bonds. All rights of action and claims under this Indenture or the Bonds may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Owners in respect of which such judgment has been recovered. Section 7.10 Limitation on Suits. No Owner of any Bond shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or Trustee, or for any other remedy hereunder, unless (a) such Owner shall have previously given written notice to the Trustee of a continuing event of default, (b) the Owners of not less than 25% of the aggregate principal amount of Bonds then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such event of default in its own name as Trustee hereunder, (c) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60 day period by the Owners of a majority of the aggregate principal amount of Bonds then Outstanding; it being understood and intended that no one or more Owners shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Owner, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Owners. ARTICLE VIII THE TRUSTEE Section 8.01 Employment of the Trustee. The Authority hereby appoints and employs the Trustee to receive, deposit and disburse the Base Rental Payments, to authenticate, deliver and transfer the Bonds and to perform the other functions contained herein, all in the manner provided herein and subject to the conditions and terms hereof. By executing and delivering this Indenture, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an event of default has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. In case an event of default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and 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. The Trustee hereby 2017-11-21 Agenda Packet Page 378 35 covenants and agrees that it will not encumber the Leased Property, other than Permitted Encumbrances. Section 8.02 Duties, Removal and Resignation of the Trustee. The Authority may, by an instrument in writing, remove the Trustee initially a party hereto and any successor thereto unless an event of default shall have occurred and then be continuing, and, shall remove the Trustee initially a party hereto and any successor thereto if at any time (a) requested to do so by an instrument or concurrent instruments in writing signed by the Owners of a majority of the aggregate principal amount of Bonds at the time Outstanding (or their attorneys duly authorized in writing), or (b) the Trustee shall cease to be eligible in accordance with the following sentence, and shall appoint a successor Trustee. The Trustee and any successor Trustee shall be: (i) a national banking association in good standing authorized to exercise trust powers or having the powers of a trust company and duly authorized to exercise trust powers within the State having a combined capital and surplus of at least $250,000,000, and subject to supervision or examination by federal or state authority, or (ii) a state-chartered commercial bank that is a member of the Federal Reserve System having at least $1,000,000,000 of assets. If such entity publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and the City and by giving notice, by first class mail, postage prepaid, of such resignation to the Owners at their addresses appearing on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the event the Authority does not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the Authority, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Indenture and vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.03 Compensation of the Trustee. The City shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder and reimburse the Trustee for all its reasonable advances and expenditures (which shall not include “overhead expenses” except as such expenses are included as a component of the Trustee’s stated annual fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee, employed by it in the exercise and performance of its rights and obligations 2017-11-21 Agenda Packet Page 379 36 hereunder. The Trustee may take whatever legal actions are lawfully available to it directly against the Authority or the City. The City shall, to the extent permitted by law, indemnify and save the Trustee harmless against any liabilities, costs, claims or expenses, including those of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder, under the Lease Agreement, or in connection with any document or transaction contemplated hereunder or thereunder, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its misconduct. The duty of the City to indemnify the Trustee shall survive the termination and discharge of this Indenture and the earlier removal or resignation of the Trustee. 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 hereunder. Upon an event of default, and only upon an event of default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of and premium, if any, and interest on any Bond, upon the trust estate for the foregoing fees, charges and expenses incurred by it. When the Trustee incurs expenses or renders services after the occurrence of an event of default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law. Section 8.04 Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affidavit, bond, certificate, consent, notice, request, requisition, resolution, statement, telegram, voucher, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners of the Bonds pursuant to this Indenture, unless such Owners shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith. The Trustee shall not be responsible for the sufficiency of the Bonds or the Lease Agreement, or of the assignment made to it by the Assignment Agreement, or for statements made in any preliminary or final official statement relating to the Bonds, or of the title to the Leased Property. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the City or a Written Certificate of the Authority, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the 2017-11-21 Agenda Packet Page 380 37 Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable. The Trustee may buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Owner may be entitled to take with like effect as if the Trustee were not a party hereto. The Trustee, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Authority or the City, and may act as agent, depository or trustee for any committee or body of Owners or of owners of obligations of the Authority or the City as freely as if it were not the Trustee hereunder. The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall in a commercially reasonable manner pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established hereunder, except only for its own willful misconduct, negligence or breach of an obligation hereunder. The Trustee shall not be deemed to have knowledge of an event of default unless it has actual knowledge thereof. The Trustee may, on behalf of the Owners, intervene in any judicial proceeding to which the Authority or the City is a party and which, in the opinion of the Trustee and its counsel, affects the Bonds or the security therefor, and shall do so if requested in writing by the Owners of at least 5% of the aggregate principal amount of Bonds then Outstanding, provided the Trustee shall have no duty to take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action. The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and expenses shall survive its resignation or removal and final payment or defeasance of the Bonds. All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees and agents of the Trustee. The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. The Trustee shall not be accountable for the use or application by the Borrower of any of the Bonds or the proceeds thereof or for the use or 2017-11-21 Agenda Packet Page 381 38 application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any paying agent. The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, that the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. In acting or omitting to act pursuant to the Lease Agreement or Site Lease, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture and the Lease Agreement, including, but not limited to, this Article VIII. ARTICLE IX MODIFICATION OR AMENDMENTS Section 9.01 Modifications and Amendments Permitted. (a) This Indenture and the rights and obligations of the Authority, the City, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into with the written consent of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding, which shall have been filed with the Trustee. No such modification or amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the Owner of each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or (iii) permit the creation of any lien on the Base Rental Payments and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners of the Bonds of the lien created by this Indenture on such Base Rental Payments and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. (b) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into without the consent of any Bond Owners for any one or more of the following purposes: 2017-11-21 Agenda Packet Page 382 39 (1) to add to the covenants and agreements of the Authority or the City in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority or the City; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture; (3) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III hereof; (4) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; (5) to modify, amend or supplement this Indenture in such manner as to cause interest on a Series of Bonds issued in accordance with Section 103 of the Code to be or continue to be excludable from gross income for purposes of federal income taxation by the United States of America or to maintain the status of the Series 2017A Bonds as New Clean Renewable Energy Bonds under Section 54C of the Code and as Specified Tax Credit Bonds under Section 6431(f)(3) of the Code; and (6) in any other respect whatsoever as the Authority and the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Bond Owners hereunder, in the opinion of Bond Counsel filed with the Authority, the City and the Trustee. (c) Promptly after the execution by the Authority, the City and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Authority), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. (d) No Supplemental Indenture shall modify any of the rights or obligations of the Trustee without the Trustee’s prior written consent. Section 9.02 Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the City, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 2017-11-21 Agenda Packet Page 383 40 Section 9.03 Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand of the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same interest rate and maturity. Section 9.04 Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner. ARTICLE X DEFEASANCE Section 10.01 Discharge of Indenture. If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all or a portion of the Outstanding Bonds, the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners of such Bonds shall cease to be entitled to the pledge of the Base Rental Payments and the other amounts as provided herein, and, except as provided below, all agreements, covenants and other obligations of the Authority and the City to the Owners of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority and the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and if all of the Outstanding Bonds have been paid or deemed paid, the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium, if any, on such Bonds. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non- presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the compensation and indemnity of the Trustee, the payment of rebate and compliance with the Tax Certificate shall remain in effect and shall be binding upon the Trustee, the City and the Authority. 2017-11-21 Agenda Packet Page 384 41 Section 10.02 Bonds Deemed To Have Been Paid. If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bonds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 hereof if (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail or send, on a date in accordance with the provisions of Section 4.02 hereof, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02 hereof, (b) there shall have been deposited with the Trustee either (i) money in an amount which shall be sufficient, or (ii) Federal Securities that are not subject to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money, if any deposited with the Trustee at the same time, shall, as verified by an independent certified public accountant, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bonds at maturity or upon redemption, and (c) in the event such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail or send notice of redemption of such Bonds on a specified redemption date in accordance with Section 4.02 hereof, and to give as soon as practicable, a notice to the owners of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bonds. Section 10.03 Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, to the extent permitted by law, any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for one year after the date of deposit of such moneys, shall be repaid to the Authority (without liability for interest) free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Authority as aforesaid, the Trustee may (at the cost of the Authority) first mail, by first class mail postage prepaid, to the Owners of Bonds which have not yet been paid, at the respective addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof. ARTICLE XI MISCELLANEOUS Section 11.01 Benefits of Indenture Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the City, the Trustee and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the Authority or the City shall be for the sole and exclusive benefit of the Trustee and the Owners. Section 11.02 Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee, or any officer thereof, is named or referred to herein, such 2017-11-21 Agenda Packet Page 385 42 reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 11.03 Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient. The ownership of any Bonds and the amount, payment date, number and date of owning the same may be proved by the Registration Books. Any declaration, request or other instrument in writing of the Owner of any Bond shall bind all future Owners of such Bond with respect to anything done or suffered to be done by the Authority, the City or the Trustee in good faith and in accordance therewith. Section 11.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby. Section 11.05 Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee may, in lieu of such cancellation and delivery, destroy such Bonds. Section 11.06 Funds and Accounts. Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at an times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Owners. The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Indenture. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations hereunder. 2017-11-21 Agenda Packet Page 386 43 Section 11.07 Article and Section Headings Gender and References. The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections,” subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, subsection or clause thereof. Section 11.08 Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 11.09 Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are actually known by the Trustee to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; except that, in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver of an Owner, only Bonds which the Trustee actually knows to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded unless all Bonds are so owned or held, in which case such Bonds shall be considered Outstanding for the purpose of such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority and the City shall specify in a Written Certificate of the City and Authority those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such Certificate. Section 11.10 Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and 2017-11-21 Agenda Packet Page 387 44 pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 10.03 hereof but without any liability for interest thereon. Section 11.11 Payment on Non-Business Days. In the event any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day with the same effect as if made on such non-Business Day. Section 11.12 California Law. This Indenture shall be construed and governed in accordance with the laws of the State of California. Section 11.13 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the City:City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Director of Finance/Treasurer If to the Authority: Chula Vista Municipal Financing Authority c/o City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director If to the Trustee:U.S. Bank National Association 633 West Fifth St., 24th Floor Los Angeles, California 90071 Attention: Global Corporate Trust Services Ref: City of Chula Vista Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answer back or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (d) if given by any other means, upon delivery at the address specified in this Section. Section 11.14 Notice to Rating Agencies. The Trustee shall provide S&P, if the Bonds are then rated by S&P, and Moody’s, if the Bonds are then rated by Moody’s, with prompt notice of any substitution or release of property pursuant to Section 9.03 of the Lease Agreement. Section 11.15 Execution in Counterparts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 2017-11-21 Agenda Packet Page 388 S-1 IN WITNESS WHEREOF, the Authority and the City have caused this Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written, CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Executive Director ATTEST: Secretary CITY OF CHULA VISTA By: Director of Finance/Treasurer ATTEST: City Clerk [SIGNATURES CONTINUED ON NEXT PAGE.] 2017-11-21 Agenda Packet Page 389 S-2 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 2017-11-21 Agenda Packet Page 390 A-1 EXHIBIT A FORM OF SERIES 2017A BOND No. ____$___________ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) INTEREST RATE MATURITY DATE DATED DATE CUSIP ______%December 1, 20__ ___________,2017 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: _________________________ THOUSAND DOLLARS The Chula Vista Municipal Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”) on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on June 1 and December 1 in each year, commencing June 1, 2018 (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to May 15, 2018, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on this Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by U.S. Bank National Association, as Trustee (the “Trustee”) on each Interest Payment Date to the 2017-11-21 Agenda Packet Page 391 A-2 Registered Owner hereof, by wire transfer so long as the Bonds are held in book-entry form as set forth in the Indenture and otherwise by first class mail, postage prepaid, to the address of the Registered Owner shown on the Registration Books at the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date or by wire transfer as permitted pursuant to the terms of the Indenture. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City of Chula Vista (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. This Bond is part of a duly authorized issue of bonds issued for the purpose of financing the acquisition, construction and installation of certain public capital improvements within the City and described in the proceedings for the issuance of the Bonds (the “Project”), and designated as the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable)” (the “Series 2017A Bonds”) in the aggregate principal amount of $__________. The Series 2017A Bonds are issued pursuant to the Indenture, dated as of December 1, 2017 (the “Indenture”), by and among the Authority, the City and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, the Series 2017A Bonds have been issued concurrently and on a parity with the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) (the “Series 2017B Bonds”) and Additional Bonds (“Additional Bonds”) may be issued by the Authority secured by a lien on a parity with the lien securing the Series 2017A Bonds and the Series 2017B Bonds. The Series 2017A Bonds, the Series 2017B Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Marks- Roos Local Bond Pooling Act of 1985 (the “Act”) and the laws of the State of California. Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of December 1, 2017 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned, without recourse, by the Authority to the Trustee. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets. The Series 2017A Bonds are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). The Series 2017A Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds (as defined in the Indenture) received with respect to all or a portion of the property leased under the Lease Agreement, deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal 2017-11-21 Agenda Packet Page 392 A-3 to the principal amount of the Series 2017A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. The Series 2017A Bonds maturing on and after December 1, 20__ are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 20__, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. Upon the occurrence of an Extraordinary Event, the Series 2017A Bonds shall be subject to redemption at the option of the Authority, prior to their maturity date, in whole or in part, on any date designated by the Authority prior to December 1, 20__, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. The Series 2017A Bonds maturing on December 1, 20__ are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each June 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Series 2017A Term Bonds Maturing December 1, 20__ Date (December 1)Principal Amount _____________ (1)Final Maturity The Series 2017A Bonds are subject to extraordinary mandatory redemption, in whole or in part, within 90 days following the third anniversary of the Closing Date of the Series 2017A Bonds, or 90 days following the date of termination of any period of time negotiated with the IRS that extends the date by which the proceeds of the sale of the Series 2017A Bonds must be expended, as evidenced in writing from the IRS, in authorized denominations, at a redemption price equal to the principal amount of the Series 2017A Bonds called for redemption, in an amount equal to the unexpended proceeds of the sale of the Series 2017A Bonds held by the Authority, but only to the extent that the Authority fails to expend all of the proceeds of the Series 2017A Bonds for certain qualified purposes as required by Section 54A(d)(2)(B)(i) of the Code within three years of issuance thereof. The Trustee on behalf and at the expense of the Authority shall give notice of any redemption to the Registered owners of any Series 2017A Bonds designated for redemption in the manner provided in the Indenture, at least 30 but not more than 60 days prior to the date fixed for redemption. Neither failure to receive any such notice so mailed or given, nor any defect therein, shall affect the validity of the proceedings for the redemption of such Series 2017A Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2017A Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2017A Bonds, interest on such Series 2017A Bonds will cease to accrue and become payable. 2017-11-21 Agenda Packet Page 393 A-4 Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2017A Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2017A Bonds of other Authorized Denominations. This Bond is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Series 2017A Bond or Series 2017A Bonds, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected, or, (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification, or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the owners of all Bonds then outstanding. The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments (as defined in the Indenture) and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. 2017-11-21 Agenda Packet Page 394 A-5 IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chairperson and Secretary, all as of the Dated Date identified above. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Chairperson Attest: Secretary 2017-11-21 Agenda Packet Page 395 A-6 [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION] This is one of the Series 2017A Bonds described in the within-mentioned Indenture and registered on the Registration Books. Date: __________, 2017 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory 2017-11-21 Agenda Packet Page 396 A-7 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Series 2017A Bonds. A signed copy is on file in my office. Secretary of the Board of the Chula Vista Municipal Financing Authority [FORM OF ASSIGNMENT] For value, received the undersigned hereby sells, assigns and transfers unto ____________________________________________ whose address and social security or other tax identifying number is ______________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises. Dated: ____________________ Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within pond in every particular without alteration or enlargement or any change whatsoever. 2017-11-21 Agenda Packet Page 397 B-1 EXHIBIT B FORM OF SERIES 2017B BOND No. ____$___________ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) INTEREST RATE MATURITY DATE DATED DATE CUSIP ______%December 1, 20__ ___________, 2017 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: _________________________ THOUSAND DOLLARS The Chula Vista Municipal Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified above or registered assigns (the “Registered Owner”) on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on June1 and December 1 in each year, commencing June 1, 2018 (the “Interest Payment Dates”), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date, whether or not such day is a Business Day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to May 15, 2018, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on this Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined). Interest hereon is payable by U.S. Bank National Association, as Trustee (the “Trustee”) on each Interest Payment Date to the 2017-11-21 Agenda Packet Page 398 B-2 Registered Owner hereof, by wire transfer so long as the Bonds are held in book-entry form as set forth in the Indenture and otherwise by first class mail, postage prepaid, to the address of the Registered Owner shown on the Registration Books at the close of business on the fifteenth calendar day of the month next preceding such Interest Payment Date or by wire transfer as permitted pursuant to the terms of the Indenture. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City of Chula Vista (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing. This Bond is part of a duly authorized issue of bonds issued for the purpose of financing the acquisition, construction and installation of certain public capital improvements within the City and described in the proceedings for the issuance of the Bonds (the “Project”), and designated as the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt)” (the “Series 2017B Bonds”) in the aggregate principal amount of $__________. The Series 2017B Bonds are issued pursuant to the Indenture, dated as of December 1, 2017 (the “Indenture”), by and among the Authority, the City and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, the Series 2017B Bonds have been issued concurrently and on a parity with the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”), and Additional Bonds (“Additional Bonds”) may be issued by the Authority secured by a lien on a parity with the lien securing the Series 2017A Bonds and the Series 2017B Bonds. The Series 2017A Bonds, the Series 2017B Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Marks- Roos Local Bond Pooling Act of 1985 (the “Act”) and the laws of the State of California. Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of December 1, 2017 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned, without recourse, by the Authority to the Trustee. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets. The Series 2017B Bonds are authorized to be issued in the form of fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). The Series 2017B Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds (as defined in the Indenture) received with respect to all or a portion of the property leased under the Lease Agreement, deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal 2017-11-21 Agenda Packet Page 399 B-3 to the principal amount of the Series 2017B Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. The Series 2017B Bonds maturing on and after December 1, 20__ are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 20__, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. The Series 2017B Bonds maturing on December 1, 20__ are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each June 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Series 2017B Term Bonds Maturing December 1, 20__ Date (December 1)Principal Amount _____________ (1)Final Maturity The Trustee on behalf and at the expense of the Authority shall give notice of any redemption to the Registered owners of any Series 2017B Bonds designated for redemption in the manner provided in the Indenture, at least 30 but not more than 60 days prior to the date fixed for redemption. Neither failure to receive any such notice so mailed or given, nor any defect therein, shall affect the validity of the proceedings for the redemption of such Series 2017B Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. The Redemption Price of the Series 2017B Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2017B Bonds, interest on such Series 2017B Bonds will cease to accrue and become payable. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2017B Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2017B Bonds of other Authorized Denominations. This Bond is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Series 2017B Bond or Series 2017B Bonds, in Authorized Denominations, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. 2017-11-21 Agenda Packet Page 400 B-4 The Indenture and the rights and obligations of the Authority, the City, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest thereon, or extend the time of payment, without the consent of the owner of each Bond so affected, or, (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification, or (c) permit the creation of any lien on the Base Rental Payments and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture or deprive the owners of the Bonds of the lien created by the Indenture on such the Base Rental Payments and such other assets (except as expressly provided in the Indenture), without the consent of the owners of all Bonds then outstanding. The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture. All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments (as defined in the Indenture) and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds. IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chairperson and Secretary, all as of the Dated Date identified above. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Chairperson Attest: Secretary 2017-11-21 Agenda Packet Page 401 B-5 [FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION] This is one of the Series 2017B Bonds described in the within-mentioned Indenture and registered on the Registration Books. Date: __________, 2017 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Signatory 2017-11-21 Agenda Packet Page 402 B-6 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Secretary of the Board of the Chula Vista Municipal Financing Authority [FORM OF ASSIGNMENT] For value, received the undersigned hereby sells, assigns and transfers unto ____________________________________________ whose address and social security or other tax identifying number is ______________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises. Dated: ____________________ Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor. Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within pond in every particular without alteration or enlargement or any change whatsoever. 2017-11-21 Agenda Packet Page 403 C-1 EXHIBIT C DESCRIPTION OF PROJECT 2017-11-21 Agenda Packet Page 404 Stradling Yocca Carlson & Rauth Draft of 11/14/17 RECORDING REQUESTED BY: Chula Vista Municipal Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Robert J. Whalen, Esq. [Space above for Recorder’s use.] THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. THE GRANTOR AND THE GRANTEE ARE GOVERNMENTAL AGENCIES. THE LEASE TERM IS LESS THAN 35 YEARS. LEASE AGREEMENT by and between CITY OF CHULA VISTA and CHULA VISTA MUNICIPAL FINANCING AUTHORITY Dated as of December 1, 2017 Relating to $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) 2017-11-21 Agenda Packet Page 405 TABLE OF CONTENTS Page i ARTICLE I DEFINITIONS Section 1.01 Definitions ..............................................................................................................2 ARTICLE II LEASE OF PROPERTY; TERM; CONSTRUCTION Section 2.01 Lease of Leased Property........................................................................................4 Section 2.02 Term; Occupancy....................................................................................................4 Section 2.03 Deposit of Bond Proceeds ......................................................................................4 Section 2.04 Completion of Project.............................................................................................5 Section 2.05 Payment of Project and Delivery Costs..................................................................5 Section 2.06 Completion Certification........................................................................................5 Section 2.07 Compliance with Law.............................................................................................5 ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments.............................................................................................5 Section 3.02 Additional Rental Payments...................................................................................6 Section 3.03 Fair Rental Value....................................................................................................7 Section 3.04 Payment Provisions ................................................................................................7 Section 3.05 Appropriations Covenant........................................................................................7 Section 3.06 Rental Abatement...................................................................................................7 ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 Maintenance and Utilities.......................................................................................8 Section 4.02 Additions to Leased Property .................................................................................8 Section 4.03 Installation of City’s Equipment.............................................................................8 ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Leased Property Damage Insurance; Workers’ Compensation Insurance.........................................................................9 Section 5.02 Title Insurance......................................................................................................10 Section 5.03 Additional Insurance Provision; Form of Policies................................................10 Section 5.04 Self-Insurance.......................................................................................................10 2017-11-21 Agenda Packet Page 406 TABLE OF CONTENTS (continued) Page ii ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies.........................................................................................11 Section 6.02 Waiver...................................................................................................................14 ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain...................................................................................................14 Section 7.02 Prepayment...........................................................................................................14 ARTICLE VIII COVENANTS Section 8.01 Right of Entry.......................................................................................................15 Section 8.02 Liens and Encumbrances......................................................................................15 Section 8.03 Quiet Enjoyment...................................................................................................16 Section 8.04 Authority Not Liable.............................................................................................16 Section 8.05 Assignment and Subleasing..................................................................................16 Section 8.06 Title to Leased Property........................................................................................17 Section 8.07 Authority’s Purpose..............................................................................................17 Section 8.08 Representations of the City...................................................................................17 Section 8.09 Representation of the Authority............................................................................17 ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages..................................................................................17 Section 9.02 Use of the Leased Property...................................................................................17 Section 9.03 Substitution or Release of the Leased Property....................................................18 ARTICLE X MISCELLANEOUS Section 10.01 Law Governing.....................................................................................................19 Section 10.02 Notices..................................................................................................................19 Section 10.03 Validity and Severability......................................................................................19 Section 10.04 Net-Net-Net Lease................................................................................................20 Section 10.05 Taxes.....................................................................................................................20 Section 10.06 Section Headings..................................................................................................20 Section 10.07 Amendments.........................................................................................................20 Section 10.08 Assignment...........................................................................................................21 2017-11-21 Agenda Packet Page 407 TABLE OF CONTENTS (continued) Page iii Section 10.09 Execution ..............................................................................................................21 SIGNATURES................................................................................................................................... S-1 EXHIBIT A DESCRIPTION OF THE LEASED PROPERTY....................................................A-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE .............................................................B-1 2017-11-21 Agenda Packet Page 408 1 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Lease Agreement”) executed and entered into as of December 1, 2017, is by and between the CITY OF CHULA VISTA (the “City”), a municipal corporation and a charter city duly organized and existing under the Constitution and laws of the State of California, as lessee, and the CHULA VISTA MUNICIPAL FINANCING AUTHORITY (the “Authority”), a joint exercise of powers authority duly organized and existing under the laws of the State of California, as lessor. RECITALS WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Act”), the Authority is authorized to issue bonds to finance or refinance public capital improvements whenever there are significant public benefits of the type described in the Act; and WHEREAS, the City and the Authority desire to finance a portion of the costs of the acquisition,construction, equipping and installation of certain capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City (together, the “Project”) which constitutes a public capital improvement eligible for financing under the Act and is located within the City; and WHEREAS, in order to facilitate the financing of the Project, the City is leasing certain real property and the improvements located thereon (the “Leased Property”) to the Authority pursuant to a Site Lease, dated as of the date hereof and recorded concurrently herewith, and the City is subleasing the Leased Property back from the Authority pursuant to this Lease Agreement (the “Leased Property”); WHEREAS, the City and the Authority have determined that it is in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of bonds payable from the base rental payments (the “Base Rental Payments”) to be made by the City under this Lease Agreement; WHEREAS, the City and the Authority have determined that it is in the best interests of the City and the Authority to provide for the issuance of such bonds payable from the Base Rental Payments pursuant to an Indenture, dated as of the date hereof, by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”); WHEREAS, all rights to receive the Base Rental Payments, and certain other rights, will be assigned,without recourse, by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof and being recorded concurrently herewith; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement; 2017-11-21 Agenda Packet Page 409 2 NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement, have the meanings herein specified, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Indenture. “Additional Bonds” means bonds other than the 2017 Bonds issued under the Indenture in accordance with the provisions thereof. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 hereof. “Authority” means the Chula Vista Municipal Financing Authority, a joint exercise of powers authority organized and existing under the laws of the State of California. “Base Rental Deposit Date” means the fifth Business Day next preceding each Interest Payment Date. “Base Rental Payments” means all amounts payable to the Authority from the City as Base Rental Payments pursuant to Section 3.01 hereof. “Base Rental Payment Schedule” means the schedule of Base Rental Payments payable to the Authority from the City pursuant to Section 3.01 hereof and attached hereto as Exhibit B. “Bonds” means 2017 Bonds and any Additional Bonds issued under the Indenture. “City” means the City of Chula Vista, a municipal corporation and charter city duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Closing Date” means the date of issuance of the 2017 Bonds and the date of issuance of each series of Additional Bonds, as applicable. “Completion Certificate” means the certificate of the City filed with the Trustee and signed by an Authorized City Representative, as prescribed by Section 2.06 hereof. “Indenture” means the Indenture, dated as of the date hereof, by and among the Authority, the City and the Trustee, as originally executed and as it may from time to time be amended or supplemented in accordance with the provisions thereof. “Joint Powers Agreement” means the Joint Exercise of Powers Agreement, dated as of June 11, 2013, by and between the City and the Housing Authority of the City of Chula Vista, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. 2017-11-21 Agenda Packet Page 410 3 “Lease Agreement” means this Lease Agreement, as originally executed and as it may from time to time be amended in accordance with the provisions hereof. “Leased Property” means the real property described in Exhibit A hereto and the improvements located thereon. “Net Proceeds” means the proceeds received from the property or title insurance policies required pursuant to this Lease Agreement and the proceeds of any award made in eminent domain proceedings for the taking of the Leased Property, or any portion thereof, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof. “Permitted Encumbrances” means, with respect to the Leased Property, as of any particular time, (a)liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the City may, pursuant to provisions of Article V hereof, permit to remain unpaid, (b) the Assignment Agreement, (c) this Lease Agreement, (d) the Site Lease, (e) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law as normally exist with respect to properties similar to the Leased Property for the purposes for which it was acquired or is held by the City, (f) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions or encumbrances which exist of record as of the Closing Date which the City certifies in writing will not affect the intended use of the Leased Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing, and (g) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Closing Date which the City certifies in writing do not affect the intended use of the Leased Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture and the Assignment Agreement and to which the Authority and the City consent in writing. “Project” means the capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City and further described in Exhibit C hereto and, subject to the limitations set forth in Section 2.04 below, any other capital improvements or equipment of the City as set forth in a Written Certificate of the City. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments. “Rental Period” means the period from the Closing Date through December 1, 2018 and, thereafter, the twelve-month period commencing on December 2 of each year and ending on the following December 1 during the term of the Lease Agreement. “Site Lease” means the Site Lease, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and hereof. “Series 2017A Bonds” means the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable)issued under the Indenture. 2017-11-21 Agenda Packet Page 411 4 “Series 2017B Bonds” means the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt)issued under the Indenture. “2017 Bonds” means the Series 2017A Bonds and the Series 2017B Bonds. “Termination Date” means December 1, 20__, unless extended or sooner terminated as provided in Section 2.02 hereof. “Trustee” means the trustee appointed under the Indenture and referred to therein as the Trustee. ARTICLE II LEASE OF PROPERTY; TERM; CONSTRUCTION Section 2.01 Lease of Leased Property. (a) The Authority hereby leases to the City and the City hereby leases from the Authority the Leased Property, on the terms and conditions hereinafter set forth, subject to all Permitted Encumbrances. (b) The leasing of the Leased Property by the City to the Authority pursuant to the Site Lease shall not effect or result in a merger of the City’s leasehold estate pursuant to this Lease Agreement and its fee estate as lessor under the Site Lease, and the Authority shall continue to have a leasehold estate in the Leased Property pursuant to the Site Lease throughout the term thereof and hereof. The leasehold interest granted by the City to the Authority pursuant to the Site Lease is and shall be independent of this Lease Agreement; this Lease Agreement shall not be an assignment or surrender of the leasehold interest granted to the Authority under the Site Lease. Section 2.02 Term; Occupancy. The term of this Lease Agreement shall commence on the Closing Date for the 2017 Bonds and shall end on the Termination Date, unless such term is extended or sooner terminated as hereinafter provided. If on the Termination Date all of the Outstanding Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if Additional Rental Payments shall remain due and payable or shall have been abated at any time and for any reason, then the term of this Lease Agreement shall be extended until the date upon which (i) all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, or (ii) the Indenture shall be discharged by its terms and all Additional Rental Payments shall have been paid in full. Notwithstanding the foregoing, the term of this Lease Agreement shall in no event be extended beyond December 1, 2050, such extended date being the “Maximum Lease Term.” If prior to the Termination Date, all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, the Indenture shall be discharged by its terms and all Additional Rental Payments shall have been paid in full, then the term of this Lease Agreement shall end simultaneously therewith. Section 2.03 Deposit of Bond Proceeds. On the Closing Date for the 2017 Bonds and on each Closing Date for any Additional Bonds, the Authority agrees to pay or cause to be paid to the Trustee the proceeds of the sale of the 2017 Bonds and Additional Bonds, which moneys, in the case of the 2017 Bonds, shall be deposited with the Trustee as provided in Section 3.02 of the Indenture, 2017-11-21 Agenda Packet Page 412 5 or in the case of Additional Bonds as provided in any Supplemental Indenture which relates to such Additional Bonds. Section 2.04 Completion of Project. The Authority hereby appoints the City as its agent to acquire, construct, equip and install the Project, and, in so doing, the City agrees to comply with the provisions of Section 2.07 hereof. The City may change the specifications of the Project from those set forth in Exhibit C or finance other capital improvements of the City from proceeds of the Series 2017B Bonds, so long as such change does not substantially alter the nature of the Project as a project financeable pursuant to the Act or adversely affect the exclusion of interest on the Series 2017B Bonds and any Additional Bonds issued on a tax-exempt basis from gross income for federal income tax purposes, the exemption of interest on the 2017 Bonds from State of California personal income taxes, the status of the Series 2017A Bonds as New Clean Renewable Energy Bonds under Section 54C of the Code or Specified Tax Credit Bonds under Section 6431(f)(3) of the Code. Section 2.05 Payment of Project and Delivery Costs. Payment of the Project Costs shall be made from the moneys deposited with the Trustee in the Acquisition and Construction Fund as provided in Section 2.03 hereof and Section 3.02(b) of the Indenture, which shall be disbursed in accordance and upon compliance with 5.05 of the Indenture. Section 2.06 Completion Certification. Upon the completion of acquisition, construction, delivery and installation of the portion of the Project to be financed with the proceeds of the 2017 Bonds and each series of Additional Bonds, the City shall deliver to the Trustee a Completion Certificate with respect thereto. On the date of filing a Completion Certificate, all excess moneys remaining in the Acquisition and Construction Fund for the 2017 Bonds or issue of Additional Bonds for which such Completion Certificate is delivered shall be applied in accordance with the provisions of Section 5.05 of the Indenture. Section 2.07 Compliance with Law. (a) The City shall comply with all applicable provisions for bids and contracts prescribed by law, including, without limitation, the Public Contracts Code and the Government Code of the State. (b) The City shall comply with all provisions relating to prevailing wage rates and working hours applicable to it under the laws of the State. (c) The City shall prepare and adopt plans and specifications for the acquisition, construction, equipping and installation of one or more components of the Project, as needed, pursuant to the Government Code and Public Contracts Code of the State. ARTICLE III RENTAL PAYMENTS Section 3.01 Base Rental Payments. (a) Subject to the provisions hereof relating to a revision of the Base Rental Payment Schedule pursuant to subsection (b) of this Section, the City shall pay to the Authority, as Base Rental Payments (subject to the provisions of Section 3.06 and Article VII hereof) the amount 2017-11-21 Agenda Packet Page 413 6 at the times specified in the Base Rental Payment Schedule. Rental Payments, including Base Rental Payments, shall be paid by the City to the Authority for and in consideration of the right to use and occupy the Leased Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or of the State of California, or of any political subdivision thereof, within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation. (b) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the obligation of the City to pay Rental Payments shall continue to and including the Base Rental Deposit Date preceding the date of termination of this Lease Agreement (as so extended pursuant to Section 2.02 hereof). Upon such extension, the Base Rental Payments shall be established so that they will be sufficient to pay all extended and unpaid Base Rental Payments; provided, however, that the Rental Payments payable in any Rental Period shall not exceed the annual fair rental value of the Leased Property as determined by the City in its discretion. Section 3.02 Additional Rental Payments. The City shall also pay, as Additional Rental Payments, such amounts as shall be required for the payment of the following: (a) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Leased Property or the respective interests or estates of the Authority or the City therein; (b) all reasonable administrative costs of the Authority relating to the Leased Property including, but without limiting the generality of the foregoing, salaries, wages, fees and expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture, fees of auditors, accountants, attorneys or engineers, and all other necessary and reasonable administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Indenture or this Lease Agreement or to defend the Authority and its members, officers, agents and employees; (c) insurance premiums for all insurance required pursuant to Article V hereof; (d) any amounts with respect to this Lease Agreement or the Bonds required to be rebated to the federal government in accordance with Section 148(f) of the Code; and (e) all other payments, other than Base Rental Payments, required to be paid by the City under the provisions of this Lease Agreement or the Indenture. Amounts constituting Additional Rental Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof. 2017-11-21 Agenda Packet Page 414 7 Section 3.03 Fair Rental Value. The parties hereto have agreed and determined that the annual fair rental value of the Leased Property is not less than the maximum annual Rental Payments due in any year. In making such determination of fair rental value, consideration has been given to the uses and purposes that may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public and to an appraisal of fair rental value of a portion of the Leased Property delivered to the City. Payments of the Rental Payments for the Leased Property during each Rental Period shall constitute the total rental for said Rental Period. Section 3.04 Payment Provisions. Each installment of Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Authority at the principal office of the Trustee in Los Angeles, California, or such other place or entity as the Authority or Trustee shall designate. Each Base Rental Payment shall be deposited with the Trustee no later than the Base Rental Deposit Date preceding the Interest Payment Date on which such Base Rental Payment is due. Any Base Rental Payment which shall not be paid by the City when due and payable under the terms of this Lease Agreement shall bear interest from the date when the same is due hereunder until the same shall be paid at the rate equal to the highest rate of interest on any of the Outstanding Bonds. Notwithstanding any dispute between the Authority and the City, the City shall make all Rental Payments when due without deduction or offset of any kind and shall not withhold any Rental Payments pending the final resolution of such dispute. In the event of a determination that the City was not liable for said Rental Payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent Rental Payments due hereunder or refunded at the time of such determination. Amounts required to be deposited by the City with the Trustee pursuant to this Section on any date shall be reduced to the extent of available amounts on deposit in the Base Rental Payment Fund, the Interest Fund or the Principal Fund under the Indenture. Section 3.05 Appropriations Covenant. The City covenants to take such action as may be necessary to include all Rental Payments due hereunder in its annual budgets and to make necessary annual appropriations for all such Rental Payments. If the City has not included, in its final annual budget for a fiscal year, all Base Rental Payments due in such fiscal year, the City shall deliver to the Authority and the Trustee written notice of the failure to include such Base Rental Payments within ten days after the adoption thereof. The covenants on the part of the City contained herein shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City. Section 3.06 Rental Abatement. Except as otherwise specifically provided in this Section, during any period in which, by reason of material damage to, or destruction or taking by condemnation of, the Leased Property, or any defect in title to the Leased Property, there is substantial interference with the City’s right to use and occupy any portion of the Leased Property, Rental Payments shall be abated proportionately, and the City waives the benefits of Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate the Lease Agreement by virtue of any such interference, and this Lease Agreement shall continue in full force and effect. The amount of such abatement shall be agreed upon by the City and the Authority; provided, however, that the Rental Payments due for any Rental Period shall not exceed the annual fair rental value of that portion of the Leased Property available for use and occupancy by the City during such Rental Period. The City and the Authority shall calculate such abatement and shall provide the 2017-11-21 Agenda Packet Page 415 8 Trustee with a certificate setting forth such calculation and the basis therefor. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to or destruction of the Leased Property, ending with the substantial completion of the work of repair or replacement of the Leased Property, or the portion thereof so damaged or destroyed and with respect to a title defect, the removal of the title defect causing an interference with use; and the term of this Lease Agreement shall be extended as provided in Section 2.02 hereof, except that the term shall in no event be extended beyond the Maximum Lease Term described in Section 2.02. Notwithstanding the foregoing, to the extent that moneys are available to be credited towards the payment of Rental Payments in any of the funds and accounts established under the Indenture, Rental Payments shall not be abated as provided above but, rather, shall be payable by the City as a special obligation payable solely from said funds and accounts. ARTICLE IV MAINTENANCE, ALTERATIONS AND ADDITIONS Section 4.01 Maintenance and Utilities. Throughout the term of this Lease Agreement, as part of the consideration for rental of the Leased Property, all improvement, repair and maintenance of the Leased Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Leased Property, which may include, without limitation, janitor service, security, power gas, telephone, light, heating, ventilation, air conditioning, water and all other utility services, and shall pay for or otherwise arrange for payment of the cost of the repair and replacement of the Leased Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Rental Payments, the Authority agrees to provide only the Leased Property. Section 4.02 Additions to Leased Property. Subject to Section 8.02 hereof, the City and any sublessee shall, at its own expense, have the right to make additions, modifications and improvements to the Leased Property so long as such additions, modifications and improvements will not result in an abatement of Rental Payments. To the extent that the removal of such additions, modifications or improvements would not cause material damage to the Leased Property, such additions, modifications and improvements shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. Such additions, modifications and improvements shall not in any way damage the Leased Property or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Leased Property, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is at least equal to the value of the Leased Property immediately prior to the making of such additions, modifications and improvements. Section 4.03 Installation of City’s Equipment. The City and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon the Leased Property. All such items shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. The City or such sublessee may remove or modify such equipment or other personal property at any time, provided that such party shall repair and restore any and all damage to the Leased Property resulting from the installation, modification or removal of any such items. Nothing in this Lease Agreement shall prevent the City or any sublessee from 2017-11-21 Agenda Packet Page 416 9 purchasing items to be installed pursuant to this Section under a conditional sale or lease purchase contract, or subject to a vendor’s lien or security agreement as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Leased Property; and provided further, however, that the City may construct, equip and install a portion of the Project on the Leased Property. ARTICLE V INSURANCE Section 5.01 Commercial General Liability and Leased Property Damage Insurance; Workers’ Compensation Insurance. (a) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, a standard commercial general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Leased Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $1,000,000 for damage to property (subject to a deductible clause of not to exceed $500,000) resulting from a single accident or event. Such commercial general liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City provided such self-insurance complies with the provisions of Section 5.04 hereof. The proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the proceeds of such liability insurance shall have been paid. (b) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the California Labor Code, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Leased Property and to cover full liability for compensation under any such act; provided, however, that the City’s obligations under this subsection may be satisfied by self-insurance, provided such self-insurance complies with the provisions of Section 5.04 hereof. (c) The City shall maintain or cause to be maintained, fire, lightning and special extended coverage insurance (which shall include coverage for vandalism and malicious mischief, but need not include coverage for earthquake or flood damage) on all improvements constituting any part of the Leased Property in an amount of not less than the replacement cost of such improvements. All insurance required to be maintained pursuant to this subsection may be subject to a deductible in an amount not to exceed $500,000. The City’s obligations under this subsection may be satisfied by self-insurance, provided such self-insurance complies with the provisions of Section 5.04 hereof. 2017-11-21 Agenda Packet Page 417 10 (d) The City shall maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any part of the Leased Property as a result of any of the hazards required to be covered by the insurance required pursuant to subsection (c) of this Section in an amount not less than the maximum remaining scheduled Base Rental Payments in any future 24-month period on such portions of the Leased Property. The City shall not be permitted to self-insure its obligation under this subsection. (e) The insurance required by this Section shall be provided by reputable insurance companies with claims paying abilities determined, in the reasonable opinion of the City’s risk manager or an independent insurance consultant, to be adequate for the purposes hereof. (f) The Net Proceeds received pursuant to the insurance required by Section 5.01(c) shall be deposited to the Net Proceeds Fund in accordance with Section 5.03 of the Indenture and the proceeds received pursuant to the insurance required pursuant to Section 5.01(d) shall be deposited to the Base Rental Payment Fund for application in accordance with the Indenture. Section 5.02 Title Insurance. The City shall provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Leased Property in the aggregate amount of not less than the initial aggregate principal amount of the 2017 Bonds. Such policy or policies shall insure (a) the fee interest of the City in the Leased Property, (b) the Authority’s leasehold estate in the Leased Property under the Site Lease, and (c) the City’s leasehold estate in the Leased Property hereunder, subject only to Permitted Encumbrances. All Net Proceeds received under said policy or policies shall be deposited with the Trustee and applied as provided in Section 5.04 of the Indenture. So long as any of the Bonds remain Outstanding, each policy of title insurance obtained pursuant to the Indenture or this Lease Agreement or required thereby or hereby shall provide that all proceeds thereunder shall be payable to the Trustee for the benefit of the Bond Owners. Section 5.03 Additional Insurance Provision; Form of Policies. The City shall pay or cause to be paid when due the premiums for all insurance policies required by Section 5.01 hereof. All such policies shall provide that the Trustee shall be given 30 days’ notice of the expiration thereof or any intended cancellation thereof. The Trustee shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. All policies shall name the City and the Authority as insureds and in the case of the policies required by Sections 5.01(c) and 5.01(d) and 5.02, the Trustee as an insured and as loss payee. The City shall cause to be delivered to the Trustee on or before August 15 each year, commencing August 15, 2018, a Certificate of the City stating that such policies are in full force and effect and that the City is in full compliance with the requirements of this Article. The Trustee shall be entitled to rely upon said Certificate of the City as to the City’s compliance with this Article. The Trustee shall not be responsible for the sufficiency of coverage or amounts of such policies. Section 5.04 Self-Insurance. Insurance provided through a California joint powers authority of which the City is a member or with which the City contracts for insurance shall not be deemed to be self-insurance for purposes hereof. Any self-insurance maintained by the City pursuant to this Article shall comply with the following terms: (a) the self-insurance program shall be approved in writing by a professionally certified risk manager or by an independent insurance consultant; 2017-11-21 Agenda Packet Page 418 11 (b) the self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid, the adequacy of each such fund shall be evaluated on an annual basis by a professionally certified risk manager or by an independent insurance consultant and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of a professionally certified risk manager or such independent insurance consultant, as applicable; and (c) in the event the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by a professionally certified risk manager or by an independent insurance consultant, shall be maintained. ARTICLE VI DEFAULTS AND REMEDIES Section 6.01 Defaults and Remedies. (a) (i)If the City shall fail (A) to pay any Rental Payment payable hereunder when the same becomes due and payable, time being expressly declared to be of the essence in this Lease Agreement, or (B) to keep, observe or perform any other term, covenant or condition contained herein or in the Indenture to be kept or performed by the City, or (ii) upon the happening of any of the events specified in this subsection or in subsection (b) of this Section, the City shall be deemed to be in default hereunder and it shall be lawful for the Authority, to exercise any and all remedies available pursuant to law or granted pursuant to this Lease Agreement. The City shall in no event be in default in the observance or performance of any covenant, condition or agreement in this Lease Agreement on its part to be observed or performed, other than as referred to in clause (i)(A) of the preceding sentence, unless the City shall have failed, for a period of 30 days or such additional time as is reasonably required to correct any such default after notice by the Authority to the City properly specifying wherein the City has failed to perform any such covenant, condition or agreement. Upon any such default, the Authority, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following: (1) To terminate this Lease Agreement in the manner hereinafter provided on account of default by the City, notwithstanding any re-entry or re-letting of the Leased Property as hereinafter provided for in subparagraph (2) hereof, and to re-enter the Leased Property and remove all persons in possession thereof and all personal property whatsoever situated upon the Leased Property and place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City. In the event of such termination, the City agrees to surrender immediately possession of the Leased Property, without let or hindrance, and to pay the Authority all damages recoverable at law that the Authority may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Leased Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. Neither notice to pay Rental Payments or to deliver up possession of the Leased Property given pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property nor the appointment of a receiver upon initiative of the Authority to protect the Authority’s interest under this Lease Agreement shall of itself operate to terminate this Lease Agreement, and no termination of this Lease Agreement on account of default 2017-11-21 Agenda Packet Page 419 12 by the City shall be or become effective by operation of law or acts of the parties hereto, or otherwise, unless and until the Authority shall have given written notice to the City of the election on the part of the Authority to terminate this Lease Agreement. The City covenants and agrees that no surrender of the Leased Property or of the remainder of the term hereof or any termination of this Lease Agreement shall be valid in any manner or for any purpose whatsoever unless stated by the Authority by such written notice. (2) Without terminating this Lease Agreement, (x) to collect each installment of Rental Payments as the same become due and enforce any other terms or provisions hereof to be kept or performed by the City, regardless of whether or not the City has abandoned the Leased Property, or (y) to exercise any and all rights of entry and re-entry upon the Leased Property and to re-let the Leased Property. In the event the Authority, does not elect to terminate this Lease Agreement in the manner provided for in subparagraph (1) hereof, the City shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the City and, if the Leased Property is not re-let, to pay the full amount of the Rental Payments to the end of the term of this Lease Agreement or, in the event that the Leased Property is re-let, to pay any deficiency in Rental Payments that results therefrom; and further agrees to pay said Rental Payments and/or Rental Payment deficiency punctually at the same time and in the same manner as hereinabove provided for the payment of Rental Payments hereunder, notwithstanding the fact that the Authority may have received in previous years or may receive thereafter in subsequent years Rental Payments in excess of the Rental Payments herein specified, and notwithstanding any entry or re-entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property. Should the Authority elect to re-enter as herein provided, the City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City to re-let the Leased Property, or any part thereof, subject to any deed restrictions contained on such portions of the Leased Property, from time to time, either in the Authority’s name or otherwise, upon such terms and conditions and for such use and period as the Authority may deem advisable and to remove all persons in possession thereof and all personal property whatsoever situated upon the Leased Property and to place such personal property in storage in any warehouse or other suitable place, for the account of and at the expense of the City, and the City hereby indemnifies and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon and re-letting of the Leased Property and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease Agreement constitute full and sufficient notice of the right of the Authority to re-let the Leased Property in the event of such re-entry without effecting a surrender of this Lease Agreement, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of this Lease Agreement irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease Agreement shall vest in the Authority to be effected in the sole and exclusive manner provided for in subparagraph (1) hereof. The City further agrees to pay the Authority the cost of any alterations or additions to the Leased Property necessary to place the Leased Property in condition for re-letting immediately upon notice to the City of the completion and installation of such additions or alterations, subject to any deed restrictions contained on such portions of the Leased Property. The City shall retain the portion of rental obtained by the Trustee, as assignee of the Authority, that is in excess of the Rental Payments, the fees, expenses and costs of the Trustee of re- 2017-11-21 Agenda Packet Page 420 13 letting the Leased Property, and all amounts payable by the City under this Lease Agreement and the Indenture. The City hereby waives any and all claims for damages caused or which may be caused by the Authority in re-entering and taking possession of the Leased Property as herein provided and all claims for damages that may result from the destruction of or injury to the Leased Property and all claims for damages to or loss of any property belonging to the City, or any other person, that may be in or upon the Leased Property. (b) If (i) the City’s interest in this Lease Agreement or any part thereof is assigned or transferred, either voluntarily or by operation of law or otherwise, without the written consent of the Authority and, as hereinafter provided for, or (ii) the City or any assignee shall file any petition or institute any proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the City’s debts or obligations, or offers to the City’s creditors to elect a composition or extension of time to pay the City’s debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of the City’s debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be instituted or taken against the City, or if a receiver of the business or of the property or assets of the City shall be appointed by any court, except a receiver appointed at the instance or request of the Authority, or if the City shall make a general assignment for the benefit of the City’s creditors, or (iii) the City shall abandon or vacate the Leased Property, then the City shall be deemed to be in default hereunder. (c) In addition to the other remedies set forth in this Section, upon the occurrence of an event of default, the Authority shall be entitled to proceed to protect and enforce the rights vested in the Authority by this Lease Agreement or by law. The provisions of this Lease Agreement and the duties of the City and of its city council, officers or employees shall be enforceable by the Authority by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, the Authority shall have the right to bring the following actions: (i) Accounting. By action or suit in equity to require the City and its city council, officers and employees and its assigns to account as the trustee of an express trust. (ii) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Authority or its assignee. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s or its assignee’s rights against the City (and its city council, officers and employees) and to compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the City as provided herein. Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege hereunder shall not impair the right of the Authority to the further exercise thereof or the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting” as used in this Section shall include, but not be limited to, re-letting by means of the operation by the Authority of the 2017-11-21 Agenda Packet Page 421 14 Leased Property. If any statute or rule of law validly shall limit the remedies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. In the event the Authority shall prevail in any action brought to enforce any of the terms and provisions of this Lease Agreement, the City agrees to pay a reasonable amount as and for attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available to the Authority hereunder. Notwithstanding anything to the contrary contained in this Lease Agreement, the Authority shall have no right upon a default hereunder by the City to accelerate Rental Payments. The Authority hereby acknowledges that the ability to re-let certain portions of the Leased Property is limited by deed restrictions. (d) Notwithstanding anything to the contrary contained in this Lease Agreement, the termination of this Lease Agreement by the Authority and its assignees on account of a default by the City under this Section shall not effect or result in a termination of the Site Lease. Section 6.02 Waiver. Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of any other default or of the same default subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease Agreement. ARTICLE VII EMINENT DOMAIN; PREPAYMENT Section 7.01 Eminent Domain. If all of the Leased Property (or portions thereof such that the remainder is not usable for public purposes by the City) shall be taken under the power of eminent domain, the term hereof shall cease as of the day that possession shall be so taken. If less than all of the Leased Property shall be taken under the power of eminent domain and the remainder is usable for public purposes by the City at the time of such taking, then the Lease Agreement shall continue in full force and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in such event there shall be a partial abatement of the Rental Payments in accordance with the provisions of Section 3.06 hereof. So long as any Bonds shall be Outstanding, any award made in eminent domain proceedings for the taking of the Leased Property, or any portion thereof, shall be paid to the Trustee and applied to the redemption of Bonds as provided in subsection (a) of Section 4.01 of the Indenture, in the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued and in Section 5.03 of the Indenture. Any such award made after all of the Bonds, and all other amounts due under the Indenture and hereunder, have been fully paid, shall be paid to the Authority and to the City as their respective interests may appear. Section 7.02 Prepayment. (a) The City may prepay, from any source of available funds, including, but not limited to Net Proceeds, all or any portion of the Base Rental Payments attributable to the Bonds by 2017-11-21 Agenda Packet Page 422 15 depositing with the Trustee moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the Indenture sufficient to make the principal and interest payments when due on the Bonds to be paid from such Base Rental Payments. (b) If less than all of the Base Rental Payments attributable to the Bonds are prepaid pursuant to the provisions of this Section of this Lease Agreement then, as of the date of the deposit pursuant to subsection (a) of this Section, the amount of the remaining Base Rental Payments to be paid shall be calculated by the City and transmitted to the Trustee in order to take such prepayment into account; provided, however, the remaining Base Rental Payments shall be sufficient to pay the principal of and interest on the Bonds when due. The City agrees that if, following a partial prepayment of such Base Rental Payments, the Leased Property is damaged or destroyed or taken by eminent domain, or a defect in title to the Leased Property is discovered, the City shall not be entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and the City shall not be entitled to any reimbursement of such Base Rental Payments. (c) If all of the Base Rental Payments are prepaid in accordance with the provisions of this Lease Agreement then, as of the date of such deposit pursuant to subsection (a) of this Section and, if applicable, the corresponding provisions hereof relating to the prepayment of Base Rental Payments attributable to Additional Bonds, and payment of all other amounts owed under this Lease Agreement, the term of this Lease Agreement shall be terminated. (d) Before making any prepayment pursuant to this Article, the City shall give written notice to the Authority and the Trustee specifying the date on which the prepayment will be made (conditionally or otherwise), which date shall be not less than 30 nor more than 60 days from the date such notice is given to the Authority. ARTICLE VIII COVENANTS Section 8.01 Right of Entry. The City hereby covenants and agrees that the Authority and its assignees shall have the right to enter upon and to examine and inspect the Leased Property during reasonable business hours (and in emergencies at all times) for any purpose connected with the Authority’s rights or obligations under this Lease Agreement, and for all other lawful purposes. Section 8.02 Liens and Encumbrances. In the event the City shall at any time during the term of this Lease Agreement cause any changes, alterations, additions, improvements, or other work to be done or performed or materials to be supplied, in or upon the Leased Property, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Leased Property and which may be secured by a mechanics’, materialmen’s or other lien against the Leased Property or the Authority’s interest therein, and will cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien, it may do so as long as such contest is in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment. The City shall not create any mortgage, pledge, lien, charge or encumbrance upon the Leased Property other than Permitted Encumbrances. 2017-11-21 Agenda Packet Page 423 16 Section 8.03 Quiet Enjoyment. The parties hereto mutually covenant that the City, by keeping and performing the covenants and agreements herein contained, shall at all times during the term of this Lease Agreement peaceably and quietly have, hold and enjoy the Leased Property without suit, trouble or hindrance from the Authority. Section 8.04 Authority Not Liable. The Authority and its directors, officers, agents and employees, shall not be liable to the City or to any other party whomsoever for any death, injury or damage that may result to any person or property by or from any cause whatsoever in, on or about the Leased Property. To the extent permitted by law, the City shall, at its expense, indemnify and hold the Authority and the Trustee and all directors, members, officers and employees thereof harmless against and from any and all claims by or on behalf of any person, firm, corporation or governmental authority arising from the acquisition, construction, occupation, use, operation, maintenance, possession, conduct or management of or from any work done in or about the Leased Property or from the subletting of any part thereof, including any liability for violation of conditions, agreements, restrictions, laws, ordinances, or regulations affecting the Leased Property or the occupancy or use thereof, but excepting the negligence or willful misconduct of the persons or entity seeking indemnity. The City also covenants and agrees, at its expense, to pay and indemnify and save the Authority and the Trustee and all directors, officers and employees thereof harmless against and from any and all claims arising from (a) any condition of the Leased Property and the adjoining sidewalks and passageways, (b) any breach or default on the part of the City in the performance of any covenant or agreement to be performed by the City pursuant to this Lease Agreement, (c) any act of negligence of licensees in connection with their use, occupancy or operation of the Leased Property, or (d) any accident, injury or damage whatsoever caused to any person, firm or corporation in or about the Leased Property or upon or under the sidewalks and from and against all costs, reasonable counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any claim referred to in this Section, but excepting the negligence or willful misconduct of the person or entity seeking indemnity. In the event that any action or proceeding is brought against the Authority or the Trustee or any director, member, officer or employee thereof, by reason of any such claim, the City, upon notice from the Authority or the Trustee or such director, member, officer employee thereof, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to the Authority or the Trustee or such director, member, officer or employee thereof. Section 8.05 Assignment and Subleasing. Neither this Lease Agreement nor any interest of the City hereunder shall be sold, mortgaged, pledged, assigned, or transferred by the City by voluntary act or by operation by law or otherwise. The Leased Property may be subleased in whole or in part by the City subject to all of the following conditions: (a) this Lease Agreement and the obligation of the City to make all Rental Payments hereunder shall remain the primary obligation of the City; (b) the City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (c) no such sublease by the City shall cause the Leased Property to be used for a purpose other than a governmental or proprietary function authorized under the provisions of the Constitution and laws of the State of California; (d) any sublease of the Leased Property by the City shall explicitly provide that such sublease is subject to all rights of the Authority under this Lease Agreement, including, the right 2017-11-21 Agenda Packet Page 424 17 to re-enter and re-let the Leased Property or terminate this Lease Agreement upon a default by the City; and (e) the City shall furnish the Authority and the Trustee with an Opinion of Counsel to the effect that such sublease will not, in and of itself, cause the interest on the Series 2017B Bonds, and any Additional Bonds issued on a tax-exempt basis, to be included in gross income for federal income tax purposes or to cause the Series 2017A Bonds not to be New Clean Renewable Energy Bonds under Section 54C of the Code or Specified Tax Credit Bonds under Section 6431(f)(3) of the Code. Section 8.06 Title to Leased Property. Upon the termination or expiration of this Lease Agreement (other than as provided in Section 6.01 and Section 7.01 hereof), and the first date upon which the Bonds are no longer Outstanding, all right, title and interest in and to the Leased Property shall vest in the City. Upon any such termination or expiration, the Authority shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record. Section 8.07 Authority’s Purpose. The Authority covenants that, prior to the discharge of this Lease Agreement and the Bonds, it will not engage in any activities inconsistent with the purposes for which the Authority is organized, as set forth in the Joint Powers Agreement. Section 8.08 Representations of the City. The City represents and warrants to the Authority that (a)the City has the full power and authority to enter into, to execute and to deliver this Lease Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement and the Indenture, and (b) the Leased Property will be used in the performance of essential governmental functions. Section 8.09 Representation of the Authority. The Authority represents and warrants to the City that the Authority has the full power and authority to enter into, to execute and to deliver this Lease Agreement, the Assignment Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement, the Assignment Agreement and the Indenture. ARTICLE IX NO CONSEQUENTIAL DAMAGES; USE OF THE PROPERTY; SUBSTITUTION OR RELEASE Section 9.01 No Consequential Damages. In no event shall the Authority or the Trustee be liable for any incidental, indirect, special or consequential damages in connection with or arising out of this Lease Agreement or the City’s use of the Leased Property. Section 9.02 Use of the Leased Property. The City will not use, operate or maintain the Leased Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease Agreement. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Leased Property) with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Leased Property; provided, however, that the City may contest in good faith the validity or application of any 2017-11-21 Agenda Packet Page 425 18 such law or rule in any reasonable manner which does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to any of the Leased Property or its interest or rights under this Lease Agreement. Section 9.03 Substitution or Release of the Leased Property. The City shall have the right to substitute alternate real property for any portion of the Leased Property or to release a portion of the Leased Property from this Lease Agreement upon compliance with the provisions of this Section 9.03. All costs and expenses incurred in connection with such substitution or release shall be borne by the City. Notwithstanding any substitution or release of Leased Property pursuant to this Section 9.03, there shall be no reduction in or abatement of the Base Rental Payments due from the City hereunder as a result of such substitution or release. Any such substitution or release of any portion of the Leased Property shall be subject to the following specific conditions, which are hereby made conditions precedent to such substitution or release: (a) an independent certified real estate appraiser selected by the City shall have found (and shall have delivered a certificate to the City and the Trustee setting forth its findings) that the Leased Property, as constituted after such substitution or release, (i) has an annual fair rental value at least equal to the maximum Base Rental Payments payable by the City in any Rental Period, and (ii) has a useful life in excess of the final maturity of any Outstanding Bonds; (b) the City shall have obtained or caused to be obtained a CLTA or ALTA title insurance policy or policies with respect to any substituted property in the amount at least equal to the aggregate principal amount of any Outstanding Bonds of the type and with the endorsements described in Section 5.02 hereof; (c) the City shall have provided the Trustee with an Opinion of Counsel to the effect that such substitution or release will not, in and of itself, cause the interest on the Series 2017B Bonds, and any Additional Bonds issued on a tax-exempt basis, to be included in gross income for federal income tax purposes or to cause the Series 2017A Bonds not to be New Clean Renewable Energy Bonds under Section 54C of the Code or Specified Tax Credit Bonds under Section 6431(f)(3) of the Code; (d) the City, the Authority and the Trustee shall have executed, and the City shall have caused to be recorded with the San Diego County Recorder, any document necessary to reconvey to the City the portion of the Leased Property being released and to include any substituted real property in the description of the Leased Property contained herein and in the Site Lease; (e) the City shall have provided notice of such substitution or release to each rating agency then rating the Bonds in accordance with Section 11.14 of the Indenture; (f) no event of default (within the meaning of Article VI hereof) has occurred and is continuing; (g) the City will give, or cause to be given, any notice of the occurrence of such substitution or release required to be given pursuant to the Continuing Disclosure Agreement; (h) the City will certify to the Trustee that the City has no current intent to sell or dispose of the substituted real property; and 2017-11-21 Agenda Packet Page 426 19 (i) the City shall certify to the Trustee that any substitution or release shall not cause the City to violate any of its covenants, representations and warranties made in this Lease Agreement. ARTICLE X MISCELLANEOUS Section 10.01 Law Governing. THIS LEASE AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 10.02 Notices. All written notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the City:City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Director of Finance If to the Authority: Chula Vista Municipal Financing Authority 276 Fourth Avenue Chula Vista, California 91910 Attention: Executive Director Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section. Section 10.03 Validity and Severability. If for any reason this Lease Agreement shall be held by a court of competent jurisdiction to be void, voidable or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants and conditions of the City hereunder, including the covenant to pay Rental Payments, is unenforceable for the full term hereof; then and in such event this Lease Agreement is and shall be deemed to be a Lease Agreement under which the Rental Payments are to be paid by the City annually in consideration of the right of the City to possess, occupy and use the Leased Property, and all of the terms, provisions and conditions of this Lease Agreement, except to the extent that such terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect. 2017-11-21 Agenda Packet Page 427 20 Section 10.04 Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Rental Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever and notwithstanding any dispute between the City and the Authority. Section 10.05 Taxes. The City shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Leased Property or the respective interests or estates therein; provided, however, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the term of this Lease Agreement as and when the same become due. The City or any sublessee may, at the City’s or such sublessee’s expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority or the Trustee shall notify the City or such sublessee that, in the opinion of independent counsel, by nonpayment of any such items, the interest of the Authority in the Leased Property will be materially endangered or the Leased Property, or any part thereof, will be subject to loss or forfeiture, in which event the City or such sublessee shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee. Section 10.06 Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Lease Agreement. Section 10.07 Amendments. (a) This Lease Agreement and the Site Lease may be amended and the rights and obligations of the Authority and the City hereunder and thereunder may be amended at any time by an amendment hereto or thereto which shall become binding upon execution and delivery by the Authority and the City, but only with the prior written consent of the Owners of a majority of the principal amount of the Bonds then Outstanding pursuant to the Indenture, provided that no such amendment shall (i) extend the payment date of any Base Rental Payments, reduce the interest component or principal component of any Base Rental Payments or change the prepayment terms and provisions, without the prior written consent of the Owner of each Bond so affected, or (ii) reduce the percentage of the principal amount of the Bonds the consent of the Owners of which is required for the execution of any amendment of this Lease Agreement or the Site Lease. (b) In addition to the amendments under subsection (a) of this Section, the Lease Agreement and the Site Lease and the rights and obligations of the Authority and the City hereunder and thereunder may also be amended at any time by an amendment hereto or thereto which shall become binding upon execution by the Authority and the City, without the written consents of any Owners but only to the extent permitted by law and only for any one or more of the following purposes: (i) to add to the agreements, conditions, covenants and terms required by the Authority or the City to be observed or performed herein or therein other agreements, conditions, 2017-11-21 Agenda Packet Page 428 21 covenants and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein or therein to or conferred herein or therein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or therein or in regard to questions arising hereunder or thereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and which shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel; (iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the continued exclusion from gross income for federal income tax purposes of the interest on the Series 2017B Bonds and the and any Additional Bonds issued on a tax-exempt basis or the status of the Series 2017A Bonds as New Clean Renewable Energy Bonds; (iv) to provide for the substitution or release of a portion of the Leased Property in accordance with the provisions of Section 9.03 hereof; (v) to provide for the issuance of Additional Bonds in accordance with Article III of the Indenture; or (vi) to make such other changes herein or therein or modifications hereto or thereto as the Authority or the City may deem desirable or necessary, and which shall not materially adversely affect the interests of the Owners, as evidenced by an Opinion of Bond Counsel. Section 10.08 Assignment. The City and the Authority hereby acknowledge the assignment of this Lease Agreement (except for the Authority’s obligations and its rights to indemnify and to give consents or approvals hereunder), and the Base Rental Payments payable hereunder, to the Trustee pursuant to the Assignment Agreement. Any right granted to the Authority hereunder which is assigned to the Trustee pursuant to the Assignment Agreement may be exercised by the Trustee without the consent of the Authority. To the extent that this Lease Agreement confers upon or gives or grants the Trustee any right, remedy or claim under or by reason of this Lease Agreement, the Trustee is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Section 10.09 Execution. This Lease Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Lease Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2017-11-21 Agenda Packet Page 429 S-1 IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. CITY OF CHULA VISTA By: David Bilby Director of Finance/Treasurer ATTEST: Kerry Bigelow City Clerk CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Gary Halbert Executive Director ATTEST: Kerry Bigelow Secretary 2017-11-21 Agenda Packet Page 430 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in the Leased Property conveyed under the foregoing Lease Agreement to the City of Chula Vista, a municipal corporation and a charter city duly organized and existing under the Constitution and laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the City Council of the City of Chula Vista, pursuant to authority conferred by resolution of the said City Council adopted on November 21, 2017 and the grantee consents to recordation thereof by its duly authorized officer. Dated: __________, 2017 CITY OF CHULA VISTA By: Gary Halbert City Manager 2017-11-21 Agenda Packet Page 431 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2017-11-21 Agenda Packet Page 432 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2017-11-21 Agenda Packet Page 433 A-1 EXHIBIT A LEGAL DESCRIPTION OF THE LEASED PROPERTY LEGAL DESCRIPTION PARCEL A (CHULA VISTA LIBRARY): THOSE PORTIONS OF LOTS 9 AND 16 IN QUARTER SECTION 137 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 16; THENCE NORTH 70°59’18” EAST ALONG THE SOUTHERLY LINE OF SAID LOT A DISTANCE OF 591.35 FEET TO THE WESTERLY LINE OF THE EASTERLY 30 FEET OF SAID LOT; THENCE NORTH 1846’14” WEST ALONG SAID WESTERLY LINE AND NORTHERLY PROLONGATION THEREOF 295.44 FEET TO THE NORTHERLY LINE OF THE SOUTHERLY 5 FEET OF SAID LOT 9; THENCE SOUTH 7059’24” WEST ALONG SAID NORTHERLY LINE 591.12 FEET TO THE WESTERLY LINE OF SAID LOT 9; THENCE ALONG THE WESTERLY LINE OF SAID LOTS 9 AND 16 SOUTH 1843’30” EAST 295.50 FEET TO THE POINT OF BEGINNING. PARCEL B (HARVEST PARK): PARCEL B1 LOT A OF CHULA VISTA TRACT NO. 97-02 MCMILLIN OTAY RANCH SPA 1 PHASE 2, UNIT 7 (R-12E), IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13885, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY ON DECEMBER 8, 1999. PARCEL B2 LOT D OF CHULA VISTA TRACT NO. 97-02 MCMILLIN OTAY RANCH SPA 1 PHASE 2, UNIT 7 (R-12E), IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13885, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY ON DECEMBER 8, 1999. 2017-11-21 Agenda Packet Page 434 B-1 EXHIBIT B BASE RENTAL PAYMENT SCHEDULE Date*Principal Component Interest Component Total Base Rental ___________ *Base Rental Deposit Date is 5 Business Days prior to each of the dates listed above and the Base Rental Payments due shall be deposited with the Trustee not later than the Base Rental Deposit Date. 2017-11-21 Agenda Packet Page 435 A-2 EXHIBIT C DESCRIPTION OF PROJECT The acquisition and installation of solar photovoltaic panels at the following sites to be installed by Johnson Controls, Inc. (“JCI”) pursuant to the terms of that certain Performance Contract between JCI and the City dated September 12, 2017: Site Production (kWh) Estimated Cost Police Station 817,609 $ 2,130,107 Civic Center 1,062,636 3,627,653 Main Library 577,505 1,825,467 Public Works Facility 588,466 1,833,740 South Library 282,920 873,112 Loma Verde Aquatic Center 180,620 523,215 Parkway Aquatic Center & Parkway Gymnasium 123,974 385,483 Montevalle Rec Center 175,787 587,077 Boys & Girls Club 99,057 330,101 Mount San Miguel Park 97,448 297,685 Animal Care 91,838 280,394 Salt Creek Recreation Center 70,610 207,025 Total 4,168,470 $12,901,059 In the event that there are unexpended proceeds of the Series 2017B Bonds following the installation of the solar photovoltaic panels, the City may, subject to the limitations set forth in Section 2.04 of this Lease Agreement, expend such amounts on other capital improvements of the City. 2017-11-21 Agenda Packet Page 436 Stradling Yocca Carlson & Rauth Draft of 11/14/17 RECORDING REQUESTED BY: Chula Vista Municipal Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Robert J. Whalen, Esq. [Space above for Recorder’s use.] THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. THE GRANTOR AND THE GRANTEE ARE GOVERNMENTAL AGENCIES. THE LEASE TERM IS LESS THAN 35 YEARS. SITE LEASE by and between CITY OF CHULA VISTA and CHULA VISTA MUNICIPAL FINANCING AUTHORITY Dated as of December 1, 2017 Relating to $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) 2017-11-21 Agenda Packet Page 437 SITE LEASE THIS SITE LEASE (this “Site Lease”), executed and entered into as of December 1, 2017, is by and between the CITY OF CHULA VISTA (the “City”), a municipal corporation and a charter city duly organized and existing under the Constitution and laws of the State of California, as lessor, and the CHULA VISTA MUNICIPAL FINANCING AUTHORITY, a joint exercise of powers authority duly organized and existing under the laws of the State of California (the “Authority”), as lessee. WITNESSETH: WHEREAS, the Authority is issuing its Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”) and its Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) (together, the “Bonds”) to finance the acquisition, construction, equipping and installation of certain capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City (together, the “Project”) as further described in the Lease Agreement (defined below); and; WHEREAS, in order to facilitate the issuance of the Bonds and the financing of the Project, the City will lease certain real property and the improvements located thereon (the “Leased Property”) to the Authority pursuant to this Site Lease, and the City will sublease the Leased Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof and being recorded concurrently herewith (the “Lease Agreement”); WHEREAS, the Leased Property is more particularly described in Exhibit A hereto; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to finance the Project through the issuance by the Authority of the Bonds payable from the base rental payments (the “Base Rental Payments”) to be made by the City under the Lease Agreement; WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide for the issuance of the Bonds pursuant to an Indenture, dated as of the date hereof, by and among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”); WHEREAS, all rights to receive the Base Rental Payments are being assigned, without recourse,by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof (the “Assignment Agreement”) and being recorded concurrently herewith; WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Site Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Site Lease; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto agree as follows: 2017-11-21 Agenda Packet Page 438 2 ARTICLE I DEFINITIONS Except as otherwise defined herein, or unless the context clearly otherwise requires, words and phrases defined in Article I of the Lease Agreement or in Article I of the Indenture shall have the same meaning in this Site Lease. ARTICLE II LEASE OF THE LEASED PROPERTY; RENTAL Section 2.01 Lease of Leased Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, for the benefit of the Owners of the Bonds, the Leased Property, subject only to Permitted Encumbrances, to have and to hold for the term of this Site Lease. Section 2.02 Rental. The Authority shall cause to be paid to the Trustee on the date of issuance of the Bonds for the benefit of the City as and for rental of the Leased Property hereunder the sum of $___________. Section 2.03 Purpose. The Authority shall use the Leased Property solely for the purpose of subleasing the same to the City pursuant to the Lease Agreement; provided that, in the event of default by the City under the Lease Agreement, the Authority may exercise the remedies provided in the Lease Agreement. ARTICLE III QUIET ENJOYMENT; DEFAULT Section 3.01 Quiet Enjoyment. The parties intend that the Leased Property will be leased back to the City pursuant to the Lease Agreement for the term thereof. It is further intended that, to the extent provided herein and in the Lease Agreement, if an event of default occurs under the Lease Agreement, the Authority, or its assignee, will have the right, for the then remaining term of this Site Lease to (a) take possession of the Leased Property, (b) if it deems it appropriate, cause an appraisal of the Leased Property and a study of the then reasonable use thereof to be undertaken, and (c) relet the Leased Property. Subject to any rights the City may have under the Lease Agreement (in the absence of an event of default) to possession and enjoyment of the Leased Property, the City hereby covenants and agrees that it will not take any action to prevent the Authority from having quiet and peaceable possession and enjoyment of the Leased Property during the term hereof and will, at the request of the Authority and at the City’s cost, to the extent that it may lawfully do so, join in any legal action in which the Authority asserts its right to such possession and enjoyment. Section 3.02 Default. In the event the Authority shall be in default in the performance of any obligation on its part to be performed under the terms hereof, which default continues for thirty (30) days following notice and demand for correction thereof to the Authority, the City may exercise any and all remedies granted by law, except that no merger of this Site Lease and of the Lease Agreement shall be deemed to occur as a result thereof; provided that, so long as the Bonds executed and delivered pursuant to the Indenture are Outstanding, the City shall have no power to terminate 2017-11-21 Agenda Packet Page 439 3 this Site Lease by reason of any default on the part of the Authority, if such termination would affect or impair any assignment of the Lease Agreement then in effect between the Authority and the Trustee. ARTICLE IV SPECIAL COVENANTS AND PROVISIONS Section 4.01 Waste. The Authority agrees that at all times that it is in possession of the Leased Property, it will not commit, suffer or permit any waste on the Leased Property, and that it will not willfully or knowingly use or permit the use of the Leased Property for any illegal purpose or act. Section 4.02 Further Assurances and Corrective Instruments. The City and the Authority agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be leased or for carrying out the expressed intention of this Site Lease, the Indenture and the Lease Agreement. Section 4.03 Waiver of Personal Liability. All liabilities under this Site Lease on the part of the Authority shall be solely liabilities of the Authority as a joint exercise of powers entity, and the City hereby releases each and every director, officer and employee of the Authority of and from any personal or individual liability under this Site Lease. No director, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this Site Lease to the City or to any other party whomsoever for anything done or omitted to be done by the Authority hereunder. All liabilities under this Site Lease on the part of the City shall be solely liabilities of the City as a municipal corporation, and the Authority hereby releases each and every member, officer and employee of the City of and from any personal or individual liability under this Site Lease. No member, officer or employee of the City shall at any time or under any circumstances be individually or personally liable under this Site Lease to the Authority or to any other party whomsoever for anything done or omitted to be done by the City hereunder. Section 4.04 Taxes. The City covenants and agrees to pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property. Section 4.05 Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Leased Property at any reasonable time to inspect the same. Section 4.06 Representations of the City. The City represents and warrants to the Authority and the Trustee, as the assignee of the Authority’s rights hereunder, as follows: (a) the City has the full power and authority to enter into, to execute and to deliver this Site Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution of this Site Lease; 2017-11-21 Agenda Packet Page 440 4 (b) the Leased Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien or encumbrance which would prohibit or materially interfere with the use of the Leased Property for governmental purposes as contemplated by the City; provided, however, such use is subject to certain restrictions contained in the Permitted Encumbrances (as defined in the Lease Agreement); (c) all taxes, assessments or impositions of any kind with respect to the Leased Property, except current taxes, have been paid in full; and (d) the Leased Property is necessary to the City in order for the City to perform its governmental functions. Section 4.07 Representations of the Authority. The Authority represents and warrants to the City and the Trustee, as its assignee hereunder,that the Authority has the full power and authority to enter into, to execute and to deliver this Site Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this Site Lease. Section 4.08 Eminent Domain. In the event the whole or any portion of the Leased Property is taken by eminent domain proceedings, the interest of the Authority shall be recognized and is hereby determined to be the amount of the then unpaid Base Rental Payments payable under the Lease Agreement, and the amount of the unpaid Additional Rental Payments due under the Lease Agreement, and any condemnation proceeds paid shall first be applied to the payment of the Base Rental Payments and the Additional Rental Payments, with the balance of the award, if any, being paid to the City. ARTICLE V ASSIGNMENT, SUBLEASING, MORTGAGING AND SELLING Section 5.01 Assignment and Subleasing. This Site Lease may be sold or assigned and the Leased Property subleased, as a whole or in part, by the Authority without the necessity of obtaining the consent of the City, if an event of default occurs under the Lease Agreement. The Authority shall, within 30 days after such an assignment or sublease, furnish or cause to be furnished to the City a true and correct copy of such assignment or sublease, as the case may be. Section 5.02 Restrictions on City. The City agrees that, except with respect to Permitted Encumbrances, it will not mortgage, sell, encumber, assign, transfer or convey the Leased Property or any portion thereof during the term of this Site Lease. ARTICLE VI TERM; TERMINATION Section 6.01 Term. The term of this Site Lease shall commence on the date of issuance of the Bonds and shall remain in full force and effect from such date to and including December 1, 20__ unless such term is extended or sooner terminated as hereinafter provided. Section 6.02 Extension; Early Termination. If, on December 1, 20__, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the 2017-11-21 Agenda Packet Page 441 5 Indenture shall not be discharged by its terms, or if the Rental Payments payable under the Lease Agreement shall have been abated at any time, then the term of this Site Lease shall be automatically extended until the date upon which all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, except that the term of this Site Lease shall in no event be extended beyond December 1, 2050. If, prior to December 1, 20__ all Bonds shall be fully paid, or provisions therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, the term of this Site Lease shall end simultaneously therewith. Section 6.03 Surrender Upon Termination. The Authority agrees, upon the termination hereof, to quit and surrender the Leased Property in the same good order and condition as the same was in at the time of commencement of the terms hereunder, reasonable wear and tear excepted, and agrees that any permanent improvements to the Leased Property at the time of the termination hereof shall remain thereon and title thereto shall vest in the City. ARTICLE VII MISCELLANEOUS Section 7.01 Binding Effect. This Site Lease shall inure to the benefit of and shall be binding upon the City, the Authority and their respective successors and assigns. Section 7.02 Severability. In the event any provision of this Site Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.03 Amendments, Changes and Modifications. This Site Lease may be amended, changed, modified, altered or terminated only in accordance with the provisions of Section 10.07 of the Lease Agreement. Section 7.04 Assignment to Trustee. The Authority and City acknowledge that, concurrently with the execution of this Site Lease, the Authority is assigning its right, title and interest in and to this Site Lease (but none of its obligations and none of its rights to provide consents or approvals hereunder) to the Trustee pursuant to the Assignment Agreement. The City consents to such assignment. Section 7.05 Execution In Counterparts. This Site Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06 Applicable Law. This Site Lease shall be governed by and construed in accordance with the laws of the State of California. Section 7.07 Captions. The captions or headings in this Site Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Site Lease. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2017-11-21 Agenda Packet Page 442 S-1 IN WITNESS WHEREOF, the Authority and the City have caused this Site Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. CITY OF CHULA VISTA By: David Bilby Director of Finance/Treasurer ATTEST: Kerry Bigelow City Clerk CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Gary Halbert Executive Director ATTEST: Kerry Bigelow Secretary 2017-11-21 Agenda Packet Page 443 CERTIFICATE OF ACCEPTANCE This is to certify that the interest in real property conveyed under the foregoing Site Lease to the Chula Vista Municipal Financing Authority (the “Authority”), a body corporate and politic, is hereby accepted by the undersigned officer or agent on behalf of the Board of Directors of the Authority (the “Board”), pursuant to authority conferred by a resolution of said Board adopted on November 21, 2017, and the grantee consents to recordation thereof by its duly authorized officer. Dated: __________, 2017 CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Gary Halbert Executive Director 2017-11-21 Agenda Packet Page 444 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2017-11-21 Agenda Packet Page 445 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2017-11-21 Agenda Packet Page 446 A-1 EXHIBIT A LEGAL DESCRIPTION OF THE LEASED PROPERTY LEGAL DESCRIPTION Real Property in the City of Chula Vista, County of San Diego, State of California, described as follows: PARCEL A (CHULA VISTA LIBRARY): THOSE PORTIONS OF LOTS 9 AND 16 IN QUARTER SECTION 137 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 16; THENCE NORTH 70°59’18” EAST ALONG THE SOUTHERLY LINE OF SAID LOT A DISTANCE OF 591.35 FEET TO THE WESTERLY LINE OF THE EASTERLY 30 FEET OF SAID LOT; THENCE NORTH 1846’14” WEST ALONG SAID WESTERLY LINE AND NORTHERLY PROLONGATION THEREOF 295.44 FEET TO THE NORTHERLY LINE OF THE SOUTHERLY 5 FEET OF SAID LOT 9; THENCE SOUTH 7059’24” WEST ALONG SAID NORTHERLY LINE 591.12 FEET TO THE WESTERLY LINE OF SAID LOT 9; THENCE ALONG THE WESTERLY LINE OF SAID LOTS 9 AND 16 SOUTH 1843’30” EAST 295.50 FEET TO THE POINT OF BEGINNING. PARCEL B (HARVEST PARK): PARCEL B1 LOT A OF CHULA VISTA TRACT NO. 97-02 MCMILLIN OTAY RANCH SPA 1 PHASE 2, UNIT 7 (R-12E), IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13885, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY ON DECEMBER 8, 1999. PARCEL B2 LOT D OF CHULA VISTA TRACT NO. 97-02 MCMILLIN OTAY RANCH SPA 1 PHASE 2, UNIT 7 (R-12E), IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13885, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY ON DECEMBER 8, 1999. 2017-11-21 Agenda Packet Page 447 Stradling Yocca Carlson & Rauth Draft of 11/14/17 1 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement dated as of December 1, 2017 (the “Disclosure Agreement”) is executed and delivered by the City of Chula Vista (the “City”) and Willdan Financial Services (the “Dissemination Agent”) in connection with the execution and delivery of $_________ Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”) and the $__________ Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Bonds”). The Bonds are being executed pursuant to an Indenture dated as of December 1, 2017 (the “Indenture”), by and among the City, U.S. Bank National Association, as trustee (the “Trustee”) and the Chula Vista Municipal Financing Authority (the “Authority”). The City covenants as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (defined below). SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Beneficial Owner” shall mean any person which 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). “Disclosure Representative” shall mean the City Manager, Assistant City Manager, Deputy City Manager, Chief Financial Officer, Director of Finance/Treasurer of the City or the designee of any one of such officers, or such other officer or employee as the City Manager shall designate in writing from time to time. “Dissemination Agent” shall mean Willdan Financial Services, or any successor dissemination agent designated in writing by the City Manager and which has filed with the City a written acceptance of such designation. “EMMA” shall mean the Electronic Municipal Market Access system of the MSRB. “Listed Events” shall mean any of the events listed in Sections 5(a) and 5(b) of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. “Official Statement” shall mean the Official Statement relating to the Bonds dated _____________, 2017. “Participating Underwriter” shall mean Brandis Tallman LLC. 2017-11-21 Agenda Packet Page 448 2 “Repository” shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California. SECTION 3. Provision of Annual Reports. (a) The City shall, or, upon delivery of the Annual Report to the Dissemination Agent, shall cause the Dissemination Agent to, not later than March 31 of each year, commencing March 31, 2018, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(d). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report. (b) Not later than five (5) days prior to the date for the filing of an Annual Report, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by five (5) days prior to such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to inquire if the City is in compliance with subsection (a). (c) If the City is unable to provide to the Repository an Annual Report by the date required in subsection (a), the Dissemination Agent shall send a notice to the Repository in the form required by the Repository stating that the Annual Report has not been filed and, if provided by the City, the date the City anticipates the filing to be made. (d) The Dissemination Agent shall: (i) determine each year prior to date for providing the Annual Report the name and address of the Repository if other than the MSRB; and (ii) file a report with the City certifying that the Annual Report has been provided to the Repository pursuant to this Disclosure Agreement and stating the date it was provided to the Repository. 2017-11-21 Agenda Packet Page 449 3 SECTION 4. Content of Annual Reports. The Official Statement shall be filed as and shall constitute the City’s Annual Report due by March 31, 2018. Thereafter, the City’s Annual Report shall contain or include by reference the following: (a) The City’s audited financial statements, prepared in accordance with generally accepted auditing standards for municipalities in the State of California, for the prior fiscal year of the City. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) To the extent not contained in the audited financial statements filed pursuant to the preceding subsection (a) by the date required by Section 3 hereof, updates of Table Nos. 10, 11, 15, 19, 20, 25 and 26 set forth in the Official Statement. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The City shall clearly identify each such other document so included by reference. In the event that the City shall modify the basis upon which its financial statements are prepared, the Dissemination Agent shall provide a notice of such modification to the Repository, including the information set forth in Section 8(b) below. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause the Dissemination Agent to give, notice to the Repository of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) business days after the occurrence of the event: 1. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting financial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB); 6. tender offers; 7. defeasances; 8. ratings changes; and 2017-11-21 Agenda Packet Page 450 4 9. bankruptcy, insolvency, receivership or similar proceedings. Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not more than ten (10) Business Days after the occurrence of such event: 1. unless described in paragraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 2. the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 3. appointment of a successor or additional trustee or the change of the name of a trustee; 4. nonpayment related defaults; 5. modifications to the rights of Owners of the Bonds; 6. notices of prepayment; and 7. release, substitution or sale of property securing repayment of the Bonds. (c) Whenever the City obtains knowledge of the occurrence of a Listed Event under 5(b) above, the City shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If a Listed Event under Section 5(a) has occurred, or if the City determines that knowledge of the occurrence of a Listed Event under 5(b) above would be material under applicable federal securities laws, the City shall file a notice of such Listed Event with the Repository in a timely manner not more than 10 business days after the event. Notwithstanding the foregoing, notice of the Listed Event described in subsection (b)(6) need not be given under this section any earlier 2017-11-21 Agenda Packet Page 451 5 than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. (e) The City hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the City and that the Dissemination Agent shall not be responsible for determining whether the City’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. The City’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. SECTION 7. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty days written notice to the City and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the City and shall have no duty to review any information provided to it by the City. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the City in a timely manner and in a form suitable for filing. SECTION 8. Amendment; Waiver. (a) Notwithstanding any other provision of this Disclosure Agreement, the City may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (1) If the amendment or waiver related to the provisions of Sections 3(a), 4, or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (2) The undertaking hereunder, 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 execution and delivery of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (3) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. (b) In the event of any amendment or waiver of a provision of this Disclosure Agreement, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment is related to the accounting principles to be followed in preparing financial statements, (i) notice of such change 2017-11-21 Agenda Packet Page 452 6 shall be given in the same manner as for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in 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 9. Format of Filings with Repository. Any report or filing with the Repository pursuant to this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying information as is prescribed by the Repository. SECTION 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation hereunder to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Agreement, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the City to comply with this Disclosure Agreement shall be an action to compel performance and the City shall have no monetary liability to any person as a result of any failure to comply with the terms of this Disclosure Agreement. SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees, to the extent permitted by law, to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. In performing its duties hereunder, the Dissemination Agent shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. 2017-11-21 Agenda Packet Page 453 7 SECTION 13. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the City:City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attention: City Manager To the Dissemination Agent: Willdan Financial Services 27368 Via Industria, Suite 200 Temecula, CA 92590 SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2017-11-21 Agenda Packet Page 454 8 SECTION 16. Signatures. This Disclosure Agreement has been executed by the undersigned on the date hereof, and such signature by the City binds the City to the undertaking herein provided and such signature by the Dissemination Agent binds the Dissemination Agent to the terms hereof applicable to it. CITY OF CHULA VISTA By: Director of Finance/Treasurer WILLDAN FINANCIAL SERVICES, as Dissemination Agent By: Authorized Officer 2017-11-21 Agenda Packet Page 455 Stradling Yocca Carlson & Rauth Draft of 11/14/17 RECORDING REQUESTED BY: Chula Vista Municipal Financing Authority AND WHEN RECORDED RETURN TO: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attention: Robert J. Whalen, Esq. [Space above for Recorder’s use.] THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11921 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE. THE ASSIGNOR IS A GOVERNMENTAL AGENCY. THE LEASE TERM IS LESS THAN 35 YEARS. ASSIGNMENT AGREEMENT by and between CHULA VISTA MUNICIPAL FINANCING AUTHORITY and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of December 1, 2017 Relating to $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $_____________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) 2017-11-21 Agenda Packet Page 456 1 ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”), executed and entered into as of December 1, 2017, is by and between the CHULA VISTA MUNICIPAL FINANCING AUTHORITY, a joint exercise of powers entity organized and existing under and by virtue of the laws of the State of California (the “Authority”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as Trustee (the “Trustee”). WITNESSETH: WHEREAS, the City of Chula Vista (the “City”) and the Authority desire to finance the costs of the acquisition and construction and installation of consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City (together, the “Project”) as further described in the Lease Agreement (defined below); and; WHEREAS, in order to finance the Project, the City is leasing certain real property and the improvements located thereon (the “Leased Property”) to the Authority pursuant to a Site Lease, dated as of the date hereof and being recorded concurrently herewith, and the City is subleasing the Leased Property back from the Authority pursuant to a Lease Agreement dated as of the date hereof and being recorded concurrently herewith; WHEREAS, the Leased Property is more particularly described in Exhibit A hereto; WHEREAS, under the Lease Agreement, the City is obligated to make Base Rental Payments (as defined in the Lease Agreement) to the Authority; WHEREAS, the Authority desires to assign, without recourse, certain of its rights in the Site Lease and the Lease Agreement, including its right to receive the Base Rental Payments, to the Trustee for the benefit of the owners of the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”) and the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) (together, the “Bonds”) being issued pursuant to the Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and the Trustee; WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Assignment Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Assignment Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows: Section 1. Assignment. The Authority, for good and valuable consideration, the receipt of which is hereby acknowledged, does hereby sell, assign and transfer to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the owners of the Bonds, all of its right, title and interest in and to the Site Lease and the Lease Agreement including, without limitation, its right to 2017-11-21 Agenda Packet Page 457 2 receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided, however, that the Authority shall retain its obligations under the Lease Agreement and Site Lease and its rights to indemnification and to give approvals and consents under the Lease Agreement and the Site Lease and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment, subject to the terms and provisions of the Indenture, and all such Base Rental Payments shall be applied and the rights so assigned shall be exercised by the Trustee as provided in the Lease Agreement and the Indenture. Section 3. Conditions. This Assignment Agreement shall impose no obligations upon the Trustee beyond those expressly provided in the Indenture. Section 4. Further Assurances. The Authority shall make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Assignment Agreement, and for better assuring and confirming to the Trustee, for the benefit of the owners of the Bonds, the rights intended to be conveyed pursuant hereto. Section 5. Governing Law. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST. Section 6. Execution. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Assignment Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 2017-11-21 Agenda Packet Page 458 S-1 IN WITNESS WHEREOF, the Authority and the Trustee have caused this Assignment Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above-written. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Gary Halbert Executive Director ATTEST: Kerry Bigelow Secretary [SIGNATURES CONTINUED ON NEXT PAGE.] 2017-11-21 Agenda Packet Page 459 S-2 [SIGNATURE PAGE CONTINUED.] U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Ismael Diaz Authorized Officer 2017-11-21 Agenda Packet Page 460 CONSENT The City of Chula Vista hereby consents to the foregoing. CITY OF CHULA VISTA, as Lessee By: David Bilby Director of Finance/Treasurer ATTEST: Kerry Bigelow City Clerk 2017-11-21 Agenda Packet Page 461 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2017-11-21 Agenda Packet Page 462 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On ___________________ before me, ____________________________________, Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal SIGNATURE OF NOTARY PUBLIC 2017-11-21 Agenda Packet Page 463 A-1 EXHIBIT A LEGAL DESCRIPTION OF THE LEASED PROPERTY PARCEL A (CHULA VISTA LIBRARY): THOSE PORTIONS OF LOTS 9 AND 16 IN QUARTER SECTION 137 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. ACCORDING TO MAP THEREOF NO. 505, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MARCH 13, 1888, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 16; THENCE NORTH 70°59’18” EAST ALONG THE SOUTHERLY LINE OF SAID LOT A DISTANCE OF 591.35 FEET TO THE WESTERLY LINE OF THE EASTERLY 30 FEET OF SAID LOT; THENCE NORTH 1846’14” WEST ALONG SAID WESTERLY LINE AND NORTHERLY PROLONGATION THEREOF 295.44 FEET TO THE NORTHERLY LINE OF THE SOUTHERLY 5 FEET OF SAID LOT 9; THENCE SOUTH 7059’24” WEST ALONG SAID NORTHERLY LINE 591.12 FEET TO THE WESTERLY LINE OF SAID LOT 9; THENCE ALONG THE WESTERLY LINE OF SAID LOTS 9 AND 16 SOUTH 1843’30” EAST 295.50 FEET TO THE POINT OF BEGINNING. PARCEL B (HARVEST PARK): PARCEL B1 LOT A OF CHULA VISTA TRACT NO. 97-02 MCMILLIN OTAY RANCH SPA 1 PHASE 2, UNIT 7 (R-12E), IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13885, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY ON DECEMBER 8, 1999. PARCEL B2 LOT D OF CHULA VISTA TRACT NO. 97-02 MCMILLIN OTAY RANCH SPA 1 PHASE 2, UNIT 7 (R-12E), IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 13885, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY ON DECEMBER 8, 1999. 2017-11-21 Agenda Packet Page 464 4842-3652-6418.3 NP DRAFT 11/15 $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) BOND PURCHASE AGREEMENT _________, 2017 Chula Vista Municipal Financing Authority 276 Fourth Avenue Chula Vista, California 91910 City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Ladies and Gentlemen: Brandis Tallman LLC (the “Underwriter”) offers to enter into this Bond Purchase Agreement (this “Purchase Contract”) with the Chula Vista Municipal Financing Authority (the “Authority”) and the City of Chula Vista (the “City”). This offer is made subject to the Authority’s and the City’s acceptance by execution of this Purchase Contract and delivery of the same to the Underwriter on or before 11:59 p.m. Pacific Time on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority and the City at any time prior to such acceptance. Upon the Authority’s and the City’s acceptance hereof, the Purchase Contract will be binding upon the Authority, the City and the Underwriter. The Authority and the City acknowledge and agree that: (i) the primary role of the Underwriter, as an underwriter, is to purchase securities, for resale to investors, in an arm’s length commercial transaction between the Authority, the City, and the Underwriter and the Underwriter has financial and other interests that differ from those of the Authority and the City; (ii) the Underwriter is acting solely as a principal and is not acting as a Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), financial advisor or fiduciary to the Authority and the City, and has not assumed any advisory or fiduciary responsibility to the Authority and the City with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Authority and the City on other matters); (iii) the only obligations the Underwriter has to the Authority and the City with respect to the transaction contemplated 2017-11-21 Agenda Packet Page 465 4842-3652-6418.3 2 hereby expressly are set forth in this Purchase Contract; and (iv) the Authority and the City have consulted their own municipal, legal, accounting, tax, financial and other advisors, as applicable, to the extent they have deemed appropriate. The City acknowledges and represents that it has engaged Harrell & Company Advisors, LLC as its municipal advisor and will rely solely on the financial advice of Harrell & Company Advisors, LLC with respect to the Bonds (as defined below). The City acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter’s disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (“MSRB”). Capitalized terms used in this Purchase Contract and not otherwise defined herein will have the respective meanings set forth for such terms in the Indenture (defined below). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Contract, the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell and deliver to the Underwriter, all (but not less than all) of the following bonds: (a) the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series A Bonds”) at a purchase price of $___________ (being an amount equal to the principal amount of the Series A Bonds ($___________), plus/less an original issue premium/discount of $___________, and less an underwriter’s discount of $___________), and (b) the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt) (the “Series B Bonds,” and, together with the Series A Bonds, the “Bonds”) at a purchase price of $___________ (being an amount equal to the principal amount of the Series B Bonds ($___________), plus/less an original issue premium/discount of $___________, and less an underwriter’s discount of $___________). The obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds will be conditioned on the sale and delivery of all of the Bonds by the Authority to the Underwriter at Closing (hereafter defined). Section 2. Bond Terms; Authorizing Instruments; Purpose. The Bonds will be dated their date of delivery and will mature and bear interest as shown on Exhibit A. The Bonds will be as described in, and will be issued and secured under, an Indenture, dated as of December 1, 2017 (the “Indenture”), among the Authority, the City and U.S. Bank National Association, as trustee (the “Trustee”). The Bonds are payable and subject to redemption as shown in Exhibit A. The Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code, and are payable from and secured by the Authority’s pledge of (i) “Base Rental Payments” under and as defined in the Indenture, which will be made by the City under a Lease Agreement, dated as of December 1, 2017, between the Authority, as lessor, and the City, as lessee (the “Lease Agreement”) and (ii)moneys in certain funds and accounts held by the Trustee under the Indenture. The City and the Authority are also entering into a Site Lease dated as of December 1, 2017 (the “Site Lease”). Under the Site Lease, the City leases the real property described therein to the Authority and, under the Lease Agreement, the Authority leases the same real property back to the City. 2017-11-21 Agenda Packet Page 466 4842-3652-6418.3 3 The Authority will assign to the Trustee its right to receive the Base Rental Payments pursuant to an Assignment Agreement, dated as of December 1, 2017 (the “Assignment Agreement”). The Authority is issuing the Bonds to (i) provide funds to finance capital improvements related to City buildings, equipment and infrastructure as set forth in the Infrastructure, Facilities, and Equipment Expenditure Plan adopted by the City Council of the City on December 6, 2016 and any other capital improvements or equipment as set forth in a written certificate of the City, and (ii) pay the costs of issuing the Bonds. Section 3. [Reserved]. Section 4. Official Statement; Continuing Disclosure. The Authority and the City have delivered to the Underwriter the Preliminary Official Statement dated November ____, 2017 (the “Preliminary Official Statement”) and will deliver to the Underwriter a final official statement dated the date of this Purchase Contract (as amended and supplemented from time to time pursuant to Section 5(i) of this Purchase Contract, the “Official Statement”). Subsequent to its receipt of the Authority’s and the City’s 15c2-12 Certificates, in substantially the forms attached hereto as Exhibit B-1 and Exhibit B-2, deeming the Preliminary Official Statement final for purposes of Rule 15c2-12 of the Securities and Exchange Commission (“Rule 15c2-12”), the Underwriter has distributed copies of the Preliminary Official Statement. The Authority and the City hereby ratify the use by the Underwriter of the Preliminary Official Statement and authorize the Underwriter to use and distribute in printed and/or electronic format the Official Statement (including all information previously permitted to have been omitted by Rule 15c2-12, and any supplements and amendments thereto as have been approved by the Authority and the City, the Indenture, the Site Lease, the Assignment Agreement, the Lease Agreement, this Purchase Contract, the Continuing Disclosure Agreement (hereinafter defined) and all information contained therein, and all other documents, certificates and written statements furnished by the Authority and the City to the Underwriter in connection with the transactions contemplated by this Purchase Contract, in connection with the offer and sale of the Bonds by the Underwriter. The Underwriter hereby agrees to deliver a copy of the Official Statement to the (the MSRB through the Electronic Municipal Marketplace Access website of the MSRB on or before the Closing and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. The Authority and the City agree to deliver to the Underwriter as many copies of the Official Statement as the Underwriter will reasonably request as necessary to comply with paragraph (b)(4) of Rule 15c2-12. The Authority and the City agree to deliver the final Official Statement within seven business days after the execution hereof, or such earlier date identified by the Underwriter to be necessary to allow the Underwriter to meet its obligations under Rule 15c2-12 and Rule G-32 of the MSRB. In connection with issuance of the Bonds, and in order to assist the Underwriter with complying with the provisions of Rule 15c2-12, the City will execute a continuing disclosure agreement (the “Continuing Disclosure Agreement”) with Willdan Financial Services, as dissemination agent (the “Dissemination Agent”), under which the City will undertake to provide certain financial and operating data as required by Rule 15c2-12. The form of the 2017-11-21 Agenda Packet Page 467 4842-3652-6418.3 4 Continuing Disclosure Agreement is attached as an appendix to the Preliminary Official Statement and will be attached as an appendix to the final Official Statement. Section 5. Representations, Warranties and Covenants of the Authority. The Authority hereby represents, warrants and agrees with the Underwriter that: (a) The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State of California (the “State”) and has all necessary power and authority to adopt the Authority Resolution (defined below), to enter into and perform its duties under the Indenture, the Assignment Agreement, the Lease Agreement, the Site Lease, and this Purchase Contract (the “Authority Agreements”). (b) After the City Council conducted a public hearing, the board of directors (the “Board”) of the Authority has taken official action by resolution adopted on ______, 2017 (the “Authority Resolution”) adopted by a majority of the members of the Board at a regular meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of the Authority Agreements and the execution and delivery of the Official Statement and the taking of any and all such action as may be required on the part of the Authority to carry out, give effect to and consummate the transactions contemplated hereby. (c) By all necessary official action, the Authority has duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement, has duly authorized and approved the execution and delivery of, and the performance of its obligations under, the Bonds and the Authority Agreements, and the consummation by it of all other transactions contemplated by the Authority Resolution, the Authority Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered by their respective parties, the Authority Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the Authority, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) The statements and information contained in the Official Statement (other than CUSIP numbers, information relating to DTC and its book-entry only system and information provided by the Underwriter as to which no view is expressed) do not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make such statements therein, in the light of the circumstances under which they were made, not misleading. (e) As of the date hereof, except as disclosed in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending against the Authority or, to the best knowledge of the Authority, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or 2017-11-21 Agenda Packet Page 468 4842-3652-6418.3 5 powers of the Authority, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of Authority Agreements or the Bonds, or (iii) in any way question or affect the Authority Agreements or the transactions contemplated by the Authority Agreements, the Official Statement, or any other agreement or instrument to which the Authority is a party relating to the Bonds. (f) There is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the Authority required for the execution and delivery of this Purchase Contract or the consummation by the Authority of the other transactions contemplated by the Official Statement or the Authority Agreements. (g) Any certificate signed by any official of the Authority authorized to do so will be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (h) Except as previously disclosed to the Underwriter, the Authority is not in default, and at no time has the Authority defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) If between the date of this Purchase Contract and the date which is 25 days following the End of the Underwriting Period (as defined below), any event will occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority will immediately notify the Underwriter, and if, in the opinion of the Underwriter and the Authority, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. “End of the Underwriting Period” will mean the later of: (i) the Closing Date, and (ii) the date the Underwriter does not directly retain an unsold balance of the Bonds for sale to the public, provided that unless the Underwriter notifies the Authority on or prior to the Closing Date that it directly retains an unsold balance of the Bonds for sale to the public, the End of the Underwriting Period will be deemed to have occurred on the Closing Date. (j) After the Closing, the Authority will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter reasonably objects in writing or which is disapproved by Underwriter’s Counsel (hereinafter defined). If any event relating to or affecting the Authority occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Authority will use its best efforts to assist the Underwriter in preparing (at the expense of the Authority for 25 days after the date of the Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it 2017-11-21 Agenda Packet Page 469 4842-3652-6418.3 6 will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the Authority will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. Section 6. Representations, Warranties and Covenants of the City. The City hereby represents, warrants and agrees with the Underwriter that: (a) The City is a municipal corporation, organized and existing under the laws of the State of California (the “State”) and has all necessary power and authority to adopt its resolution adopted on _____, 2017 (the “City Resolution”), to enter into and perform its duties under the Site Lease, the Lease Agreement, the Indenture, the Continuing Disclosure Agreement and this Purchase Contract (the “City Agreements”) and, when executed and delivered by the respective parties thereto, the City Agreements will each constitute legal, valid and binding obligation of the City enforceable in accordance with its respective terms. (b) The city council (the “City Council”) of the City has taken official action by conducting a public hearing and adopting the City Resolution by a majority of the members of the City Council at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of the City Agreements and the execution and delivery of the Official Statement and the taking of any and all such action as may be required on the part of the City to carry out, give effect to and consummate the transactions contemplated hereby. (c) By all necessary official action, the City has duly adopted the City Resolution, has duly authorized the preparation and delivery of the Preliminary Official Statement and the preparation, execution and delivery of the Official Statement, has duly authorized and approved the execution and delivery of, and the performance of its obligations under, the City Agreements, and the consummation by it of all other transactions contemplated by the City Resolution, the City Agreements, the Preliminary Official Statement and the Official Statement. When executed and delivered by their respective parties, the City Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute legal, valid and binding agreements or obligations of the City, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State. (d) At the time of the City’s acceptance hereof and at all times subsequent thereto up to and including the time of the Closing, the information and statements in the Official Statement (other than CUSIP numbers, any information concerning the Depository Trust Company and the book-entry system for the Bonds and information provided by the Underwriter as to which no view is expressed) do not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2017-11-21 Agenda Packet Page 470 4842-3652-6418.3 7 (e) As of the date hereof, other than as disclosed in the Official Statement, there is no action, suit, proceeding or investigation before or by any court, public board or body pending against the City or, to the best knowledge of the City, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City, or the titles of its members or officers; (ii) in any way question or affect the validity or enforceability of City Agreements or the Bonds, or (iii) in any way question or affect the Purchase Contract or the transactions contemplated by the Purchase Contract, the Official Statement, or any other agreement or instrument to which the City is a party relating to the Bonds. (f) There is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the City required for the execution and delivery of this Purchase Contract or the consummation by the City of the other transactions contemplated by the Official Statement or the City Agreements. (g) Any certificate signed by any official of the City authorized to do so will be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (h) Except as previously disclosed to the Underwriter, the City is not in default, and at no time has the City defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) Except as disclosed in the Official Statement, there has not been any materially adverse change in the financial condition of the City since June 30, 2016, and there has been no occurrence or circumstance or combination thereof that is reasonably expected to result in any such materially adverse change. (j) If between the date of this Purchase Contract and the date which is 25 days following the End of the Underwriting Period (as defined above), any event will occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City will immediately notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. (k) After the Closing, the City will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter reasonably objects in writing or which is disapproved by Underwriter’s Counsel. If any event relating to or affecting the City occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the City will use its best efforts to assist the Underwriter in preparing (at the expense of the City for 25 days after the date of the Closing, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the 2017-11-21 Agenda Packet Page 471 4842-3652-6418.3 8 Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. For the purposes of this subsection, the City will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. (l) Except as disclosed in the Official Statement, the City has not previously failed to comply in all material respects with any undertakings under Rule 15c2-12 in the past five years. (m) The City does not need the consent of its auditor to include its comprehensive annual financial report for the fiscal year ended June 30, 2016 as an appendix to the Official Statement. (n) The City covenants with the Underwriter that the City will cooperate with the Underwriter (at the cost and written directions of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdiction of the United States as the Underwriter may reasonably request; provided, however, that the City shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction. The City consents to the use by the Underwriter of the City Agreements, the Preliminary Official Statement and the Official Statement in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of the Bonds. Section 7. The Closing. At 8:00 A.M., Pacific time, on December __, 2017, or on such earlier or later time or date as may be agreed upon by the Underwriter, the Authority and the City (the “Closing”), the Authority will deliver the Bonds to the Underwriter, through the book-entry system of The Depository Trust Company (“DTC”). Prior to the Closing, the Authority and the City will deliver, at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation (“Bond Counsel”) in Newport Beach, California, or such other place as is mutually agreed upon by the Underwriter and the Authority, the other documents described in this Purchase Contract. On the date of the Closing, the Underwriter will pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Contract in immediately available funds to the order of the Trustee. The Bonds will be issued in fully registered form and will be prepared and delivered as one Bond for each maturity registered in the name of a nominee of DTC. It is anticipated that CUSIP identification numbers will be inserted on the Bonds, but neither the failure to provide such numbers nor any error with respect thereto will constitute a cause for failure or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Contract. Section 8. Conditions to Underwriter’s Obligations. The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties of the Authority and the City contained herein and to be contained in the documents and instruments to be delivered on the date of the Closing, and upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments to be delivered at or prior to the date of the Closing. The Underwriter’s obligations 2017-11-21 Agenda Packet Page 472 4842-3652-6418.3 9 under this Purchase Contract are and will also be subject to the sale, issuance and delivery of the Bonds as well as the following conditions: (a) The representations and warranties of the Authority and the City contained in this Purchase Contract will be true and correct in all material respects on the date of this Purchase Contract and on and as of the date of the Closing as if made on the date of the Closing; (b) As of the date of the Closing, the Official Statement may not have been amended, modified or supplemented, except in any case as may have been agreed to by the Underwriter; (c) (i) As of the date of the Closing, the Authority Resolution, the City Resolution, the Authority Agreements and the City Agreements will be in full force and effect, and will not have been amended, modified or supplemented, except as may have been agreed to by the Underwriter, (ii) the Authority will perform or have performed all of its obligations required under or specified in the Authority Resolution, the Authority Agreements and this Purchase Contract to be performed at or prior to the date of the Closing; and (iii) the City will perform or have performed all of its obligations required under or specified in the City Resolution, the City Agreements and this Purchase Contract to be performed at or prior to the date of the Closing; (d) As of the date of the Closing, all necessary official action of the Authority relating to the Authority Agreements, the Authority Resolution and the Official Statement, and all necessary official action of the City relating to the City Agreements, the City Resolution, and the Official Statement, will have been taken and will be in full force and effect and will not have been amended, modified or supplemented in any material respect, except as may have been agreed to by the City and Underwriter; and (e) As of or prior to the date of the Closing, the Underwriter will have received each of the following documents: (1) Certified copies of the Authority Resolution and the City Resolution. (2) Duly executed copies of the Indenture, the Assignment Agreement, the Lease Agreement, the Site Lease, the Continuing Disclosure Agreement and this Purchase Contract. (3) The Preliminary Official Statement and the Official Statement, with the Official Statement duly executed on behalf of the Authority and the City. (4) An approving opinion of Bond Counsel, dated as of the Closing, as to the validity of the Bonds and the exclusion of interest on the Series B Bonds from federal gross income and the Bonds from State income taxation, addressed to the Authority substantially in the form attached as an appendix to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriter. (5) A supplemental opinion of Bond Counsel, addressed to the Underwriter, to the effect that: 2017-11-21 Agenda Packet Page 473 4842-3652-6418.3 10 (i) The Purchase Contract has been duly executed and delivered by the Authority and the City and, assuming due authorization, execution and delivery by the Underwriter, is valid and binding upon the Authority and the City, subject to laws relating to bankruptcy, insolvency, reorganization or creditors’ rights generally and to the application of equitable principles; (ii) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (iii) The statements contained in the Official Statement on the cover and under the headings “INTRODUCTION,” “THE BONDS,” “SOURCES OF PAYMENT FOR THE BONDS” and “TAX MATTERS,” and in “APPENDIX A – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and “APPENDIX D – PROPOSED FORM OF BOND COUNSEL OPINION,” insofar as such statements purport to describe certain provisions of the Bonds, the Site Lease, the Lease Agreement, the Assignment Agreement and the Indenture, or to summarize the opinion of Bond Counsel regarding the tax-exempt nature of the Series B Bonds, are accurate in all material respects. (6) A letter from Stradling Yocca Carlson & Rauth, a Professional Corporation, as disclosure counsel to the City, addressed to the Underwriter, to the effect that: During the course of our work on this matter, no facts have come to our attention that cause us to believe that the Official Statement (excluding therefrom the financial statements, any financial or statistical data, or forecasts, charts, numbers, estimates, projections, assumptions or expressions of opinion or any information with respect to the Authority or the City’s compliance with continuing disclosure undertakings under Rule 15c2-12 included in the Official Statement and the appendices to the Official Statement) as of the date of the Official Statement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (7) An opinion or opinions of the City Attorney, dated as of the Closing addressed to the Authority, the City and the Underwriter, in form and substance acceptable to the Underwriter, to the effect that: (i) The City is a municipal corporation duly organized and validly existing under the laws of the State of California. The City Council is the governing body of the City. (ii) The City has all necessary power and authority to adopt the City Resolution, to enter into and perform its duties under the City Agreements, and, when executed and delivered by the respective parties thereto, the City Agreements will each constitute a legal, valid and binding obligation of the City enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, moratorium and the exercise of equitable principles where equitable remedies are sought. 2017-11-21 Agenda Packet Page 474 4842-3652-6418.3 11 (iii) The City Resolution was duly adopted at a meeting of the City Council, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the City Resolution is in full force and effect and has not been modified, amended or rescinded since the date of its adoption. (iv) The execution and delivery by the City of the City Agreements, the Official Statement and the other instruments contemplated by any of such documents to which the City is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States or any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound in a manner which would materially adversely affect the City’s performance under the City Agreements. (v) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations under the City Agreements have been obtained and are in full force and effect. (vi) To the best of the City Attorney’s knowledge, other than as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, is pending or threatened in any way against the City (A) affecting the existence of the City or the titles of its City Council members or its officers to their respective offices, (B) affecting the existence of the City, (C) seeking to restrain or to enjoin the issuance or sale of the Bonds, (D) in any way contesting or affecting the validity or enforceability of the City Resolution or the City Agreements, (E) in any way contesting the powers of the Authority to issue or sell the Bonds or the City’s authority with respect to the City Resolution or the City Agreements, (F) in any way contesting or affecting any of the rights, powers, duties or obligations of the City with respect to the money or property pledged or to be pledged under the Indenture, the Lease Agreement or the Site Lease or (G) in any way questioning the accuracy of the statements in the Official Statement. (vii) The Authority is a joint exercise of powers authority organized and validly existing under the laws of the State of California. The Board of Directors of the Authority is the governing body of the Authority. (viii) The Authority has all necessary power and authority to adopt the Authority Resolution, to enter into and perform its duties under the Authority Agreements and, when executed and delivered by the respective parties thereto, 2017-11-21 Agenda Packet Page 475 4842-3652-6418.3 12 the Authority Agreements will each constitute legal, valid and binding obligation of the Authority enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, moratorium and the exercise of equitable principles where equitable remedies are sought. (ix) The Authority Resolution was duly adopted at a regular meeting of the Board of Directors, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Authority Resolution is in full force and effect and has not been modified, amended or rescinded since the date of its adoption. (x) To the best of the City Attorney’s knowledge, other than as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, is pending or threatened in any way against the Authority (A) affecting the existence of the Authority or the titles of its Board members or its officers to their respective offices, (B) affecting the existence of the Authority, (C) seeking to restrain or to enjoin the issuance or sale of the Bonds, (D) in any way contesting or affecting the validity or enforceability of the Authority Resolution or the Authority Agreements, (E) in any way contesting the powers of the Authority to issue or sell the Bonds or its authority with respect to the Authority Resolution or the Authority Agreements, (F) in any way contesting or affecting any of the rights, powers, duties or obligations of the Authority with respect to the money or property pledged or to be pledged under the Indenture, the Lease Agreement or the Site Lease or (G) in any way questioning the accuracy of the statements in the Official Statement. (xi) The execution and delivery by the Authority of the Authority Agreements, the Official Statement and the other instruments contemplated by any of such documents to which the Authority is a party, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States or any department, division, agency or instrumentality of either thereof, or any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound in a manner which would materially adversely affect the Authority’s performance under the Authority Agreements. (xii) All approvals, consents, authorizations, elections and orders of or filings or registrations with any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Authority of its obligations under the Authority Agreements have been obtained and are in full force and effect. 2017-11-21 Agenda Packet Page 476 4842-3652-6418.3 13 (xiii) Nothing has come to the attention of the City Attorney which has led the City Attorney to believe that the Official Statement (excluding therefrom the financial and statistical data, information regarding compliance with continuing disclosure obligations of the City and its related entities, forecasts included therein and information about The Depository Trust Company or information provided by the Underwriter, as to which no opinion need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect. (8) A letter of Nixon Peabody LLP (“Underwriter’s Counsel”), addressed to the Underwriter, in form and substance acceptable to the Underwriter. (9) Executed certificates of the Authority and the City, dated as of the date of the Preliminary Official Statement, in the forms attached as Exhibit B-1 and Exhibit B-2. (10) An executed closing certificate of the Authority, dated as of the Closing, in the form attached as Exhibit C. (11) An executed closing certificate of the City, dated as of the Closing, in the form attached as Exhibit D. (12) The opinion of counsel of the Trustee dated as of the Closing, addressed to the Authority, the City and the Underwriter to the effect that: (i) The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the State, having full powers and authority and being qualified to enter into, accept and administer the trust created under the Indenture, and to enter into the Indenture and the Assignment Agreement. (ii) The Indenture and the Assignment Agreement have been duly authorized, executed and delivered by the Trustee, and, assuming due authorization, execution and delivery by the other parties thereto, the Indenture and the Assignment Agreement constitute legal, valid and binding agreements of the Trustee enforceable in accordance with their terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and the application of equitable principles if equitable remedies are sought. (13) A certificate of the Trustee dated as of the Closing, in the form attached as Exhibit E. (14) A tax certificate relating to the Series B Bonds duly signed on behalf of the Authority and the City in form and substance acceptable to Bond Counsel and the Underwriter. 2017-11-21 Agenda Packet Page 477 4842-3652-6418.3 14 (15) Evidence of required filings with the California Debt and Investment Advisory Commission. (16) Evidence of one or more of the CLTA or ALTA title insurance policies required under the Lease Agreement for the real property described therein. (17) A copy of the executed Blanket Authority Letter of Representations by and between the Authority and DTC relating to the book-entry system. (18) Evidence that the Bonds have received the rating set forth on the cover of the Official Statement. (19) A certificate of Harrell & Company Advisors, LLC, the City’s municipal advisor, in the form and substance attached hereto as Exhibit F. (20) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the Authority and the City with legal requirements, the truth and accuracy, as of the date of the Closing, of the representations of the Authority and the City herein contained and of the Official Statement and the due performance or satisfaction by the Authority and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Authority and the City. All of the opinions, letters, certificates, instruments and other documents mentioned in this Purchase Contract will be deemed to be in compliance with the provisions of this Purchase Contract if, but only if, they are in form and substance satisfactory to the Underwriter. If the Authority and the City are unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Purchase Contract or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds will be terminated for any reason permitted by this Purchase Contract, this Purchase Contract will terminate and neither the Underwriter, the Authority nor the City will be under further obligations hereunder, except that the respective obligations of the Authority, the City and the Underwriter set forth in Section 12 of this Purchase Contract will continue in full force and effect. Section 9. Conditions to Authority’s and City’s Obligations. The performance by the Authority and the City of their respective obligations under this Purchase Contract are conditioned upon: (i) the performance by the Underwriter of its obligations hereunder and (ii) receipt by the Authority and the City of opinions addressed to the Authority and the City, and receipt by the Underwriter of opinions addressed to the Underwriter, and the delivery of certificates being delivered on the date of the Closing by persons and entities other than the Authority and the City. Section 10. Termination Events. The Underwriter will have the right to terminate the Underwriter’s obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds by notifying the Authority and the City of its election to do so if, after the execution hereof and prior to the Closing, any of the following events occurs: 2017-11-21 Agenda Packet Page 478 4842-3652-6418.3 15 (1) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by any decision issued by a court of the United States (including the United States Tax Court) or of the State of California, by any ruling or regulation (final, temporary or proposed) issued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State of California, or by a tentative decision or announcement by any member of the House Ways and Means Committee, the Senate Finance Committee, or the Conference Committee with respect to contemplated legislation or by legislation enacted by, pending in, or favorably reported to either the House of Representatives or either House of the Legislature of the State of California, or formally proposed to the Congress of the United States by the President of the United States or to the Legislature of the State of California by the Governor of the State of California in an executive communication, affecting the tax status of the Authority or the City, its property or income, its bonds (including the Bonds) or the interest thereon or any tax exemption granted or authorized by the Internal Revenue Code of 1986, as amended; (2) the United States becomes engaged in hostilities that result in a declaration of war or a national emergency, or any other outbreak of hostilities occurs, or a local, national or international calamity or crisis occurs, financial or otherwise, the effect of such outbreak, calamity or crisis being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; (3) there occurs a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by the United States, New York State or California State authorities; (4) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission is issued or made to the effect that the issuance, offering or sale of the Bonds is or would be in violation of any provision of the Securities Act of 1933, as then in effect, or of the Securities Exchange Act of 1934, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (5) legislation is enacted by the House of Representatives or the Senate of the Congress of the United States of America, or a decision by a court of the United States of America is rendered, or a ruling or regulation by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter is made or proposed to the effect that the Bonds are not exempt from registration, qualification or other similar requirements of the Securities Act of 1933, as then in effect, or of the Trust Indenture Act of 1939, as then in effect; (6) in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price generally of obligations of the general character of the Bonds, might be materially and adversely affected because additional material restrictions not in force as of the date hereof is imposed upon trading in securities generally by any governmental authority or by any national securities exchange; 2017-11-21 Agenda Packet Page 479 4842-3652-6418.3 16 (7) the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, 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, or financial responsibility requirements of the Underwriter; (8) a general banking moratorium is established by federal, New York or State authorities; (9) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; (10) any legislation, ordinance, rule or regulation is introduced in or be enacted by any governmental body, department or agency in the State or a decision of a court of competent jurisdiction within the State is rendered, which, in the opinion of the Underwriter, after consultation with the Authority and the City, materially adversely affects the market price of the Bonds; (11) any federal or California court, authority or regulatory body takes action materially and adversely affecting the collection of Base Rental Payments under the Lease Agreements for application as set forth in the Indenture; (12) any withdrawal, downgrading or placement on credit watch negative of any underlying rating of any securities of the Authority or the City by a national municipal bond rating agency that, in the opinion of the Underwriter, adversely affects the market price of the Bonds; or (13) an event or circumstance occurs which in the reasonable opinion of the Underwriter makes untrue or misleading in any material respect any statement or information contained in the Official Statement (other than any information relating to the Underwriter). Section 11. Establishment of Issue Price. The Underwriter agrees to make an initial public offering of all of the Bonds at the public offering prices (or yields) set forth on Exhibit G attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Exhibit G. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit H, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately 2017-11-21 Agenda Packet Page 480 4842-3652-6418.3 17 reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Authority under this Section to establish the issue price of the Bonds may be taken on behalf of the Authority by the Authority’s municipal advisor identified herein and any notice or report to be provided to the Authority may be provided to the Authority’s municipal advisor. Certain terms used in this Section are defined below. Except as otherwise set forth in Exhibit G attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% Test”), identified under the column “10% Test Used” in Exhibit G, is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% Test). At or before the execution of this Purchase Contract, the Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% Test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% Test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit G attached hereto, except as otherwise set forth therein. Exhibit G also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriter shall promptly advise the Authority when it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date. The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (1) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the applicable Bonds of that maturity or all such Bonds of that maturity have been sold to the public 2017-11-21 Agenda Packet Page 481 4842-3652-6418.3 18 and (2) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Underwriter. The Authority acknowledges that, in making the representation set forth in this subsection, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this Section. Further, for purposes of this Section: (i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) “sale date” means the date of execution of this Purchase Contract by all parties. Section 12. Payment of Expenses. The Underwriter will be under no obligation to pay, and the Authority will pay the following expenses incident to the performance of the Authority’s and the City’s obligations hereunder: (i) the fees and disbursements of the City’s municipal advisor and of Bond Counsel and Disclosure Counsel; 2017-11-21 Agenda Packet Page 482 4842-3652-6418.3 19 (ii) the cost of printing and delivering the Bonds, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to Section 4 of this Purchase Contract); (iii) the fees and disbursements of accountants, advisers and of any other experts or consultants retained by the Authority or the City; and (iv) any other expenses and costs of the Authority and the City incident to the performance of their respective obligations in connection with the authorization, issuance and sale of the Bonds, including out of pocket expenses and regulatory expenses, and any other expenses agreed to by the parties. (b) The City and the Authority will be under no obligation to pay, and the Underwriter will pay, any fees of the California Debt and Investment Advisory Commission, the cost of obtaining CUSIP numbers, the cost of preparation of any “blue sky” or legal investment memoranda and this Purchase Contract; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of Underwriter’s Counsel (if any) and any advertising expenses. Section 13. Notices. Any notice or other communication to be given to the Authority or the City under this Purchase Contract may be given by delivering the same in writing to the Authority and the City at the addresses set forth on the first page of this Purchase Contract, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Brandis Tallman LLC, 22 Battery St., Suite 500, San Francisco, California 94111 Attention: Richard Brandis. Section 14. Survival of Representations, Warranties, Agreements. All of the Authority’s and the City’s representations, warranties and agreements contained in this Purchase Contract will remain operative and in full force and effect regardless of: (a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Contract. The agreements contained in this Section and in Section 12 will survive any termination of this Purchase Contract. Section 15. Benefit; No Assignment. This Purchase Contract is made solely for the benefit of the Authority, the City and the Underwriter (including its successors and assigns), and no other person will acquire or have any right hereunder or by virtue hereof. The rights and obligations created by this Purchase Contract are not subject to assignment by the Underwriter, the Authority or the City without the prior written consent of the other parties hereto. Section 16. Severability. In the event that any provision of this Purchase Contract is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision of this Purchase Contract. Section 17. Counterparts. This Purchase Contract may be executed in any number of counterparts, all of which taken together will constitute one agreement, and any of the parties hereto may execute the Purchase Contract by signing any such counterpart. 2017-11-21 Agenda Packet Page 483 4842-3652-6418.3 20 Section 18. Governing Law. This Purchase Contract will be governed by the laws of the State of California. Section 19. Effectiveness. This Purchase Contract will become effective upon the execution of the acceptance hereof by an authorized officer of the Authority and the City, and will be valid and enforceable as of the time of such acceptance. Very truly yours, BRANDIS TALLMAN LLC, as Underwriter By:____________________________________ Authorized Representative Accepted: CHULA VISTA MUNICIPAL FINANCING AUTHORITY By:___________________________________ Authorized Representative Time of Execution: ____ Pacific Time CITY OF CHULA VISTA By:___________________________________ Authorized Representative Time of Execution: ____ Pacific Time 2017-11-21 Agenda Packet Page 484 4842-3652-6418.3 A-1 EXHIBIT A BOND TERMS $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) Principal Payment Date (December 1)Principal Rate REDEMPTION PROVISIONS OF THE SERIES A BONDS Optional Redemption. The Series 2017A Bonds maturing on or before December 1, 2027, are not subject to optional redemption prior to their respective stated maturities. The Series 2017A Bonds maturing on and after December 1, 2028 are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 2027, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. Extraordinary Redemption from Insurance Proceeds. The Series 2017A Bonds are subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds (as defined in the Indenture) received with respect to all or a portion of the property leased under the Lease Agreement, deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2017A Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. 2017-11-21 Agenda Packet Page 485 4842-3652-6418.3 A-2 Extraordinary Mandatory Redemption from Unexpended Series 2017A Bond Proceeds. The Series 2017A Bonds are subject to extraordinary mandatory redemption, in whole or in part, within 90 days following the third anniversary of the Closing Date of the Series 2017A Bonds, or 90 days following the date of termination of any period of time negotiated with the IRS that extends the date by which the proceeds of the sale of the Series 2017A Bonds must be expended, as evidenced in writing from the IRS, in authorized denominations, at a redemption price equal to the principal amount of the Series 2017A Bonds called for redemption, in an amount equal to the unexpended proceeds of the sale of the Series 2017A Bonds held by the Authority, but only to the extent that the Authority fails to expend all of the proceeds of the Series 2017A Bonds for certain qualified purposes as required by Section 54A(d)(2)(B)(i) of the Code within three years of issuance thereof. Special Optional Redemption Following Loss of Subsidy Payments. Upon the occurrence of an Extraordinary Event (as defined in the Indenture), the Series 2017A Bonds shall be subject to redemption, at the option of the Authority, prior to their maturity date, in whole or in part, on the date designated by the Authority prior to December 1, 20__, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium Mandatory Sinking Fund Redemption. The Series 2017A Bonds maturing December 1, 20__ (the “20__ Term Bonds”) are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each December 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Date Sinking Fund (December 1)Redemption Amount 2017-11-21 Agenda Packet Page 486 4842-3652-6418.3 A-3 $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) Principal Payment Date (December 1)Principal Rate REDEMPTION PROVISIONS OF THE SERIES B BONDS Optional Redemption. The Series 2017B Bonds maturing on and after December 1, 20__ are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 20__, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. Extraordinary Redemption from Insurance Proceeds. The Series 2017B Bonds are subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds (as defined in the Indenture) received with respect to all or a portion of the property leased under the Lease Agreement, deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Series 2017B Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. 2017-11-21 Agenda Packet Page 487 4842-3652-6418.3 A-4 Mandatory Sinking Fund Redemption. The Series 2017B Bonds maturing December 1, 20__ (the “20__ Term Bonds”) are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each December 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Date Sinking Fund (December 1)Redemption Amount 2017-11-21 Agenda Packet Page 488 4842-3652-6418.3 B-1-1 EXHIBIT B-1 CERTIFICATE OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY REGARDING PRELIMINARY OFFICIAL STATEMENT $_______________* CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________* CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) The undersigned hereby states and certifies: 1. That he is the duly appointed, qualified and acting Chief Financial Officer of the Chula Vista Municipal Financing Authority (the “Authority”) and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; and 2. That there has been delivered to Brandis Tallman LLC, as the underwriter of the captioned bonds (the “Bonds”), a Preliminary Official Statement dated _____, 2017 for the Bonds (including the cover page and all appendices thereto, the “Preliminary Official Statement”), which the Authority deems final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for information permitted to be omitted therefrom by Rule 15c2-12. Dated: _______, 2017 CHULA VISTA MUNICIPAL FINANCING AUTHORITY By:_____________________________________ David Bilby Chief Financial Officer _________________________ * Preliminary, subject to change. 2017-11-21 Agenda Packet Page 489 4842-3652-6418.3 B-2-1 EXHIBIT B-2 CERTIFICATE OF THE CITY OF CHULA VISTA REGARDING PRELIMINARY OFFICIAL STATEMENT $_______________* CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________* CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) The undersigned hereby states and certifies: 1. That he is the duly appointed, qualified and acting Director of Finance/Treasurer of the City of Chula Vista (the “City”) and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; and 2. That there has been delivered to Brandis Tallman LLC, as the underwriter of the captioned bonds (the “Bonds”), a Preliminary Official Statement dated _____, 2017 for the Bonds (including the cover page and all appendices thereto, the “Preliminary Official Statement”), which the City deems final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for information permitted to be omitted therefrom by Rule 15c2-12. Dated: _____, 2017 CITY OF CHULA VISTA By: David Bilby Director of Finance/Treasurer 2017-11-21 Agenda Packet Page 490 4842-3652-6418.3 C-1 EXHIBIT C $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) CLOSING CERTIFICATE OF THE AUTHORITY The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the Chula Vista Municipal Financing Authority (the “Authority”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the Authority as follows: (a) The representations, warranties and covenants of the Authority contained in the Bond Purchase Agreement dated _____, 2017, among the Authority, the City of Chula Vista and Brandis Tallman LLC, as underwriter (the “Purchase Contract”), are true and correct and in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing. (b) The Authority Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the Authority and the Underwriter. (c) The Authority has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (d) Subsequent to the date of the Official Statement and on or prior to the date of this certificate, there has been no material adverse change in the condition (financial or otherwise) of the Authority, whether or not arising in the ordinary course of the operations of the Authority, as described in the Official Statement. Capitalized terms used but not defined herein have the meanings given such terms in the Bond Purchase Agreement. Dated: _____, 2017. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Authorized Officer 2017-11-21 Agenda Packet Page 491 4842-3652-6418.3 D-1 EXHIBIT D $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) CLOSING CERTIFICATE OF THE CITY The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the City of Chula Vista (the “City”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City as follows: (a) The representations, warranties and covenants of the City contained in the Bond Purchase Agreement dated ______, 2017, among the City, the Chula Vista Municipal Financing Authority and Brandis Tallman LLC, as underwriter (the “Purchase Contract”) are true and correct and in all material respects on and as of the date of the Closing with the same effect as if made on the date of the Closing. (b) The City Resolution is in full force and effect at the date of the Closing and has not been amended, modified or supplemented, except as agreed to by the City and the Underwriter. (c) The City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied on or prior to the date of the Closing. (d) Subsequent to the date of the Official Statement and on or prior to the date of this certificate, there has been no material adverse change in the condition (financial or otherwise) of the City, whether or not arising in the ordinary course of operations, as described in the Official Statement. Capitalized terms used but not defined herein have the meanings given in the Purchase Contract. Dated: _____, 2017. CITY OF CHULA VISTA By: Authorized Officer 2017-11-21 Agenda Packet Page 492 4842-3652-6418.3 E-1 EXHIBIT E $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) CLOSING CERTIFICATE OF THE TRUSTEE The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of U.S. Bank National Association (the “Trustee”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the Trustee as follows: (a) The Trustee has all necessary power to enter into the Indenture, dated as of December 1, 2017 (the “Indenture”), the Assignment Agreement, dated as of December 1, 2017 (the “Assignment Agreement”) and (b) The Indenture and the Assignment Agreement have been duly authorized, executed and delivered by the Trustee and the Indenture, the Assignment Agreement constitute the legal, valid and binding obligations of the Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought; (c) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Trustee or the performance by the Trustee of its duties and obligations under the Indenture and the Assignment Agreement; (d) The execution and delivery by the Trustee of the Indenture and the Assignment Agreement and compliance with the terms thereof will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties (except that no representation, warranty or agreement need be made by such counsel with respect to any federal or State securities or blue sky laws or regulations); and (e) There is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending, or to the best knowledge of the Trustee, threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Indenture or the Assignment Agreement, or contesting the powers of the Trustee or its authority to enter into and perform its obligations thereunder. 2017-11-21 Agenda Packet Page 493 4842-3652-6418.3 E-2 Capitalized terms used but not defined herein have the meanings given such terms in the Purchase Contract. Dated: December __, 2017. U.S. BANK NATIONAL ASSOCIATION, as trustee By: Authorized Officer 2017-11-21 Agenda Packet Page 494 4842-3652-6418.3 F-1 EXHIBIT F $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) CERTIFICATE OF MUNICIPAL ADVISOR The undersigned hereby states and certifies: (i) that the undersigned is an authorized officer of Harrell & Company Advisors, LLC (the “Municipal Advisor”), which has acted as municipal advisor to Chula Vista Municipal Financing Authority (the “Authority”) in connection with the issuance of the above-referenced bonds (the “Bonds”), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (ii) that the Municipal Advisor has participated in the preparation of the Preliminary Official Statement dated _____, 2017 and the final Official Statement dated _____, 2017 (the “Official Statement”) relating to the Bonds; and (iii) that nothing has come to the attention of the Municipal Advisor which would lead it to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Dated ______, 2017. HARRELL & COMPANY ADVISORS, LLC, as Municipal Advisor By: Authorized Officer 2017-11-21 Agenda Packet Page 495 4842-3652-6418.3 G-1 EXHIBIT G-1 $_______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) MATURITY SCHEDULE Maturity Date (December 1) Principal Amount Interest Rate Yield Price 10% Test Satisfied 10% Test Not Satisfied Subject to Hold-The- Offering Price Rule 2017-11-21 Agenda Packet Page 496 4842-3652-6418.3 G-2 $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) MATURITY SCHEDULE Maturity Date (December 1) Principal Amount Interest Rate Yield Price 10% Test Satisfied 10% Test Not Satisfied Subject to Hold-The- Offering Price Rule 2017-11-21 Agenda Packet Page 497 4842-3652-6418.3 H-1-1 EXHIBIT H-1 $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) FORM OF ISSUE PRICE CERTIFICATE The undersigned, on behalf of Brandis Tallman LLC (“Brandis Tallman”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Series A Bonds”). 1.Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A. 2.Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Brandis Tallman offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (b) As set forth in the Bond Purchase Agreement, dated _____ __, 2017, by and among Brandis Tallman, the Chula Vista Municipal Financing Authority and the City of Chula Vista, Brandis Tallman has agreed in writing that, (i) for each Maturity of the Hold-the-Offering- Price Maturities, it would neither offer nor sell any of the Series A Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold- the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Series A Bonds during the Holding Period. 3.Defined Terms. (a)General Rule Maturities means those Maturities of the Series A Bonds listed in Schedule A hereto as the “General Rule Maturities.” (b)Issuer means the City of Chula Vista Municipal Financing Authority. 2017-11-21 Agenda Packet Page 498 4842-3652-6418.3 H-1-2 (c)Maturity means Series A Bonds with the same credit and payment terms. Series A Bonds with different maturity dates, or Series A Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. (d)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e)Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Series A Bonds. The Sale Date of the Series A Bonds is _____, 2017. (f)Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Series A Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Series A Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Series A Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Brandis Tallman’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer and the City with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Series A Bonds, and by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with rendering its opinion that the interest on the Series A Bonds, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Series A Bonds. BRANDIS TALLMAN LLC, as Underwriter By: Authorized Officer 2017-11-21 Agenda Packet Page 499 4842-3652-6418.3 H-1-3 SCHEDULE A SALE PRICES OF THE GENERAL RULE MATURITIES (Attached) 2017-11-21 Agenda Packet Page 500 4842-3652-6418.3 H-1-4 SCHEDULE B PRICING WIRE INFORMATION (Attached) 2017-11-21 Agenda Packet Page 501 4842-3652-6418.3 H-2-1 EXHIBIT H-2 $______________ CHULA VISTA MUNICIPAL FINANCING AUTHORITY LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) FORM OF ISSUE PRICE CERTIFICATE The undersigned, on behalf of Brandis Tallman LLC (“Brandis Tallman”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Series B Bonds”). 1.Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A. 2.Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Brandis Tallman offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Series B Bonds is attached to this certificate as Schedule B. (b) As set forth in the Bond Purchase Agreement, dated ______ __, 2017, by and among Brandis Tallman, the Chula Vista Municipal Financing Authority and the City of Chula Vista, Brandis Tallman has agreed in writing that, (i) for each Maturity of the Hold-the-Offering- Price Maturities, it would neither offer nor sell any of the Series B Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold- the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Series B Bonds during the Holding Period. 3.Defined Terms. (a)General Rule Maturities means those Maturities of the Series B Bonds listed in Schedule A hereto as the “General Rule Maturities.” (b)Issuer means the City of Chula Vista Municipal Financing Authority. 2017-11-21 Agenda Packet Page 502 4842-3652-6418.3 H-2-2 (c)Maturity means Series B Bonds with the same credit and payment terms. Series B Bonds with different maturity dates, or Series B Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. (d)Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e)Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Series B Bonds. The Sale Date of the Series B Bonds is _____, 2017. (f)Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Series B Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Series B Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Brandis Tallman’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer and the City with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Series B Bonds, and by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Series B Bonds. BRANDIS TALLMAN LLC, as Underwriter By: Authorized Officer 2017-11-21 Agenda Packet Page 503 4842-3652-6418.3 SCHEDULE A SALE PRICES OF THE GENERAL RULE MATURITIES (Attached) 2017-11-21 Agenda Packet Page 504 4842-3652-6418.3 H-2-2 SCHEDULE B PRICING WIRE INFORMATION (Attached) 2017-11-21 Agenda Packet Page 505 PRELIMINARY OFFICIAL STATEMENT DRAFT DATED NOVEMBER 13, 2017 NEW ISSUE - BOOK-ENTRY RATING S&P: “___” (See “CONCLUDING INFORMATION - Rating on the Bonds” herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described more fully herein, interest (and original issue discount) on the Series 2017B Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Series 2017A Bonds and the Series 2017B Bonds is exempt from State of California personal income tax. See “TAX MATTERS” herein. CHULA VISTA MUNICIPAL FINANCING AUTHORITY $13,300,000* LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $1,050,000* LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) Dated: Date of Delivery Due: As shown on the inside cover page The Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”) and Lease Revenue Bonds Series 2017B (Tax-Exempt) (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Bonds”) are being issued to finance photovoltaic energy systems at various City facilities, capitalize interest on the Bonds and pay the costs incurred in connection with the issuance of the Bonds. The Bonds are payable from the revenues and funds pledged under the Indenture, as defined herein, consisting primarily of Base Rental Payments (the “Base Rental Payments”) to be made by the City of Chula Vista (the “City”) to the Chula Vista Municipal Financing Authority (the “Authority”) as rental for certain City-owned property (the “Leased Property”) pursuant to a Lease Agreement, as defined herein, and from certain funds held under the Indenture including insurance proceeds and condemnation awards. The City is required under the Lease Agreement to make Base Rental Payments in each fiscal year in consideration of the use and possession of the Leased Property from any source of legally available funds in an amount sufficient to pay the annual principal and interest due on the Bonds, subject to abatement, as described herein. See “SOURCES OF PAYMENT FOR THE BONDS” and “RISK FACTORS” herein. Interest on the Bonds is payable semiannually on December 1 and June 1 of each year, commencing June 1, 2018. The Series 2017A Bonds are subject to optional redemption prior to maturity, and are also subject to mandatory sinking fund redemption as described herein. The Bonds are also subject to extraordinary mandatory redemption and special optional redemption, as described herein. See “THE BONDS - General Provisions” and “THE BONDS - Redemption” herein. The Authority and the City will designate the Series 2017A Bonds as “New Clean Renewable Energy Bonds” (“New CREBs”) under section 54C of the Internal Revenue Code of 1986, as amended (the “Code”) and will irrevocably elect under section 6431(f)(2) of the Code to receive a direct payment from the United States Treasury equal to the lesser of (i) the amount of interest payable with respect to the Series 2017A Bonds, or (ii) seventy percent (70%) of the amount of interest which would be payable with respect to the Series 2017A Bonds if the interest rates were determined at the applicable credit rate determined under section 54A(b)(3) of the Code. See “THE BONDS - Designation of the Series 2017A Bonds as New Clean Renewable Energy Bonds” herein. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM BASE RENTAL PAYMENTS AND OTHER FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT A DEBT, OBLIGATION OR LIABILITY OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AUTHORITY), NOR DO THEY CONSTITUTE A PLEDGE OF THE FAITH AND CREDIT OR THE TAXING POWER OF ANY OF THE FOREGOING (INCLUDING THE AUTHORITY AND THE CITY). THE AUTHORITY DOES NOT HAVE ANY TAXING POWER. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE CITY’S OBLIGATION TO MAKE BASE RENTAL PAYMENTS IS AN OBLIGATION PAYABLE FROM THE CITY’S GENERAL FUND OR ANY OTHER SOURCE OF FUNDS LEGALLY AVAILABLE TO THE CITY TO MAKE BASE RENTAL PAYMENTS. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION OR ANY OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION, OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. See “RISK FACTORS” herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds. The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the City and the Authority by the City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel, and for the Underwriter by Nixon Peabody LLP, Los Angeles, California. It is anticipated that the Bonds, in book- entry form, will be available for delivery on or about December 21, 2017 through the facilities of The Depository Trust Company (see “APPENDIX E - THE BOOK-ENTRY SYSTEM” herein). The date of the Official Statement is _______, 2017. __________________________ * Preliminary, subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of such jurisdiction. 2017-11-21 Agenda Packet Page 506 CHULA VISTA MUNICIPAL FINANCING AUTHORITY $13,300,000* LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) MATURITY SCHEDULE (Base CUSIP®† 17132E) Maturity Date Principal Interest December 1 Amount Rate Yield Price CUSIP®† 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 $______ ____% Term Bonds maturing December 1, 2043*, Yield ____% CUSIP®† ______ $______ ____% Term Bonds maturing December 1, 2048*, Yield ____% CUSIP®† ______ __________________________ * Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the City, the Municipal Advisor or the Underwriter and are included solely for the convenience of the holders of the Bonds. None of the Authority, the City, the Municipal Advisor or the Underwriter is responsible for the selection or use of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. 2017-11-21 Agenda Packet Page 507 CHULA VISTA MUNICIPAL FINANCING AUTHORITY $1,050,000* LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) MATURITY SCHEDULE (Base CUSIP®† 17132E) Maturity Date Principal Interest December 1 Amount Rate Yield Price CUSIP®† 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 __________________________ * Preliminary, subject to change. † CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers Association. CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the City, the Municipal Advisor or the Underwriter and are included solely for the convenience of the holders of the Bonds. None of the Authority, the City, the Municipal Advisor or the Underwriter is responsible for the selection or use of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. 2017-11-21 Agenda Packet Page 508 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the City, any press release and any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced herein, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward- looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Authority or the City to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Authority, the City, the Municipal Advisor or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of the Bonds, the Lease Agreement, the Indenture or other documents, are made subject to the provisions of such documents and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City Clerk for further information. See “INTRODUCTION - Summaries Not Definitive.” The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Bonds are Exempt from Securities Laws Registration. The issuance, sale and delivery of the Bonds has not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the execution, sale and delivery of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(l2) of the Securities Exchange Act of 1934. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which 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. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover pages hereof and said public offering prices may be changed from time to time by the Underwriter. City Website. The City maintains a website. The information on such website is not part of this Official Statement and is not intended to be relied on by investors with respect to the Bonds unless specifically set forth or incorporated herein. 2017-11-21 Agenda Packet Page 509 CITY OF CHULA VISTA, CALIFORNIA CITY COUNCIL AND AUTHORITY BOARD MEMBERS Mary Casillas Salas, Mayor John McCann, Councilmember, District 1 Patricia Aguilar, Councilmember, District 2 Stephen Padilla, Councilmember, District 3 Mike Diaz, Councilmember, District 4 ________________________________________ CITY STAFF Gary Halbert, City Manager Maria Kachadoorian, Assistant City Manager Kelley Bacon, Deputy City Manager Kelly Broughton, Director of Development Services Eric Crockett, Director of Economic Development Jim Geering, Fire Chief David Bilby, Director of Finance/Treasurer Courtney Chase, Director of Human Resources Edward Chew, Director of Information Technology Services Betty Waznis, Director of Library Roxana Kennedy, Chief of Police Richard Hopkins, Director of Public Works Kristi McClure Huckaby, Director of Recreation Glen R. Googins, City Attorney Donna Norris, CMC, City Clerk ________________________________________ PROFESSIONAL SERVICES Bond Counsel and Disclosure Counsel Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California Municipal Advisor Harrell & Company Advisors, LLC Orange, California Trustee U.S. Bank National Association Los Angeles, California 2017-11-21 Agenda Packet Page 510 TABLE OF CONTENTS INTRODUCTION ...................................................... 1 The City and the Authority ........................................ 1 Purpose ...................................................................... 1 Security and Sources of Repayment .......................... 2 Limited Obligation ..................................................... 2 No Reserve Fund ....................................................... 3 Designation of the Series 2017A Bonds as New Clean Renewable Energy Bonds ............................. 3 Legal Matters ............................................................. 3 Professional Services ................................................. 3 Offering of the Bonds ................................................ 3 Summaries Not Definitive ......................................... 4 THE FINANCING PLAN .......................................... 4 Estimated Sources and Uses of Funds ....................... 4 The Project ................................................................. 4 THE LEASED PROPERTY ...................................... 5 THE BONDS ............................................................... 6 General Provisions ..................................................... 6 Redemption ................................................................ 6 Scheduled Debt Service on the Bonds ..................... 10 Scheduled Debt Service on the Bonds ..................... 12 Debt Service Requirements ..................................... 13 Additional Bonds ..................................................... 14 SOURCES OF PAYMENT FOR THE BONDS ..... 14 General ..................................................................... 14 Base Rental Payments; Abatement .......................... 14 No Reserve Fund ..................................................... 15 Insurance Relating to the Leased Property .............. 15 Remedies on Default ................................................ 17 Encumbrances .......................................................... 17 New CREBs Subsidy Payments .............................. 17 CITY OF CHULA VISTA ........................................ 18 General Information ................................................. 18 General Organization ............................................... 18 Governmental Services ............................................ 19 Community Facilities and Services ......................... 20 Transportation .......................................................... 20 Population ................................................................ 21 Per Capita Personal Income ..................................... 21 Employment ............................................................. 22 Industry .................................................................... 23 Largest Employers ................................................... 24 Commercial Activity ................................................ 24 Building Activity ..................................................... 26 FINANCIAL INFORMATION ............................... 26 Fiscal Policies .......................................................... 26 Budgetary Process and Administration .................... 29 Economic Conditions and Outlook .......................... 29 Revenues and Expenditures ..................................... 31 Ad Valorem Property Taxes ..................................... 34 Local Taxes .............................................................. 38 Motor Vehicle License Fees ..................................... 41 Public Facilities Development Impact Fees ............. 41 Personnel .................................................................. 42 Employee Relations and Collective Bargaining ....... 42 Pension Plans ........................................................... 42 Defined Contribution Pension Plan .......................... 50 Other Post Employment Benefits ............................. 50 Risk Management .................................................... 52 City Investment Policy and Portfolio ....................... 53 Outstanding Indebtedness of the City ...................... 54 Joint Financing Agreement with Respect to the Chula Vista Bayfront ............................................. 55 Elite Athlete Training Center ................................... 56 Estimated Direct and Overlapping Debt .................. 56 Financial Statements ................................................ 58 RISK FACTORS ....................................................... 63 Base Rental Payments .............................................. 63 Natural Hazards ....................................................... 64 Limited Recourse on Default; No Acceleration ....... 65 Enforcement of Remedies ........................................ 65 Bankruptcy ............................................................... 66 State Budget ............................................................. 67 Constitutional Limitation on Taxes and Expenditures ......................................................... 69 Federal Legislation .................................................. 73 Early Redemption Risk ............................................ 73 Loss of Tax Exemption on the Series 2017B Bonds 73 IRS Audit of Tax-Exempt Bond Issues .................... 74 Secondary Market Risk ............................................ 74 TAX MATTERS ........................................................ 74 LEGAL MATTERS .................................................. 78 Enforceability of Remedies ...................................... 78 Approval of Legal Proceedings ................................ 78 Absence of Litigation ............................................... 78 CONCLUDING INFORMATION .......................... 79 Rating on the Bonds ................................................. 79 Underwriting ............................................................ 79 The Municipal Advisor ............................................ 79 Continuing Disclosure ............................................. 80 References ................................................................ 80 Execution ................................................................. 81 APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS APPENDIX B - CITY AUDITED FINANCIAL STATEMENTS APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX D - PROPOSED FORM OF BOND COUNSEL OPINIONS APPENDIX E - THE BOOK-ENTRY SYSTEM 2017-11-21 Agenda Packet Page 511 1 OFFICIAL STATEMENT CHULA VISTA MUNICIPAL FINANCING AUTHORITY $13,300,000* LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS) (FEDERALLY TAXABLE) $1,050,000* LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) This Official Statement which includes the cover page, the inside cover page and appendices (the “Official Statement”), is provided to furnish certain information concerning the sale by the Chula Vista Municipal Financing Authority (the “Authority”) of the Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable) (the “Series 2017A Bonds”) and Lease Revenue Bonds Series 2017B (Tax-Exempt) (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Bonds”). INTRODUCTION This Introduction contains only a brief description of this issue and does not purport to be complete. The Introduction is subject in all respects to more complete information in the entire Official Statement and the offering of the Bonds to potential investors is made only by means of the entire Official Statement and the documents summarized herein. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Bonds (see “RISK FACTORS” herein). For definitions of certain capitalized terms used herein and not otherwise defined, and the terms relating to the Bonds, see the summary included in “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” herein. The City and the Authority The City of Chula Vista (the “City”) is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border in an area generally known as “South Bay.” The City encompasses approximately 50 square miles. Based on population, Chula Vista is the second largest city in San Diego County (see “CITY OF CHULA VISTA” herein). The Authority is a joint exercise of powers authority organized and existing under and by virtue of the Joint Exercise of Powers Act, constituting Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Joint Powers Act”). The City and the Housing Authority of the City of Chula Vista formed the Authority by the execution of a joint exercise of powers agreement on June 11, 2013. Pursuant to the Joint Powers Act, the Authority is authorized to issue lease revenue bonds to provide funds to acquire or construct and to refinance public capital improvements and to provide for such revenue bonds to be repaid from lease payments, such as the Base Rental Payments described herein. The Authority is governed by a five-member Board which consists of all members of the City Council. The Mayor serves as the Chair of the Authority. The City Manager acts as the Executive Director. Purpose The Bonds are being issued to finance photovoltaic energy systems at various City facilities, to capitalize interest on the Bonds and to pay the costs of issuance of the Bonds. See “THE FINANCING PLAN” herein. __________________________ * Preliminary, subject to change. 2017-11-21 Agenda Packet Page 512 2 Security and Sources of Repayment The Bonds are secured under an Indenture, dated as of December 1, 2017, (the “Indenture”), by and among the Authority, the City and U.S. Bank National Association, Los Angeles, California, as trustee (the “Trustee”) (see “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - INDENTURE” herein). The Bonds are payable from the revenues pledged under the Indenture. The revenues consist primarily of Base Rental Payments (the “Base Rental Payments”) to be made by the City to the Authority as the rental for certain city facilities (the “Leased Property”) and from certain funds held under the Indenture and investment earnings thereon, and from net proceeds of insurance or condemnation awards. See “THE LEASED PROPERTY” herein. Pursuant to a Site Lease, dated as of December 1, 2017 (the “Site Lease”), by and between the Authority and the City, the City will lease the Leased Property to the Authority. The Authority will lease the Leased Property back to the City under the Lease Agreement, dated as of December 1, 2017, by and between the City and the Authority (the “Lease Agreement”). The Base Rental Payments are to be made by the City pursuant to the Lease Agreement. All of the Authority’s right, title and interest in and to the Lease Agreement (apart from certain rights to receive Additional Rental, as defined therein, to the extent payable to the Authority and to indemnification), including the right to receive Base Rental Payments under the Lease Agreement, will be assigned to the Trustee under the Indenture and under the Assignment Agreement, dated as of December 1, 2017 (the “Assignment Agreement”), by and between the Authority and the Trustee, for the benefit of Owners of the Bonds. In general, the City is required under the Lease Agreement to pay to the Authority the Base Rental Payments for use and possession of the Leased Property, which amounts are calculated to be sufficient in both time and amount to pay, when due, the principal of and interest on the Bonds. The City’s obligation to pay Base Rental Payments under the Lease Agreement is subject, however, to events of abatement as described therein. The City is required to make the Base Rental Payments from legally available funds. The City will covenant in the Lease Agreement to take such actions as may be necessary to include all Base Rental Payments in its annual budgets and to make the necessary annual appropriations for all such Base Rental Payments subject to complete or partial abatement of such Base Rental Payments resulting from a taking of the Leased Property (either in whole or in part) under the powers of eminent domain or resulting from title defect or damage or destruction of all or any portion of the Leased Property (see “RISK FACTORS - Base Rental Payments - Abatement” herein). For a summary of the Indenture and the Lease Agreement, see “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” herein. Certain capitalized terms used in this Official Statement and not otherwise defined have the meanings given them in “APPENDIX A.” The rights of the owners of the Bonds and the enforceability of the Bonds, the Indenture, the Site Lease, the Lease Agreement and the Assignment Agreement may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity and by the limitations on legal remedies against municipalities in the State of California (see “RISK FACTORS - Limited Recourse on Default; No Acceleration” herein). Limited Obligation THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED BY A PLEDGE OF BASE RENTAL PAYMENTS AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE. THE AUTHORITY HAS NO TAXING POWER. 2017-11-21 Agenda Packet Page 513 3 THE CITY’S OBLIGATION TO MAKE BASE RENTAL PAYMENTS IS AN OBLIGATION PAYABLE FROM THE CITY’S GENERAL FUND OR ANY OTHER SOURCE OF FUNDS LEGALLY AVAILABLE TO THE CITY TO MAKE BASE RENTAL PAYMENTS. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION OR ANY OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION, OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. No Reserve Fund The Authority will not fund a reserve fund for the Bonds. Designation of the Series 2017A Bonds as New Clean Renewable Energy Bonds On August 3, 2017, the City received allocations of volume cap to issue New Clean Renewable Energy Bonds (“New CREBs”) with respect to the twelve Renewable Energy Projects described under the caption “THE FINANCING PLAN - The Project” herein. The City and the Authority have designated the Series 2017A Bonds as New CREBs. Legal Matters Certain legal matters relating to the issuance of the Bonds are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. The proposed form of Bond Counsel’s opinion expected to be delivered upon the issuance of the Bonds is attached hereto as “APPENDIX D.” Certain legal matters will be passed on for the City and the Authority by Glen R. Googins, as City Attorney and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel, and for the Underwriter by its counsel, Nixon Peabody LLP, Los Angeles, California. Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds. Professional Services U.S. Bank National Association, Los Angeles, California, serves as Trustee under the Indenture. Harrell & Company Advisors, LLC (the “Municipal Advisor”) has advised the City as to the financial structure and certain other financial matters relating to the Bonds. Fees payable to the Municipal Advisor are contingent upon the sale and delivery of the Bonds. Offering of the Bonds Authority for Issuance and Delivery. The Bonds are to be issued in accordance with applicable provisions of the California Government Code, the Indenture and by Resolution No. MFA-______ of the Authority adopted on November 21, 2017. Offering and Delivery of the Bonds. The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Bond Counsel. It is anticipated that the Bonds, in book-entry form, will be available for delivery on or about December 19, 2017 through the facilities of The Depository Trust Company. 2017-11-21 Agenda Packet Page 514 4 Summaries Not Definitive The summaries and references contained herein with respect to the Indenture, the Site Lease, the Lease Agreement, the Assignment Agreement, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the documents described herein are available for inspection during the period of initial offering of the Bonds at the offices of the Municipal Advisor. Copies of these documents may be obtained after delivery of the Bonds at the trust office of the Trustee, U.S. Bank National Association, Los Angeles, California or from the City Clerk, City of Chula Vista, 276 Fourth Avenue, Chula Vista, California 91910. THE FINANCING PLAN Estimated Sources and Uses of Funds The proceeds from the sale of the Bonds are anticipated to be applied as follows: Series 2017A Bonds Series 2017B Bonds Sources of Funds Par Amount of Bonds Original Issue Premium Total Sources Uses of Funds Acquisition and Construction Fund Interest Fund (1) Underwriter’s Discount Costs of Issuance Fund (2) Total Uses ________________________________________ (1) Interest on the Series 2017A Bonds will be capitalized to June 1, 2018 and interest on the Series 2017B Bonds will be capitalized to December 1, 2018. (2) Expenses include fees and expenses of Bond Counsel, Municipal Advisor, Disclosure Counsel and the Trustee, rating fees, costs of printing the Official Statement, and other costs of issuance of the Bonds. The Project The proceeds of the Bonds deposited in the Acquisition and Construction Fund are expected to be used to acquire and construct photovoltaic energy systems at twelve facilities located throughout the City (the “Renewable Energy Projects”). The Renewable Energy Projects consist of the installation of an aggregate 2,434 Kw DC photovoltaic energy systems. The City received the New CREBs allocation to finance the Renewable Energy Projects on August 3, 2017. The Renewable Energy Projects are projected to produce energy and reduce the City’s expenditures on electricity at the facilities, in amounts greater than the operation and maintenance costs, future major maintenance costs and financing costs. The affected facilities are the City’s Civic Center, Police Headquarters, Main Library, Public Works facility, South Chula Vista Library, Loma Verde Aquatic Center, Parkway Aquatic Center and Gymnasium, Montevalle Recreation Center, Boys& Girls Club, Mount San Miguel Park, Animal Care Shelter and Salt Creek Recreation Center. 2017-11-21 Agenda Packet Page 515 5 THE LEASED PROPERTY Description of the Leased Property Pursuant to the terms of the Site Lease, the City will lease certain real property and the improvements thereon owned by City (the “Leased Property”) to the Authority. Pursuant to the terms of the Lease Agreement, the Authority will lease the Leased Property back to the City. The Leased Property consists of the City’s main library and its Harvest Park. The City’s main library (“Library”) is located on a 4-acre site adjacent to the City’s civic center complex and main police headquarters. The Library is 58,000 square feet including a basement, and was constructed in 1974. The City’s Harvest Park consists of a 5.3-acre neighborhood park in eastern Chula Vista, improved with picnic areas, play equipment, restrooms, shelters and gazebos and a soccer field. A recent appraisal of the Library estimates the value at $12,700,000. Based on recent appraisals of comparable park facilities located in the City, the City estimates the value of Harvest Park to be at least $9,000,000. The component properties of the Leased Property are not located in a 100-year flood plain. The facilities are not currently insured for earthquake or flood (see “RISK FACTORS - Natural Hazards”). Substitution or Release of Property Under the terms of the Lease Agreement, the City may substitute other property for the Leased Property, or any portion thereof, and may release portions of the Leased Property provided that certain conditions set forth in the Lease Agreement are met. See “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - LEASE AGREEMENT - NO CONSEQUENTIAL DAMAGES; USE OF THE LEASED PROPERTY; SUBSTITUTION OR RELEASE - Substitution or Release of the Leased Property.” 2017-11-21 Agenda Packet Page 516 6 THE BONDS General Provisions Payment of the Bonds. Interest on the Bonds is payable at the rates per annum set forth on the inside cover page hereof, on June 1, 2018 and each December 1 and June 1 thereafter (each, an “Interest Payment Date”) until maturity. The Bonds will be issued in the form of fully registered Bonds in the principal amount of $5,000 each or any integral multiple thereof. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months. Principal on the Bonds is payable on the dates and in the amounts set forth on the inside cover page hereof. Interest on the Bonds is payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the fifteenth day of the month preceding such Interest Payment Date (a “Record Date”), in which event it will bear interest from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full. Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest shall be paid on each Interest Payment Date to the Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Book-Entry System. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by wire of the Trustee to DTC which will remit such interest and principal to DTC Participants (as defined herein), who will, in turn, remit such interest and principal to Beneficial Owners (as defined herein) of the Bonds (see “APPENDIX E - THE BOOK-ENTRY SYSTEM” herein). As long as DTC is the registered owner of the Bonds and DTC’s book-entry method is used for the Bonds, the Trustee will send any notices to Bond Owners only to DTC. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the Indenture. Redemption Optional Redemption of Series 2017A Bonds. The Series 2017A Bonds maturing on or before December 1, 2027, are not subject to optional redemption prior to their respective stated maturities. The Series 2017A Bonds maturing on and after December 1, 2028 are subject to optional redemption prior to maturity in whole or in part on any date on or after December 1, 2027, at the option of the Authority, from any source of moneys, or in the event the City exercises its option under the Lease Agreement to prepay the corresponding principal components of Base Rental Payments (in integral multiples of $5,000), at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. No Optional Redemption of Series 2017B Bonds. The Series 2017B Bonds are not subject to optional redemption prior to their respective stated maturities. 2017-11-21 Agenda Packet Page 517 7 Mandatory Sinking Fund Redemption. The Series 2017A Bonds maturing December 1, 2043* (the “2043 Term Bonds”) are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each December 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Date (December 1) Sinking Fund Redemption Amount The Series 2017A Bonds maturing December 1, 2048* (the “2048 Term Bonds”) are subject to mandatory redemption prior to their maturity at a redemption price of 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on each December 1 commencing December 1, 20__ in the principal amounts and on the scheduled mandatory redemption dates as follows: Date (December 1) Sinking Fund Redemption Amount In addition, in lieu of mandatory sinking fund redemption thereof, the 2043 Term Bonds or the 2048 Term Bonds may be purchased by the Authority and tendered to the Trustee pursuant to the provisions of the Indenture. Extraordinary Redemption From Net Proceeds. The Bonds are subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds received with respect to all or a portion of the Leased Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. “Net Proceeds” means the proceeds received from the property or title insurance policies required pursuant to the Lease Agreement and the proceeds of any award made in eminent domain proceedings for the taking of the Leased Property, or any portion thereof, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof. See “SOURCES OF PAYMENT FOR THE BONDS - Insurance Relating to the Leased Property.” There can be no assurance that insurance proceeds will be adequate to redeem all of the Bonds following an insured loss (see “RISK FACTORS - Base Rental Payments - Insurance” herein). __________________________ * Preliminary, subject to change. 2017-11-21 Agenda Packet Page 518 8 Extraordinary Mandatory Redemption from Unexpended Series 2017A Bond Proceeds. The Series 2017A Bonds are subject to extraordinary mandatory redemption, in whole or in part, within 90 days following the third anniversary of the Closing Date of the Series 2017A Bonds, or 90 days following the date of termination of any period of time negotiated with the IRS that extends the date by which the proceeds of the sale of the Series 2017A Bonds must be expended, as evidenced in writing from the IRS, in authorized denominations, at a redemption price equal to the principal amount of the Series 2017A Bonds called for redemption, in an amount equal to the unexpended proceeds of the sale of the Series 2017A Bonds held by the Authority, but only to the extent that the Authority fails to expend all of the proceeds of the Series 2017A Bonds for certain qualified purposes as required by Section 54A(d)(2)(B)(i) of the Code within three years of issuance thereof. Special Optional Redemption Following Loss of Subsidy Payments. Upon the occurrence of an Extraordinary Event, the Series 2017A Bonds shall be subject to redemption, at the option of the Authority, prior to their maturity date, in whole or in part, on the date designated by the Authority, at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. “Extraordinary Event” means: (i) the occurrence of a Determination of Loss of New Clean Renewable Energy Bond Status, or (ii) (a) the occurrence of a material adverse change under Section 54C or 6431 of the Code, (b) the publication by the IRS or the United States Treasury of any guidance with respect to such sections; or (c) any other determination by the IRS or the United States Treasury, which determination is not the result of a failure of the City to satisfy certain requirements of the Indenture or the Lease, the result of which, as reasonable determined by the Authority (and which determination shall be conclusive), is to eliminate or reduce by 25% or more the Subsidy Payments expected to be received with respect to the Series 2017A Bonds. “Subsidy Payments” means, with respect to the Series 2017A Bonds, the cash subsidy payments payable from the United States Treasury under Section 6431 of the Code equal to 70% of the amount of interest that would be payable on such Interest Payment Date for the Series 2017A Bonds if such interest were determined at the federal tax credit rate determined in accordance with Section 54A(b)(3) of the Code.. “Accountable Event of Loss of New Clean Renewable Energy Bonds Status” means (a) the enactment of legislation by the Congress of the United States of America, (b) the promulgation of a non-appealable ruling, notice or determination by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holding by a court of competent jurisdiction, the effect of any of which either (i) causes the Series 2017A Bonds to lose their status or otherwise fail to qualify as “New Clean Renewable Energy Bonds” under Section 54C of the Tax Code or (ii) reduces, defers or eliminates the Subsidy Payments by an amount which equals or exceeds 25% of the amount which would otherwise be payable in respect of the Series 2017A Bonds under Section 6431 of the Tax Code. “Determination of Loss of New Clean Renewable Energy Bond Status” means (a) a final determination by the IRS (after the City has exhausted all administrative appeal remedies) determining that an Accountable Event of Loss of New Clean Renewable Energy Bond Status has occurred (b) a non-appealable holding by a court of competent jurisdiction holding that an Accountable Event of Loss of New Clean Renewable Energy Bond Status has occurred. Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption, among maturities of Bonds of such Series (a) as directed in a Written Certificate of the Authority with respect to any optional redemption, extraordinary optional redemption or extraordinary mandatory redemption of Bonds of a Series, (b) on a pro rata basis as nearly as practicable among maturities 2017-11-21 Agenda Packet Page 519 9 of all Series of Bonds with respect to any extraordinary redemption from Net Proceeds and (c) among maturities as provided in the Supplemental Indenture pursuant to which Additional Bonds are issued with respect to any other redemption of Additional Bonds,. The Bonds to be redeemed will be selected by lot among Bonds of the same Series with the same maturity, in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed. Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall send by first class mail, or if the Owner of such Bonds is a depository, by such method as acceptable to such depository, notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services by such manner of delivery as then acceptable to such entities, at least 30 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption price and shall specify the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Such notice of redemption may also state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. So long as DTC is the registered Owner of the Bonds, all redemption notices will be provided only to DTC as the Owner and not to the Beneficial Owners of the Bonds. See “APPENDIX E - THE BOOK-ENTRY SYSTEM.” Effect of Redemption. If, on the date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been sent, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon. Partial Redemption. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds in authorized denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered. 2017-11-21 Agenda Packet Page 520 10 Scheduled Debt Service on the Bonds The following is a schedule of the total debt service on the Series 2017A Bonds, assuming no special optional redemption or mandatory extraordinary redemption prior to maturity. Semi-Annual Period Ending Principal Interest Total Fiscal Year Total* June 1, 2018 December 1, 2018 June 1, 2019 December 1, 2019 June 1, 2020 December 1, 2020 June 1, 2021 December 1, 2021 June 1, 2022 December 1, 2022 June 1, 2023 December 1, 2023 June 1, 2024 December 1, 2024 June 1, 2025 December 1, 2025 June 1, 2026 December 1, 2026 June 1, 2027 December 1, 2027 June 1, 2028 December 1, 2028 June 1, 2029 December 1, 2029 June 1, 2030 December 1, 2030 June 1, 2031 December 1, 2031 June 1, 2032 December 1, 2032 June 1, 2033 December 1, 2033 June 1, 2034 December 1, 2034 June 1, 2035 Continued on next page. 2017-11-21 Agenda Packet Page 521 11 Continued from previous page. Semi-Annual Period Ending Principal Interest Total Fiscal Year Total* December 1, 2035 June 1, 2036 December 1, 2036 June 1, 2037 December 1, 2037 June 1, 2038 December 1, 2038 June 1, 2039 December 1, 2039 June 1, 2040 December 1, 2040 June 1, 2041 December 1, 2041 June 1, 2042 December 1, 2042 June 1, 2043 December 1, 2043 June 1, 2044 December 1, 2044 June 1, 2045 December 1, 2045 June 1, 2046 December 1, 2046 June 1, 2047 December 1, 2047 June 1, 2048 December 1, 2048 Total ________________________________________ * Fiscal Years ending June 30. 2017-11-21 Agenda Packet Page 522 12 Scheduled Debt Service on the Bonds The following is a schedule of the total debt service on the Series 2017B Bonds. Semi-Annual Period Ending Principal Interest Total Fiscal Year Total* June 1, 2018 December 1, 2018 June 1, 2019 December 1, 2019 June 1, 2020 December 1, 2020 June 1, 2021 December 1, 2021 June 1, 2022 December 1, 2022 June 1, 2023 December 1, 2023 June 1, 2024 December 1, 2024 June 1, 2025 December 1, 2025 June 1, 2026 December 1, 2026 June 1, 2027 December 1, 2027 June 1, 2028 December 1, 2028 ________________________________________ * Fiscal Years ending June 30. 2017-11-21 Agenda Packet Page 523 13 Debt Service Requirements Annual debt service on the Bonds (assuming no redemptions of the Bonds other than sinking account redemptions) and the Subsidy Payments is presented below. Fiscal Year Ending Subsidy June 30 Series 2017A Bonds* Payments* Series 2017B Bonds* Total* 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 Total ________________________________________ (1) Includes mandatory sinking account installments. (2) Calculated at 2.75%*, assuming 6.6% reduction from maximum allowable rate of 2.94%* due to sequestration. * Preliminary, subject to change. 2017-11-21 Agenda Packet Page 524 14 Additional Bonds The Authority may at any time issue one or more series of “Additional Bonds” payable from Base Rental Payments on a parity with the Bonds subject to certain conditions precedent set forth in the Indenture (see “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - INDENTURE - ISSUANCE OF ADDITIONAL BONDS” herein). SOURCES OF PAYMENT FOR THE BONDS General The Bonds are payable from and secured by a pledge of Base Rental Payments to be made by the City to the Authority as the rental for the Leased Property and certain funds held under the Indenture and investment earnings thereon, and from Net Proceeds. As security for the Bonds, pursuant to the Assignment Agreement, the Authority will assign to the Trustee for the payment of the Bonds the Authority’s rights, title and interest in the Lease Agreement (with certain exceptions), including the right to receive Base Rental Payments to be made by the City under the Lease Agreement. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED BY A PLEDGE OF BASE RENTAL PAYMENTS AND CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE. THE AUTHORITY HAS NO TAXING POWER. Base Rental Payments; Abatement The City is required to pay to the Authority the Base Rental Payments for use of the Leased Property, which are equal to the principal of and interest due on the Bonds. The Lease Agreement requires the City to make Base Rental Payments to the Authority at least 5 Business Days preceding each Interest Payment Date. Base Rental Payments to be paid by the City are assigned and are to be transmitted directly to the Trustee. The Indenture provides that the Base Rental Payments will be deposited in Base Rental Payment Fund maintained by the Trustee under the Indenture and applied to pay the principal and interest on the Bonds. The City will covenant in the Lease Agreement to take such action as may be necessary to include all Base Rental Payments in its annual budgets and to make annual appropriations for all such Base Rental Payments. The Lease Agreement provides that the several actions required by such covenants are deemed to be and shall be construed to be duties imposed by law and that it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such official to enable the City to carry out and perform the covenants in the Lease Agreement agreed to be carried out and performed by the City. The City’s obligation to make Base Rental Payments will be abated in whole or in part to the extent of substantial interference with use and possession of the Leased Property arising from damage, destruction, title defect or taking by eminent domain of the Leased Property. Abatement would not constitute a default under the Lease Agreement or the Indenture and the Trustee would not be entitled in such event to pursue remedies against the City. See “RISK FACTORS - Base Rental Payments - Abatement” herein. Under the Lease Agreement, the City will agree to pay all taxes, assessments, utility charges, and insurance premiums charged with respect to the Leased Property and certain expenses related to the Bonds, including the fees and expenses of the Trustee. The City is responsible for repair and maintenance of the Leased Property during the term of the Lease Agreement. The City may at its own expense in good faith contest, and leave unpaid during such contest, such taxes, assessments and utility and other charges if certain requirements set forth in the Lease Agreement are satisfied. 2017-11-21 Agenda Packet Page 525 15 Should the City default under the Lease Agreement, the Trustee, as assignee of the Authority, may terminate the Lease Agreement and re-lease the Leased Property or may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis. Under no circumstances will the Trustee have the right to accelerate Base Rental Payments. The exercise of the remedies provided to the Trustee is subject to various limitations on the enforcement of remedies against public agencies. See “RISK FACTORS - Limited Recourse on Default; No Acceleration” and “- Enforcement of Remedies” herein. See also “RISK FACTORS - Base Rental Payments - Base Rental Payments are Limited Obligations of the City” herein. THE OBLIGATION OF THE CITY TO PAY BASE RENTAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO PAY BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. In addition to any Additional Bonds, the City may enter into other obligations payable from its general fund without the consent of the Bond Owners. To the extent the City issues such obligations, funds available to pay Base Rental Payments may be reduced. See “FINANCIAL INFORMATION - Joint Financing Agreement with Respect to the Chula Vista Bayfront” and “RISK FACTORS - Base Rental Payments - Base Rental Payments are Limited Obligations of the City” herein. No Reserve Fund The Authority will not fund a reserve fund for the Bonds. Insurance Relating to the Leased Property The Lease Agreement requires the City to maintain property damage insurance, including fire insurance with extended coverage on all improvements constituting any part of the Leased Property. The City is also required to maintain rental interruption insurance on the improvements constituting any part of the Leased Property in an amount equal the maximum remaining scheduled Base Rental Payments due for a period of 24 months. The rental interruption insurance is payable only following a loss of use of any part of the Leased Property due to one of the hazards covered by the City’s property damage insurance policy. The City is not required under the Lease Agreement to maintain earthquake or flood insurance. Therefore, there will be no property insurance or rental interruption insurance payable with respect to uninsured hazards or the unimproved portions of the Leased Property. The Lease Agreement also required the City to obtain a policy of title insurance insuring title to the Leased Property in an amount not less than the initial principal amount of the Bonds and general liability insurance insuring the City, the Authority and their respective members, officers, agents and employees. See “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - LEASE AGREEMENT - INSURANCE” and “RISK FACTORS - Base Rental Payments - Insurance” herein. In accordance with the Indenture, if the Leased Property or any portion thereof is damaged or destroyed, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Property or the affected portion thereof in accordance with the provisions of the Indenture. The Net Proceeds, including the proceeds of any self-insurance, received on account of any damage or destruction of the Leased Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in a special account and made available for, and, to the extent necessary shall be applied to, the cost of repair 2017-11-21 Agenda Packet Page 526 16 or replacement of the Leased Property, or the affected portion thereof, upon receipt of a Written Request of the City, together with invoices therefor. Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Leased Property or the portions of the Leased Property which were damaged or destroyed. If the City does intend to replace or repair the Leased Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the special account. In the event of any damage to or destruction of the Leased Property caused by one of the perils covered by the insurance required by the Lease Agreement which would result in an abatement of rental payments or any portion thereof, then the City shall direct the Trustee, in writing, to apply the Net Proceeds together with other legally available funds that the City elects to contribute, to the repair, reconstruction or replacement of the damaged or destroyed portions of the Leased Property; provided, however, that the City shall not be required to repair or replace any portion of the Leased Property pursuant to the Indenture if such Net Proceeds, together with any other amounts held under the Indenture and any other legally available funds made available by the City at its election, are sufficient to redeem (i) all of the Outstanding Bonds, or (ii) a portion of the Outstanding Bonds such that the resulting Base Rental Payments in any Rental Period following such partial redemption are sufficient to pay in such Rental Period the principal of and interest on all Bonds to remain Outstanding immediately after such partial redemption. If the City is not required to replace or repair the Leased Property, or the affected portion thereof, or to use such amounts to redeem Bonds, then such proceeds shall be paid to the City to be used for any lawful purpose, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Leased Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Leased Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds. If the insurance proceeds and any amounts contributed by the City are not sufficient to repair all of the damaged or destroyed Leased Property, there could be an abatement of Base Rental Payments under the Lease Agreement and a failure to pay the principal of and interest on the Bonds when due. An abatement is not an event of default under the Indenture or the Lease Agreement. Proceeds of rental interruption insurance shall be deposited to the Base Rental Payment Fund and be applied to the payment of the principal of and interest due on the Bonds to the extent of any abatement of Base Rental Payments pursuant to the Lease Agreement, and otherwise as directed in writing by the City. Proceeds of any policy of title insurance received by the Trustee in respect of the Leased Property will be applied and disbursed by the Trustee as follows: (a) if the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Leased Property and will not result in an abatement of Rental Payments payable by the City under the Lease Agreement, such proceeds will be remitted to the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Leased Property and will result in an abatement of Rental Payments payable by the City under the Lease Agreement, then upon written direction of the City, the Trustee will deposit such proceeds in the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in the Indenture and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued. The proceeds of any award in eminent domain received in respect to the Leased Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds. 2017-11-21 Agenda Packet Page 527 17 Remedies on Default If the City defaults in performance of its obligations under the Lease Agreement, the Trustee, as assignee of the Authority, may elect not to terminate the Lease Agreement and may re-enter and relet the Leased Property and may enforce the Lease Agreement and hold the City liable for all Base Rental Payments on an annual basis while re-entering and reletting the Leased Property. Such re-entry and reletting shall not effect a surrender of the Lease Agreement. The City, in the event of default, will have no right to any rentals received by the Trustee through reletting of the Leased Property, except amounts in excess of the Base Rental Payments and other amounts due under the Lease Agreement. Alternatively, the Trustee may elect to terminate the Lease Agreement and may re-enter and relet the Leased Property and seek to recover all costs, losses or damages caused by the City’s default. In such event, the Lease Agreement provides that the City will be liable for all costs, loss or damage howsoever occurring. There are limitations on the reletting of the Leased Property and the exercise of remedies under the Lease Agreement. See “RISK FACTORS - Limited Recourse on Default; No Acceleration” and “- Enforcement of Remedies” and “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - LEASE AGREEMENT - DEFAULTS AND REMEDIES.” Encumbrances The City may not create any mortgage, pledge, lien, charge or encumbrance upon the Leased Property other than “Permitted Encumbrances.” See “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - LEASE AGREEMENT - DEFINITIONS.” New CREBs Subsidy Payments The City has made an irrevocable election to have Section 6431 of the Code apply to the Series 2017A Bonds so that the Series 2017A Bonds are treated as “specified tax credit bonds,” with respect to which the City will be allowed a direct interest subsidy payment from the United States Treasury to the City. As a result of this election, interest on the Series 2017A Bonds is not excludable from gross income of owners of the Series 2017A Bonds under Section 103 of the Code, and owners of the Series 2017A Bonds will not be allowed any federal tax credits as a result of ownership of or receipt of interest payments on the Series 2017A Bonds. See “TAX MATTERS .” The obligation of the United States Treasury under Section 6431 of the Code to make direct payments to the City in respect of interest payments on the Series 2017A Bonds (the “Subsidy Payments”) does not constitute a full faith and credit guarantee of the Series 2017A Bonds by the United States of America. As described under “TAX MATTERS,” no assurances are provided that the City will receive any Subsidy Payments. The amount of the Subsidy Payments is subject to legislative changes by the Congress and the President of the United States of America. Subsidy Payments are subject to sequestration under The Budget Control Act of 2011, Pub. L. No. 112-25, 125 Stat. 240, unless the Congress and the President take action to prevent such sequestration. Subsidy Payments can also be offset against certain amounts that may, for unrelated reasons, be owed by the City to an agency of the United States of America or certain state agencies. The City cannot and does not make any representation regarding the City’s receipt of Subsidy Payments with respect to the Series 2017A Bonds, including the amount and timing of receipt of such payments. The Subsidy Payments, payable directly to the City, are not pledged to the Owners of the Series 2017A Bonds as security therefore. In circumstances where the Subsidy Payments are significantly reduced, the City and the Authority have the option to redeem the Series 2017A Bonds prior to maturity. See “THE BONDS - REDEMPTION - Special Optional Redemption Following Loss of Subsidy Payments” herein. 2017-11-21 Agenda Packet Page 528 18 CITY OF CHULA VISTA General Information Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in an area generally known as “South Bay.” Chula Vista’s city limits cover approximately 50 square miles. Neighboring communities include the City of San Diego and National City to the north and the City of Imperial Beach and the communities of San Ysidro and Otay Mesa to the south. With a January 2017 estimated population of 267,917, Chula Vista is the second largest city in the County. The City maintains an internet website (www.chulavistaca.gov) for various purposes, however, none of the information on that website is intended to be relied upon by investors in making any investment decision or to provide any continuing information with respect to the Bonds or any other bonds or obligations of the City. General Organization Chula Vista was incorporated as a general law city on March 17, 1911, and operates under the council/manager form of government. It became a charter city in 1949. The City is governed by a five- member council consisting of four members elected by geographic district and a Mayor, each elected at large. The City Attorney is also elected at large. The positions of City Manager and City Clerk are filled by appointments of the Council. In Fiscal Year 2017-18, the City had 1,006 authorized full-time staff positions including sworn officers and fire personnel. Including part-time personnel, the City employs approximately 1,320 staff. The members of the City Council, the expiration dates of their terms and key administrative personnel are set forth in the charts below. CITY COUNCIL City Council Member Term Expires Mary Casillas Salas, Mayor December 2018 John McCann, District 1 December 2018 Patricia Aguilar, District 2 December 2018 Stephen Padilla, District 3 December 2020 Mike Diaz, District 4 December 2020 2017-11-21 Agenda Packet Page 529 19 CITY STAFF Gary Halbert, City Manager Maria Kachadoorian, Assistant City Manager Kelley Bacon, Deputy City Manager Kelly Broughton, Director of Development Services Eric Crockett, Director of Economic Development Jim Geering, Fire Chief David Bilby, Director of Finance/Treasurer Courtney Chase, Director of Human Resources Edward Chew, Director of Information Technology Services Betty Waznis, Director of Library Roxana Kennedy, Chief of Police Richard Hopkins, Director of Public Works Kristi McClure Huckaby, Director of Recreation Glen R. Googins, City Attorney Donna Norris, CMC, City Clerk Governmental Services Public Safety and Welfare For Fiscal Year 2017-18, the City of Chula Vista Police Department has authorized total positions of 333, including sworn officers and non-sworn personnel providing patrol, traffic, animal control and investigations. There are nine fire stations located in and operated by the City, staffed by 148 fire personnel. Community Services Services provided by the City include building permit and inspection, planning and zoning, landscape and public infrastructure maintenance, street cleaning, traffic signal maintenance and municipal code compliance. Public Services Water is supplied to Chula Vista by the Otay Water District and the Sweetwater Water District. Sewer service is provided by the City. Electric power and natural gas are provided by San Diego Gas and Electric. The Chula Vista Public Library is comprised of three individual libraries connected by a wide-area network. The Library delivers books in English and Spanish, videos and CDs, and community programming to the City’s residents nearly every day of the year. The Library contains an Office of Cultural Arts dedicated to advancing the arts and culture in a manner designed to preserve the diverse cultures of the area. Culture and Leisure Chula Vista is the home to a variety of cultural and educational facilities such as the Chula Vista Heritage Museum, Onstage Playhouse, and the San Diego Junior Theater. The Chula Vista Recreation Department provides citizens with a variety of park and recreational services on a year round basis. Facilities include nine community and recreation centers, including a youth community center and a senior center. The City also has two community pools open year round, 43 community and neighborhood parks, and a Memorial Bowl with seating for 700 at which the City’s Summer Concert Series is hosted. The City also has after-school recreation programs throughout the community. 2017-11-21 Agenda Packet Page 530 20 Community Facilities and Services Public educational instruction for kindergarten through high school is provided by the Chula Vista Elementary School District and Sweetwater Union High School District. There are also four adult education schools and numerous private schools. In addition to Southwestern College, a two year Community College, there are seven universities or colleges within commuting distance from Chula Vista in the San Diego metropolitan area. There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals in Chula Vista. Chula Vista is home to the 20,000 seat Sleep Train Amphitheatre, the Living Coast Discovery Center, Aquatica SeaWorld Waterpark, four golf courses, numerous parks and open spaces, and a harbor which includes two marinas, an RV park, and several restaurants. The City now owns the Chula Vista Elite Athlete Training Center, formerly a United States Olympic Committee (“USOC”) training facility. The center is located on a 150-acre property adjacent to the Otay Lake reservoir. In 2016, the City and USOC negotiated an agreement pursuant to which in exchange for the deeding of the facility to the City for one dollar, the City has taken over responsibility for operation of the facility. Under the agreement the City will continue to provide the USOC with access to an elite Olympic training center and may use the facility for other events and activities that would be compatible uses. Transportation U.S. Highways 5 (along the coast) and 805 (inland) provide full freeway access from Chula Vista north to San Diego and south to the Mexican border. Commuter rail service is provided by the San Diego Trolley, a light rail system. Eleven bus routes serve Chula Vista. The City established Chula Vista Express, a three-part commuting program to promote public transportation, carpooling, vanpooling, biking and walking to work as alternatives to driving alone. It offers free bus service from the eastern part of the City to downtown San Diego, and a free shuttle from the eastern part of the City to the H Street Trolley Station and a cash incentive for riding or joining a vanpool or carpool. Air cargo and passenger flight services are provided at San Diego’s Lindbergh International Airport, 12 miles west, which is served by all major airlines. Cargo shipping is available at the Unified Port of San Diego, which serves as a transshipment facility for the region, which includes San Diego, Orange, Riverside, San Bernardino and Imperial counties, plus northern Baja California, Arizona and points east. 2017-11-21 Agenda Packet Page 531 21 Population The following table provides a comparison of population growth for Chula Vista and San Diego County between 2013 and 2017. TABLE NO. 1 CHANGE IN POPULATION CHULA VISTA AND SAN DIEGO COUNTY 2013 – 2017 CHULA VISTA SAN DIEGO COUNTY January 1 Percentage Percentage Year Population Change Population Change 2013 256,366 3,195,215 2014 260,416 1.6% 3,231,651 1.1% 2015 263,028 1.0 3,266,192 1.1 2016 264,911 0.7 3,286,717 0.6 2017 267,917 1.1 3,316,192 0.9 % Increase Between 2013 - 2017 4.5 3.8 __________________________________________ Source: State of California, Department of Finance, “E-4 Population Estimates for Cities, Counties, and the State, 2011-2017, with 2010 Census Benchmark” Sacramento, California, May 2017. Per Capita Personal Income Per capita personal income information for Chula Vista, San Diego County, the State of California and the United States is summarized in the following table. TABLE NO. 2 PER CAPITA PERSONAL INCOME CITY OF CHULA VISTA, SAN DIEGO COUNTY, STATE OF CALIFORNIA AND UNITED STATES 2011 – 2015 Year Chula Vista San Diego County (1) State of California (1) United States (1) 2011 $41,900 $46,374 $45,820 $42,453 2012 43,060 47,961 48,312 44,267 2013 42,640 48,938 48,471 44,462 2014 42,880 51,174 50,988 46,414 2015 42,920 53,298 53,741 48,112 ____________________________________ (1) For San Diego County, State of California and United States, per capita personal income was computed using Census Bureau midyear population estimates. Estimates for 2011-2015 reflect county population estimates available as of March 2016. Note: All dollar estimates are in current dollars (not adjusted for inflation). Last updated: November 17, 2016 - new estimates for 2015; revised estimates for 2011-2014. Source: U.S. Department of Commerce, Bureau of Economic Analysis, and City of Chula Vista Comprehensive Annual Financial Report. 2017-11-21 Agenda Packet Page 532 22 Employment As of September 2017 the civilian labor force for the City was approximately 123,200 of whom 116,900 were employed. The unadjusted unemployment rate as of September 2017 was 5.2% for the City as compared to 4.1% for the County and 4.7% for the State. Civilian labor force, employment and unemployment statistics for the City, County, the State and the United States, for the years 2012 through 2016 are shown in the following table: TABLE NO. 3 CITY OF CHULA VISTA CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT ANNUAL AVERAGES Year Civilian Labor Force Employment Unemployment Unemployment Rate 2012 City of Chula Vista 121,300 107,500 13,800 11.4% San Diego County 1,540,400 1,399,900 140,600 9.1 California 18,523,800 16,602,700 1,921,100 10.4 United States 154,975,000 142,469,000 12,506,000 8.1 2013 City of Chula Vista 121,100 109,300 11,800 9.8 San Diego County 1,543,200 1,422,500 120,700 7.8 California 18,624,300 16,958,700 1,665,600 8.9 United States 155,389,000 143,929,000 11,460,000 7.4 2014 City of Chula Vista 120,700 110,900 9,700 8.1 San Diego County 1,543,700 1,444,500 99,300 6.4 California 18,755,000 17,348,600 1,406,400 7.5 United States 155,922,000 146,305,000 9,617,000 6.2 2015 City of Chula Vista 121,100 113,200 7,900 6.5 San Diego County 1,554,800 1,474,400 80,400 5.2 California 18,893,200 17,723,300 1,169,900 6.2 United States 157,130,000 148,834,000 8,296,000 5.3 2016 City of Chula Vista 122,200 115,000 7,200 5.9 San Diego County 1,570,400 1,497,000 73,500 4.7 California 19,102,700 18,065,000 1,037,700 5.4 United States 159,187,000 151,436,000 7,751,000 4.9 ____________________________________ Source: California State Employment Development Department and United States Bureau of Labor Statistics. 2017-11-21 Agenda Packet Page 533 23 Industry The City is located in the San Diego-Carlsbad Metropolitan Statistical Area. The number of wage and salary workers by industry for each of the years 2013 through 2017 in the Metropolitan Statistical Area is presented in Table No. 4 below. TABLE NO. 4 SAN DIEGO-CARLSBAD METROPOLITAN STATISTICAL AREA WAGE AND SALARY WORKERS BY INDUSTRY (1) 2013 - 2017 (in Thousands) Industry 2013 2014 2015 2016 2017 Government 225.9 227.1 231.6 239.3 242.8 Other Services 49.9 53 54.1 55.4 60.4 Leisure and Hospitality 172.4 180.8 187.6 196.3 196.6 Educational and Health Services 180.0 186.8 193.8 198.8 202.7 Professional and Business Services 221.8 224.4 230.7 235.1 232.6 Financial Activities 70.6 69.3 71.0 72.9 76.0 Information 24.4 24.4 23.6 23.6 23.6 Transportation, Warehousing and Utilities 26.9 27.1 28.9 29.7 27.8 Service Producing Retail Trade 140.4 143.2 145.8 145.5 146.6 Wholesale Trade 43.1 43.6 44.1 44.9 44.9 Manufacturing Nondurable Goods 24.1 25.0 26.5 27.3 27.7 Durable Goods 75.4 77.9 80.8 80.8 80 Goods Producing Construction 62.2 65.4 72.5 77.4 81.4 Mining and Logging 0.3 0.4 0.3 0.3 0.3 Total Nonfarm 1,317.4 1,348.4 1,391.3 1,427.3 1,443.4 Farm 10.3 10.2 9.4 9.2 9.4 Total (all industries) 1,327.7 1,358.6 1,400.7 1,436.5 1,452.8 ____________________________________ (1) Annually, as of September. Note: Data may not add due to rounding. Source: State of California Employment Development Department, Labor Market Information Division, “Industry Employment & Labor Force - by month, March 2016 Benchmark.” 2017-11-21 Agenda Packet Page 534 24 Largest Employers The largest employers operating within the City and their respective number of employees as of June 30, 2016 are as follows: [to be updated] TABLE NO. 5 CITY OF CHULA VISTA LARGEST EMPLOYERS Name of Company Number of Employees Product/Service Sweetwater Union High School District 4,385 Education Chula Vista Elementary School District 3,245 Education Rohr Inc./Goodrich Aerospace 2,468 Aerospace Manufacturing Sharp Chula Vista Medical Center 2,131 Hospital Southwestern Community College 1,409 Education Wal-Mart 1,239 General Merchandise City of Chula Vista 1,195 Government Scripps Mercy Hospital Chula Vista 1,098 Hospital Costco 760 General Merchandise Aquatica 513 Water Park ____________________________________ Source: City of Chula Vista Comprehensive Annual Financial Report. The City is not aware of any significant changes in largest employers within the City since June 30, 2016. Commercial Activity The following table summarizes the volume of retail and food services sales and taxable transactions for the City for 2011 through 2015 (the most recent year for which statistics are available for the full year). TABLE NO. 6 CITY OF CHULA VISTA TOTAL TAXABLE TRANSACTIONS (in Thousands) 2011 – 2015 Retail and Retail and Total Taxable Food Services Food Services Transactions Issued Sales Year ($000’s) % Change Permits ($000’s) % Change Permits 2011 2,184,654 2,714 2,421,667 4,095 2012 2,258,846 3.4% 2,778 2,501,497 3.3% 4,149 2013 2,333,365 3.3 2,835 2,589,379 3.5 4,182 2014 2,395,041 2.6 2,914 2,667,866 3.0 4,291 2015 2,394,868 (0.0) N/A 2,687,701 0.7 N/A ____________________________________ Source: California State Board of Equalization, “Taxable Sales in California.” 2017-11-21 Agenda Packet Page 535 25 Taxable transactions by type of business for the City are summarized below for 2011 through 2015 (the most recent year for which statistics are available for the full year). TABLE NO. 7 CITY OF CHULA VISTA TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in Thousands) 2011 – 2015 2011 2012 2013 2014 2015 (1) Retail and Food Services Clothing and Clothing Accessories Stores $ 139,282 $ 147,168 $ 150,789 $ 154,234 General Merchandise Stores 657,146 668,390 675,819 683,633 Food and Beverage Stores 124,929 131,846 139,157 145,854 Food Services and Drinking Places 297,506 317,320 338,183 363,202 Home Furnishings and Appliance Stores 150,305 150,541 153,461 141,676 Building Materials and Garden Equipment and Supplies 99,766 105,472 109,437 113,633 Motor Vehicle and Parts Dealers 209,121 230,345 246,160 256,247 Gasoline Stations 303,189 305,217 304,968 312,153 Other Retail Group 203,410 202,547 215,390 224,411 Total Retail and Food Services 2,184,654 2,258,846 2,333,365 2,395,041 $2,394,868 All Other Outlets 237,013 242,651 256,014 272,825 292,833 Total All Outlets $2,421,667 $2,501,497 $2,589,379 $2,667,866 $2,687,701 ____________________________________ (1) Beginning in 2015, the State Board of Equalization stopped publishing Industry-level data. Note: Detail may not compute to total due to rounding. Source: State Board of Equalization, “Taxable Sales in California.” 2017-11-21 Agenda Packet Page 536 26 Building Activity The following table summarizes building activity valuations for the City of Chula Vista for the Fiscal Years 2012-13 through 2016-17. TABLE NO. 8 CITY OF CHULA VISTA BUILDING ACTIVITY AND VALUATION (in Thousands) 2012-13 – 2016-17 Residential Building Non-Residential Building Permits Issued Permits Issued Fiscal Year Units Valuation Buildings Valuation 2012-13 954 $226,972,213 13 $22,328,114 2013-14 571 116,869,207 26 53,222,385 2014-15 1,014 175,417,974 21 18,222,385 2015-16 635 114,755,591 13 25,699,274 2016-17 847 143,328,403 40 15,179,745 ____________________________________ Source: City of Chula Vista. FINANCIAL INFORMATION Fiscal Policies The City Council has adopted several policies that form the overall framework within which the City’s operating budget is formulated and serve as a basis for resource allocation decisions. These policies are summarized below. General  The City’s financial assets will be managed in a sound and prudent manner in order to ensure the continued viability of the organization.  A comprehensive operating and capital budget for all City funds will be developed annually and presented to the City Council for approval. The purpose of the annual budget will be to (1) identify community needs for essential services, (2) identify the programs and specific activities required to provide these essential services, (3) establish program policies and goals that define the nature and level of program services required, (4) identify alternatives for improving the delivery of program services, (5) identify the resources required to fund identified programs and activities, and enable accomplishment of program objectives, and (6) set standards to facilitate the measurement and evaluation of program performance.  The City’s annual operating budget will be balanced whereby planned expenditures do not exceed anticipated revenues.  Recurring revenues will fund recurring expenditures. One-time revenues will be used for capital, reserve augmentation, or other nonrecurring expenditures.  Accounting systems will be maintained in accordance with Generally Accepted Accounting Principles. 2017-11-21 Agenda Packet Page 537 27  Investment policy and practice will be in accordance with State statutes that emphasize safety and liquidity over yield, including quarterly status reports to the City Council.  City operations will be managed and budgets prepared with the goal of maintaining an “Available Fund Balance” in the General Fund of no less than 15% of the General Fund operating budget.  General Fund fiscal status reports reflecting comparisons of actual and projected performance with budget allocations for both revenue and expenditures will be presented to the City Council on a quarterly basis. Reserves The City will target to maintain a minimum “Operating Reserve” equal to 15% of operating budget to address extraordinary needs of an emergency nature, an “Economic Contingency Reserve” of 5% of operating budget to mitigate service impacts during a significant downturn in the economy and a “Catastrophic Event Reserve” of 3% of operating budget to fund unanticipated expenses related to a major natural disaster in the City. The City’s Operating Reserve for the Fiscal Year ending June 30, 2017 is expected to be 11.7% of 2016-17 expenditures and 11.7% of 2017-18 expenditures and the Economic Contingency Reserve is expected to be 2.6% of 2016-17 and 1.9% of 2017-18 expenditures. To date, the Catastrophic Event Reserve has not been funded. Revenue  The City will endeavor to maintain a diversified and stable revenue base in order to minimize the impact to programs from short-term economic fluctuations.  Revenue projections will be maintained for the current year and four future fiscal years, and estimates will be based on a conservative, analytical, and objective process.  In order to maintain flexibility, except as required by law or funding source, the City will avoid earmarking any restricted revenues for a specific purpose or program.  The City has established user fees to best ensure that those who use a proprietary service pay for that service in proportion to the benefits received. With few exceptions, such as those services provided for low-income residents, fees have been set to enable the City to recover the full cost of providing those services.  User fees will be reviewed and updated on an ongoing basis to ensure that program costs continue to be recovered and that the fees reflect changes in levels of service delivery.  The City will recover the cost of new facilities and infrastructure necessitated by new development consistent with State law and the City’s Growth Management Program. Development Impact Fees will be closely monitored and updated to ensure that they are maintained at a level adequate to recover costs.  When considering new development alternatives, the City will attempt to determine the fiscal impact of proposed projects, annexations, etc. and ensure that mechanisms are put in place to provide funding for any projected negative impacts on City operations. 2017-11-21 Agenda Packet Page 538 28 Expenditures  Budgetary control will be exercised at the Department/category level, meaning that each department is authorized to spend up to the total amount appropriated for that department within the expenditure categories of Personnel Costs, Supplies & Services, Other Charges, Utilities, and Capital. Transfers of appropriations between expenditure categories of up to $15,000 may be approved by the City Manager. Transfers of appropriations between expenditure categories in excess of $15,000, or between departments require City Council approval.  Appropriations, other than for capital projects, remaining unspent at the end of any fiscal year will be cancelled and returned to Available Fund Balance with the exception of any appropriations encumbered as the result of a valid purchase order or as approved for a specific project or purpose by the City Council or the City Manager. Appropriations for capital projects will necessarily be carried over from year to year until the project is deemed to be complete.  The City will establish and maintain equipment replacement and facility maintenance funds as deemed necessary to ensure that monies are set aside and available to fund ongoing replacement needs.  The City will attempt to compensate non-safety employees at rates above the middle of the labor market as measured by the median rate for similar jurisdictions. Capital  Major capital projects will be included in a capital improvement program budget (the “CIP Budget”) reflecting a five-year period. The CIP Budget will be updated annually and presented to City Council for approval. Resources will be formally appropriated (budgeted) for the various projects on an annual basis in accordance with the five-year plan. Capital Financing and Debt Management  The City will consider the use of debt financing only for one-time capital improvement projects when the project’s useful life will exceed the term of the financing and when resources are identified sufficient to fund the debt service requirements. Some exceptions to this CIP driven focus are the issuance of pension obligation bonds, where financial benefits are significantly greater than the costs and where the benefits are determined to be a financially prudent option, and of short-term instruments such as tax and revenue anticipation notes, which are to be used for prudent management purposes. Bonded debt should not be issued for projects with minimal public benefit or support, or to finance normal operating expenditures.  The City will attempt to limit the total amount of annual debt service payments guaranteed by the General Fund to no more than 10% of estimated General Fund revenues.  The City will consider requests from developers for the use of debt financing secured by property based assessments or special taxes in order to provide for necessary infrastructure for new development only under strict guidelines adopted by the City Council, which may include minimum value-to-lien ratios and maximum tax burdens.  The City will strive to minimize borrowing costs by seeking the highest credit rating possible, procuring credit enhancement such as letters of credit or insurance, when cost effective, and maintaining good communications with credit rating agencies regarding the City’s fiscal condition.  The City will diligently monitor its compliance with bond legal covenants, including adherence to continuing disclosure requirements and federal arbitrage regulations. 2017-11-21 Agenda Packet Page 539 29  In addition to externally financed debt, the City utilizes inter-fund loans whenever possible to reduce borrowing costs or provide for shorter term loans. When interest is charged on internal loans, it is done at the same rate the City earns from its pooled investments. Planning Documents Beginning in 2011, the City prepared a Five-Year Financial Outlook and embarked on a Fiscal Recovery and Progress Plan. The City then adopted a Strategic Plan in 2012. The City continued to update the Five- Year Financial Outlook annually until 2016, when it developed a Long-Term Financial Plan for a 10 year period. The overall goal of these planning documents is to provide advance information on the City’s financial condition that can be used by decision makers in developing budgets and prioritizing goals as well as responding timely to any projected budget imbalances. In December 2016, the City also adopted a plan for the expenditure of the Measure P Sales Tax (see “Local Taxes - Sales and Use Taxes”) below. Budgetary Process and Administration An annual budget is adopted by the City Council prior to the first day of the fiscal year. The budget process includes submittal of each department’s budget request for the next fiscal year, a detailed review of each department’s proposed budget by the City Manager, and a final City Manager recommended budget transmitted to the City Council for its review before the required date of adoption. Once transmitted to the City Council, the proposed budget is made available for public inspection. A public hearing is held to give the public the opportunity to comment upon the proposed budget. Notice of such public hearing is published in a newspaper of general circulation. The adoption of the budget is accomplished by the approval of a Budget Resolution. The legal level of budgetary control is at the department level. Any budget modification, which would result in an appropriation increase, requires City Council approval. The City Manager and Finance Director are jointly authorized to transfer appropriations up to $15,000 within a departmental budget. Any appropriation transfers between departments or greater than $15,000 require City Council approval. All appropriations which are not obligated, encumbered or expended at the end of the fiscal year lapse and become a part of the unreserved fund balance which may be appropriated for the next fiscal year. An annual budget is approved by the City Council for the general, special revenue and debt service funds except for the Developer’s Deposit Special Revenue Fund, which is used to account for various developer deposits for development projects and is used to fund staff costs and other costs related to specific projects. These budgets are prepared on the modified accrual basis of accounting. The budgets of the capital projects funds are primarily long-term budgets, which emphasize major programs and capital outlay plans extending over a number of years. Economic Conditions and Outlook Despite a financial outlook that is more strained than it has been in recent years, the City continues to see revenue growth, infrastructure improvements, and growth in commercial and residential development. Positive revenue growth is being outpaced by pension and health care cost increases and will continue to be a challenge in the coming years. The Long-Term Financial Plan, described above, indicates a high likelihood of future structural deficits absent further action by the City to bridge the funding gap. The City will continue to implement efficiency measures to help mitigate the impacts of the cost increases and to implement new ways to maximize limited resources while delivering high quality services to the community. A positive note was the approval by voters of Measure P – a temporary, ten‐year, half‐cent sales tax to fund high priority infrastructure needs. Collection of the increased sales tax began on April 1, 2017. The Measure P sales tax increase is projected to raise $178 million over the next ten years. 2017-11-21 Agenda Packet Page 540 30 Sales Tax. Sales tax revenue is highly sensitive to economic conditions and reflects the factors that drive taxable sales including the levels of unemployment, consumer confidence, per capita income and business investment. Consumer spending decreased significantly nationwide during the recent economic recession, and the City did not see its sales tax reach pre-recession levels until 2013. Between 2013 and 2016, sales tax revenues increased by 16%. The 2017-18 Budget reflects modest growth in sales tax, exclusive of Measure P, of 2% compared to the Fiscal Year 2016-17 budget for sales tax (net of the impact of a one-time adjustment in Fiscal Year 2015-16 known as the “Triple-Flip,” see “Local Taxes - Sales and Use Taxes” below). The Measure P Sales Tax is expected to generate $16.3 million in its first full year of collection in Fiscal Year 2017-18. Property Tax and Assessed Value. Property tax revenue fell throughout the economic recession, with Chula Vista being one of the hardest hit areas in San Diego County. During the economic recession the City’s assessed valuation dropped over 15% from its prior peak in 2009 and until 2013-14 was still declining. The City’s assessed value in Fiscal Year 2015-16 of $24.45 billion finally reached the prior Fiscal Year 2008-09 highest value. The positive assessed value trend is anticipated to continue into Fiscal Year 2017-18 as reflected in a budgeted property tax revenue increase of 5.6% (net of a one-time loan repayment from City’s Successor Agency) or approximately $1.7 million compared to the Fiscal Year 2016- 17 budget. A similar increase was budgeted for property taxes paid to the City in lieu of motor vehicle license fees (see “Motor Vehicle License Fees” below). The actual assessed value for Fiscal Year 2016-17 reflected a net increase of approximately 5.5% from the prior fiscal year. The trend is anticipated to continue and a 4.5% increase in assessed valuation is projected in Fiscal Year 2017-18. Transient Occupancy Tax. The City’s transient occupancy tax (“TOT”) revenues have increased on a yearly basis since 2010. In Fiscal Year 2017-18, the City is projecting an increase of $661,000, due to modest growth in occupancy and room rates, together with the opening of a new hotel in the City during Fiscal Year 2017-18. Staffing Levels. As revenues have improved, the City has continued the trend of slowly recovering its staffing levels previously reduced as a result of the recent economic recession. Since Fiscal Year 2013-14 the City has been able to achieve a modest 4.6% increase in staffing, managing to generally keep pace with the 3.7% population increase over the same time period, resulting in a slight net increase in Full-time Equivalent (“FTE”) positions since 2013-14 to 3.8 FTE positions from 3.7 FTE positions per 1,000 residents. Bargaining Unit Agreements. The Fiscal Year 2017-18 Budget includes funding for the annualized costs of negotiated salary increases approved for employee groups during Fiscal Year 2016‐17 and agreements for the Police Officers’ Association and the International Association of Firefighters reached for Fiscal Year 2017-18. Pension Costs. The increase in retirement cost driven by lower investment returns of the California Public Employees Retirement System (“CalPERS”) is a significant budgetary challenge facing the City. The payments made to the retirement system equaled 16.2% of the City’s General Fund in the Fiscal Year 2016- 17 budget and are estimated at $24.5 million in 2017-18, or 14.7% of the 2017-18 Proposed Budget. Over the last several years CalPERS has made a series of changes that have resulted in higher contribution rates. The impact of these cost increases has been partially offset through negotiations with the City’s bargaining groups, and has resulted in the implementation of pension reform. Under the negotiated pension reform, employees have agreed to pay an increased share of pension costs, thereby reducing the impact of pension cost increases to the City’s budget. The City’s required contributions will be further impacted by changes in actuarial assumptions approved by CalPERS in December 2016. See “Pension Plans.” Health Care Costs. Flex/health insurance represents 7.4% of the total Fiscal Year 2017-18 General Fund expenditure budget and accounts for the healthcare costs for permanent employees. The annually increasing flex/health insurance cost is also a challenge that the City will continue to address in future budgets. The Fiscal Year 2017‐18 Budget shows a slight decrease in these costs compared to the prior fiscal year adopted 2017-11-21 Agenda Packet Page 541 31 budget. In Fiscal Year 2016‐17 the anticipated increase in healthcare premiums was estimated at 15%. The actual increase was lower than this estimation as a result of the City’s switch in health insurance providers in 2017. This is carried forward into the first half of Fiscal Year 2017‐18, which results in the slight decrease in comparison to the prior year adopted budget. The 2017‐18 Budget assumes a 10% increase in healthcare premiums in calendar year 2018. Revenues and Expenditures The City’s General Fund Budget includes programs which are provided on a largely city-wide basis. The programs and services are financed primarily by the City’s share of property taxes, sales tax, revenues from the State, and charges for services provided. Revenues The largest components of budgeted Fiscal Year 2017-18 General Fund revenues (including transfers) are property taxes (20.3%), sales taxes other than Measure P (19.9%), property taxes in lieu of motor vehicle license fees (12.6%) and Measure P Sales Tax (9.8%). The revenues in Table No. 9 that follows are categorized as:  Property Taxes and Property Tax in Lieu of Motor Vehicle License Fees;  Sales Taxes, including the Measure P Sales Tax;  Other Taxes, detailed in Table No. 15 “Tax Revenues by Source,” which include utility users tax, transient occupancy tax, franchise fees, business licenses and other taxes such as documentary transfer tax;  Licenses and Permits, which includes construction building permits and engineering permits;  Fines, Forfeitures and Penalties, which includes municipal and vehicle code violations;  Use of Money and Property, which includes rental income for various City facilities and investment income;  Intergovernmental Revenue;  Charges for Services, comprised of charges such as plan checking, building inspection and other municipal services, animal shelter contracts, services to the Port of San Diego, recreation program fees and staff services reimbursement;  Other Revenue, which includes charges to other funds for overhead and administration, and reimbursements for costs relating to staffing for open space and assessment district maintenance and capital improvements, and  Transfers In from the Gas Tax Fund, Traffic Safety Fund, Asset Seizure Fund, Proposition 42 Fund, Sewer Service Fund and other funds to reimburse for qualifying expenditures or overhead. Expenditures The expenditures in Table No. 9 that follows are categorized by governmental function. Each function generally includes salaries and benefits and materials and supplies. 2017-11-21 Agenda Packet Page 542 32 Salaries and benefits include direct personnel costs, benefits, health insurance costs and workers’ compensation and unemployment insurance costs. Materials and supplies include non-personnel operating costs and contract professional services. Transfers Out are primarily transfers to the debt service funds for the General Fund share of payments on outstanding debt not paid for using Public Facilities Development Impact Fees (see “Public Facilities Development Impact Fees” below). The City provides both police and fire services. These public safety expenditures represent approximately 48.6% of the total budgeted General Fund expenditures (including transfers) for Fiscal Year 2017-18. Table No. 9 provides a comparison of audited results for Fiscal Years 2014-15 and 2015-16, unaudited results for Fiscal Year 2016-17 and the amended budget for Fiscal Year 2017-18 (as amended to reflect any budget amendments to date). A five-year summary of the General Fund Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance is shown in Table Nos. 25 and 26. As noted above, General Fund fiscal status reports reflecting comparisons of actual and projected performance with budget allocations for both revenue and expenditures are presented to the City Council on a quarterly basis. The report for the quarter ending September 30, 2017 was presented to the City Council on November 7, 2017. This report states that overall, General Fund revenues are projected to be lower by $6,100 from the amended budget in Fiscal Year 2017-18, but that the net impact of this shortfall is expected to be offset elsewhere in the budget during the fiscal year. 2017-11-21 Agenda Packet Page 543 33 TABLE NO. 9 CITY OF CHULA VISTA GENERAL FUND REVENUES AND EXPENDITURES 2014-15 2015-16 2016-17 2017-18 Actual Actual Unaudited Budget (4) Revenues: Property Tax $ 29,705,939 $ 30,443,378 $ 32,513,443 $ 33,849,178 Property Tax in Lieu of MVLF 17,779,353 18,934,656 19,965,908 20,844,039 Sales Tax 30,394,291 34,180,296 33,449,706 33,767,466 Measure P Sales Tax (1) - - 3,906,919 16,320,000 Other Taxes 22,858,848 24,173,583 23,569,116 24,743,434 Licenses and Permits 1,281,656 1,301,243 1,266,886 1,524,632 Intergovernmental Revenue 1,933,114 2,530,464 1,936,758 1,722,934 Fines, Forfeitures and Penalties 1,638,251 1,249,457 1,123,011 1,075,423 Use of Money & Property 2,832,039 2,879,878 2,604,439 2,421,115 Charges for Services (2) 9,430,097 9,264,462 10,377,601 8,255,255 Other Revenue 4,116,777 2,302,038 3,813,239 1,034,065 Reimbursements from Other Funds 9,273,303 10,064,380 17,028,388 9,823,215 Transfers In (2) 9,994,525 9,036,494 10,165,449 11,206,503 Total Revenues 141,238,193 146,360,289 161,720,863 166,587,259 Expenditures: General Government 20,841,178 22,242,694 29,070,977 25,338,530 Public Safety - Police 46,484,920 49,151,324 50,434,681 53,331,216 Public Safety - Fire 26,024,758 26,987,659 28,776,457 27,711,512 Public Works 27,822,644 28,139,011 29,124,089 26,178,086 Recreation and Library 7,273,387 7,747,274 8,129,832 8,227,037 Planning and Building 2,464,305 2,276,098 2,319,089 2,708,162 Capital Outlay 1,081,105 2,235,590 2,921,945 150,211 Transfers Out 6,082,780 6,335,351 7,025,684 22,942,505 (1) Total Expenditures 138,075,077 145,115,001 157,802,754 166,587,259 Net Change in Fund Balances 3,163,116 1,245,288 3,918,109 - Beginning Unassigned Fund Balance (3) 14,511,252 16,412,878 17,872,368 17,855,389 Change in Reserves (1,261,490) 214,202 (2,353,000) - Ending Unassigned Fund Balance (3) $ 16,412,878 $ 17,872,368 $ 19,437,477 $ 17,855,389 ____________________________________ (1) Includes voter-approved sales tax transferred to Measure P Capital Project Fund (see “Local Taxes” below). (2) The City budgets charges for ambulance services in a separate fund and transfers in the revenues to the General Fund. These revenues are shown as Charges for Services in the audited financial statements. (3) Does not include Committed or Assigned Fund Balance. See “Financial Statements - GASB Statement No. 54” herein. (4) Including budget amendments to date. Source: City of Chula Vista. 2017-11-21 Agenda Packet Page 544 34 Ad Valorem Property Taxes Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured,” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State assessed property and real property having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Property taxes on the secured roll are due in two installments, on November 1 and February 1 of the fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be prepaid by payment of the delinquent taxes and the delinquency penalty, plus a prepayment penalty of l½% per month to the time of prepayment. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County Tax Collector. Property taxes on the unsecured roll become delinquent, if unpaid on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of l½% per month begins to accrue on November 1 of the fiscal year. The County of San Diego has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Taxable Property and Assessed Valuation. Set forth in Table No. 10 are assessed valuations for secured and unsecured property within the City. Article XIIIA of the California Constitution prescribes the method for determining the full cash value of real property and the maximum ad valorem tax on real property. The full cash value, once established, is subject to annual adjustment to reflect inflation at a rate not to exceed 2% or a reduction in the California Consumer Price Index. There may also be declines in valuations if the California Consumer Price Index is negative. Proposition 8 provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to conditions in the real estate market, damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The City saw significant Proposition 8 reductions in property values between 2008 and 2012, reducing assessed values by 19%. Assessed values began to recover in Fiscal Year 2013-14, but did not exceed pre-recession levels until Fiscal Year 2016-17. See “RISK FACTORS - Constitutional Limitation on Taxes and Expenditures - Article XIIIA” and “- Proposition 8 Adjustments” herein. 2017-11-21 Agenda Packet Page 545 35 TABLE NO. 10 CITY OF CHULA VISTA GROSS ASSESSED VALUE OF ALL TAXABLE PROPERTY Fiscal Year Secured Unsecured Total 2010-11 $20,727,034,672 $508,410,557 $21,235,445,229 2011-12 20,622,452,438 531,510,997 21,153,963,435 2012-13 20,459,110,877 483,686,031 20,942,796,908 2013-14 21,179,757,717 466,551,192 21,646,268,909 2014-15 22,642,031,835 448,408,518 23,090,440,353 2015-16 24,001,104,385 454,894,256 24,455,998,641 2016-17 25,328,420,138 447,654,371 25,776,074,509 2017-18 26,640,897,032 465,373,283 27,106,270,315 ____________________________________ Source: San Diego County Auditor-Controller. Property Tax Collections. A five year history of property tax levies and collections for the City is set forth in Table No. 11. The Board of Supervisors of the County approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (known as the “Teeter Plan”), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State. Under the Teeter Plan, the County apportions secured property taxes and assessments on an accrual basis when due (irrespective of actual collections) to participating local political subdivisions for which the County acts as the levying or collecting agency. The City does not participate in the Teeter Plan. As a result, the County apportions to the City only the secured property taxes actually collected, including penalties and interest paid on delinquent installments of property taxes. TABLE NO. 11 CITY OF CHULA VISTA PROPERTY TAX LEVIES AND COLLECTIONS Current Percentage Collections in Total Percentage Fiscal Total Tax Tax of Levy Subsequent Tax of Year Levy (1) Collections Collected Years (2) Collections Levy 2012-13 $25,352,454 $24,982,072 98.54% $117,973 $25,100,045 99.00% 2013-14 26,063,753 25,758,225 98.83 39,776 25,798,001 98.98 2014-15 27,726,666 27,398,740 98.82 36,404 27,435,143 98.95 2015-16 29,083,269 28,800,156 99.03 68,973 28,869,128 99.26 2016-17 30,632,668 30,388,650 99.20 49,984 30,438,634 99.37 ____________________________________ (1) Levy amounts do not include supplemental taxes. (2) Collection amounts represent delinquencies collected for all prior years during the current tax year. Total delinquent collections are reduced by any refunds processed from prior year tax collections. Source: City of Chula Vista. 2017-11-21 Agenda Packet Page 546 36 Largest Taxpayers. The largest property taxpayers in the City as of June 30, 2017 are as shown in Table No. 12. TABLE NO. 12 CITY OF CHULA VISTA LARGEST PROPERTY TAXPAYERS Assessed Percent Taxpayer Valuation of Total Rohr Inc. $ 198,528,281 0.77% Homefed Otay Land II LLC 155,952,435 0.61 John Hancock Life Insurance Co. 144,662,789 0.56 GGP Otay Ranch LP 119,625,786 0.46 Regulo Place Apt Investors LP 105,233,043 0.41 Brisa Acquisitions LLC 102,677,670 0.40 Vista Pacific Villas LP 93,361,400 0.36 JBP Development 85,611,502 0.33 HCA Properties 80,567,753 0.31 BREFMCA LLC 77,685,406 0.30 Total $1,163,906,065 4.52% ____________________________________ Source: City of Chula Vista. Redevelopment - Related Property Tax Considerations. The California Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State) authorized the redevelopment agency of any city or county to receive an allocation of tax revenues resulting from increases in assessed values of properties within designated redevelopment project areas (the “incremental value”) occurring after the year the project area was formed. In effect, local taxing authorities, such as the City, realized tax revenues only on the assessed value of such property at the time the redevelopment project was created for the duration of such redevelopment project. Although Assembly Bill No. 26 (“AB X1 26”), enacted on June 29, 2011 as Chapter 5 of Statutes of 2011, statutorily dissolved redevelopment agencies as of February 1, 2012, the enforceable obligations of dissolved redevelopment agencies continue to be paid from property taxes derived from such incremental value until the enforceable obligations are paid in full in accordance with Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the California Health and Safety Code (as such statutory provisions may be amended from time to time the “Dissolution Act”). The City had formed several redevelopment projects prior to the State’s enactment of the Dissolution Act. Table No. 13 sets forth total assessed valuations and redevelopment agency incremental values. 2017-11-21 Agenda Packet Page 547 37 TABLE NO. 13 CITY OF CHULA VISTA TOTAL AND NET PROPERTY TAX VALUATIONS Fiscal Year Total Assessed Valuation Redevelopment Agency Incremental Value Net Value Percent Change 2010-11 $21,235,445,229 $(1,172,995,829) $20,062,449,400 2011-12 21,153,963,435 (1,212,102,912) 19,941,860,523 (0.6)% 2012-13 20,942,796,908 (1,143,033,852) 19,799,763,056 (0.7) 2013-14 21,646,268,909 (1,255,372,303) 20,390,936,606 1.7 2014-15 23,090,440,553 (1,260,053,981) 21,830,386,572 8.3 2015-16 24,455,998,641 (1,327,278,438) 23,128,720,203 5.9 2016-17 25,776,074,509 (1,371,791,234) 24,404,283,275 5.5 2017-18 27,106,270,315 (1,508,723,549) 25,132,173,483 3.0 _______________________________________ Source San Diego County Auditor-Controller. In the first year after redevelopment agencies were statutorily dissolved, the Dissolution Act established a process for determining the liquid assets that redevelopment agencies should have shifted to their successor agencies when they were dissolved, and the amount that should be available for remittance by the successor agencies to their respective county auditor-controller for distribution to affected taxing entities within the project areas of the former redevelopment agencies. This determination process is commonly known as the “due diligence review process” and was required to be completed through the final step (review by the State Department of Finance) by November 9, 2012 with respect to affordable housing funds and by April 1, 2013 with respect to non-housing funds. Generally, redevelopment agencies were required to remit to their respective county auditor-controller the amount of unobligated balances determined by the State Department of Finance. In turn, such remitted unobligated balances were distributed to taxing entities within the applicable redevelopment project area (including the City with respect to its redevelopment projects) in proportion to such taxing entity’s share of property tax revenues in the tax rate area for the applicable fiscal year. The Dissolution Act also provides for proceeds of the sale of land owned by redevelopment agencies at the time of their statutory dissolution to be remitted to the applicable county auditor-controller for distribution to the affected taxing entities within the applicable redevelopment project area (including the City with respect to its redevelopment projects) in proportion to such taxing entity’s share of property tax revenues in the tax rate area for the applicable fiscal year. Further, under the Dissolution Act, taxing entities with jurisdictions within a redevelopment project, such as the City, are to receive distributions (in proportion to such taxing entity’s share of property tax revenues in the tax rate area for the applicable fiscal year) of residual amounts of property taxes attributable to incremental value of such redevelopment projects on each June 1 and January 2, after payment of: (i) tax sharing obligations established previously pursuant to the Community Redevelopment Law, (ii) enforceable obligations of the successor agency to the former redevelopment agency, and (iii) an administrative cost allowance to such successor agency. As enforceable obligations of the former redevelopment agency and its successor agency are paid and retired, residual amounts of property tax revenues attributable to redevelopment project area incremental value are expected to increase over time. The table below summarizes the distributions received by the City of its share of (i) unobligated balances determined pursuant to the due diligence review process described above, (ii) proceeds of the sale of land owned by the City’s redevelopment agency at the time of its dissolution, and (iii) residual amounts of property taxes derived from its redevelopment projects since the statutory dissolution of the City’s 2017-11-21 Agenda Packet Page 548 38 redevelopment agency on February 1, 2012. These amounts are included in property tax revenues in Table No. 15. TABLE NO. 14 CITY OF CHULA VISTA CITY SHARE OF DUE DILIGENCE REVIEW PROCEEDS, LAND SALE PROCEEDS, AND RESIDUAL PROPERTY TAXES ATTRIBUTABLE TO THE REDEVELOPMENT PROJECTS Fiscal Year Residual Property Taxes Land Sale/Due Diligence Review Proceeds Total 2012/13 $1,276,823 $ - $1,276,823 2013/14 1,055,004 - 1,055,004 2014/15 805,449 46,483 851,932 2015/16 957,989 - 957,989 2016/17 1,005,383 51,510 1,056,893 2017/18 (1) 1,231,542 - 1,231,542 _______________________________________ (1) Fiscal Year 2017-18 Budget. Source: City of Chula Vista and Successor Agency to the Redevelopment Agency of the City of Chula Vista, based on information compiled from San Diego County Auditor- Controller. Local Taxes In addition to ad valorem taxes on real property, the City receives the following non-real estate local taxes (see “RISK FACTORS - Constitutional Limitation on Taxes and Expenditures - Proposition 62” and “- Proposition 218” herein). Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization. Each local jurisdiction receives an amount equal to 1% of taxable sales within its jurisdiction. In November 2016, voters in the City approved “Measure P,” the levy of an additional 1/2% sales tax for a 10-year term, commencing April 1, 2017. This new sales tax increased the amount of sales tax received by the City starting late in the 2016-17 Fiscal Year. The first full year of Measure P Sales Tax will occur in Fiscal Year 2017-18. The City has approved a policy to transfer the additional sales tax out of the General Fund to the Measure P Fund, where it will be expended to service the debt that was issued to fund authorized improvements and to pay direct costs relating to other City-wide capital projects, facilities and equipment expenditures. The figures shown in Table No. 15 for sales tax revenues include property tax that the City received in lieu of sales tax because of the “Triple Flip.” See “RISK FACTORS - State Budget - State Legislative Shifts of Property Tax Allocation” herein. The City treated the Triple Flip property tax revenue as sales tax in its financial statements. There was a final one-time Triple Flip adjustment payment in 2015-16, of which the City received approximately $4 million. In addition, the City receives a portion of a ½ cent sales tax increase approved by voters in 1993 pursuant to Proposition 172. Sales tax generated by this increase is used to offset certain expenses for public safety. Utility Users Tax. A utility users tax (“UUT”) is levied on gas and electric customers based on usage (.01103 per therm for gas; .00300 per kilo watt for electricity) and telephone services based on gross 2017-11-21 Agenda Packet Page 549 39 receipts. The UUT was first levied in 1970 and the last increase in tax rates was in 1979. A class action lawsuit was filed against the City contending that a tax on wireless phone use was not covered in the implementing UUT ordinance. A preliminary settlement agreement was entered into in April 2013 for rebates to affected wireless phone users who paid the UUT of their wireless phone bills from April 2010 to April 2013. The court approved the final settlement on December 12, 2013. At June 30, 2012, the City had recorded $7.3 million of disputed UUT as “deferred revenue” on its balance sheet. As of June 30, 2013, the City recorded another $4.1 million as “deferred revenue,” moved $8 million of disputed UUT to a liability account in accordance with the settlement agreement, and recorded $900,000 of prior deferred revenue to pay expenses of the UUT litigation, leaving $2.5 million in UUT that had been collected in the “deferred revenue” account. Under the terms of the settlement, a portion of the $8 million was applied to pay legal fees and expenses and a portion was paid to the claims administrator for disbursement to the affected class of wireless phone users. Pursuant to the settlement agreement, the balance of the funds were earmarked as separate from the General Fund and used for the benefit of Chula Vista citizens to address communications, police services, fire services, libraries, parks and recreation services. Pursuant to the settlement, starting March 1, 2014 the UUT rate on phone service was reduced from 5% to 4.75%. The City recognized a total $10.5 million of deferred UUT revenue in 2013-14, which is reflected in Table No. 15. Franchise Fees. The City levies a franchise fee on its cable television, trash collection and utility franchises. The City increased its franchise fees in 2014-15. Business License Tax. The City levies a business license tax based on number of employees. Transient Occupancy Tax. The City levies a 10% transient occupancy tax on hotel and motel bills. Property Transfer Taxes. The City receives a documentary stamp tax which is assessed for recordation of real property transfers. There is no time limit established for the collection of the utility users tax or the transient occupancy tax. There is also no expiration for the levy of sales tax pursuant to Proposition 172. See “RISK FACTORS - Base Rental Payments” and “Constitutional Limitation on Taxes and Expenditures - Proposition 218” herein. Table No. 15 below summarizes the tax revenues by source for the 2012-13 through the 2017-18 fiscal years. 2017-11-21 Agenda Packet Page 550 40 TABLE NO. 15 CITY OF CHULA VISTA GENERAL FUND TAX REVENUES BY SOURCE % of 2017-18 Unaudited Amended Budget 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Budget (4) Property Tax $ 27,876,534 $ 28,492,215 $ 29,705,939 $ 30,443,378 $ 32,513,443 $ 33,620,932 20.3% Property Tax In Lieu of VLF (1) 16,253,826 16,773,957 17,779,353 18,934,656 19,965,908 20,844,039 12.6 Sales Tax 28,627,785 29,171,174 30,394,291 34,180,296 33,449706 32,935,356 19.9 Measure P Sales Tax (2) - - - - 3,906,919 16,320,000 9.8 Franchise Fees 9,266,768 8,845,067 10,831,671 11,709,977 11,515,850 11,968,646 7.2 Utility Users Tax (3) 4,428,794 17,525,294 6,364,691 5,844,248 5,786,326 5,860,328 3.5 Transient Occupancy Tax 2,471,252 2,632,774 3,136,847 3,827,244 3,650,442 4,316,267 2.6 Business License Tax 1,260,622 1,328,554 1,407,145 1,538,595 1,558,887 1,424,643 0.9 Property Transfer Tax 1,125,252 949,603 1,118,494 1,253,479 1,057,611 1,173,550 0.7 Total $ 91,310,833 $105,718,638 $100,738,431 $107,731,873 $113,405,092 $128,463,761 77.5% ____________________________________ (1) See “Motor Vehicle License Fees” below. For comparison purposes, these amounts are included in “Taxes” for all years. (2) City voters approved an additional 1/2% City sales tax, which commenced in April 2017, and will be levied for 10 years. (3) The City began recording a portion of the utility users’ tax as deferred revenue in Fiscal Year 2010-11. In 2012-13, the City recognized $900,000 of deferred revenue to pay expenses related to the settlement described above regarding the utility users tax on wireless phone use. In 2013-14, the remaining $10.5 million of deferred revenue was recognized. (4) Including transfer in from other funds. Source: City of Chula Vista. 2017-11-21 Agenda PacketPage 551 41 Motor Vehicle License Fees The City receives a portion of VLF collected state-wide. The total VLF budgeted for Fiscal Year 2017-18 is approximately $20.8 million, all of which is included in the City’s Fiscal Year 2017-18 Budget as intergovernmental revenues, but will be received through an in lieu payment from State property tax revenues. Although the VLF is shown in Table No. 15 in all years as “Property Tax In Lieu of VLF” for comparison purposes, the property tax portion of the VLF was phased in over several years, and in the City’s financial statements, the City reflected the VLF in “Intergovernmental Revenues” in Fiscal Year 2012-13 and in all other years in “Taxes.” Public Facilities Development Impact Fees The City assesses certain fees on new development. One such fee is the Public Facilities Development Impact Fee, or “PFDIF.” These revenues are recorded in a Development Impact Fee Fund. See “APPENDIX B - CITY AUDITED FINANCIAL STATEMENTS.” The City utilizes the PFDIF to offset the cost of constructing or financing certain public facilities, such as the City’s Civic Center complex and the Police Headquarters, including paying a portion of the lease payments related to the financing of these improvements. See “Outstanding Indebtedness of the City” below. The receipt of the PFDIF is dependent upon building activity in the City and such revenues were significantly reduced during the recession years. Over the last eight years PFDIF revenues have ranged from a high of $18 million in Fiscal Year 2005-06 to a low of $695,793 in Fiscal Year 2008-09. Such amounts have not always been adequate in some years to pay the proportionate share of lease payments as expected and such amounts have instead been funded with the PFDIF fund balance or interfund loans made to the PFDIF fund. The accumulated balance of PFDIF revenues at June 30, 2017 is expected to be approximately $7.15 million and the interfund loans due to other funds from the PFDIF is expected to be $8.15 million. Fiscal Year PFDIF Revenues (1) 2008-09 $ 695,793 2009-10 1,610,071 2010-11 4,208,203 2011-12 3,122,330 2012-13 6,808,865 2013-14 4,554,723 2014-15 5,371,592 2015-16 6,473,891 2016-17 Estimate 4,460,000 2017-18 Projected 7,000,000 ____________________________________ (1) Does not include investment income/market value decline in investment value or reimbursements from other funds for prior expenditures. Source: City of Chula Vista. The City is projecting approximately $7.0 million in PFDIF fee revenues for Fiscal Year 2017-18 as compared to a total of approximately $5.2 million in annual lease payments on all City financings which could be paid from such revenues (see “Outstanding Indebtedness of the City” below). While the City has projected that future development will stabilize and believes that annual PFDIF revenues, or accumulated PFDIF revenues, will be available to pay a portion of the lease payments referenced above, there can be no guarantee that building activity will occur as anticipated, and as a result, the City General Fund may be 2017-11-21 Agenda Packet Page 552 42 required to pay a greater share of lease payments than currently anticipated by the City. However, to mitigate future fluctuations in PFDIF revenues from again impacting the General Fund, the City generally expects to reserve $5.2 million (one year’s share of debt service on PFDIF – eligible projects) of the PFDIF fund balance, subject to variations year-to-year, due to repayment of interfund loans. The City has maintained this additional reserve in full since Fiscal Year 2011-12, and anticipates continued reserves at least equal to $5.2 million through the term of current debt repayment. Personnel Employee salaries and benefits account for over 70% of the City’s General Fund estimated expenditures for Fiscal Year 2017-18. Table No. 16 sets forth historical employee information for the City as of June 30 in each of the last five fiscal years and budgeted for 2017-18 based on authorized, budgeted full-time equivalent positions. TABLE NO. 16 CITY OF CHULA VISTA CITY PERSONNEL Fiscal Year Number of Full Time Permanent Employees Employees Per Thousand Population 2012-13 932 3.70 2013-14 950 3.70 2014-15 961 3.70 2015-16 966 3.60 2016-17 984 3.70 2017-18 1,006 3.80 ____________________________________ Source: City of Chula Vista. Employee Relations and Collective Bargaining City employees are represented by five labor unions and associations: the Chula Vista Employees’ Association (“CVEA”), the Chula Vista Police Officers’ Association (“POA”), the International Association of Fire Fighters (“IAFF”), the Western Council of Engineers (“WCE”) and Mid Managers and Professional Association (“MMPA”). CVEA is the largest association, representing approximately 45.5% of all City employees. Currently 95% of all City employees are covered by negotiated agreements. Current negotiated agreements of CVEA and WCE expire June 30, 2017 and the City is negotiating with these two bargaining groups. The current negotiated agreement with MMPA expires June 30, 2018. The current negotiated agreement with POA expires June 30, 2020 and the current negotiated agreement with IAFF expires December 31, 2019. Pension Plans This caption contains certain information relating to CalPERS. The information is primarily derived from information produced by CalPERS, its independent accountants and its actuaries. The City has not independently verified the information provided by CalPERS and does not guarantee the accuracy of the information provided by CalPERS. The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by 2017-11-21 Agenda Packet Page 553 43 reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future. Plan Description. The City provides retirement benefits, disability benefits, periodic cost-of-living adjustments, and death benefits to plan members and beneficiaries (the “Plans”). The Plans are part of an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State. Benefit provisions are established by State statute and by City contracts with employee bargaining groups. The Plans as described herein cover three separate employee groups – Miscellaneous, Safety Fire and Safety Police. California Public Employees’ Pension Reform Act of 2013. On September 12, 2012, the Governor signed into law the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”), which made changes to CalPERS Plans, most substantially affecting new employees hired after January 1, 2013 (the “Implementation Date”). For non-safety CalPERS participants hired after the Implementation Date, PEPRA changed the normal retirement age by increasing the eligibility for the 2% age factor from age 55 to 62 and increased the eligibility requirement for the maximum age factor of 2.5% to age 67. PEPRA also: (i) requires all new participants enrolled in CalPERS after the Implementation Date to contribute at least 50% of the total annual normal cost of their pension benefit each year as determined by an actuary to a maximum of 8% of salary, (ii) requires CalPERS to determine the final compensation amount for employees based upon the highest annual compensation earnable averaged over a consecutive 36-month period as the basis for calculating retirement benefits for new participants enrolled after the Implementation Date, and (iii) caps “pensionable compensation” for new participants enrolled after the Implementation Date at 100% of the federal Social Security contribution and benefit base for members participating in Social Security or 120% for members not participating in Social Security, while excluding previously allowed forms of compensation under the formula such as payments for unused vacation, annual leave, personal leave, sick leave, or compensatory time off. Benefit Tiers. In 2011 the City established two tiers of benefits for employees in each of the employee plans (Miscellaneous, Safety Fire and Safety Police), based on date of hire (“Tier 1” and “Tier 2”). Benefits were reduced for Tier 2 employees hired on or after April 22, 2011. Due to PEPRA, the City added a benefit tier in each employee group for employees subject to PEPRA (“PEPRA Tier”). Ultimately, PEPRA is expected to reduce the City’s long-term pension obligation as existing employees retire and new employees are hired to replace them. The Plans’ provisions and benefits in effect at June 30, 2017, are summarized as follows: Miscellaneous Plan Tier 1 Tier 2 PEPRA Tier Benefit Formula 3% at 60 2% at 60 2% at 62 Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 50 52 Monthly Benefits, as a % of Eligible Compensation 2.0% to 3.0% 1.092% to 2.418% 1.0% to 2.5% Required Employee Contribution Rates 8.0% 7.0% 6.75% Required Employer Contribution Rates 29.693% 29.693% 29.693% 2017-11-21 Agenda Packet Page 554 44 Safety Fire Plan Tier 1 Tier 2 PEPRA Tier Benefit Formula 3% at 50 3% at 55 2.7% at 57 Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 50 50 Monthly Benefits, as a % of Eligible Compensation 3.0% 2.4% to 3.0% 2.0% to 2.7% Required Employee Contribution Rates 9.0% 9.0% 12.25% Required Employer Contribution Rates 33.691% 33.691% 33.691% Safety Police Plan Tier 1 Tier 2 PEPRA Tier Benefit Formula 3% at 50 3% at 55 2.7% at 57 Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 50 50 Monthly Benefits, as a % of Eligible Compensation 3.0% 2.4% to 3.0% 2.0% to 2.7% Required Employee Contribution Rates 9.0% 9.0% 12.25% Required Employer Contribution Rates 33.691% 33.691% 33.691% Funding Policy. Active members in the Plans are required to contribute a percent of their annual covered salary as shown in the charts above. All employees pay their own employee contributions towards retirement. Actuarial Methods and Assumptions Used to Determine Total Pension Liability. The total pension liabilities in the June 30, 2015 actuarial valuations, rolled forward to June 30, 2016, using standard update procedures, were determined using the following actuarial assumptions: Valuation Date June 30, 2015 Measurement Date June 30, 2016 Actuarial Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.65% Inflation 2.75% Projected Salary Increase Varies (1) Investment Rate of Return 7.65%(2) Mortality (3) Post Retirement Benefit Increase Contract cost of living adjustment up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter ____________________________________ (1) Varies by entry age and service. (2) Net of pension plan investment and administrative expenses, including inflation. (3) The mortality table used was developed based on CalPERS’ specific data. The table includes 20 years of mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the CalPERS 2014 Experience Study. 2017-11-21 Agenda Packet Page 555 45 All other actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study (“Experience Study”) for the period 1997 to 2011. Further details of the Experience Study can be found on the CalPERS website under Forms and Publications. Recent Changes in Actuarial Assumptions. In March 2012, CalPERS voted to decrease the investment rate of return used in future actuarial valuations from 7.75% to 7.5%. This change was implemented over a two-year period beginning with the 2013-14 rates. In April 2013, CalPERS voted to raise employer rates roughly 50% over the next seven years, replacing current actuarial methods. Over five years, the new method increases employer rates to the level needed to project 100% funding in 30 years. Also in April 2013, CalPERS approved a recommendation to change the amortization and smoothing policies. Prior to this change, CalPERS employed an amortization and smoothing policy, which spread investment returns over a 15-year period while experience gains and losses were amortized over a rolling 30-year period. Effective with the June 30, 2013 valuations, CalPERS will no longer use an actuarial value of assets and will employ an amortization and smoothing policy that will spread rate increases or decreases over a five-year period, and will amortize all experience gains and losses over a fixed 30-year period. The new amortization and smoothing policy was used for the first time in the June 30, 2013 actuarial valuations. These valuations were performed in the fall of 2014 and affect employer contribution rates beginning in Fiscal Year 2015-16. In February 2014, CalPERS adopted new demographic assumptions regarding improved mortality rates. According to CalPERS, this could result in rates as much as 2% to 5% higher. The impact is phased in and affects rates beginning in Fiscal Year 2016-17. On December 21, 2016, the CalPERS Board of Administration approved an incremental lowering of the discount rate from 7.5% to 7.0% over the next three Fiscal Years. For Fiscal Years 2017-18, 2018-19 and 2019-20, the Board of Administration approved discount rates of 7.375%, 7.25% and 7.0%, respectively. While the full impact of the discount rate changes on the City is not yet clear, CalPERS expects such changes to increase average employer rates by approximately 1% to 3% of normal cost as a percent of payroll for most miscellaneous retirement plans and by approximately 2% to 5% for most safety plans. CalPERS also expects the discount rate changes to result in increased unfunded accrued liability payments for employers, and estimates that many employers will see such payments increase by 30% to 40%. 2017-11-21 Agenda Packet Page 556 46 Contribution Rates. The contribution requirements of Plan members and the City are established by CalPERS. The City’s percentage of payroll for CalPERS payments for Fiscal Years 2010-11 through 2016-17 are shown in the table below. These rates do not include the employees’ contribution rates. The rates include both the employer’s normal cost and an unfunded actuarial liability rate. TABLE NO. 17 EMPLOYER RETIREMENT CONTRIBUTION RATES Fiscal Year Miscellaneous Safety Plans 2010-11 19.599% 22.654% 2011-12 22.702 26.134 2012-13 23.668 26.492 2013-14 25.437 27.316 2014-15 26.235 28.857 2015-16 28.119 30.431 2016-17 29.693 33.691 ____________________________________ Source: California Public Employees’ Retirement System. CalPERS modified the calculation of the contribution rates beginning in Fiscal Year 2017-18. CalPERS now represents only the employer’s normal cost as a percentage of payroll, and includes a dollar amount for the amortization of the unfunded actuarial liability (UAL). Shown in Table No. 18 are the CalPERS projections of the normal cost and amortization of the UAL for the City. For comparison, the normal cost for 2016-17 was 11.828% for the Miscellaneous Plan and 20.181% for the Safety Plans (combined Safety Fire and Safety Police members’ Plans). TABLE NO. 18 PROJECTED EMPLOYER RETIREMENT CONTRIBUTIONS Miscellaneous Safety Plans Fiscal Year Normal Cost Amortize UAL Normal Cost Amortize UAL 2017-18 11.376% $ 9,751,783 19.656% $ 6,012,543 2018-19 11.582 11,342,809 20.054 7,613,001 2019-20 12.200 13,766,000 20.900 9,452,000 2020-21 13.300 14,590,000 22.700 10,877,000 2021-22 13.300 16,324,000 22.700 12,605,000 ____________________________________ Projected by CalPERS based on various assumptions as of July 2017. Source: California Public Employees’ Retirement System. 2017-11-21 Agenda Packet Page 557 47 Annual Pension Costs. A five-year history of the City’s required annual pension costs is shown in the table below. The required contribution was determined as part of an annual actuarial valuation. The most recent actuarial assumptions are described under the caption “Actuarial Methods and Assumptions Used to Determine Total Pension Liability.” TABLE NO. 19 FIVE-YEAR TREND INFORMATION FOR ANNUAL PENSION COSTS ALL TIERS COMBINED Fiscal Year Annual Pension Cost (APC) 2012-13 $18,188,432 2013-14 16,215,564 2014-15 20,818,356 2015-16 21,054,501 2016-17 (1) 22,250,000 _______________________________________ (1) Unaudited. Source: City of Chula Vista 2017-11-21 Agenda Packet Page 558 48 Pension Liabilities. The City’s net pension liability for the Plans is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plans is measured as of June 30, 2016, using the annual actuarial valuation as of June 30, 2015 rolled forward to June 30, 2016 using standard update procedures. The City’s changes in net pension liability for the Plans between June 30, 2015 and 2016 was as follows: TABLE NO. 20 NET PENSION LIABILITY BY PLAN Miscellaneous Plan Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability/(Assets) (c)=(a)-(b) Balance at: 6/30/2015 (Valuation Date) (1) $474,412,350 $327,365,459 $147,046,891 Changes Recognized for the Measurement Period: Service Cost 8,451,918 - 8,451,918 Interest on the Total Pension Liability 35,618,575 - 35,618,575 Changes of Benefit Terms - - - Changes of Assumptions - - - Differences Between Expected and Actual Experience (2,524,955) - (2,524,955) Plan to Plan Resource Movement - - - Contribution - Employer - 12,461,946 (12,461,946) Contributions - Employees - 3,764,641 (3,764,641) Net Investment Income - 1,747,676 (1,747,676) Benefit Payments including Refunds of Employee Contributions (21,022,078) (21,022,078) - Administrative Expense - (199,512) 199,512 Other Miscellaneous Income - - - Net Changes During 2015-16 20,523,420 (3,247,327) 23,770,747 Balance at: 6/30/2016 (Measurement Date) (1) $494,935,770 $324,118,132 $170,817,638 _______________________________________ (1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report. (Continued on following page) 2017-11-21 Agenda Packet Page 559 49 Safety Plans (Combined Fire and Police) Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability/(Assets) (c)=(a)-(b) Balance at: 6/30/2015 (Valuation Date) (1) $417,807,186 $319,795,324 $98,011,862 Changes Recognized for the Measurement Period: Service Cost 9,971,492 - 9,971,492 Interest on the Total Pension Liability 31,658,073 - 31,658,073 Changes of Benefit Terms - - - Changes of Assumptions - - - Difference Between Expected and Actual Experience 768,421 768,421 Plan to Plan Resource Movement - - - Contribution - Employer - 10,971,712 (10,971,712) Contributions - Employees - 3,420,273 (3,420,273) Net Investment Income - 1,664,170 (1,664,170) Benefit Payments including Refunds of Employee Contributions (19,460,670) (19,460,670) - Administrative Expense - (194,899) 194,899 Other Miscellaneous Income - - - Net Changes During 2015-16 22,937,316 (3,599,414) 26,536,730 Balance at: 6/30/2016 (Measurement Date) (1) $440,744,502 $316,195,910 $124,548,592 _______________________________________ (1) The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. This may differ from the plan assets reported in the funding actuarial valuation report. Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents what the City’s net pension liability would be if it were calculated using a 6% discount rate, a 7% discount rate and an 8% discount rate. Miscellaneous Safety Combined Net Pension Liability 6% Discount Rate $278,994,645 $234,022,920 Net Pension Liability 7% Discount Rate $205,718,582 $162,880,408 Net Pension Liability 8% Discount Rate $145,404,804 $105,186,070 See Note 11 of the City’s Comprehensive Annual Financial Report included in “APPENDIX B” for further information about the Plans. 2017-11-21 Agenda Packet Page 560 50 Defined Contribution Pension Plan The City provides pension plan benefits for all of its part-time employees through a defined contribution plan (Public Agency Retirement Plan). In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The plan is administered by Public Agency Retirement Services. All part-time employees are eligible to participate from the date of employment. Federal legislation requires contributions of at least 7.5% to a retirement plan, and City Council resolved to match the employees’ contributions of 3.75%. The City’s contributions for each employee (and interest earned by the accounts) are fully vested immediately. For the year ended June 30, 2017, the City’s total payroll and covered payroll for the Public Agency Retirement Plan was $________. The City made employer contributions of $_______, and employees contributed $______ (both calculated at 3.75% of current covered payroll). Other Post Employment Benefits Plan Description. The City provides a Retiree Healthcare Plan, a single employer defined benefit plan, which allows retirees to purchase healthcare coverage under the City’s medical plan. Retirees pay 100% of the premiums. Retirees not eligible for Medicare pay the same healthcare premiums as active employees, even though retiree’s healthcare costs are greater than that of active employees. This results in an implied subsidy of retiree’s healthcare costs by the City. In Fiscal Year 2011-12, the City entered into an agreement with various bargaining groups eliminating the subsidized retiree health care rates for employees hired under the Tier 2 Plan. Employees hired under the PEPRA Tier Plan are also not eligible for this benefit. The post employment benefit is a single-employer plan. The plan has not been audited and therefore, there is no audited benefit plan report available. Eligibility. Employees are eligible for retiree health benefits if they retire from the City on or after age 50 (unless disabled) and are eligible for PERS pension. The benefits are available only to employees who retired from the City. The benefits terminate at age 65. Membership of the plan consisted of the following at June 30, 2017: Police Fire Miscellaneous Total Eligible active employees Enrolled eligible retirees The information above does not reflect current retirees that are not yet enrolled in the healthcare plan but are eligible to enroll in the plan at a later date. Funding Policy. The City offers an implied subsidy benefit paid from the City’s General Fund. The City’s contribution is based on pay-as-you-go. Tier 1 retirees pay 100% of their individual (subsidized) premiums. Tier 2 and PEPRA Tier retirees will pay 100% of the unsubsidized (unblended) health care premiums. 2017-11-21 Agenda Packet Page 561 51 Annual OPEB Cost and Net OPEB Obligation. The City’s annual other post employment benefit (“OPEB”) cost (expense) is calculated based on the annual required contribution (“ARC”) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for Fiscal Years 2012-13 through 2016-17, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation for these benefits. TABLE NO. 21 ANNUAL OPEB COST AND NET OPEB OBLIGATION 2012-13 2013-14 2014-15 2015-16 2016-17 Annual required contribution $1,974,000 $2,100,000 $1,920,000 $2,039,000 Interest on net OPEB obligation 187,000 241,000 295,000 337,000 Adjustment to the annual required contribution (460,000) (607,000) (767,000) (912,000) Net OPEB cost 1,701,000 1,734,000 1,448,000 1,464,000 Contribution made (359,000) (392,000) (389,000) (434,000) Increase in net OPEB liability 1,342,000 1,342,000 1,059,000 1,030,000 Net OPEB liability, beginning of the year 4,685,000 6,027,000 7,369,000 8,428,000 Net OPEB liability, end of year $6,027,000 $7,369,000 $8,428,000 $9,458,000 ____________________________________ Source: City of Chula Vista Comprehensive Annual Financial Report. The City’s annual OPEB cost and the percentage of annual OPEB cost contributed to the plan for Fiscal Years 2012-13 through 2016-17, and the net OPEB obligation as of June 30 of each Fiscal Year were as follows: TABLE NO. 22 OPEB COSTS AND NET OPEB OBLIGATION Fiscal Year Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 2012-13 $1,701,000 21% $6,027,000 2013-14 1,734,000 23 7,369,000 2014-15 1,448,000 27 8,428,000 2015-16 1,464,000 30 9,458,000 2016-17 ____________________________________ Source: City of Chula Vista Comprehensive Annual Financial Report. Funded Status and Funding Progress. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress presents information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits. 2017-11-21 Agenda Packet Page 562 52 TABLE NO. 23 SCHEDULE OF FUNDING PROGRESS (1) Actuarial Valuation Date June 30 Entry Age Actuarial Accrued Liability Actuarial Value of Assets Unfunded AAL (UAAL) Funded Ratio Covered Payroll UAAL as a Percentage of Covered Payroll 2009 $11,885,000 $ - $11,885,000 0.0% $69,087,000 17.2% 2012 13,081,000 - 13,081,000 0.0 62,923,000 20.8 2014 12,877,000 - 12,877,000 0.0 58,224,000 22.1 ____________________________________ (1) The next actuarial valuation will be dated June 30, 2016 and is expected to be completed in November 2017. Source: City of Chula Vista Comprehensive Annual Financial Report. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial assets, consistent with the long-term perspective of the calculations. The actuarial cost method used for determining the benefit obligation is the Entry Age Normal Cost Method. The current actuarial assumptions included a 4.0% discount rate, the inflation rate for HMO’s starts at 7.5% (the increase in 2016 premiums over 2015) and grades down to 5.0% (2021 premiums over 2020) and remains at 5.0% into the future. This assumption means healthcare costs are assumed to increase, on the average, 6.75% a year for HMOs/PPOs Non-Medicare and 6.95% a year for HMOs/PPOs Medicare a year for the next six years after 2014. The general inflation assumption rate is 3% and is assumed that healthcare costs will level off at 1.5% over general inflation. The City’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll over a closed 30 years. Risk Management Workers’ Compensation. The City is self-insured for the first $1,000,000 per occurrence for workers’ compensation liabilities. Excess workers’ compensation coverage is obtained through participation in the CSAC Excess Insurance Authority (“CSAC-EIA”) Excess Workers’ Compensation Program. CSAC-EIA states that there are currently 323 member entities participating in the program that offers per occurrence coverage up to $5,000,000 through pooled resources and from $5,000,000 to statutory limits via group purchased excess insurance policies. Property Coverage. The City carries insurance coverage for property damage through CSAC-EIA. The CSAC-EIA property damage coverage includes a deductible of $10,000, with a deductible of $100,000 for vehicles valued over $100,000. Public Liability. The City maintains a $500,000 self-insured retention and purchases excess coverage from CSAC-EIA to $25,000,000 along with the additional Optional Excess Liability of $25,000,000 for a total of $50,000,000. Only the probable amounts of loss as estimated by the City’s Risk Manager and Attorney, including an estimate of incurred-but-not reported losses, have been recorded as liabilities in the financial statements. There were no reductions in insurance from the prior year and there were no insurance settlements that exceeded coverage in each of the past three years. 2017-11-21 Agenda Packet Page 563 53 The aggregate change in the balance of claims payable as recorded in the Governmental Activities were as follows: Beginning of Fiscal Year Liability Claims and Changes in Estimates Claims Payments Balance at Fiscal Year End 2012-13 $22,189,864 $3,288,127 $(4,456,532) $21,021,459 2013-14 21,021,459 5,186,700 (3,846,924) 22,361,235 2014-15 22,361,235 4,470,778 (4,221,708) 22,610,305 2015-16 22,610,305 6,077,047 (6,218,413) 22,468,939 2016-17 ____________________________________ Source: City of Chula Vista Comprehensive Annual Financial Report. City Investment Policy and Portfolio The City administers a pooled investment program, except for those funds which are managed separately by trustees appointed under bond indentures. This program enables the City to combine available cash from all funds and to invest cash that exceeds current needs. Under the City’s Investment Policy and in accordance with the Government Code, the City may invest in the following types of investments subject to certain limitations on maturity and amount: Bankers’ Acceptances, Negotiable Certificates of Deposits, Commercial Paper, State and Local Agency Bonds, U.S. Treasury Obligations, U.S. Agency Securities, Repurchase Agreements, Reverse-Purchase Agreements, Medium-Term Corporate Notes, Time Certificates of Deposits, Money Market Funds, Local Agency Investment Fund (LAIF) and the Investment Trust of California (CalTrust). As of September 30, 2017, the book value (unaudited) of the Chief Financial Officer’s investment program (excluding funds held under bond indentures) was $__________. The diversification of the Chief Financial Officer’s investment portfolio assets as of such date is shown in the following table. Type of Investment % of Combined Portfolio Federal Securities Pooled Investments Corporate Notes Commercial Paper Asset Backed Securities Cash/Time Deposits Unrealized Gain on Fair Market Value Accrued Interest 100.0% As of September 30, 2017, the weighted average maturity of the investment portfolio was ___ years and the yield (at cost) was ___% (excluding cash and time deposits). It has been the City’s general practice to purchase investments and hold them until their maturity. Given this practice, the City does not expect its rate of return on the investment portfolio to be affected by fluctuations in the market value of investments. 2017-11-21 Agenda Packet Page 564 54 Outstanding Indebtedness of the City In addition to the Bonds, the City has the following outstanding indebtedness exclusive of obligations to be paid from specifically pledged revenues, such as revenue bonds, tax allocation bonds, assessment district, special tax bonds or Section 108 Loans. The City has never defaulted in the payment of any of its obligations. Original Amount Final Category of Indebtedness Obligation Outstanding Maturity (1) 2014 Refunding Certificates of Participation (Police Facility Project) $45,920,000 $39,440,000 2032 (2) 2015 Refunding Certificates of Participation (Civic Center Project) 34,330,000 31,840,000 2034 (3) 2016 Refunding Certificates of Participation (Civic Center Project) 8,600,000 8,600,000 2036 (4) 2016 Lease Revenue Refunding Bonds 25,885,000 24,415,000 2033 (5) 2017 Lease Revenue Bonds 61,355,000 61,355,000 2027 (6) Notes Payable 7,052,850 3,805,585 2026 (7) Capital Leases 3,077,211 2,127,598 2031 (8) Capital Leases 1,285,053 1,173,985 2025 (9) Compensated Absences 2,368,027 N/A __________________________ (1) The City delivered 2014 Refunding Certificates of Participation to refinance its outstanding 2002 Certificates of Participation, which originally provided funds to construct the City’s Police Headquarters. Approximately 44.4%, of the annual lease payments will be funded from the PFDIF (approximately $1,643,000 of a total $3,700,000), subject to the availability of funds. (2) The City delivered 2015 Certificates to provide funds to refinance its outstanding 2004 Certificates of Participation and a portion of the 2006 Certificates of Participation. Approximately $1,230,000 of the approximate $2,920,000 annual lease payments for the 2015 Certificates will be funded from the PFDIF, subject to the availability of funds and an additional $595,000 will be funded from residential construction taxes. (3) The City delivered 2016 Refunding Certificates of Participation to refinance its outstanding 2006 Certificates of Participation, which originally provided a portion of the funds to construct the City’s Civic Center. Approximately 77.8%, of the annual lease payments will be funded from the PFDIF (approximately $220,000 through 2026 and $794,000 beginning in 2027), subject to the availability of funds. (4) The Authority issued 2016 Lease Refunding Revenue Bonds to provide funds to refinance the City’s outstanding 2010 Certificates of Participation which originally provided a portion of the funds to construct the City’s Civic Center and to refinance other outstanding debt. Approximately 71.5%, of the annual lease payments will be funded from the PFDIF (approximately $1,516,000 of a total $2,120,000), subject to the availability of funds. (5) In July 2017, the Authority issued 2017 Lease Revenue Bonds to finance a portion of the projected outlined in the City’s Measure P expenditure plan. (6) (a) In September, 2007, the City Council authorized the City’s participation in the California Energy Commission (CEC) and the SDG&E On-Bill Financing program. These loans would bridge the financial gap between energy conservation project capital costs and the available rebates for energy conservation equipment. As of June 30, 2017, the outstanding balance was $2,355,551. (b) In December 2012, the City entered into a lease purchase agreement to purchase energy conservation equipment relating to the Municipal Street Lighting Retrofit Project. As of June 30, 2017-11-21 Agenda Packet Page 565 55 2017, the outstanding balance was $1,450,034. Annual payments for these obligations total approximately $648,000. (7) (a) In August 2013, the City entered into a lease purchase agreement to purchase energy conservation equipment relating to the Municipal Solar Project. As of June 30, 2017, the outstanding balance was $1,561,416. (b) The City has capitalized leases for the purchase of fire apparatus and computer equipment. As of June 30, 2017, the outstanding balance of these obligations was $566,182. Annual lease payments for these leases total $435,000. (8) During 2016, the City capitalized leases for the purchase of additional fire apparatus. The annual lease payments commenced in Fiscal Year 2016-17, and total $152,000. (9) Represents that portion of compensated absences as of June 30, 2016 not expected to be paid during the current year. Joint Financing Agreement with Respect to the Chula Vista Bayfront The San Diego Unified Port District (“Port District”) and the City have worked cooperatively for some years in furtherance of a Chula Vista Bayfront Master Plan to address the development/redevelopment of the Chula Vista Bayfront located in western Chula Vista along the southern portion of the San Diego Bay, on land primarily owned by the Port District. The first major planned development would be a 1,450-room resort hotel and conference center project (“RHCC”). Over 1,500 condominiums are also planned. The City and the Port District entered into a financing agreement in May 2012 (the “2012 Financing Agreement”) to identify resources to be committed by each agency to address the expected difference between the developer investment and the costs of the RHCC, which includes the conference center and substantial public infrastructure expense (“Public Facilities”). Taken together, the Public Facilities are anticipated to cost approximately $285 million. To the extent that these facilities are financed, the City and the Port District anticipate funding typical financing costs associated with those borrowings as well. Under the 2012 Financing Agreement, the City committed to use certain new revenue to be generated by the RHCC from a variety of sources including TOT applicable to the RHCC, net of expected operation and maintenance costs associated with the RHCC project. The Port District also committed certain revenues under the 2012 Financing Agreement. In 2015, the Port District identified a potential developer for the RHCC project, RIDA Development Corporation (“RIDA”). The City, the Port District and RIDA have been in discussions to see if an agreement acceptable to all parties can be finalized. Based on these discussions, an amendment to the 2012 Financing Agreement was drafted. The City Council voted in November 2016 to adopt an Amended and Restated Financing Agreement, in which it committed to use current TOT generated from the existing Bayfront RV park as well as an amount equivalent to the funds currently received from the Port District to reimburse the City for the cost of providing municipal public services in the tidelands (together totaling approximately $1.5 million annually). The City also committed to contribute sales tax generated by the RHCC project and to provide approximately $4.4 million in one-time funding for specific sewer improvements. Further, the City agreed to pursue approval of a property tax allocation that it would contribute to the RHCC project if approved and received, and to form a community facilities district to levy special taxes to be committed to the RHCC project. Lastly, the City accepted sole responsibility for a new fire station and the operation and maintenance of a planned shuttle service within the Bayfront. Additional funds committed by the Port District include ground lease revenues generated by existing tenants on the Chula Vista Bayfront (approximately $2.7 million annually), and one-time infrastructure funding totaling $4.7 million. The governing board of the Port District approved the Amended and Restated Financing Agreement on June 20, 2017. The Chula Vista Bayfront Facilities Financing Authority (the “Authority”) was formed through a joint exercise of powers agreement between the City and the Port District in May of 2014. If an agreement with RIDA is entered into, the Authority will likely issue bonds to fund the construction of the Public Facilities, 2017-11-21 Agenda Packet Page 566 56 which will be secured by the City and Port District contributions, as identified in the Amended and Restated Financing Agreement. The security for the payment may take the form of a lease agreement payable from the City’s General Fund but calling for annual payments in amounts not greater than the amounts generated with respect to specific, identified revenue streams. While the majority of the revenues committed pursuant to the Amended and Restated Financing Agreement are project generated, there are potential impacts to existing General Fund revenues, as previously described. Current financial modeling of the RHCC indicates sufficient project revenues to fully offset operation and maintenance costs and to reimburse the City for non-project generated funds committed in the Amended and Restated Financing Agreement ($1.5 million annually). Taken as a whole, the Bayfront project and the City’s financial commitment would be material to the General Fund of the City. Negotiations among the parties are ongoing and are subject to numerous legal and practical impediments and conditions, and there can be no assurance that any transaction will be entered into or performed, if entered into. Likewise, it is possible that any transaction may involve different terms from those outlined above which may involve added costs to the City, but, currently, the City does not anticipate approving an agreement with greater risk to obligations funded from the General Fund of the City other than as described above. On June 20, 2017, the City Council and the Port District approved a Non-Binding Letter of Intent with RIDA (“LOI”). The LOI is intended to describe the negotiated terms and conditions for financing the project. The parties anticipate negotiation of a Disposition and Development Agreement as the next step in the development and financing process. Elite Athlete Training Center As described under the heading “CITY OF CHULA VISTA - Community Facilities and Services,” the City and USOC have executed an agreement pursuant to which the USOC deeded its training facility to the City. The City will operate the training facility while providing for its continued use for portions of the year for U.S. Olympic athletes. The City has contracted with a third party to operate the facility and does not expect to commit any significant amount of City funds to the operation. Estimated Direct and Overlapping Debt Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. as of June 30, 2017. The Debt Report is included for general information purposes only and the City makes no representation as to its completeness or accuracy. Any inquiries concerning the scope and methodology of procedures carried out to compile the information presented should be directed to California Municipal Statistics, Inc. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations are not payable from the City’s General Fund nor are they necessarily obligations secured by property within the City. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. 2017-11-21 Agenda Packet Page 567 57 TABLE NO. 24 CITY OF CHULA VISTA DIRECT AND OVERLAPPING DEBT AS OF JUNE 30, 2017 2016-17 Assessed Valuation: $25,776,074,509 Total Debt City’s Share of OVERLAPPING TAX AND ASSESSMENT DEBT: 6/30/17 % Applicable (1) Debt 6/30/17 Metropolitan Water District $ 74,905,000 0.996% $ 746,054 Otay Municipal Water District, I.D. No. 27 3,995,000 99.996 3,994,840 Southwestern Community College District 326,088,676 51.349 167,443,274 Sweetwater Union High School District 391,939,739 61.283 240,192,430 Chula Vista City School District 48,750,000 87.351 42,583,613 Chula Vista City School District Schools Facilities Improvement District No. 1 83,580,000 78.315 65,455,677 National School District 26,050,000 2.871 747,896 City of Chula Vista Community Facilities Districts 133,015,000 100. 133,015,000 Sweetwater Union High School District Community Facilities District No. 1 25,605,016 100. 25,605,016 Sweetwater Union High School District Community Facilities District No. 2 151,544 100. 151,544 Sweetwater Union High School District Community Facilities District No. 3 8,154,962 100. 8,154,962 Sweetwater Union High School District Community Facilities District No. 4 4,328,476 100. 4,328,476 Sweetwater Union High School District Community Facilities District No. 5 2,159,502 80.884 1,746,692 Sweetwater Union High School District Community Facilities District No. 6 9,490,443 100. 9,490,443 Sweetwater Union High School District Community Facilities District No. 10 6,061,760 15.812 958,485 Sweetwater Union High School District Community Facilities District No. 11 6,317,491 100. 6,317,491 Sweetwater Union High School District Community Facilities District No. 12 2,850,922 100. 2,850,922 Sweetwater Union High School District Community Facilities District No. 13 3,646,528 100. 3,646,528 Sweetwater Union High School District Community Facilities District No. 14 6,762,651 100. 6,762,651 Sweetwater Union High School District Community Facilities District No. 15 3,959,087 100. 3,959,087 Sweetwater Union High School District Community Facilities District No. 16 4,224,289 100. 4,224,289 Sweetwater Union High School District Community Facilities District No. 17 6,516,392 100. 6,516,392 Sweetwater Union High School District Community Facilities District No. 18 151,544 100. 151,544 City of Chula Vista 1915 Act Bonds 5,695,000 100. 5,695,000 California Statewide Communities Development Authority 1915 Act Bonds 489,134 100. 489,134 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 745,227,440 DIRECT AND OVERLAPPING GENERAL FUND DEBT: San Diego County General Fund Obligations $291,180,000 5.516% $ 16,061,489 San Diego County Pension Obligation Bonds 605,520,000 5.516 33,400,483 San Diego County Superintendent of Schools Obligations 11,800,000 5.516 650,888 Southwestern Community College District Certificates of Participation 890,000 51.349 457,006 Sweetwater Union High School District General Fund Obligations 43,565,000 61.283 26,697,939 Chula Vista City School District Certificates of Participation 158,000,000 87.351 138,014,580 City of Chula Vista Certificates of Participation 106,025,000 100 106,025,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 321,307,385 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $29,315,000 99.141% $ 29,063,184 TOTAL DIRECT DEBT $ 106,025,000 TOTAL OVERLAPPING DEBT $ 989,573,009 COMBINED TOTAL DEBT $1,095,598,009 (2) (1) The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity. Ratios to 2016-17 Assessed Valuation: Total Overlapping Tax and Assessment Debt ................................................. 2.89% Total Direct Debt ($106,025,000) ................................................................. 0.41% Combined Total Debt ....................................................................................... 4.25% Ratios to Redevelopment Successor Agency Incremental Valuation ($1,354,453,404): Total Overlapping Tax Increment Debt ........................................................... 2.15% ____________________________________ Source: California Municipal Statistics, Inc. 2017-11-21 Agenda Packet Page 568 58 Financial Statements The City’s accounting policies conform to generally accepted accounting principles and reporting standards set forth by the State Controller. The audited financial statements also conform to the principles and standards for public financial reporting established by the National Council of Government Accounting and the Governmental Accounting Standards Board. Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. The City retained the firm of Lance, Soll & Lunghard, LLP, Certified Public Accountants, Brea, California, to examine the general purpose financial statements of the City as of and for the year ended June 30, 2016. The following tables summarize the audited Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance of the City’s General Fund for the last five fiscal years. See “APPENDIX B” hereto for the audited financial statements for the Fiscal Year ended June 30, 2016. The City has not requested, and the auditor has not provided, any review or update of such statements in connection with their inclusion in this Official Statement. GASB Statement No. 54. The City was required to implement Governmental Accounting Standards Board (“GASB”) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definition, for the Fiscal Year ending June 30, 2011. GASB Statement No. 54 establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The initial distinction that is made in reporting fund balance information is identifying amounts that are considered nonspendable, such as fund balance associated with inventories. GASB Statement No. 54 also provides for additional classification as “restricted,” “committed,” “assigned,” and “unassigned” based on the relative strength of the constraints that control how specific amounts can be spent. GASB Statements No. 68 and 71. Reporting obligations under GASB Statement No. 68 - Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 (“GASB No. 68”), and GASB Statement No. 71 - Pension Transitions for Contributions Made Subsequent to the Measurement Date - an amendment of GASB No. 68, commenced with financial statements for Fiscal Year 2014-15. Under GASB No. 68, an employer reports the net pension liability, pension expense and deferred outflows/deferred inflows of related to pensions in its financial statements as part of its financial position. The result of the implementation of these standards was to decrease the governmental activities net position at July 1, 2014 by $214.4 million and to decrease the business-type activities net position at July 1, 2014 by $28.7 million. The audited financial statements of the City for the Fiscal Year ended June 30, 2016 included in “APPENDIX B” contain additional information about the retirement liability and the application of GASB No. 68. See Notes 1 and 16 in the City’s audited financial statements attached in “APPENDIX B” for a discussion of additional accounting changes and prior period adjustments. 2017-11-21 Agenda Packet Page 569 59 Restatement of Net Position. In the Fiscal Year 2014-15 and 2015-16 audits, City Staff identified multiple construction in progress capital assets that were not capitalized and reported this to the City’s auditor. With this information, the City’s auditor noted certain deficiencies in internal controls related to the City’s accounting for completed construction in progress items that were not properly recorded as being placed in service. The City conducted an in-depth analysis of the issue and determined that certain costs related to these projects should have been capitalized and not expensed. In Fiscal Year 2015-16, management made the necessary accounting corrections which caused a restatement of net position in the government-wide statement of activities for both governmental and business-type activities. There was a net increase in the City’s net position in Fiscal Year 2015-16 of $43.7 million which included a restatement of $30.4 million when compared to the prior year. As set forth in Table No. 26 below, there was no restatement of position in the General Fund in Fiscal Year 2014-15 and a restatement in Fiscal Year 2015-16 which increased the General Fund ending balance by approximately $25,000 (see Independent Auditors’ Report on Internal Controls in “APPENDIX B”). Set forth on the following pages in Table No. 25 is the audited General Fund balance sheet for the last four fiscal years and the General Fund unaudited balance sheet for Fiscal Year 2016-17 and Table No. 26 presents a four year history of audited General Fund revenues, expenditures and changes in fund balances, with unaudited figures for Fiscal Year 2016-17. 2017-11-21 Agenda Packet Page 570 60 TABLE NO. 25 CITY OF CHULA VISTA GENERAL FUND BALANCE SHEET 2013 (a) 2014 (a) 2015 (a) 2016 (a) Unaudited 2017 (b) Assets: Pooled cash and investments $24,347,238 $20,276,201 $20,402,711 $16,094,309 Receivables: Accounts 1,673,960 792,147 2,066,125 2,631,053 Taxes 7,911,510 7,378,291 8,030,250 12,995,472 Accrued interest 25,816 27,374 - - Deferred loans 79,182 65,454 65,454 62,884 Allowance for uncollectible loans - - (65,454) (62,884) Other - - - - Prepaid costs - - 32,906 38,788 Due from other governments 188,542 844,196 275,123 614,891 Due from other funds 4,073,822 2,937,494 4,096,758 3,832,041 Due from Successor Agency 9,002,419 9,297,040 - - Due from agency fund 94,016 - - - Advances to other funds 1,621,446 1,661,076 1,496,657 1,488,267 Inventories and prepaid costs 104,344 61,805 - - Restricted Assets: Cash and investments with fiscal agents - - 1,274,067 - Due from Successor Agency of Chula Vista RDA - - 9,591,661 9,885,147 Total Assets $49,122,295 $43,341,078 $47,266,258 $47,579,968 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $ 2,027,105 $ 6,712,402 $ 1,744,436 $ 2,315,153 Accrued liabilities 4,127,118 - 5,492,633 3,193,649 Retention payable 212,667 - - 1,089 Settlement payable 8,000,000 - - - Pass-through payable - - 8,229 - Deferred revenue 6,786,230 - - - Total Liabilities 21,153,120 6,712,402 7,245,298 5,509,891 DEFERRED INFLOWS OF RESOURCES: Unavailable revenues - 3,669,767 3,898,935 4,677,420 Total Deferred inflows of resources - 3,669,767 3,898,935 4,677,420 Continued on next page. 2017-11-21 Agenda Packet Page 571 61 TABLE NO. 25 CITY OF CHULA VISTA GENERAL FUND BALANCE SHEET Continued from previous page. 2013 (a) 2014 (a) 2015 (a) 2016 (a) Unaudited 2017 (b) Fund Balances (1): Nonspendable: Prepaid costs $ - $ 61,805 $ 32,906 $ 38,788 Notes and loans - 5,854,271 5,889,439 - Due from Successor Agency of Chula Vista RDA - - - 5,834,630 Advances to other funds - 1,508,736 1,496,657 1,488,267 Committed to: Capital projects - 1,839,650 3,226,070 2,072,436 Economic contingency 3,600,000 3,600,000 3,600,000 San Diego Authority for Freeway Emergency - 695,951 695,951 664,659 Legal counsel - 80,000 80,000 46,050 Assigned to: General government - 535,776 916,473 1,677,574 Public safety - 1,106,960 939,669 1,181,062 Parks and recreation - 152,853 116,375 170,661 Public works - 101,975 122,650 836,035 Library - 41 5,000 185 Public liability - - 2,587,957 1,909,942 Nonspendable (2) 7,481,079 - - - Restricted (2) 750,951 - - - Committed (2) 2,298,088 - - - Assigned (2) 6,648,922 - - - Unassigned (2) 10,790,135 14,511,252 16,412,878 17,872,368 Total Fund Balances $27,969,175 $32,958,909 $36,122,025 $37,392,657 Total liabilities, Deferred Inflows of Resources, and Fund Balances $49,122,295 $43,341,078 $47,266,258 $47,579,968 ____________________________________ (1) See “GASB Statement No 54” above. (2) Change in financial statement presentation in 2014 to show individual components of the fund balance commitments and designations. Source: (a) City of Chula Vista Comprehensive Annual Financial Reports; and (b) City of Chula Vista. 2017-11-21 Agenda Packet Page 572 62 TABLE NO. 26 CITY OF CHULA VISTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 2013 (a) 2014 (a) 2015 (a) 2016 (a) Unaudited 2017 (b) Revenues: Taxes $ 75,841,123 (1) $105,718,638 $100,738,431 $107,731,873 Intergovernmental 19,542,065 (1) 2,477,213 1,933,114 2,530,464 Licenses and permits 1,395,519 1,315,445 1,281,656 1,301,243 Charges for services 8,357,509 9,257,946 9,430,097 9,264,462 Fines and forfeitures 1,002,946 1,009,736 1,638,251 1,249,457 Use of money and property 2,201,490 2,522,893 2,832,039 2,879,878 Miscellaneous 13,023,676 11,580,545 12,811,856 11,988,931 Total Revenues 121,364,328 133,882,416 130,665,444 136,946,308 Expenditures: Current: General government 22,742,279 20,586,160 23,305,483 24,518,792 Public safety 66,359,410 68,776,426 72,509,678 76,138,983 Public works 26,014,418 27,092,607 27,822,644 28,139,011 Parks and recreation 3,362,558 3,588,693 3,746,349 4,057,799 Library 3,182,483 3,336,380 3,527,038 3,689,475 Capital outlay 1,172,734 849,234 1,081,105 2,235,590 Total Expenditures 122,833,882 124,229,500 131,992,297 138,779,650 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,469,554) 9,652,916 (1,326,853) (1,833,342) Other Financing Sources (Uses): Transfers in 9,661,447 9,571,300 9,994,525 9,036,494 Transfers out (4,910,795) (14,234,482) (6,082,780) (6,335,351) Capital leases - - 578,224 377,487 Total Other Financing Sources (Uses): 4,750,652 (4,663,182) 4,489,969 3,078,630 Net Change in Fund Balances 3,281,098 4,989,734 3,163,116 1,245,288 Fund Balances, Beginning of Year, as previously reported 24,688,077 27,969,175 32,958,909 36,122,025 Restatements - - - 25,344 Fund Balances, Beginning of Year, as restated 24,688,077 27,969,175 32,958,909 36,147,369 Fund Balances, End of Year $ 27,969,175 $ 32,958,909 $ 36,122,025 $ 37,392,657 ____________________________________ (1) The City reflected the Property Taxes In-Lieu of Motor Vehicle Fees in “Intergovernmental Revenues” in Fiscal Year 2012-13, and in all other years in “Taxes.” See “Local Taxes” and “Motor Vehicle License Fees” above. (2) Includes one-time recognition of $10.5 million in deferred UUT revenue. See “Local Taxes” above and corresponding $8.0 million required transfer out of the General Fund. Source: (a) City of Chula Vista Comprehensive Annual Financial Reports and (b) City of Chula Vista. 2017-11-21 Agenda Packet Page 573 63 RISK FACTORS The purchase of the Bonds involves investment risk. If a risk factor materializes to a sufficient degree, it could delay or prevent payment of principal of and/or interest on the Bonds. Such risk factors include, but are not limited to, the following matters and should be considered, along with other information in this Official Statement, by potential investors. Base Rental Payments Base Rental Payments are Limited Obligations of the City. The Base Rental Payments and other payments due under the Lease Agreement (including a proportionate share of the costs of improvement, repair and maintenance of the Leased Property and taxes, other governmental charges and assessments levied against the Leased Property) are not secured by any pledge of taxes or other revenues of the City but are payable from yearly appropriations of any funds lawfully available to the City. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other services before paying Base Rental Payments and other payments due under the Lease Agreement. The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues (see “Constitutional Limitation on Taxes and Expenditures” below). To the extent these types of events or other events adversely affecting the funds available to the City occur in any year, the funds available to pay Base Rental Payments may be decreased. The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to the City to pay Base Rental Payments may be decreased (see “FINANCIAL INFORMATION - Outstanding Indebtedness of the City” and “- Joint Financing Agreement with Respect to the Chula Vista Bayfront” herein). Abatement. Except to the extent that amounts are available (i) in the Base Rental Payment Fund under the Indenture, (ii) from proceeds of rental interruption insurance, or (iii) as payments due from third parties due to a delay in reconstructing the Leased Property, the amount of Base Rental Payments and Additional Payments, as defined in “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS,” shall be abated during any period in which by reason of damage, destruction or taking by eminent domain of the Leased Property or defects in title with respect to the Leased Property there is substantial interference with the use and possession of all or a portion of the Leased Property by the City. The amount of such abatement shall be such that the resulting Base Rental Payments, exclusive of the amounts described above, do not exceed the fair rental value (as determined by the City and the Authority in a written certificate to the Trustee) for the use and possession of the portion of the Leased Property not damaged, destroyed, interfered with or taken. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, or taking by eminent domain or title defect and ending with the substantial completion of the replacement or work of repair or the removal of the title defect causing such interference with use. The Lease Agreement shall continue in full force and effect following an event of abatement and the City waives any right to terminate the Lease Agreement by virtue of an abatement event. In the event that such funds are insufficient to make all payments due on the Bonds during the period that the Leased Property, or portion thereof, is being restored, then all or a portion of such payments may not be made and no remedy is available to the Trustee or the Owners under the Lease Agreement or Indenture for nonpayment under such circumstances. Failure to pay principal or interest with respect to the Bonds as a result of abatement of the City’s obligation to make Base Rental Payments under the Lease Agreement is not an event of default under the Indenture or the Lease Agreement. In the event that Base Rental Payments are abated due to damage caused by earthquake or flood, such abatement may continue indefinitely since the Lease Agreement does not require earthquake or flood insurance, and the City cannot be compelled to repair or replace the damaged Leased Property or to redeem the Bonds but will covenant in the Indenture to repair or replace the Leased Property from other lawfully available funds to the extent that the Net Proceeds are insufficient. See “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - LEASE 2017-11-21 Agenda Packet Page 574 64 AGREEMENT - RENTAL PAYMENTS - Rental Abatement” and “- INDENTURE - SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS - Application of Net Proceeds and Rental Interruption Insurance.” Notwithstanding the provisions of the Lease Agreement and the Indenture specifying the extent of abatement of Base Rental Payments and the application of other funds in the event of the City’s failure to have use and occupancy of the Leased Property, such provisions may be superseded by operation of law, and, in such event, the resulting Base Rental Payments of the City may not be sufficient to pay all of the remaining principal and interest due on the Bonds. Insurance. The Lease Agreement obligates the City to obtain and keep in force various forms of insurance to assure repair or replacement of the improvements constituting the Leased Property in the event of damage or destruction to or title defect affecting the Leased Property and to maintain rental interruption insurance in an amount equal to maximum annual Base Rental Payments in any 24 month period (see “APPENDIX A - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS - LEASE AGREEMENT - INSURANCE” herein). The Lease Agreement does not require earthquake or flood insurance. See “Natural Hazards” below. The City makes no representation as to the ability or willingness of any insurer to fulfill its obligations under any insurance policy provided for in the Lease Agreement. In addition, certain risks are not covered by such property insurance (see “SOURCES OF PAYMENT FOR THE BONDS - Insurance Relating to the Leased Property” herein). In the event the Leased Property is partially or completely damaged or destroyed due to any uninsured or underinsured event, it is likely that Base Rental Payments will be partially or completely abated. Further, with respect to an insured event, if any Leased Property so damaged or destroyed is not repaired or replaced within the period during which the proceeds of rental interruption insurance are available, abatement could prevent the City from timely paying Base Rental Payments and the Authority from paying the principal of and interest on the Bonds when due. The rental interruption insurance will only be payable following an insured loss and in the event of an uninsured loss such as earthquake or flood, no amounts will be available under the rental interruption insurance policy. Discovery of a Hazardous Substance That Would Limit the Beneficial Use of the Leased Property. In general, the owners and lessees of a parcel may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 sometimes referred to as CERCLA or the Superfund Act, is the most well-known and widely applicable of these laws but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or lessee) is obligated to remedy a hazardous substance condition of property whether or not the owner (or lessee) had any involvement in creating or handling the hazardous substance. The effect, therefore, should the Leased Property be affected by a hazardous substance, might be to limit the beneficial use of the Leased Property upon discovery and during remediation. The City is not aware of any such condition on the Leased Property. Natural Hazards Seismic Considerations. According to the Public Safety Element of the City’s General Plan, the City is located in a seismically active region and could be impacted by a major earthquake originating from the numerous faults in the area. Traces of the potentially active La Nacion fault zone are known to cross the City in a generally north-south direction within the central portion of the City. The nearest active faults are the Rose Canyon fault, located approximately 14 miles northwest of the City, and the Coronado Bank fault, located approximately 30 miles from the City. Other active faults in the region are located more than 60 miles from the City. Seismic hazards encompass potential surface rupture, ground shaking, liquefaction and landslides. Strong vibrations due to earthquakes can cause liquefaction of certain soil types. Areas of the City in close proximity to San Diego Bay and the Sweetwater and Otay River Valley have shallow groundwater tables 2017-11-21 Agenda Packet Page 575 65 and poorly consolidated granular sediments potentially subject to seismically-induced liquefaction. A portion of the City is also subject to landslides in the event of an earthquake. A major earthquake could cause widespread destruction and significant loss of life in a populated area such as the City. If an earthquake were to substantially damage or destroy taxable property within the City, a reduction in taxable values of property in the City and a reduction in revenues available to the General Fund to make Base Rental Payments would be likely to occur. Seismic activity may also reduce or eliminate the use and occupancy of the Leased Property by the City. The City carries no earthquake insurance on City facilities, including the Leased Property. Flooding and Tsunamis. Portions of the City are located in a 100-year flood plain. Portions of the City are also located along the Pacific Ocean and the City could be subject to impacts from tsunamis in the event of an earthquake occurring off-shore. If either a flood or a tsunami were to substantially damage or destroy taxable property within the City, a reduction in taxable values of property in the City and a reduction in revenues available to the General Fund to make Base Rental Payments would be likely to occur. The City carries no flood insurance on City facilities including the Leased Property. There is no assurance that, in the event of a natural disaster, sufficient City reserves or Federal Emergency Management Agency assistance would be available for the repair or replacement of the Leased Property. Limited Recourse on Default; No Acceleration If an event of default occurs and is continuing under the Lease Agreement, there is no remedy of acceleration of any Base Rental Payments which have not come due and payable in accordance with the Lease Agreement. The City will continue to be liable for Base Rental Payments as they become due and payable in accordance with the Lease Agreement if the Trustee does not terminate the Lease Agreement, and the Trustee would be required to seek a separate judgment each year for that year’s defaulted Base Rental Payments. Any such suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds or property needed to serve the public welfare and interest. In addition, the enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time-consuming. The Lease Agreement permits the Trustee to take possession of and re-lease the Leased Property in the event of a default by the City under the Lease Agreement. Even if the Trustee could readily re-lease the Leased Property, the rents may not be sufficient to enable it to pay principal and interest on the Bonds in full when due. Any such re-leasing of the Leased Property would be subject to existing encumbrances thereon. Six of the parcels of Leased Property when granted to the City were limited to public park or open space purposes only (the Salt Creek Recreation Center, Mountain Hawk Park, Sunset View Park, Santa Venita Park, Veterans Park and Heritage Park) and seventh parcel, the Norman Senior Center, is limited to park use unless the City Council determines that a park use for the property is no longer in the public interest. The Parking Garage component of the Leased Property is subject to a reciprocal easement agreement that grants to the owner of the adjacent commercial development the right to set rules and regulations for the public parking spaces. Given these provisions, the re-letting of these parcels may not be feasible or practicable. See “THE LEASED PROPERTY” herein. Enforcement of Remedies The enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time consuming. The rights and remedies provided in the Lease Agreement and the Indenture may be limited by and are subject to the limitations on legal remedies against cities, including State constitutional limits on expenditures, and limitations on the enforcement of judgments against funds needed to serve the public welfare and interest; by federal bankruptcy laws, as now or hereafter enacted; applicable 2017-11-21 Agenda Packet Page 576 66 bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect (see “Bankruptcy” below); equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Constitution; the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose; and the limitations on remedies against municipal entities in the State. Bankruptcy proceedings or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights. The legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s legal opinion) will be qualified as to the enforceability of the Bonds, the Indenture, the Site Lease, the Lease Agreement, the Assignment Agreement and other related documents, by bankruptcy, insolvency, reorganization, moratorium, arrangement, fraudulent conveyance and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitation on legal remedies against public agencies in the State. See “Bankruptcy” below. Bankruptcy In addition to the limitations on remedies contained in the Indenture and the Lease Agreement, the rights and remedies in the Lease Agreement may be limited and are subject to the provisions of federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect the enforcement of creditors’ rights. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code) (the “Bankruptcy Code”), which governs bankruptcy proceedings of public entities such as the City, no involuntary bankruptcy petition may be filed against a public entity. However, upon satisfaction of certain prerequisite conditions, a voluntary bankruptcy petition may be filed by the City. The filing of a bankruptcy petition results in a stay against enforcement of certain remedies under agreements to which the bankrupt entity is a party. A bankruptcy filing by the City could thus limit remedies under the Lease Agreement. A bankruptcy debtor may choose to assume or reject executory contracts and leases, such as the Lease Agreement. However, a debtor may not assume or reject executory contracts to loan money or to make a financial accommodation, such as the Indenture. In the event of rejection of a lease by debtor lessee, the leased property is returned to the lessor and the lessor has a claim for a limited amount of the resulting damages. Under the Indenture, the Trustee holds a security interest in the revenues in the funds pledged thereunder, including Base Rental Payments, for the benefit of the Owners of the Bonds, but such security interest arises only when the Base Rental Payments are actually received by the Trustee following payment by the City. The Leased Property itself is not subject to a security interest, mortgage or any other lien in favor of the Trustee for the benefit of the Owners of the Bonds. In the event of a bankruptcy filed by the City and the subsequent rejection of the Lease Agreement by the City, the Trustee would recover possession of the Leased Property and would have a claim for damages against the City. The Trustee’s claim would constitute a secured claim only to the extent of revenues in the possession of the Trustee; the balance of such claim would be unsecured. Such a bankruptcy could adversely affect the payments under the Indenture. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City and could prevent the Trustee from making payments from funds in its possession; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or secured debt which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the 2017-11-21 Agenda Packet Page 577 67 possibility of the adoption of a plan (the “Plan of Adjustment”) for the adjustment of the City’s debt without the consent of the Trustee or all of the Owners of the Bonds, which Plan of Adjustment may restructure, delay, compromise or reduce the amount of any claim of the Owners of the Bonds if the Bankruptcy Court finds that the Plan of Adjustment is fair and equitable and in the best interests of creditors. In a bankruptcy of the City, if a material unpaid liability is owed to CalPERS or any other pension system (collectively the “Pension Systems”) on the filing date, or accrues thereafter, such circumstances could create additional uncertainty as to the City’s ability to make Base Rental Payments. Given that municipal pension systems in California are usually administered pursuant to state constitutional provisions and, as applicable, other state and/or city law, the Pension Systems may take the position, among other possible arguments, that their claims enjoy a higher priority than all other claims, that Pension Systems have the right to enforce payment by injunction or other proceedings outside of a City bankruptcy case, and that Pension System claims cannot be the subject of adjustment or other impairment under the Bankruptcy Code because that would purportedly constitute a violation of state statutory, constitutional and/or municipal law. It is uncertain how a bankruptcy judge in a City bankruptcy would rule on these matters. In addition, this area of law is presently very unsettled as issues of pension underfunding claim priority, pension contribution enforcement, and related bankruptcy plan treatment of such claims (among other pension-related matters) have been the subject of litigation in the Chapter 9 cases of several California municipalities, including the Cities of Stockton and San Bernardino. The Authority is a public agency and, like the City, is not subject to the involuntary procedures of the Bankruptcy Code. The Authority may also seek voluntary protection under Chapter 9 of the Bankruptcy Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the Authority would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Such a bankruptcy could adversely affect the payments under the Indenture. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the Authority or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the Authority; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the Authority’s debt without the consent of the Trustee or all of the Owners of the Bonds, which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners of the Bonds if the Bankruptcy Court finds that the Plan is fair and equitable. In a bankruptcy the Authority could challenge the assignment of the Site Lease and the Lease Agreement, and the Trustee and/or the Owners of the Bonds could be required to litigate these issues to protect their interests. State Budget The following information concerning the State’s budgets has been obtained from publicly available information which the City, the Municipal Advisor and the Underwriter believe to be reliable; however, neither the City, the Municipal Advisor nor the Underwriter guarantees the accuracy or completeness of this information and has not independently verified such information. Furthermore, it should not be inferred from the inclusion of this information in this Official Statement that the principal of or interest on the Bonds is payable by or the responsibility of the State of California. State Budget. Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State of California official statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by 2017-11-21 Agenda Packet Page 578 68 the City, and the City can take no responsibility for the continued accuracy of these internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. According to the State Constitution, the Governor of the State (the “Governor”) is required to propose a budget to the State Legislature (the “Legislature”) by no later than January 10 of each year, and a final budget must be adopted by the vote of each house of the Legislature no later than June 15, although this deadline has been routinely breached in the past. The State budget becomes law upon the signature of the Governor, who may veto specific items of expenditure. Prior to Fiscal Year 2010-11, the State budget had to be adopted by a two-thirds vote of each house of the Legislature. However, in November 2010, the voters of the State passed Proposition 25, which reduced the vote required to adopt a budget to a majority vote of each house and which provided that there would be no appropriation from the current budget or future budget to pay any salary or reimbursement for travel or living expenses for members of the Legislature for the period during which the budget was presented late to the Governor. Potential Impact of State of California Financial Condition on the City. During the most recent recession, the State faced a structural deficit that resulted in substantial annual deficits and reductions in expenditures. Although the State has had a budget surplus in the more recent fiscal years, according to the State there remain a number of major risks and pressures that threaten the State’s financial condition, including the threat of recession, potential changes to federal fiscal policies and unfunded long-term liabilities of more than $200 billion related to pensions and other post-retirement benefits. These risks and financial pressures could result in future reductions or deferrals in amounts payable to the City. The State’s financial condition and budget policies affect local public agencies throughout California. To the extent that the State budget process results in reduced revenues to the City, the City will be required to make adjustments to its budget. State budget policies can also impact conditions in the local economy and could have an adverse effect on the local economy and the City’s major revenue sources. No prediction can be made by the City as to whether the State will encounter budgetary problems in future fiscal years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors over which the City has no control. State Legislative Shifts of Property Tax Allocation. From time to time, the State has realigned certain property tax revenue to deal with its budget problems. Since 1992-93, the State has required that local agencies including cities remit a portion of property taxes received to augment school funding. These funds are deposited in each county’s Education Revenue Augmentation Fund (“ERAF”). These property taxes (approximately 17.5%) are permanently excluded from the City’s property tax revenues. On July 24, 2009, the Legislature approved amendments to the 2009-10 Budget to close its anticipated $26.3 billion budget shortfall. The approved amendments included borrowing from local governments by withholding of the equivalent of 8% of Fiscal Year 2008-09 property related tax revenues from cities’ and counties’ property tax collections under provisions of Proposition 1A (approved by the voters in 2004), which the State was required to repay with interest within three years. The first (and to date, only) shift occurred in Fiscal Year 2009-10. The City’s share of the withholding was $4,488,610. Fiscal Year 2012- 13 was the first year that another shift was allowable, but the State has not implemented another borrowing yet. 2017-11-21 Agenda Packet Page 579 69 On March 2, 2004, voters approved a bond initiative formally known as the “California Economic Recovery Act.” This act authorized the issuance of $15 billion in bonds to finance the Fiscal Year 2002-03 and Fiscal Year 2003-04 State budget deficits, which would be payable from a fund to be established by the redirection of tax revenues through the “Triple Flip.” Under the “Triple Flip,” one-quarter of local governments’ 1% share of the sales tax imposed on taxable transactions within their jurisdiction were redirected to the State. In an effort to eliminate the adverse impact of the sales tax revenue redirection on local government, the legislation provided for property taxes in the ERAF to be redirected to local government. Because the ERAF moneys were previously earmarked for schools, the legislation provided for schools to receive other state general fund revenues. The swap of sales taxes for property taxes terminated once the deficit financing bonds were repaid in September 2015. The City treated the Triple Flip property tax revenue as sales tax in its financial statements. The City also received a portion of Department of Motor Vehicles license fees (“VLF”) collected statewide. Several years ago, the State-wide VLF was reduced by approximately two-thirds. However, the State continued to remit to cities and counties the same amount that those local agencies would have received if the VLF had not been reduced, known as the “VLF backfill.” The State VLF backfill was phased out and as of 2011-12 all of the VLF is now received through an in lieu payment from State property tax revenues. Constitutional Limitation on Taxes and Expenditures State Initiative Measures Generally. Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Voters have exercised this power through the adoption of Proposition 13 (“Article XIIIA”) and similar measures, such as Propositions 22 and 26 approved in the general election held on November 2, 2010. Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the Lease. Article XIIIA. Article XIIIA of the California Constitution limits the taxing powers of California public agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot exceed 1% of the “full cash value” of the property, and effectively prohibits the levying of any other ad valorem property tax except for taxes above that level required to pay debt service on voter-approved general obligation bonds. “Full cash value” is defined as “the County assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The “full cash value” is subject to annual adjustment to reflect inflation at a rate not to exceed 2% or a reduction in the consumer price index or comparable local data. Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances. There may also be declines in valuations if the California Consumer Price Index is negative. The foregoing limitation does not apply to ad valorem taxes or special assessments to pay the interest and prepayment charges on any indebtedness approved by the voters before July 1, 1978 or any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of votes cast by the voters voting on the proposition. In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms “purchase” and “change of ownership,” for purposes of determining full cash value of property under Article XIIIA, to not include the purchase or transfer of (1) real property between spouses, and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow 2017-11-21 Agenda Packet Page 580 70 persons over age 55 who sell their residence and buy or build another of equal or lesser value within two years in the same city, to transfer the old residence’s assessed value to the new residence. In the March 26, 1996 general election, voters approved Proposition 193, which extends the parents-children exception to the reappraisal of assessed value. Proposition 193 amended Article XIIIA so that grandparents may transfer to their grandchildren whose parents are deceased, their principal residences, and the first $1,000,000 of other property without a reappraisal of assessed value. Because the Revenue and Taxation Code does not distinguish between positive and negative changes in the California Consumer Price Index used for purposes of the inflation factor, there was a decrease of 0.237% in 2009-10 – applied to the 2010-11 tax roll – reflecting the actual change in the California Consumer Price Index, as reported by the State Department of Finance. For each fiscal year since Article XIIIA has become effective (the 1978-79 Fiscal Year), the annual increase for inflation has been at least 2% except in ten fiscal years as shown below: Tax Roll Percentage Tax Roll Percentage 1981-82 1.000% 2010-11 (0.237)% 1996-96 1.190 2011-12 0.753 1996-97 1.110 2014-15 0.454 1998-99 1.853 2015-16 1.998 2004-05 1.867 2016-17 1.525 Proposition 8 Adjustments. Proposition 8, approved in 1978, provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. The City experienced Proposition 8 reductions in property values between 2009 and 2013. See “FINANCIAL INFORMATION - Ad Valorem Property Taxes - Taxable Property and Assessed Valuation” herein. Proposition 8 adjustments could happen again in future years, and are more likely to occur during a recession. Article XIIIB. On November 6, 1979, California voters approved Proposition 4, or the Gann Initiative, which added Article XIIIB to the California Constitution. Article XIIIB limits the annual appropriations of the State and any city, county, city and county, school district, authority or other political subdivision of the State. The “base year” for establishing such appropriations limit is the 1978-79 Fiscal Year, and the limit is to be adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by public agencies. Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by or for the entity and the proceeds of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. “Proceeds of taxes” include, but are not limited to, all tax revenues, certain State subventions, and the proceeds to an entity of government, from (1) regulatory licenses, user charges and user fees, to the extent that such charges and fees exceed the costs reasonably borne in providing the regulation, product or service, and (2) the investment of tax revenues. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules within the next two subsequent fiscal years. In the June 1990 election, the voters approved Proposition 111 amending the method of calculation of State and local appropriations limits. Proposition 111 made several changes to Article XIIIB. First, the term “change in the cost of living” was redefined as the change in the California per capita personal income 2017-11-21 Agenda Packet Page 581 71 (“CPCPI”) for the preceding year. Previously, the lower of the CPCPI or the United States Consumer Price Index was used. Second, the appropriations limit for the fiscal year was recomputed by adjusting the 1986- 87 limit by the CPCPI for the three subsequent years. Third and lastly, Proposition 111 excluded appropriations for “qualified capital outlay for fiscal 1990-91 as defined by the legislature” from proceeds of taxes. Section 7910 of the Government Code requires the City to adopt a formal appropriations limit for each fiscal year. The City’s appropriations limit for 2017-18 is $851,310,266. The City’s appropriations subject to the limit for 2017-18 are $117,555,471. Based on the foregoing, the appropriations limit is not expected to have any impact on the ability of the City to continue to budget and appropriate the Base Rental Payments as required by the Lease Agreement. Proposition 62. Proposition 62 was a statutory initiative adopted in the November 1986 general election. Proposition 62 added Sections 53720 to 53730, inclusive, to the California Government Code. It confirmed the distinction between a general tax and special tax, established by the State Supreme Court in 1982 in City and County of San Francisco v. Farrell, by defining a general tax as one imposed for general governmental purposes and a special tax as one imposed for specific purposes. Proposition 62 further provided that no local government or district may impose (i) a general tax without prior approval of the electorate by majority vote or (ii) a special tax without such prior approval by two-thirds vote. It further provided that if any such tax is imposed without such prior written approval, the amount thereof must be withheld from the levying entity’s allocation of annual property taxes for each year that the tax is collected. By its terms, Proposition 62 applies only to general and special taxes imposed on or after August 1, 1985. Proposition 62 was generally upheld in Santa Clara County Local Transportation Authority v. Guardino, a California Supreme Court decision filed September 28, 1995. Proposition 218. On November 5, 1996, California voters approved Proposition 218 – Voter Approval for Local Government Taxes – Limitation on Fees, Assessments, and Charges – Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Proposition 218 states that all taxes imposed by local governments shall be deemed to be either general taxes or special taxes. Special purpose districts, including school districts, have no power to levy general taxes. No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote. Proposition 218 also provides that no tax, assessment, fee or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (i) the ad valorem property tax imposed pursuant to Article XIII and Article XIIIA of the California Constitution, (ii) any special tax receiving a two-thirds vote pursuant to Section 4 of Article XIIIA the California Constitution, and (iii) assessments, fees, and charges for property related services as provided in Article XIIID. Proposition 218 added voter requirements for assessments and fees and charges imposed as an incident of property ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all assessments and fees and charges imposed as an incident of property ownership, including sewer, water, and refuse collection services, are subjected to various additional procedures, such as hearings and stricter and more individualized benefit requirements and findings. The effect of such provisions will presumably be to increase the difficulty a local agency will have in imposing, increasing or extending such assessments, fees and charges. Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments, fees and charges. This extension of the initiative power is not limited to taxes imposed on or after November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional principles relating to the impairment of contracts. 2017-11-21 Agenda Packet Page 582 72 Proposition 218 provides that, effective July 1, 1997, fees that are charged “as an incident of property ownership” may not “exceed the funds required to provide the property related services” and may only be charged for services that are “immediately available to the owner of the property.” The City levies a utility users tax (“UUT”) on gas and electric customers based on usage (.01103 per therm for gas; .00300 per kilo watt for electricity) and telephone services based on gross receipts. The UUT was first levied in 1970 and the last increase in tax rates was in 1979. A class action lawsuit was filed against the City contending that a tax on wireless phone use was not covered in the implementing UUT ordinance. A settlement agreement was entered into in December 2013 for rebates to affected wireless phone users who paid the UUT of their wireless phone bills from April 2010 to April 2013. Under the terms of the settlement, a portion of the previously collected UUT was paid to the claims administrator for disbursement to the affected class of wireless phone users. In addition, pursuant to the settlement, starting March 1, 2014 the UUT rate on phone service was reduced from 5% to 4.75%. The City does not expect the application of Proposition 218 will have a material adverse impact on its ability to pay Base Rental Payments. Voter-Approved Taxes. On November 8, 2016, voters approved Measure P, by majority vote, authorizing an additional one-half cent sales tax to be levied and collected on behalf of the City. The tax is authorized to be levied and collected for 10 years commencing April 1, 2017. Proposition 1A. Proposition 1A (“Proposition 1A”), proposed by the Legislature in connection with the 2004-05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004-05 and 2005-06. Proposition 1A provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition 1A provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other conditions are met. Such a shift may not occur more than twice in any 10-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. For Fiscal Year 2009-10, 8% of the City’s property tax revenues (approximately $4.5 million) were diverted to the State as a result of a Proposition 1A suspension. Proposition 1A also provides that if the State reduces the vehicle license fee rate below 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates. Proposition 22. On November 2, 2010, voters in the State approved Proposition 22. Proposition 22, known as the “Local Taxpayer, Public Safety, and Transportation Protection Act of 2010,” eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues. 2017-11-21 Agenda Packet Page 583 73 Proposition 26. On November 2, 2010, voters in the State also approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. The City does not expect the provisions of Proposition 26 to materially impede its ability to pay Base Rental Payments when due. Future Initiatives. From time to time other initiative measures could be adopted, affecting the ability of the City to increase revenues and appropriations. Federal Legislation The Congress and the Executive Branch are considering a number of actions that could adversely affect funding for state and local governments. The potential impact of future changes in federal legislation and policies on the City’s finances is unknown at the present time. See “TAX MATTERS” herein. Early Redemption Risk Early payment of the Base Rental Payments and early redemption of the Bonds may occur in whole or in part without premium, on any date if the Leased Property or a portion thereof is lost, destroyed or damaged beyond repair, affected by title defect or taken by eminent domain (see “THE BONDS - Redemption - Special Mandatory Redemption From Net Proceeds”). Early redemption of Series 2017A Bonds also occur in part, without premium on certain dates from unexpended proceeds of the Series 2017A Bonds or if the Subsidy Payments are substantially reduced (see ‘THE BONDS – Redemption – Extraordinary Redemption from Unexpended Series 2017A Bond Proceeds” and “-Special Optional Redemption Following Loss of Subsidy Payments” herein). Loss of Tax Exemption on the Series 2017B Bonds As discussed under the caption “TAX MATTERS” herein, interest on the Series 2017B Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2017B Bonds were executed and delivered as a result of future acts or omissions of the Authority or the City in violation of its covenants contained in the Indenture and the Lease Agreement. Should such an event of taxability occur, the Series 2017B Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity or otherwise redeemed pursuant to the extraordinary redemption provisions contained in the Indenture. In addition, Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or 2017-11-21 Agenda Packet Page 584 74 eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Series 2017B Bonds. Prospective purchasers of the Series 2017B Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Neither the Authority nor the City can provide assurance that federal tax law will not change while the Series 2017B Bonds are outstanding or that any such changes will not adversely affect the exclusion of the interest on the Series 2017B Bonds from gross income for federal income tax purposes. If the exclusion of the interest on the Series 2017B Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Series 2017B Bonds would be adversely impacted. IRS Audit of Tax-Exempt Bond Issues The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Series 2017B Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Series 2017B Bonds might be affected as a result of such an audit of the Series 2017B Bonds (or by an audit of similar bonds). Secondary Market Risk There can be no assurance that there will be a secondary market for purchase or sale of the Bonds, and from time to time there may be no market for them, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market and the financial condition of the City. TAX MATTERS Series 2017A Bonds The Authority has elected to issue the Series 2017A Bonds as New Clean Renewable Energy Bonds for purposes of Section 54C of the Code for which the Authority is allowed a refundable credit and which, with respect to any Interest Payment Date with respect to the Series 2017A Bonds, is equal to the lesser of (a) the interest payable on such Series 2017A Bonds on such Interest Payment Date or (b) 70% of the amount of interest that would have been payable on such Interest Payment Date under such Series 2017A Bonds if such interest were determined at the applicable credit rate determined under Section 54A(b)(3) of the Code. The Authority will elect to receive a Subsidy Payment from the United States Treasury equal to the lesser of (a) the interest payable on such Series 2017A Bonds on such Interest Payment Date or (b) 70% of the amount of interest that would have been payable on such Interest Payment Date under such Series 2017A Bonds if such interest were determined at the applicable credit rate determined under Section 54A(b)(3) of the Code, which will be deposited in the Series 2017A Account of the Interest Fund established for the Series 2017A Bonds under the Indenture and used to offset future debt service on the Series 2017A Bonds. UNDER NO CIRCUMSTANCES WILL THE SERIES 2017A BONDOWNERS RECEIVE OR BE ENTITLED AT ANY TIME TO A CREDIT AGAINST THE TAX IMPOSED BY THE CODE WITH RESPECT TO THE OWNERSHIP OF THE SERIES 2017A BONDS. The Authority cannot ensure that it will receive such a refundable credit at any time and in any given amount. In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, interest on the Series 2017A Bonds is exempt from State personal income tax. Except for certain exceptions, the difference between the issue price of a Series 2017A Bond (the first price at which a substantial amount of the Series 2017A Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Series 2017A Bond (to the extent the redemption price at maturity is bigger than the issue price) constitutes original issue discount. Original issue discount accrues under a constant yield method. The amount of original issue discount 2017-11-21 Agenda Packet Page 585 75 deemed received by the Series 2017A Bond Owner will increase the Series 2017A Bond Owner’s basis in the Series 2017A Bond. Series 2017A Bond Owners should consult their own tax advisor with respect to taking into account any original issue discount on the Series 2017A Bond. The amount by which a Series 2017A Bond Owner’s original basis for determining loss on sale or exchange in the applicable Series 2017A Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which the Series 2017A Bond Owner may elect to amortize under Section 171 of the Code; such amortizable bond premium reduces the Series 2017A Bond Owner’s basis in the applicable Series 2017A Bond (and the amount of taxable interest received) and is deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Series 2017A Bond Owner realizing a taxable gain when a Series 2017A Bond is sold by the Series 2017A Bond Owner for an amount equal to or less (under certain circumstances) than the original cost of the Series 2017A Bond to the Series 2017A Bond Owner. The Series 2017A Bond Owners that have a basis in the Series 2017A Bonds that is greater than the principal amount of the Series 2017A Bonds should consult their own tax advisors with respect to whether or not they should elect to amortize such premium under Section 171 of the Code. The qualification of the Series 2017A Bonds and receipt of the refundable credit for purposes of Section 54C of the Code is subject to the condition that the Authority and the City, and others comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2017A Bonds to assure that the Series 2017A Bonds qualify as New Clean Renewable Energy Bonds under Section 54C of the Code for which the Authority, on behalf of the City, has made an irrevocable election to receive a refundable credit. Failure to comply with such requirements of the Code might result in the Authority not receiving such a refundable credit, possibly retroactive to the date of issue of the Series 2017A Bonds. The IRS has initiated an expanded program for the auditing of bond issues, including both random and targeted audits. It is possible that the Series 2017A Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2017A Bonds might be affected as a result of such an audit of the Series 2017A 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, that Congress or the IRS might change the Code (or interpretation thereof) subsequent to the issuance of the Series 2017A Bonds to the extent that it adversely affects the status of the Series 2017A Bonds as New Clean Renewable Energy Bonds for purposes of Section 54C of the Code for which the Authority is entitled to a refundable credit or the market value of a Series 2017A Bond. SUBSEQUENT TO THE ISSUANCE OF THE Series 2017A 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 Series 2017A BONDS OR THE MARKET VALUE OF THE Series 2017A BONDS. TAX REFORM PROPOSALS ARE BEING CONSIDERED BY CONGRESS. IT IS POSSIBLE THAT LEGISLATIVE CHANGES MIGHT BE INTRODUCED IN CONGRESS, WHICH, IF ENACTED, WOULD RESULT IN ADDITIONAL FEDERAL INCOME OR STATE TAX BEING IMPOSED ON OWNERS OF OBLIGATIONS, SUCH AS THE Series 2017A BONDS. THE INTRODUCTION OR ENACTMENT OF ANY OF SUCH CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE Series 2017A BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE Series 2017A BONDS SUCH CHANGES (OR OTHER CHANGES) WILL NOT BE INTRODUCED OR ENACTED OR INTERPRETATIONS WILL NOT OCCUR. BEFORE PURCHASING ANY OF THE Series 2017A 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 Series 2017A BONDS. 2017-11-21 Agenda Packet Page 586 76 The federal tax and State personal income tax discussion set forth above is included for general information only and may not be applicable depending upon a Series 2017A Bond Owner’s particular situation. The ownership and disposal of the Series 2017A Bonds and the accrual or receipt of interest on the Series 2017A Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. A copy of the proposed form of opinion of Bond Counsel with respect to the Series 2017A Bonds is attached hereto as Appendix D. Series 2017B Bonds In the opinion of Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Series 2017B Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Series 2017B Bonds is exempt from State personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Series 2017B Bonds may be included as an adjustment in the calculation of alternative minimum taxable income. The difference between the issue price of a Series 2017B Bond (the first price at which a substantial amount of the Series 2017B Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to the Series 2017B Bond (to the extent the redemption price at maturity is greater than the issue price) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Series 2017B Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the Beneficial Owner of the Series 2017B Bond is excluded from gross income of such Beneficial Owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Series 2017B Bonds is based upon certain representations of fact and certifications made by the Authority and the City and others and is subject to the condition that the Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Series 2017B Bonds to assure that interest (and original issue discount) on the Series 2017B Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Series 2017B Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2017B Bonds. The Authority and the City will covenant to comply with all such requirements. The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Series 2017B Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Beneficial Owner’s basis in the applicable Series 2017B Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Beneficial Owner realizing a taxable gain when a Series 2017B Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the original cost of the Series 2017B Bond to the Beneficial Owner. Purchasers of the Series 2017B Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium. 2017-11-21 Agenda Packet Page 587 77 Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. 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, the Lease and the Tax Certificate relating to the Series 2017B Bonds permit certain actions to be taken or to be omitted if a favorable opinion of a bond counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income for federal income tax purposes of interest (or original issue discount) on any Series 2017B Bond if any such action is taken or omitted based upon the advice of counsel other than Bond Counsel. 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 Series 2017B Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2017B Bonds might be affected as a result of such an audit of the Series 2017B Bonds (or by an audit of similar securities). SUBSEQUENT TO THE ISSUANCE OF THE Series 2017B 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 Series 2017B BONDS OR THE MARKET VALUE OF THE Series 2017B BONDS. LEGISLATIVE CHANGES HAVE BEEN INTRODUCED IN CONGRESS, WHICH, IF ENACTED, WOULD RESULT IN ADDITIONAL FEDERAL INCOME OR STATE TAX BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE Series 2017B BONDS. THE INTRODUCTION OR ENACTMENT OF ANY OF SUCH CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE Series 2017B BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE Series 2017B BONDS SUCH CHANGES (OR OTHER CHANGES) WILL NOT BE INTRODUCED OR ENACTED OR INTERPRETATIONS WILL NOT OCCUR. BEFORE PURCHASING ANY OF THE Series 2017B 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 Series 2017B BONDS. Although Bond Counsel will render an opinion that the interest due on the Series 2017B Bonds is excluded from gross income for federal income tax purposes provided that the Authority and the City continue to comply with certain requirements of the Code, the ownership of the Series 2017B Bond and the accrual or receipt of interest with respect to the Series 2017B 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 Series 2017B Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences with respect to the Series 2017B Bonds. Should interest on the Series 2017B Bonds (including any original issue discount) become includable in gross income for federal income tax purposes, the Series 2017B Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture. A copy of the proposed form of opinion of Bond Counsel with respect to the Series 2017B Bonds is attached hereto in Appendix D. 2017-11-21 Agenda Packet Page 588 78 LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture, the Lease Agreement, the Site Lease, 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. In the case of any bankruptcy proceeding involving the City or the Authority, the rights of the Owners of the Bonds could be modified at the direction of the court. 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 Indenture, the Lease Agreement, the Site Lease and other pertinent documents is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. Approval of Legal Proceedings Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel, will render an opinion with respect to the validity and enforceability of the Indenture, the Lease Agreement, the Site Lease and the Assignment Agreement and as to the validity of the Bonds. See “APPENDIX D” hereto for the proposed form of Bond Counsel’s opinion. The Authority and the City have no knowledge of any fact or other information which would indicate that the Indenture, the Lease Agreement, the Site Lease, the Assignment Agreement or the Bonds are not enforceable against the Authority and the City, as applicable, except to the extent such enforcement is limited by principles of equity, by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors’ rights generally and by limitations on legal remedies against municipalities in the State. Certain legal matters will be passed on for the City and the Authority by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel and by Glen R. Googins, City Attorney. Certain legal matters will be passed on for the Underwriter by its Counsel, Nixon Peabody LLP, Los Angeles, California. Fees payable to Bond Counsel, Disclosure Counsel and Underwriter’s Counsel are contingent upon the sale and delivery of the Bonds. Absence of Litigation The City and the Authority will furnish a certificate dated as of the date of delivery of the Bonds that there is not now known to be litigation pending against the City or the Authority or threatened against the City or the Authority seeking to restrain or enjoin the execution or delivery of the Indenture, the Lease Agreement, the Site Lease or the Assignment Agreement or the sale or delivery of the Bonds, or, in any manner questioning the proceedings and authority under which the Bonds and Indenture, the Lease Agreement, the Site Lease and the Assignment Agreement are to be executed and delivered or affecting the validity thereof. There exists lawsuits and claims against the City that arise during the ordinary course of the City’s operations. In the view of the City’s management and City Attorney, there is no litigation, presently pending against the City, that will individually, or in the aggregate, impair the City’s ability to make Base Rental Payments when due. 2017-11-21 Agenda Packet Page 589 79 CONCLUDING INFORMATION Rating on the Bonds S&P Global Ratings has assigned its municipal bond rating of “___” to the Bonds. Such rating reflects only the views of the rating agency and any desired explanation of the significance of such rating should be obtained from the rating agency. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. Except as otherwise required in the Continuing Disclosure Agreement, the City undertakes no responsibility either to bring to the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price of the Bonds. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. Underwriting The Series 2017A Bonds are being sold at an aggregate purchase price of $__________ (representing the aggregate principal amount of the Series 2017A Bonds plus an original issue premium of $__________ and less an underwriting discount of $_______), pursuant to a bond purchase contract (“Bond Purchase Contract”) entered into between the Authority, the City and Brandis Tallman LLC (the “Underwriter”). The Series 2017B Bonds are being sold to the Underwriter at an aggregate purchase price of $_________ (representing the aggregate principal amount of the Series 2017B Bonds plus an original issue premium of $________ and less an underwriting discount of $_____), pursuant to the Bond Purchase Contract The expenses associated with the issuance of the Bonds are being paid by the Authority and the City from proceeds of the Bonds. The right of the Underwriter to receive compensation in connection with the Bonds is contingent upon the issuance and delivery by the Authority, and the purchase by the Underwriter, of the Bonds. The bond purchase contract provides that the Underwriter will purchase all of the Bonds if any are purchased and that the obligation of the Underwriter to accept and pay for the Bonds is subject to certain terms and conditions set forth therein, including the approval by counsel of certain legal matters. The Underwriter will initially offer the Bonds for sale at the prices and yields set forth on the inside cover page of this Official Statement. Such prices or yields may subsequently change. The Underwriter reserves the right to join with dealers and other investment banking firms in offering the Bonds for sale and may offer to sell Bonds to dealers at prices lower than the initial offering prices. The Municipal Advisor The material contained in this Official Statement was prepared by the Authority and the City with the assistance of the Municipal Advisor who advised the Authority and the City as to the financial structure and certain other financial matters relating to the Bonds. The information set forth herein received from sources other than the City has been obtained by the Authority from sources which are believed to be reliable, but such information is not guaranteed by Municipal Advisor as to accuracy or completeness, nor has it been independently verified. Fees paid to the Municipal Advisor are contingent upon the sale and delivery of the Bonds. 2017-11-21 Agenda Packet Page 590 80 Continuing Disclosure The City will covenant to provide certain annual financial information by not later than March 31 in each year (the “Annual Reports”) and notices of the occurrence of certain listed events in accordance with Rule 15c2-12 of the Securities Exchange Act of 1934 as amended (the “Rule”). Willdan Financial Services will act as Dissemination Agent. The specific nature of the information to be contained in the Annual Reports or the notices of listed events and certain other terms of the continuing disclosure obligation are found in the form of the City’s Continuing Disclosure Agreement attached in “APPENDIX C - FORM OF CONTINUING DISCLOSURE AGREEMENT.” The City and certain other entities related to the City, including the former Redevelopment Agency of the City of Chula Vista (“Former Agency”), various community facilities districts and joint powers authorities (together, the “City Entities”), have entered into previous undertakings pursuant to the Rule. Within the last five years, the City and certain of the City Entities have failed to comply with their respective prior undertakings in the following respects: (i) pursuant to the undertakings for certain of the community facilities districts, such community facilities districts were twelve days late in filing the City’s audited financial statements in 2013; (ii) pursuant to the undertakings for three series of the Former Agency’s bonds, the Former Agency’s Fiscal Year 2011 annual reports due in February and March 2012 were not filed until July 2012, 142 and 97 days late, respectively, and pursuant to the undertaking for one series of the Former Agency’s bonds, the Former Agency’s Fiscal Year 2012 annual report due in February 2013 was not filed until March 2013, 27 days late; (iii) notice of certain ratings changes relating to several issues resulting from changes in ratings on municipal bond insurance companies were not promptly filed and one notice of an underlying rating change was filed 37 days after the rating change occurred; and (iv) in certain cases information was timely filed on EMMA under the applicable base CUSIP number for the issuer but not linked to all of the individual CUSIP numbers for a series of bonds. The City has adopted policies and procedures regarding compliance with undertakings made by the City and the City Entities pursuant to the Rule and has retained the services of outside consultants to assist in the reporting process. The City’s Finance Department has assigned a specific person to coordinate with the outside consultants and to monitor compliance. References Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority and the purchasers or Owners of any of the Bonds. 2017-11-21 Agenda Packet Page 591 81 Execution The execution of this Official Statement by the Chief Financial Officer of the Authority and the City Director of Finance/Treasurer has been duly authorized by the Authority and by the City, respectively. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Chief Financial Officer CITY OF CHULA VISTA By: Director of Finance/Treasurer 2017-11-21 Agenda Packet Page 592 A-1 APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS [to be provided by Bond Counsel] 2017-11-21 Agenda Packet Page 593 B-1 APPENDIX B CITY AUDITED FINANCIAL STATEMENTS 2017-11-21 Agenda Packet Page 594 C-1 APPENDIX C FORM OF CONTINUING DISCLOSURE AGREEMENT 2017-11-21 Agenda Packet Page 595 D-1 APPENDIX D PROPOSED FORM OF BOND COUNSEL OPINIONS 2017-11-21 Agenda Packet Page 596 E-1 APPENDIX E THE BOOK-ENTRY SYSTEM The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange 2017-11-21 Agenda Packet Page 597 E-2 Commission. More information about DTC can be found at www.dtcc.com. The information contained on such Internet site is not incorporated herein by reference. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds and distributions on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption 2017-11-21 Agenda Packet Page 598 E-3 proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. 2017-11-21 Agenda Packet Page 599 NOTICE OF PUBLIC HEARING BY THE CHULA VISTA CITY COUNCIL CHULA VISTA, CALIFORNIA NOTICE IS HEREBY GIVEN that the City Council of the City of Chula Vista (the “City”) will hold a public hearing at 5:00 p.m. on November 21, 2017 or as soon thereafter as the matter can be considered, in the Chambers of the City Council of the City, 276 4th Avenue, Building A, Chula Vista, California, in accordance with Government Code Sections 4217.13 and 6586.5, at which time it will consider public testimony concerning the possible approval of a lease agreement as a facility financing contract pursuant to Government Code Section 4217.13 and the execution, sale and delivery of lease revenue bonds by the Chula Vista Municipal Financing Authority in order to acquire, construct, equip and install certain capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City. Any written comments or petitions to be submitted to the City Council must be received by the City Clerk’s Office no later than noon on the hearing date. If you wish to challenge the City’s action on these matters in court, you may be limited to raising only those issues you or someone else raise at the public hearing described in this notice, or in written correspondence delivered to the Office of the City Clerk at or prior to the public hearing. COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT (ADA) The City, in complying with the Americans with Disabilities Act, requests individuals who require special accommodation to access, attend and/or participate in a City meeting, activity or service request such accommodation at least 48 hours in advance for meetings, and 5 days for scheduled services and activities. Please contact the City Clerk’s Office for assistance at (619) 691-5041. Service for the hearing impaired is available at (619) 585-5647 (California Relay Service is available for the hearing impaired by dialing 711) at least forty-eight hours in advance of the meeting. 2017-11-21 Agenda Packet Page 600 RESOLUTION NO. _________ RESOLUTION OF THE CITY OF CHULA VISTA APPROVING THE ISSUANCE OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY’S LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS (FEDERALLY TAXABLE) AND LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) AND AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT WITH RESPECT TO THE OFFERING AND SALE OF THE BONDS AND THE EXECUTION OF DOCUMENTS AND THE TAKING OF RELATED ACTIONS NECESSARY TO ISSUE SUCH BONDS WHEREAS, the City of Chula Vista, California (the “City”) is a municipal corporation and chartered city duly organized and existing under and pursuant to the Constitution and laws of the State of California (the “State”); WHEREAS, the City desires to acquire, construct, equip and install certain capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City (together, the “Project”) all of which are located in the City; WHEREAS, the City is a member of the Chula Vista Municipal Financing Authority (the “Authority”) and the Project is located within the boundaries of the City; WHEREAS, on the date hereof the City Council held a public hearing regarding the Project and the proposed financing of the Project by the Authority in accordance with Section 6586.5 of the Marks-Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code (the “Act”) for purposes of determining a significant public benefit to the financing, and in accordance with Section 4217.13 of the California Government Code for purposes of entering into a facility financing contract related to the Project as described herein; WHEREAS, the City has determined that it would be in the best interests of the City and residents of the City to approve the preparation, sale and issuance by the Authority of the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable)” (the “Series 2017A Bonds”) and the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt)” (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Bonds”) for the purpose of financing the Project and that the issuance of the Bonds by the Authority will provide significant public benefits of the type described in the Act; WHEREAS, in order to facilitate the issuance of the Bonds, the City and the Authority desire to enter into a Site Lease between the City and the Authority (the “Site Lease”) pursuant to which the City will lease certain real property described therein (the “Leased Property,” subject to adjustment as described in Section 2 below, to the Authority, and a Lease Agreement between the City and the Authority (the “Lease Agreement”), pursuant to which the City will 2017-11-21 Agenda Packet Page 601 lease the Leased Property back from the Authority, and pay certain Base Rental Payments (as defined in the Lease Agreement), which will be pledged to the owners of the Bonds by the Authority pursuant to an Indenture by and among U.S. Bank National Association (the “Trustee”), the City and the Authority (the “Indenture”) the forms of which documents have been presented to this City Council at the meeting at which this Resolution is being adopted; and WHEREAS, following the public hearing and based on the testimony provided and supporting information provided by City staff and consultants in the staff report for this item, the City has determined that the Project consists of alternate energy equipment and is an energy conservation facility as such terms are defined in Section 4217.11 of the Government Code and the Lease Agreement constitutes a facility financing contract as such term is defined in Section 4217.11 of the Government Code meeting the requirements of Section 4217.13 of the California Government Code in that the terms of the Lease Agreement are in the best interest of the City and that the funds for the lease payments due under the Lease Agreement are projected to be available from revenues that otherwise would have been used for the purchase of electrical energy required by the City in the absence of the Project; WHEREAS, there has been delivered to the City an appraisal (the “Appraisal”) prepared by Lea & Associates, Inc. regarding the annual fair rental value of the portion of the Leased Property known as the Chula Vista Main Library and the annual fair rental value of various City parks similar to Harvest Park, which is also proposed as a part of the Leased Property; WHEREAS, the Bonds will be issued pursuant to the Act; WHEREAS, the City and the Authority desire to provide for the negotiated sale of the Bonds to Brandis Tallman LLC (the “Underwriter”); WHEREAS, the City and the Authority have selected the Underwriter to underwrite and purchase the Bonds from the Authority pursuant to a Bond Purchase Agreement by and among the City, the Authority and the Underwriter (the “Bond Purchase Agreement”) the form of which has been presented to this City Council at the meeting at which this Resolution is being adopted; WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”) requires that, in order to be able to purchase or sell the Bonds, the Underwriter must have reasonably determined that the City has undertaken in a written agreement or contract for the benefit of the holders of the Bonds to provide disclosure of certain financial information and certain events on an ongoing basis; WHEREAS, in order to cause such requirement to be satisfied, the City desires to execute and deliver a Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”) the form of which has been presented to this City Council at the meeting at which this Resolution is being adopted; WHEREAS, a form of the Preliminary Official Statement for the Bonds (the “Preliminary Official Statement”) has been prepared and presented to this City Council at the meeting at which this Resolution is being adopted; 2017-11-21 Agenda Packet Page 602 WHEREAS, the City Council has been presented with the form of each document referred to herein relating to the proposed financing of the Project, and the City Council has examined and approved each document and desires to authorize and direct the execution of the documents to which the City is a party and the consummation of the financing of the Project; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the financing of the Project authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate the financing of the Project for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the City Council of the City of Chula Vista does hereby resolve as follows: SECTION 1.Each of the above recitals is true and correct and each of the findings and determinations stated above is hereby adopted by the City Council. The City Council hereby approves the financing described in this Resolution and further finds and determines that having the Authority assist the City in the financing of the Project through the issuance of the Bonds pursuant to the Act will result in certain of the significant public benefits to the residents of the City of the types described in Section 6586(a) of the Act, including, but not limited to, demonstrable savings in interest rate, bond issuance and bond underwriting costs by issuing lease revenue bonds rather than certificates of participation and by combining the multiple allocations of tax credits for the Project into a single series of bonds. SECTION 2.The forms of the Site Lease and Lease Agreement, presented to the City Council at this meeting, are hereby approved, and each of the Mayor of the City (the “Mayor”), the City Manager of the City (the “City Manager”), the Deputy City Manager of the City (the “Deputy City Manager”) and the Director of Finance/Treasurer of the City (the “Director of Finance”) and their designees (collectively, the “Authorized Officers”), acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Site Lease and Lease Agreement in substantially said forms, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the term of the Site Lease and Lease Agreement shall terminate no later than December 1, 2048 (provided that such term may be extended as provided therein). The Leased Property to be included in the Lease Agreement and the Site Lease shall be designated by the City Manager, the Deputy City Manager, or the Director of Finance/Treasurer, and may include all or a portion of the Leased Property listed in the Lease Agreement and the Site Lease on file with the City Clerk, or such other real property assets of the City as one of such officers determines is necessary in order to satisfy any legal requirements to enter into the Lease Agreement, based on the advice of the City Attorney or bond counsel, or rating agency requirements to rate the Bonds, with such designation to be conclusively evidenced by the execution and delivery of the Site Lease and Lease Agreement by one or more of the Authorized Officers. Based on the Appraisal and other information known to the City regarding the public 2017-11-21 Agenda Packet Page 603 benefits provided by the Leased Property, the City Council hereby finds and determines that the annual lease payments and additional payments due in each fiscal year under the Lease Agreement will not exceed the fair rental value of the Leased Property during any fiscal year. Based on the information provided to the City Council and the findings set forth in Section 1 above, the City Council hereby determines that in addition to its general powers to enter into the Lease Agreement, the Lease Agreement also constitutes a facility financing contract which the City is authorized to execute pursuant to Section 4217.13 of the California Government Code. SECTION 3.The form of Indenture, presented to the City Council at this meeting, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Indenture in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the aggregate amount of the Series 2017A Bonds shall not exceed $15,000,000, the aggregate amount of the Series 2017B Bonds shall not exceed $2,000,000, the final maturity date of the Bonds shall be no later than December 1, 2048, and provided, further, that such changes, insertions and omissions shall be consistent with the terms of the Bonds established at negotiated sale pursuant to the Bond Purchase Agreement. SECTION 4.The Bond Purchase Agreement, on file with the City Clerk, is hereby approved and each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Bond Purchase Agreement, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Bond Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate Underwriter’s discount (not including any original issue discount on the Bonds) in excess of 0.6% of the aggregate principal amount of the Bonds; and provided, further, that the Bond Purchase Agreement shall be executed only if the true interest cost of the Series 2017A Bonds does not exceed 6.0% and the true interest cost of the Series 2017B Bonds does not exceed 4.0%, as determined by the Municipal Advisor (designated in Section 9 below). SECTION 5.Subject to the limitations set forth in Section 2 above, the issuance by the Authority of the Bonds in the principal amounts, bearing interest at the rates and maturing on the dates as specified in the Indenture as finally executed, is hereby approved. SECTION 6.The form of Preliminary Official Statement, presented to the City Council at this meeting, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, including all changes necessary in order to make it accurate as of its date, is hereby approved, and the use of the Preliminary Official Statement, inclusive of any such revisions, in connection with the offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are each hereby authorized to certify on behalf of the City that the Preliminary Official Statement is deemed final as of its date, within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12). 2017-11-21 Agenda Packet Page 604 SECTION 7.The preparation and delivery of an Official Statement, and its use in connection with the offering and sale of the Bonds, is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the delivery to the Underwriter. The Authorized Officers are each hereby authorized and directed, for and in the name of and on behalf of the City, to execute the final Official Statement and any amendment or supplement thereto for and in the name and on behalf of the City. SECTION 8.The form of Continuing Disclosure Agreement, presented to the City Council at this meeting, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced to the execution and delivery thereof. SECTION 9.Harrell & Company Advisors, LLC is hereby designated as the Municipal Advisor to the City and the Authority for the Bonds and Stradling Yocca Carlson & Rauth, a Professional Corporation is hereby designated as bond counsel and disclosure counsel for the Bonds, and the Authorized Officers are each hereby authorized and directed, jointly and severally, to execute any and all contracts for services and other documents necessary to procure the services of such firms for the execution and delivery of the Bonds. SECTION 10.The officers, employees and agents of the City are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including, but not limited to, the execution and delivery of agreements terminating any pre-existing leasehold, subleasehold or other interests with respect to the Leased Property. Anything to the contrary herein notwithstanding, the Director of Finance/Treasurer, or his designee, is authorized and directed to solicit and accept bids for bond insurance for the Bonds, provided he determines acceptance of the best bid will be cost effective for the City, and appropriate changes to each of the documents referenced herein to evidence such bond insurance and the terms thereof, are hereby authorized and approved. All actions heretofore taken by the officers, employees and agents of the City with respect to the transactions set forth above are hereby approved, confirmed and ratified. SECTION 11.This Resolution shall take effect immediately upon its passage. 2017-11-21 Agenda Packet Page 605 Presented by David Bilby, MSBA, CPFO Director of Finance/Treasurer Approved as to form by Glen R. Googins City Attorney 2017-11-21 Agenda Packet Page 606 2017-11-21 Agenda Packet Page 607 RESOLUTION NO. ________ RESOLUTION OF THE BOARD OF DIRECTORS OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF THE AUTHORITY’S LEASE REVENUE BONDS SERIES 2017A (NEW CLEAN RENEWABLE ENERGY BONDS (FEDERALLY TAXABLE) AND LEASE REVENUE BONDS SERIES 2017B (TAX-EXEMPT) AND AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT WITH RESPECT TO THE OFFERING AND SALE OF THE BONDS AND THE EXECUTION OF DOCUMENTS AND THE TAKING OF RELATED ACTIONS NECESSARY TO ISSUE SUCH BONDS WHEREAS, the Chula Vista Municipal Financing Authority (the “Authority”) is a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California one of the members of which is the City of Chula Vista, California (the “City”); WHEREAS, the Authority is empowered under the provisions of Article 4, Chapter 5, Division 7, Title 1 of the California Government Code (the “Act”) to issue bonds for the purpose of assisting local agencies in, among other things, financing or refinancing the cost of public capital improvements whenever the local agency determines that there are significant public benefits from such assistance; WHEREAS, the City has requested assistance from the Authority to finance the acquisition, construction, equipping and installation of certain capital improvements consisting of solar energy equipment and related improvements in various City buildings and on certain real property owned by the City (together, the “Project”); WHEREAS, the City has made a finding that the Project is located within the boundaries of the City; WHEREAS, the City has previously held a public hearing on the Project and on the proposed financing of the Project through the preparation, sale and delivery of the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017A (New Clean Renewable Energy Bonds) (Federally Taxable)” (the “Series 2017A Bonds”) and the “Chula Vista Municipal Financing Authority Lease Revenue Bonds Series 2017B (Tax-Exempt)” (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Bonds”) in accordance with Section 6586.5 of the Act and adopted its resolution approving the Project and the financing and making a finding of significant public benefits in accordance with the Act; WHEREAS, the Authority has determined that it is desirable, furthers the public purpose and will result in significant public benefits to the residents of the City, within the meaning of the Act, to assist the City in financing the Project; WHEREAS, in order to facilitate the issuance of the Bonds, the City and the Authority desire to enter into a Site Lease between the City and the Authority (the “Site Lease”) pursuant to which the City will lease certain real property described therein (the “Leased Property”), subject to adjustment 2017-11-21 Agenda Packet Page 608 as described in Section 2 below, to the Authority, and a Lease Agreement between the City and the Authority (the “Lease Agreement”), pursuant to which the City will lease the Leased Property back from the Authority, and pay certain Base Rental Payments (as defined in the Lease Agreement), which will be pledged to the owners of the Bonds by the Authority pursuant to an Indenture by and among U.S. Bank National Association (the “Trustee”), the City and the Authority (the “Indenture”) the forms of which documents have been presented to this Board of Directors at the meeting at which this Resolution is being adopted; WHEREAS, the Authority and the Trustee desire to enter into an Assignment Agreement in order to provide, among other things, for the assignment by the Authority to the Trustee, without recourse, of its right, title and interest in and to the Site Lease and the Lease Agreement as and to the extent described therein, including its right to receive the Base Rental Payments under the Lease Agreement; WHEREAS, the Bonds will be issued pursuant to the Act; WHEREAS, the City and the Authority desire to provide for the negotiated sale of the Bonds to Brandis Tallman LLC (the “Underwriter”); WHEREAS, the City and the Authority have engaged the Underwriter to underwrite and to purchase the Bonds from the Authority pursuant to a Bond Purchase Agreement by and among the City, the Authority and the Underwriter (the “Bond Purchase Agreement”); WHEREAS, a form of the Preliminary Official Statement for the Bonds (the “Preliminary Official Statement”) has been prepared; WHEREAS, the Board of Directors of the Authority (the “Board of Directors”) has been presented with the form of each document referred to herein, and the Board of Directors has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of the financing of the Project through the preparation, sale and delivery of the Bonds; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of such refinancing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such refinancing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, the Board of Directors of the Chula Vista Municipal Financing Authority does hereby resolve as follows: SECTION 1. All of the recitals herein contained are true and correct and each of the findings and determinations stated above is hereby adopted by the Board of Directors. The Board of Directors has determined that the City has made a finding that the Authority’s assistance in financing the Project by the execution and delivery of the Lease Agreement and related transactions will result in certain of the significant public benefits of the type described in Section 6586 (a) of the Act, including, but not limited to, demonstrable savings in interest rate, bond issuance and bond underwriting costs by issuing lease revenue bonds rather than certificates of participation and by 2017-11-21 Agenda Packet Page 609 combining the multiple allocations of tax credits for the Project into a single series of bonds. The Board of Directors has further determined that the City has made a finding that the Project will be located within the City. SECTION 2. The forms of the Lease Agreement and the Site Lease, presented to the Board of Directors at this meeting, are hereby approved, and each of the Chairman, Vice Chairman, Executive Director, Chief Financial Officer and Secretary of the Authority, and the Chairman’s designee (the “Authorized Officers”), acting alone, is authorized and directed to execute and deliver the Lease Agreement and the Site Lease, respectively, in substantially said forms, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the term of the Lease Agreement and the Site Lease shall terminate no later than December 1, 2048 (provided that such term may be extended as provided therein). The Leased Property to be included in the Lease Agreement and the Site Lease shall be designated by the City Manager, the Deputy City Manager or the Director of Finance/Treasurer and may include all or a portion of the Leased Property listed in the Lease Agreement and the Site Lease presented to the Board of Directors at this meeting, or such additional real property assets of the City as one of such officers determines is necessary in order to satisfy any legal requirements to enter into the Lease Agreement, based on the advice of the City Attorney or bond counsel, or rating agency requirements to rate the Bonds, with such designation to be conclusively evidenced by the execution and delivery of the Site Lease and Lease Agreement by one or more of such officers of the City and one or more of the Authorized Officers. SECTION 3. The form of Indenture, presented to the Board of Directors at this meeting, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Indenture in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the aggregate amount of the Series 2017A Bonds shall not exceed $15,000,000, the aggregate amount of the Series 2017B Bonds shall not exceed $2,000,000, the final maturity date of the Bonds shall be no later than December 1, 2048, and provided, further, that such changes, insertions and omissions shall be consistent with the terms of the Bonds established at negotiated sale pursuant to the Bond Purchase Agreement. SECTION 4. The issuance of the Series 2017A Bonds in an aggregate amount not to exceed $15,000,000 and the Series 2017B Bonds in an aggregate amount not to exceed $2,000,000, in the principal amounts, bearing interest at the rates and maturing on the dates as specified in the Indenture as finally executed, is hereby authorized and approved. SECTION 5. The form of Assignment Agreement, presented to the Board of Directors at this meeting, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Assignment Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 6. The Bond Purchase Agreement, presented to the Board of Directors at this meeting, is hereby approved, and each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name of the Authority to execute and deliver the Bond Purchase 2017-11-21 Agenda Packet Page 610 Agreement in substantially said form, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution of the Bond Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions and omissions shall not result in an aggregate Underwriter’s discount (not including any original issue discount on the Bonds) in excess of 0.6% of the aggregate principal amount of the Bonds; and provided, further, that the Bond Purchase Agreement shall be executed only if the true interest cost of the Series 2017A Bonds does not exceed 6.0% and the true interest cost of the Series 2017B Bonds does not exceed 4.0%, as determined by the Municipal Advisor (designated in Section 9 below). SECTION 7. The form of Preliminary Official Statement, presented to the Board of Directors at this meeting, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved. The Authorized Officers are each hereby authorized to make any changes to the form of the Preliminary Official Statement on file in order to make it accurate as of its date and to certify on behalf of the Authority that the Preliminary Official Statement, as revised, is deemed final as of its date, within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (except for the omission of certain final pricing, rating and related information as permitted by such Rule). The Authorized Officers are each hereby authorized and directed to furnish, or cause to be furnished, to the Underwriter a reasonable number of copies of the Preliminary Official Statement. SECTION 8. The preparation and delivery of an Official Statement, and its use in connection with the offering and sale of the Bonds, is hereby authorized and approved. The Official Statement shall be in substantially the form of the Preliminary Official Statement with such changes, insertions and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the delivery thereof to the Underwriter. Each of the Authorized Officers, acting alone, is hereby authorized and directed, for and in the name of and on behalf of the Authority, to deliver the final Official Statement, and any amendment or supplement thereto, to the Underwriter for and in the name and on behalf of the Authority. SECTION 9. Harrell & Company Advisors, LLC is hereby designated as the Municipal Advisor to the City and the Authority for the Bonds and Stradling Yocca Carlson & Rauth, a Professional Corporation is hereby designated as bond counsel and disclosure counsel for the Bonds, and the Authorized Officers are each hereby authorized and directed, jointly and severally, to execute any and all contracts for services and other documents necessary to procure the services of such firms for the execution and delivery of the Bonds. SECTION 10. The officers and agents of the Authority are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including, but not limited to, approving the payment of the costs of issuance of the Bonds and the execution and delivery of agreements terminating any pre-existing leasehold, subleasehold and other interests with respect to the Leased Property. Specifically, and without limiting the foregoing, any Authorized Officer is authorized and directed to solicit and accept bids for bond insurance for the Bonds, provided such officer determines acceptance of the best bid will be cost effective to the Authority, and appropriate changes to each of the documents referenced herein to evidence such bond insurance and the terms thereof, are hereby 2017-11-21 Agenda Packet Page 611 authorized and approved. All actions heretofore taken by the officers and agents of the Authority with respect to the transactions set forth above are hereby approved, confirmed and ratified. SECTION 11. This Resolution shall take effect from and after its date of adoption 2017-11-21 Agenda Packet Page 612 Presented by David Bilby, MSBA, CPFO Director of Finance/Treasurer Approved as to form by Glen R. Googins City Attorney 2017-11-21 Agenda Packet Page 613 2017-11-21 Agenda Packet Page 614 City of Chula Vista Staff Report File#:17-0481, Item#: 11. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING UTILITY UNDER- GROUNDING DISTRICT #141 ON F STREET FROM BAY BOULEVARD TO BROADWAY, AND DISTRICT #142 ON F STREET FROM BROADWAY TO FOURTH AVENUE AND AUTHORIZING THE EXPENDITURE OF UTILITY ALLOCATION FUNDS TO SUBSIDIZE PRIVATE SERVICE LATERAL CONVERSIONS RECOMMENDED ACTION Council conduct the public hearing and adopt the resolution. SUMMARY On October 17, 2017, Council adopted Resolution No. 2017-193, which declared the City’s intent to form two Utility Undergrounding Districts on F Street and set a public hearing for November 21, 2017 to establish these districts. The current action will form these districts and authorize utility allocation funds to be used for both undergrounding the utilities on F Street and private service laterals. ENVIRONMENTAL REVIEW Environmental Notice The Project qualifies for a Class 1 Categorical Exemption pursuant to the California Environmental Quality Act State Guidelines Section 15303 Class 3 (New Construction or Conversion of Small Structures) and/or 15301 Class 1 (Existing Facilities). Environmental Determination The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 1 Categorical Exemption pursuant to State CEQA Guidelines Section 15303 Class 3 (New Construction or Conversion of Small Structures) and/or 15301 (Existing Facilities). Thus, no further environmental review is required. BOARD/COMMISSION RECOMMENDATION Not applicable DISCUSSION On October 17, 2017, staff presented an agenda report summarizing the status of the City’s utility undergrounding program, discussing the priority of the areas with overhead utilities, and recommending the next districts to be formed and financing through the California Public Utilities’ Commission Rule 20A program. Through this program, the City receives an allocation of $2.0 million per year to be spent on utility undergrounding projects in accordance with Rule 20A requirements. Due to the high priority score and the opportunity to coordinate undergrounding with the recommended improvements in the F Street Promenade, staff recommended that the next undergrounding districts be on F Street from Bay Blvd. to Broadway (UUD #141) and on F Street City of Chula Vista Printed on 11/16/2017Page 1 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 615 File#:17-0481, Item#: 11. undergrounding districts be on F Street from Bay Blvd. to Broadway (UUD #141) and on F Street from Broadway to Fourth Avenue (UUD #142). The Notice of Intent to form these districts was passed through adoption of Resolution No. 2017-193 (Attachment 1). Estimated costs for these undergrounding districts were provided by SDG&E on June 1, 2017. The range was from $2.9 to $3.2 million for F Street from Bay Blvd. to Broadway and $1.5 to $1.7 million for Broadway to Fourth Avenue. These costs will be refined once SDG&E commences the design process. All design and construction funding will be provided through the City’s Rule 20A allocations. City staff time will be funded by TransNet in City CIP project STM394. On August 22, 2017, City staff participated with SDG&E in a walk-through of the project area, along with staff from AT&T, Media 3 and Sweetwater Authority. Based on the information obtained during the walk-through and from SDG&E, staff has prepared Boundary Maps for both districts (Attachment 2). The properties that are included obtain utility service from F Street. There will be no cost to the residents for the undergrounding for properties with service provided through SDG&E, since the cost of undergrounding the service laterals will be included in the District. Right of way acquisition is not anticipated to be required. Chula Vista Municipal Code (CVMC) Section 15.32 (Attachment 3) specifies that property owners within the utility undergrounding district to be formed and all affected utility companies shall be notified. Two properties (640 & 740 F Street) in the district do not have aerial SDG&E service from the poles on F Street but do appear to have aerial communications service (Cox, AT&T). These utilities would customarily be included in a joint service lateral trench with the SDG&E service. Since no SDG&E service lateral trench is required for these properties, the communications utilities will be notified and requested to provide an alternative connection for continued service. The property owners will also be notified prior to the date of utility pole removal to ensure coordination for the continuance of utility service. Notices of the public hearing were sent to all property owners on October 31, 2017. After the resolution of formation has been passed, a certified copy of the resolution, including maps of the undergrounding districts, will be recorded at the office of the County Recorder. After formation of the utility undergrounding districts, the following steps will be needed to proceed with the projects: ·The Capital Improvement Program (CIP) project STM-394 has been established in Fiscal Year 2017-18 for design costs related to the removal of the wood pole-mounted street lights and their replacement on new concrete standards plus relocation of other City-owned infrastructure to be done in conjunction with the undergrounding. Based on SDG&E’s schedule for completion of design, additional funding will be requested for construction costs related to signal upgrades, pavement rehabilitation, street lights, and appurtenances. ·SDG&E will prepare and submit the final trench and conduit design to other utilities and staff. It is estimated that SDG&E will request Joint Trench offers from the other utilities. The design process is estimated to take one year to complete. ·Staff will return to Council to establish the date within which conversions on private propertyCity of Chula Vista Printed on 11/16/2017Page 2 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 616 File#:17-0481, Item#: 11. ·Staff will return to Council to establish the date within which conversions on private property and pole removal must be accomplished. If needed, property owners that are responsible to complete work for the continuance of their other utility services will be notified within 15 days of passage of this resolution. ·Prior to construction, staff will obtain Permits to Enter for SDG&E from property owners located within the District in order to underground their service laterals. ·Utility undergrounding will be coordinated with the relocating of City facilities, the construction of facilities related to F Street beautification, and pavement rehabilitation. DECISION-MAKER CONFLICT Staff has reviewed the property holdings of the City Council members and has found no property holdings within 500 feet of the boundaries of the properties which are the subjects of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(11), for purposes of the Political Reform Act (Cal. Gov’t Code §87100,et seq.). Staff is not independently aware, and has not been informed by any 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 Utility Undergrounding program supports the Economic Vitality goal, as it increases the appeal and marketability of Chula Vista neighborhoods. CURRENT YEAR FISCAL IMPACT Passage of this resolution will not have any direct fiscal impact on the City. A total of $100,000 in TransNet for the design of other public facilities related to undergrounding (such as streetlights) is included in CIP STM394, Local Street Utility Undergrounding District. ONGOING FISCAL IMPACT There will be no direct fiscal impact on the City, since utility undergrounding districts will be financed using 20A funds. ATTACHMENTS 1. Agenda Statement and Resolution No. 2017-193 2. District Boundary Maps 3. CV Municipal Code Section 15.32 Staff Contact: Elizabeth Chopp, Senior Civil Engineer City of Chula Vista Printed on 11/16/2017Page 3 of 3 powered by Legistar™2017-11-21 Agenda Packet Page 617 2017-11-21 Agenda Packet Page 618 2017-11-21 Agenda Packet Page 619 2017-11-21 Agenda Packet Page 620 2017-11-21 Agenda Packet Page 621 2017-11-21 Agenda Packet Page 622 2017-11-21 Agenda Packet Page 623 2017-11-21 Agenda Packet Page 624 2017-11-21 Agenda Packet Page 625 2017-11-21 Agenda Packet Page 626 2017-11-21 Agenda Packet Page 627 2017-11-21 Agenda Packet Page 628 2017-11-21 Agenda Packet Page 629 2017-11-21 Agenda Packet Page 630 RESOLUTION NO. 2017- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING UTILITY UNDERGROUNDING DISTRICT #141 ON F STREET FROM BAY BOULEVARD TO BROADWAY, AND DISTRICT #142 ON F STREET FROM BROADWAY TO FOURTH AVENUE AND AUTHORIZING THE EXPENDITURE OF UTILITY ALLOCATION FUNDS TO SUBSIDIZE PRIVATE SERVICE LATERAL CONVERSIONS WHEREAS, the City’s consultant is finishing up the F Street Promenade Study, which envisions F Street as a gateway to the City, connecting the future Bayfront development to the Civic Center area and downtown Third Avenue. The undergrounding of utilities along F Street would enhance the beautification of the area; and WHEREAS, on October 17, 2017 Council adopted Resolution No. 2017-193, which declared the City’s intent to form two Utility Undergrounding Districts on F Street from Bay Blvd. to Broadway (UUD # 141) and on F Street from Broadway to Fourth Avenue (UUD #142) and set a public hearing for November 21, 2017 to establish these districts; and WHEREAS, paying for the cost of undergrounding private utility laterals with Rule 20A Utility Allocation Funds will reduce staff time in monitoring and reimbursing property owners and will enable undergrounding projects to commence with less delay; and WHEREAS, property owners within the proposed Utility Undergrounding Districts and affected utilities have received public hearing notices; and WHEREAS, Council has conducted a public hearing on the establishment of these districts; and WHEREAS, Council finds that the removal of poles, overhead wires, and associated overhead structures and the underground installation of wires and facilities for supplying electric, communication, television, and associated services will benefit the public health, safety and general welfare. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it establishes Utility Undergrounding District #141 on F Street from Bay Boulevard to Broadway (UUD #141) and District #142 on F Street from Broadway to Fourth Avenue (UUD #142), and authorizes the expenditure of utility allocation funds to subsidize private service lateral conversions. 2017-11-21 Agenda Packet Page 631 Resolution No. 2017- Page No. 2 Presented by Approved as to form by William S. Valle Glen R. Googins Director of Engineering & Capital Projects City Attorney 2017-11-21 Agenda Packet Page 632 City of Chula Vista Staff Report File#:17-0507, Item#: 12. CONFERENCE WITH LABOR NEGOTIATORS PURSUANT TO GOVERNMENT CODE SECTION 54957.6 Agency designated representatives: Glen Googins, Maria Kachadoorian, Kelley Bacon, Simon Silva, Gary Halbert, Courtney Chase, David Bilby Employee organization: Association of Chula Vista Employees (ACE) City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 633 City of Chula Vista Staff Report File#:17-0508, Item#: 13. CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2): One (1) Case City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 634 City of Chula Vista Staff Report File#:17-0509, Item#: 14. CONFERENCE WITH LEGAL COUNSEL--ANTICIPATED LITIGATION Initiation of litigation pursuant to Government Code Section 54956.9(d)(4): Three (3) Case(s) City of Chula Vista Printed on 11/16/2017Page 1 of 1 powered by Legistar™2017-11-21 Agenda Packet Page 635